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COMCEC Trade Outlook 2018

35

5.

TRADE ENVIRONMENT IN THE OIC MEMBER STATES

In this section, the trading environment in the OIC Member States will be brought into focus with

more in-depth analysis of the current state of affairs in terms of trade liberalization, facilitation,

promotion and financing.

Trade Liberalization:

Trade liberalization aims at eliminating the tariffs and other trade barriers hindering the flow

of goods and services among the countries. Some studies such as OECD (2011), Pavcnik (2009)

and IMF (2001) have found that trade liberalization increases trade, supports production, job

creation and poverty alleviation, prevents illegal trade and contributes to economic growth. The

existing literature has found strong correlation between openness to trade and economic

growth. For example, Panagariya (2005) concludes that it’s unlikely to find an example of a

developing country that has grown rapidly while maintaining high trade barriers.

Trade liberalization has been on top of the agenda of the international economic relations since

the Second World War. General Agreement on Tariffs and Trade (GATT) was initiated in 1947

for multilateral trade negotiations to liberalize trade. Since then, the number of countries joining

the GATT has increased dramatically. In 1994, World Trade Organization (WTO) was

established to continue these negotiations. The WTO negotiations aim at eliminating the tariffs,

non-tariff barriers and other barriers to international trade in goods and services among its

members.

Most of the OIC member states have also showed interest in joining the WTO. Up to date 44 OIC

member states have acceded to the WTO and 11 member states have the observer status.

Afghanistan became the last member of WTO on 29 July 2016.

Figure 43: WTO Membership Status of the OIC Countries

Source: WTO

Regional Trade Agreements (RTAs) is another approach

for trade liberalization. Two or more countries initiate

trade arrangements to liberalize trade among

themselves. Members of RTAs get the advantage of

exporting to the other parties to the RTAs than the

WTO

Members;

44

Observers;

11

Others; 2

“OIC Member States have

a growing interest on the

RTAs”