Preferential Trade Agreements and Trade Liberalization Efforts in the OIC Member States
With Special Emphasis on the TPS-OIC
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1. The ability of firms to engage in value chains will depends on traditional trade policies
(tariffs, export restrictions, local content requirements)
2. Tariffs, NTMs, etc. impact on foreign suppliers but also on domestic producers. If
domestic producers import intermediates then making these more expensive, reduces their
competitiveness.
3. Such barrier may also impact on foreign investment linked to exports
4. As goods cross borders several times, the quality of the logistics chain (transport,
logistics, finance, communication needed for necessary business and professional services to
move goods and coordinate production) becomes more important.
5. Services inputs are an increasingly important part of successful exporting
6. Different regulatory requirements (health, product safety, security) can impact
negatively on value chain engagement, which raises the importance of regulatory cooperation
/ coordination, possibly mutual recognition of standards, the ability to invest and protect
intellectual property.
7. Market power by a dominant local firm (e.g. port operations) may impact on the
functioning of a supply chain
8. Clusters of policies may be important: There may be "tipping" points - fixing some
barriers may not be enough to trigger investment if other policies still cause problems in the
supply chain
9. These changes potentially make it easier for small and medium sized firms to be part
of a global supply chain as component or service suppliers. However, also creates additional
demands need for information, coordination and traceability between producers between
countries (standards, reliability, lean inventories), the need to produce to different standards
to different markets, need for certification.
10. SMEs may therefore suffer disproportionately from supply chain barriers, and
therefore policies should potentially target barriers to SMEs (include SMEs in the policy
prioritisation process, e.g. targeted trade facilitation, reducing regulatory compliance costs,
moving away from paper documentation).
11. Changes / impact arising from this sort of trade may be more rapid. Tariffs dismantling
can be controlled, technology change cannot be, and as industries have become more
"footloose" it is perhaps harder to identify which will be the sunrise and sunset sectors. This
has implications for education, technology and industrial policy which need to be more
flexible/nimble.