Preferential Trade Agreements and Trade Liberalization Efforts in the OIC Member States
With Special Emphasis on the TPS-OIC
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the new entrants present little or no exports in the products covered by the Parties of the TPS-
OIC System lists, then little effect will be expected on the exports of the new entrants to the
incumbents.
In terms of imports, on the other hand, the effect will depend exclusively on the coverage lists
presented by the new entrants and how their imports adjust to the export structure of the TPS
members and the potential new entrants. The effect could be zero if the new entrants present
lower MFN tariffs as no reductions would be necessary given the provisions in the agreement.
Given the number of countries involved and the resulting combinations, it is not feasible here
to present a detailed analysis. In addition, there is a lack of information on the coverage lists
presented by the new entrants.
In terms of welfare, and assuming that the trade effects are non-marginal, as the number of
Parties of TPS-OIC System increases, the trade diversion forces are more likely to be
outweighed by trade creation and trade re-orientation. This can be explained by the fact that
as the agreement increases in members, the probability of including efficient producers
increases as well with the corresponding welfare effects on consumers. As efficient producers
enter the agreement, they will displace inefficient ones that had previously benefited from
trade diversion within the agreement. However, once again it needs to be stressed that these
welfare enhancing effects are expected to be mild as the TPS-OIC agreement is not very deep in
terms of its obligatory commitments.