Preferential Trade Agreements and Trade Liberalization Efforts in the OIC Member States
With Special Emphasis on the TPS-OIC
40
on excluded countries, basically as a result of the very different export structures between
them and the two signatories and the fact that in most of the products that these selected
vulnerable countries export to the EU and the US, the MFN is already zero.
A qualitative approach to the analysis of FTAs is the one applied by following the guidelines of
the Sussex Framework (Evans et al, 2006). The Sussex Framework discusses and applies a set
of rule of thumb to evaluating the likely effect of an FTA. Although such an analysis does not
provide estimates of the magnitude of the effects, the methodology is firmly based on clear
theoretical principles such as the comparative advantage and the gains from specialisation
coming from trade liberalisation, and can provide much more detailed and granular analysis.
The Sussex Framework has been systematised and formalised using TradeSift and it has been
applied to the analysis of many FTAs agreements. The main advantage of TradeSift and the
Sussex Framework is that its use is open to many trade policy makers and does not require
very specialised knowledge as the gravity model or the CGE. It can be applied with standard
trade and tariff data without the need of performing any statistical inference. It can be applied
very quickly and easily to the analysis of different FTAs by any trade official or policy maker as
the principles behind it are theoretically well founded but also easy to comprehend using
standard intuition.
3. CURRENT TRENDS IN PREFERENTIAL TRADE
AGREEMENTS
The preceding section covered a range of core conceptual and empirical issues. In this part of
the report we take a somewhat narrower perspective and consider more explicitly what the
provisions are in the world trading system are with regard to regional or preferential trade
agreements, and provide some summary statistics as to the nature and extent of such
agreements. In the subsequent sections of the report we then go on to considering such issues
in the context of the OIC countries.
3.1. WTO PROVISIONS FOR REGIONAL TRADE AGREEMENT
The Scope of Free Trade Agreements
Art.I of the GATT defines the Most Favoured Nation (MFN) principle determines the rules the
trade between member states. The MFN principle establishes that any advantage, favour,
privilege or immunity granted by any contracting party to any product originating in or
destined for any other country shall be accorded immediately and unconditionally to the like
product originating in or destined for the territories of all other contracting parties. In
practical terms and according to this article, any concessions made to a particular member in
terms of tariffs (and non-tariff measures) must be extended to all other members.