Preferential Trade Agreements and Trade Liberalization Efforts in the OIC Member States
With Special Emphasis on the TPS-OIC
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discriminatory effect in favour of those firms and industries already located within the borders
of the importing country. Given that each country may have different administrative and
bureaucratic procedures, it can be difficult to characterise these measures as they could take
any form.
Moreover, trade facilitation is also associated with other type of barriers not associated with
administrative procedures but to the quality of the infrastructure associated with trade such as
port, storage and other logistic facilities. By increasing the logistic costs, imported goods
become more expensive without considering the incidence of tariffs. Although their effect on
trade is very important, since it is likely that the low quality in infrastructure is also present
across the country, the discriminatory effect is less present. It is also worth noting that the
quality of infrastructure may not the result of a deliberate measure that can be easily solved by
government action or simply by a change in regulation or policy. Therefore, the focus on Trade
Facilitation is associated with all the bureaucratic measures and practices that increase the
costs of trade. Among them, it is possible to identify non-automatic import licenses, time
consuming inspections, cumbersome customs procedures, etc. These types of measures can
have an important protectionists effect on imports that could exceed cost associate with tariffs.
An FTA that liberalise trade between its members might have marginal effects if the costs of
trade associated with these types of measures remains very high.
Facilitating trade is thus about streamlining and simplifying international trade procedure.
Many approaches to trade facilitation therefore focus on customs cooperation provisions.
Some agreements extent the remit to include other border agencies, services and standards -
all with the intent of reducing transport costs and increasing the efficiency of trade as opposed
to the efficiency of production. Trade facilitation measures include anything from institutional
and regulatory reform to customs and port efficiency and are typically highly country specific
and can be costly to implement.
Rules of Origin
Rules of origin (ROOs) are an extremely detailed but essential feature of all regional or
preferential trading agreements (PTAs), except for customs unions. Hence, each regional or
preferential trading agreement which is signed contains a protocol or chapter which deals with
the issue of rules of origin. As explained below these rules of origin is essential and is needed
in order to support any process of regional integration. However, the rules can also undermine
the process of regional integration. In addition because the rules are complex and specific to
each given RTA/PTA, they have an important role to play in determining the extent to which
the regional integration process ends up being a building or a stumbling block to the
multilateral process of trade liberalisation.
The rules of origin are needed in order to establish whether a given good is genuinely eligible
for the preferential reduction or exemption from customs duties conferred by the PTA/RTA
arrangements. Suppose the preferential tariff on the export of an Ethiopian good to the EU is