Improving Customs Transit Systems
In the Islamic Countries
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SAFTA (South Asian Free Trade Area) - SAFTA agreement was signed in 2004 by the Member
States with the purpose to create a free trade area to eliminate customs duties of all traded goods
among the Member States. Four OIC MS also take part in the SAFTA agreement.
EU Common Transit Convention - The Common Transit Convention reduces barriers in trade
between the EU members, the EFTA countries, Turkey, North Macedonia, and Serbia. It enables
operators to make a single declaration when goods are in transit across Member Countries.
Turkey is the only OIC country that is part of the EU Common Transit Convention from OIC MS.
Albania is in the process of joining the NCTS.
ECOWAS (Economic Community of West African States) - ECOWAS, as a regional political
and economic union, was established in 1975. The union consists of 15 Member States from
West Africa, of which 11 are OIC MS. The primary purpose of ECOWAS is to promote economic
trade across the region, national cooperation, and monetary union. The most important
documents related to CTR are two conventions adopted in 1982: Inter-state Transport
convention (TIE) and the Inter-state Road Freight Transit convention (TRIE). As a part of
ECOWAS, there is also the West African Economic and Monetary Union (WAEMU) with eight
Francophone West African countries.
The next section is analyzing the trade costs related to these transit arrangements.
3.2.2 Trade Costs of OIC MS
The UN ESCAP and the World Bank (WB) have developed a methodology for measuring and
estimating overall international trade costs and database for over 180 countries74 . 40 OIC MS are
included in the database. It is essential to mention that this database gives bilateral measure, or
howmuch in percentage trade costs increase for one country when exporting to another country
including all costs associated in trading goods internationally with another country relative to
those involved in trading goods domestically. This measure includes international transport
costs, tariffs, and other direct and indirect costs correlated with variations in languages,
currencies as well as complicated procedures for import and export. These costs for 2016 for 40
OIC MS can be found in Figure 16. According to this data, the United Arab Emirates have the
lowest trade costs, with 178% increase of average costs for export compared to domestic trade,
and then there is Malaysia with 190% and Turkey with 192%. On the opposite end, Chad and
Brunei Darussalam have the highest costs, which are almost 5 times higher than domestic trade,
followed by Sierra Leone with a 398% increase.
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