Four Member States of OIC and D-8 signed and ready to Ratify PTA

Istanbul, Turkey | August 23, 2008 by D-8 Secretariat

The Muslim world is rapidly drawing closer to the completion of a preferential trade system that will bring about a gradual decrease in customs duties and other obstacles to trade amongst Muslim countries, the Anatolia news agency has reported.

First brought onto the agenda in 1984, a large distance has so far been covered in the creation of this new system. Among the 57 members of the Organization of the Islamic Conference (OIC), 11 states have agreed to participate, and five of these have gotten the relevant agreement ratified by their national legislatures.

The latest meeting on the issue convened in Ankara in June. According to the process outlined at this meeting, countries interested in participating in the preferential trade system will be responsible for examining its benefits and responsibilities and will then inform the OIC Standing Committee for Economic and Commercial Cooperation that they will proceed with the new system. The program involves a three-step tax reduction system among participating OIC countries. At first, those countries that impose duty that exceeds 25 percent will reduce it to 25 percent. Then countries with duty between 15 and 25 percent will lower their rates to 15 percent. Eventually, all countries will decrease duty a maximum of 10 percent. To be launched, the plan requires the approval of at least 10 member states.

Turkey, Jordan, Tunisia, the United Arab Emirates (UAE) and Guinea signed a founding agreement last year in Ankara as an expression of their commitment to the formation of a way for large-scale economic integration among Muslim countries. In addition to these counties, six more — Bangladesh, Cameroon, Egypt, Malaysia, Pakistan and Syria — have since stepped up to show their intention to take part in the formation

The preferential trade system is often regarded as a potential basis for the liberalization of trade, investment and capital movement among Muslim countries.

OIC countries are estimated to have a 9.5 percent share of global trade volume, seeing a combined $1.25 trillion in exports and $950 billion in imports in 2006. A huge trade surplus of $300 billion contributes to the purchasing power parities in these nations. Of the total trade volumes of OIC members, only 16.3 percent is realized amongst themselves. They intend to increase this to 20 percent within a few years.

Turkey seems to be the most eager country among OIC members to finalize the preferential trade system. The share of OIC members in Turkey’s exports has risen to 20.2 percent from 10.2 percent over the last four years.

“We hope that the readiness from these countries can work as a locomotive for further intra-trade relations among moslem and developing countres,” said Dipo Alam, Secretary General of D-8 said yesterday, commenting the news. He said that D-8, plus another four countries has signed the PTA in Bali Summit, and also has ratified the RoO.

“We will approach other OIC countries to sample this move in D-8 trade agreement, which represent no less than 930 million population of moslem majority in the world, so other member of OIC can also take the same initiatives,” Alam said at his office.

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