Preferential Trade Agreements and Trade Liberalization Efforts in the OIC Member States
With Special Emphasis on the TPS-OIC
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underlying technical issues and the consequences of the provisions. Other non-judicial
mechanisms, such as voluntary peer review and consultations, may also be appropriate. The
economic and human resources necessary to implement even a minimal regional decentralized
competition regime arrangement are significant for both developed and developing countries.
Nevertheless, the emerging evidence shows that the economic and welfare costs associated
with cross-border anticompetitive practices are higher. Short term political costs should be
weighed against the understanding that the long-term and sustainable benefits of a strongly
enforced regional competition regime will almost always outweigh its costs. Decentralized
agreements that only require the existence of a local competition law and authority to apply
the law, such as NAFTA, are not as economically demanding as a regime that establishes a fully
centralized law with a supporting regional authority, such as the EU or the Common Market for
Eastern and Southern Africa (COMESA).
Investment Policy
In good part driven by increased supply chain fragmentation and by the growing recognition of
the importance of investment in the process of economic growth, regional trade agreements
increasingly incorporate investment provisions. This is often instead of negotiating bilateral
investment treaties (BITs) and is in recognition of the complementary relationship between
trade and foreign direct investment (FDI). Investment provisions were one of the four
’Singapore issues’ that were originally supposed to become the new additions to the WTO in
the Doha negotiations (the other three were: trade facilitation, government procurement, and
competition policy). In good part the lack of progress in the WTO on these issues has increased
their adoption in regional trade agreements.
The investment provisions typically do not focus on simply on dealing with investment in the
post-establishment phase but also deal with the pre-establishment stage (i.e., market access,
national treatment, and most favoured treatment). In so doing they provide legal incentives
through the protection of investment once it has been undertaking, economic incentives for
investors in the form of market access. There are two main models of investment provisions in
PTAs, one following the NAFTA, and which places investment in goods and services industries
in the same chapter; and one that follows the GATS model for the provisions on investment in
services. In application, these two types of agreement tend to offer the same degree of
protection for investment and are equally liberalizing of investment.
Trade in Services
Most agreements typically focus only on trade in goods. More recent agreements such as in EU-
Mexico or in newer deeper agreements such as EU Korea also have some treatment of services.
GATS rules require there should be the equivalent of the substantially all trade provision of the
GATT ART XXIV. Generally there is a growing trend in PTAs to include provisions on
liberalizing cross-border trade in services, services-producing activities, and the temporary
movement of business people. Where services are included the focus tends to be on
professional services suppliers.