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COMCEC Trade Outlook 2019

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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

others. The European Union which was first initiated in

1950s made a domino effect on the expansion of the

RTAs worldwide. Today, many countries, including the developed ones are party to one or more

RTAs.

Most of the OIC Member States also took part in one or more RTAs over time. The number of

RTAs, which include one or more OIC Member States, has reached 113 by October 2019. Most of

these RTAs are in the form of FTAs. Most of the RTAs signed by the OIC Member States are

bilateral and concluded with the developed countries.

Figure 44: Number of RTAs including one or more OIC Member States

Source: WTO

http://rtais.wto.org/UI/PublicAllRTAList.aspx

There are also other approaches for liberalizing

trade. Some of the countries which realized that

freer trade boosts economic growth also

liberalized their trade unilaterally especially the

ones who previously experienced the generation

of exports from a less restricted trade. Many countries have diversified their economies and

enriched the goods subject to export in their countries. To export, countries do not need to

produce all the inputs within their borders any more. Imported inputs which are cheaper than

domestically produced ones are used by the firms to compete in export markets. For example

Nordas, Groli and Grosso (2006) state that in 2001 the import content of export value in the

electronics sector was 32% in China, 55% in Ireland, 65% in Thailand and 72% in the

Philippines. In many cases countries apply lower tariffs to these kinds of goods.

Application of high tariff rates is common in many OIC Member States. Countries apply high

tariffs for various reasons such as protecting domestic industry, preventing unemployment,

providing government revenue through customs duties etc. Figure 45 illustrates the highest

simple average tariff-applying WTO Members in 2018. As shown in the figure, 7 out of these 20

countries are OIC countries.

113

0

20

40

60

80

100

120

0

1

2

3

4

5

6

7

8

9

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

Total Number of RTAs

Annual Number of RTAs

“Many OIC countries apply

higher tariffs than the WTO

average”

“OIC Member States have

still a growing interest on

the RTAs”