Preferential Trade Agreements and Trade Liberalization Efforts in the OIC Member States
With Special Emphasis on the TPS-OIC
57
rather than the usual hub- spoke relationship present, particularly, when outward processing
is considered. Additionally, (Gasiorek, Augier and Lai-Tong, 2009) suggest that developed
countries should enforce rules of origin only when FTA’s partner external tariff are lower.
SPS and TBT Technical Barriers to Trade (TBT) and Sanitary and Phytosanitary (SPS)
measures are probably the most significant non-tariff measures affecting trade. Although they
frequently act as barriers against foreign competition and may discriminate in favour of
domestic suppliers; they also may respond to genuine domestic political goals such as to
correct market failures (such as asymmetric information in the case of labelling) or may
address non- economic objectives such as the protection of public health and/or animal
welfare. 10 However, although they may not have the objective of discriminating or protecting
domestic suppliers, they frequently favour domestic producers. In fact, SPS and TBT
represented 11% and 12%, respectively, of the reasons for dispute settlement (World Trade
Report, 2012)
Therefore, the main objective of including provisions on SPS and TBT in FTAs tends to
be the introduction of disciplines to facilitate the fulfilment of the necessary technical
requirements. In particular, agreements tend to include provisions on the adoption of common
standards or rules, mutual recognition and conformity assessment. Although only 60% and
67% of FTAs surveyed included TBT and SPS provisions respectively; after the conclusion
of the Uruguay Round, less than 15% of agreements during the 1990s and 2000s did not
include such provisions (Baccini, Dur, Elsig, Milewicz, 2011). It is not very frequent to see
provisions for the adoption of common set of standards in FTAs. These type of disciplines are
more likely in deeper agreements such as the European Union. It could be seen also in some
customs union such as Mercosur, although their scope is much more limited. The adoption of
common standards represents an important decision in the degree of integration between two
countries as eliminates the possibility of discrimination of grounds of non-compliance on TBTs
and SPSs. Nevertheless, even in very deep agreements such as the European Union, there can
still be differences in standards between countries. This can be dealt with by the principle of
mutual recognition. Hence mutual recognition in the EU guarantees that a product legally
marketed in one Member and not subject to harmonisation through the EU must be allowed to
be marketed in any other Member state even when it may not be in full compliance with the
technical rules of the Member State of destination.
This should not be mistaken with the mutual recognition agreements in FTAs by which
signatories will accept the certificates of conformity issued by the conformity assessments
bodies of the other signatory parties. Generally, the mutual recognition agreements include
lists of designated laboratories, bodies and other institutions in every signatory. The EU, for
example, has mutual recognition agreements with Australia, Canada, Japan, New Zealand and
the US. Some countries therefore, and perhaps particularly developing countries, may choose
to adopt the other country’s standards with the objective of securing access to that market.
This is an easy and fast way of adopting best international practices and remain competitive in
the destination market. There is evidence (Clougherty and Grajek, 2008) and (Grajek, 2004)