Preferential Trade Agreements and Trade Liberalization Efforts in the OIC Member States

With Special Emphasis on the TPS-OIC

WTO); as well as the existence and the growth of GVCs can be seen a mutually reinforcing. In

addition, the proximity of countries and links of the value chains are also important in the

determination of the formation of these plurilateral agreements and regional factories.

The Rise of Mega-regional Agreements

The analysis of the RTAs notified at the WTO revealed that they have tended to be negotiated

between developed and developing Countries or between developing countries. With the

exception of the European Union, there are few examples of RTAs solely between Developed

Countries. On the other hand, agreements between trading blocs and agreements between

many countries in different continents are becoming more frequent.

The Trans-Atlantic Trade and Investment Partnership (TTIP) between the European Union

and the United States is, by the economic importance of its two members (together they

account nearly 25% of world trade), the most important trade agreement currently under

negotiation. Although their direct effects on LDCs is expected to be minimal as Rollo et al

(2013) suggest, the effect on other more advanced countries and on world trade could be very

important. Just accounting for the effects of tariff elimination, bilateral trade is expected to

grow by almost 30%. The effects on the affected countries (likely to be other developed

countries or countries that compete with the EU in the American market or with the US in the

European market) are likely to be important. In addition to Japan, China and other MFN paying

countries in the EU and the US, agricultural product exporters in South America and Australia

could be affected, particularly in the EU market.

However, the impact arising from possible deep integration provisions could be even more

important. Although the possibility of the harmonisation of standards is small

, there is a

certain possibility of a wide agreement with respect to mutual recognition that could facilitate

enormously the certification of compliance. On the other hand, competition and trade policy

provisions could remove many of the non-tariff barriers between both countries. However, the

authority and autonomy that states in the US have in this respect may be a complication in the

agreement and then in implementation.

Hence, despite the complications in the agreement and its subsequent implementation, such an

agreement could have important effects on both economies. These effects may be particularly

important in terms of global value chain integration. The agreement will include two of the

regional factories highlighted by Baldwin (2011) and the removal of tariffs and non-tariff

measures is likely to strengthen and deepen the links between both. Additionally, any wide

and deep agreement on services might imply even stronger links. This could results in more

specialisation (with the consequent increase in economies of scale and productivity gains) and

increased trade of intermediates between both "factories".

However, the adoption of international private standards such as Globalgap tend to make them converge