Preferential Trade Agreements and Trade Liberalization Efforts in the OIC Member States

With Special Emphasis on the TPS-OIC

197

suggest that revising the agreement such that the Fast Track becomes the basis on which the

obligatory commitments are built. One way of achieving this could be to allow for a transition

period, such that the Normal Track is the starting point, but then after a period of "x" years (to

be negotiated) countries are obliged to switch to Fast Track. The transition period can allow

for a gradual transition from 7% to 75+%, which therefore reduces the discontinuity between

these two coverage levels. The Normal Track, as currently constituted, is an ineffective means

of achieving any meaningful trade policy objectives. While it might be a stepping stone for

additional and deeper commitments, it is one that is extremely "close to the shore".

Depth Coverage determines part of the strength of the tariff liberalisation tool. A

second aspect concerns the degree to which tariffs are liberalised. Here the recommendation it

to be more ambitious with regard to the extent of the tariff reductions, and for tariffs to go to

zero for all products included in the liberalisation schedule.

Rules of Origin As discussed earlier in the report - all preferential trade areas and free

trade areas require rules of origin in order to ensure that trade deflection does not occur. The

rules are necessary precisely to allow the agreements to operate. However, at the same time

the rules can be formulated in ways which are more or less supportive of the regional

integration process. The TPS-OIC rules are primarily based on the value added rule, and the

level which is set is not unusually high or "restrictive". Currently within the TPS-OIC diagonal

cumulation is allowed. A significant step forward would be to allow for full cumulation which

would make it much easier for member states to source intermediates from each other, and

could help to stimulate greater competitiveness, through greater regional supply chain

integration. The preceding recommendations have focused on improving the strength of the

agreement in terms of shallow integration - that is to say in terms of tariffs. As is clear from

this report, shallow integration is important, but it is also important to consider how deeper

integration elements can promote greater regional integration. Of course meaningful shallow

integration should be seen as a necessary precursor and complement to processes of deeper

integration.

Standards One area where the TPS-OIC could be significant is on the definition of

harmonised quality standards. Trade could be boosted if Parties of TPS-OIC System either

shared the same standards in terms of SPS and TBT, or if there was some form of

approximation of regulations and of conformity assessment procedures, and/or mutual

recognition of standards. Special care should also be placed in ensuring compatible with other

important export destination markets such as the EU or the US. Through their adoption with

respect to intra-regional trade the TPS-OIC could help boost the adoption international or

widely accepted quality standards such as Globalgap. Of course, the adoption of common

standards needs to be complemented by the adoption of rules with respect to conformity

assessment. Moreover, the TPS-OIC should include provisions with respect to assistance and

cooperation, particularly for LDCs, in the development of local facilities for testing and

certification.