Preferential Trade Agreements and Trade Liberalization Efforts in the OIC Member States
With Special Emphasis on the TPS-OIC
17
Economic and Monetary Union (WAEMU) or the Eastern Caribbean Currency Union. The East
African Community is also planning to move towards a monetary union.
The preceding defined RTAs by type according to the degree of integration involved. An
alternative approach which is also useful to consider are the underlying motives for the
agreement. On the basis of this approach one can distinguish between three main types of
agreement:
1. Bloc creation: for example the EU, NAFTA, Mercosur, Agadir
2. Bloc expansion: for example EU expansion, CAFTA
3. Market access: EU-India, US-Korea, EPAs, AGOA, various bilateral agreements
These three categories are fairly self-explanatory. Hence, first there are agreements that are
designed to create a regional trading bloc: bloc creation. These are typically between countries
with reasonable geographical proximity and almost invariable sharing borders. Such
agreements are designed therefore to increase the efficiency in the allocation of resource
across a wider and common geographical space. Deeper integration provisions may be more
likely in such agreements as their objective is often the creation of a common economic space.
Given the existence of a bloc, there may then be an incentive for excluded countries to join the
bloc and to take advantage of that larger economic and geographical market: bloc expansion
The various expansions of the EU are very good examples of this. There are then numerous
agreements which are neither concerned with bloc creation, or bloc expansion, but are more
simply concerned with improved market access to the respective markets. Many bilateral
agreements fall into this category. The US-Korea agreement, for example, is designed to
improve access for the US in Korea’s market and vice versa but there is no intent to create an
economic bloc, or economic space.
Given the preceding, the TPS-OIC is an interesting example: In terms of the formal definition by
degree of integration the TPS-OIC is a preferential trading area. However, it probably does not
sit particularly easily within any of the three categories identified above. The reason for this is
the geographical and economic diversity of the potential "members" (i.e. all those eligible, in
principle, to be part of the proposed preferential agreement). It cannot really be seen as a bloc
creation or a bloc expansion agreement because of the geographical diversity and lack of
contiguity. Nevertheless within the OIC countries, there are clearly contiguous regional blocs
which could be formed. Similarly it cannot really be seen as a market access agreement
because the aim of the agreement is to promote more than simply market access overall,
thought that may apply for certain bilateral pairings.
2.3. DEEP INTEGRATION
In the preceding section mention was made of behind the border barriers, and deep
integration measures. As this covers quite a range of possible elements of integration it is
worth considering these in a separate section of the report, which is the purpose of this section
1. Deep integration elements cover domestic policy rules whose discriminate use could nullify