Preferential Trade Agreements and Trade Liberalization Efforts in the OIC Member States
With Special Emphasis on the TPS-OIC
45
the basis of current MFN rates. The sensitive track is usually open to negotiation. These may
have longer phase-in periods. There exists a choice of negotiating exclusions in tariff
liberalization: either via a negative or a positive listing. Under the negative list approach all
sectors are included minus an identified "sensitive list". Under the positive list it is only those
sectors which are specified which see the tariff reductions. For example, the positive list
approach is taken with the ECO, LAIA, SAPTA, India-Mercosur; whereas for e.g. ASEAN and
SAFTA the negative list is the preferred route. Agreements will then typically have a range of
additional provisions some of which are de facto obligatory, such as with regard to rules of
origin, and others which are on a more selective basis, with regard to behind the border
barriers such as standards or investment, as well as dispute settlement. In reality binding
provisions or liberalisation measures with regard to these additional border barriers are rare.
Article XXIV: Although this article was present in the GATT of 1947 until the early 1990s
comparatively few agreements were negotiated under this clause - though with some
important exceptions such as the European Communities agreement of 1958, or that of EFTA.
Given that developed countries could not sign agreements under the Enabling Clause and
Art.XXIV was particularly demanding for developing countries, it also proved difficult to sign
agreements that involved developed and developing Countries. This situation changed
somewhat after the Understanding on the Interpretation of Article XXIV of the General
Agreement on Tariffs and Trade in 1994 which resulted in a substantial boost in the number of
agreements notified under Art.XXIV. both between developed countries and those that
involved developed and devel- oping countries. This understanding defines many of the
aspects that would rule agreements under Art. XXIV, such as the length of the implementation
period among others.
Art XXIV and its 1994 understanding establish the general principles that are required of an
FTA and a custom union to be compatible with the spirit of the general agreement, particularly
with respect to the non-discriminatory nature of the GATT. For example, para- graph 4 of
Art.XXIV states that "(The parties) also recognize that the purpose of a customs union of a free-
trade area should be to facilitate trade between the constituent territories and not to raise
barriers to the trade of other contracting partings with such territories". There are more
specific provisions on the scope of free trade areas and customs unions. For example,
paragraphs 8(a) and 8(b) establish that "duties and other restrictive regulations of commerce
(...) are eliminated on substantially all the trade between the constituent territories in products
originating in such territories". The article itself leaves substantial room for interpretation
over what constitutes "substantially all" and there has been significant debate regarding what
is the share of trade that would be compatible with this rule; in particular in the context of
negotiations between developed and developing and/or least developed countries
(LDCs).Despite efforts to update and clarify this article during the last WTO negotiations round
this remains a grey area, though it appear commonly accepted that substantially all entails
90% of trade.