ISLAMIC CHAMBERS OF COMMERCE, INDUSTRY & AGRICULTURE (ICCIA) 16 th Private Sector Meeting in Sharjah – UAE on March 2014 BENEFITS OF TRADE PREFERENTIAL SYSTEM TPS-OIC FOR THE PROMOTION OF INTRA- ISLAMIC TRADE

Impact of the TPS-OIC on the economies of OIC Member States and The Legal Implications of the TPS-OIC BY Dr. AbdelGadir Warsama Ghalib Senior Legal Advisor & Professor of Law American University Bahrain

Organization of Islamic Countries OIC ISLAMIC POPULATION ALMOST CONSTITITES AROUND 25% OF THE WORLD. ISLAM IS IN EVERY PART OF THE WORLD AND IS GROWING FASTLY AND MUSLIMS NEED TO BE UNITED. OIC IS AN EXAMPLE OF UNITY.

ISLAMIC CONCEPTS ISLAMIC CONCEPTS CALL \ GUIDE FOR UNITY & COOPERATION AMONG MUSLIMS. THERE ARE CLEAR DIRECTIVES TO THIS EFFECT IN THE HOLY QURAN & HADITH NABAWI. TRADE IS AN IMPORTANT ELEMENT TO ACHIEVE UNITY AMONG MUSLIMS.

IN THIS CONNECTION CERTAIN ACTIONS WERE TAKEN The trade preferential system among TPS-OIC – is a good example TPS-OIC is one of the projects of COMCEC (Standing Committee for Economic and Commercial Cooperation of the Org of Islamic Cooperation) The objective of the TPS-OIC is to promote the intra-OIC trade through exchange of trade preferences among the Member States of OIC.

AGREEMENT ON TRADE PREFERENTIAL SYSTEM Promotion of trade among OIC Member States through the exchange of trade preferences on the basis of the following principles: - Ensuring equal & non-discriminatory treatment among all participating states. -Securing mutuality of advantage3s to all participating states to enable all to benefit equally from the Trade Preferential System. -Enabling participation of groups composed of Member states only, which may participate in trade negotiations by a unified representation. -The exchanged preferences not to be limited to tariffs but are to be progressively extended to para-tariff concessions. -Extending trade preferences to all commodities including agricultural and animal products, manufactured or semi- manufactured products.

AGREEMENT ON TRADE PREFERENTIAL SYATEM -Taking in consideration differences in the levels of economic development among Contracting States in granting special treatment. -Submitting to periodical reviews and sustained evaluation of the Trade Preferential System m with a view to extending its implementation and improving its provisions in the light of the experience acquired and results obtained. -Making use of the trade financing & export credit insurance facilities provided by OIC institutions, in conformity with their rules for the products exchanged under the agreement. -This agreement shall not prejudice any legal obligations of Participating States vis-à-vis third parties. - Tariff, para-tariff and non-tariff preferences applicable within existing & future sub-regional, regional &n inter-regional groupings to which OIC Member States belong shall retain their essential character, and thier shall be no obligation on the members of such groupings to extend, nor the right of other Participating States to enjoy the benefits of such preferences.

NEGOTIAATIONS RULES MOST FAVORED NATION TREATMENT (MFN) BASIS. THERE ARE EXCEPTIONS IF ANY COUNTRY WANTS TO WITHDRAW THE CONCESSIONS GIVEN --- CERTAIN PROCEDURE TO BE FOLLOWED. SPECIAL TREATMENT FOR LEAST DEVELOPED MEMBER STATES

NEGOTIATIONS COMPONENTS OF NEGOTIATIONS TO COVER: 1- Tariff, para-tariff and non-tariff concessions 2- Arrangements compatible with the international obligations of the Participating States concerning direct trade measures including medium and long-term contracts for exports & imports of specific products or covering sectoral agreements may be considered in subsequent stages depending on developments and according to need.

What are the contents \ framework of the trade preferential system agreement ? The framework agreement on TPS-OIC is the basic legal document of the TPS-OIC. This agreement sets up the general principles towards establishing a preferential system, such as the general rules of the registrations, the scope of the goods coverage etc. The agreement entered into force in 2002 after (10) OIC Member States ratified the agreement.

Main contents of the Agreement: Among the main features of the Agreement are The Most Favored Nation Principle, Equal treatment of member states, Special treatment for Least Developed Member States. It allows the Regional Economic Groups which consist of only OIC Member States (GCC) to participate in TPS-OIC trade negotiations with a unified representation (What about COMESA?)

What is the scope of the Preferential System envisaged by the Framework Agreement? The Preferential System outlined in the agreement covers all commodity groups, including agricultural products. It extends its limits, besides tariffs, on para-tariff & non- tariff barriers. The Preferential System would be revised and further developed in time in the light of the needs and experiences gained.

What is required from member states, is it signing or ratifying the agreement ? Signing is the first step for a country in the way of adopting the Agreement. An official of a Member Country, specifically authorized for signing the Agreement, could sign the Agreement. The original copy of the Agreement is placed at the OIC General Secretariat, in Jeddah, Saudi Arabia.

RATIFICATION After signing the Agreement comes the ratification process, which is more complex and time consuming than the first step & depends on the internal procedure of each country for the ratification, such as approval by the Parliament, by the Cabinet, by the President….

Cont. The ratifying country is to send its instrument of ratification, i.e. the document proving the ratification to the General Secretariat of the OIC in Jeddah.

What is the difference between signature & ratification in law (Public International Law) ? Signature of the agreement means being party to the agreement. However, ratification means accepting the signed agreement and such acceptance makes the agreement as part of the law of the country. It becomes a law.

- What is the status of your country? Do you know ? List of all Member States is available at the General Secretariat of OIC in Jeddah. You could easily check to know all details regarding membership of your country. If, you country is not a member, you need to work hard for membership.

COMCEC & TNC Following the entry into force of the Framework Agreement, the COMCEC (Standing Committee for Economic and Commercial Cooperation of the Organization of Islamic Cooperation) - the platform for Islamic world (UMMAH) cooperation in economic & commercial aspects.) established the TNC (trade negotiating committee) in The Member States of the TNC are the OIC Member States that have signed & ratified the Framework Agreement. The main function of the TNC is to undertake negotiations for achieving the objectives of the Framework Agreement i.e. an operating trade preferential system among its members.

What kind of institutional structure do the TPS-OIC trade negotiations have ? The COMCEC is the supervisory body for the implementation of the Framework Agreement, which equips it with final decision-making power in this regard. It is responsible, inter alia, for establishing the TNC and constituting the TNCs internal rules adopting the outcome of the negotiations and launching rounds of trade negotiations. The TNC, on behalf of COMCEC, works to implement the objectives of the agreement and reports to the COMCEC.

Who can join the TPS-OIC trade negotiations ? Any OIC member Country wishing to join negotiations, first, has to sign & ratify the Framework Agreement and submit the instrument of ratification to the General Secretariat of the OIC. In doing so, it becomes a member country of the TNC. Second, it must sign the PRETAS, which shall constitute the theme of the negotiations in the second round, due to annexes and other issues related to its implementation.

TPS-OIC Versus WTO What are the differences between this agreement TPS-OIC & the WTO agreements ? WTO, is a worldwide agreement to promote trade. Due to the differences of opinion between the Developed States & the Undeveloped States, WTO took very long time to conclude. However, such grave differences may not be the same among OIC Member States and this could be taken as an advantage. OIC Member States must benefit from the good & bad results that came out from WTO deliberations.

TPS-OIC The 2nd round of trade negotiations for establishing the TPS-OIC was conducted between 2006 & The Rules of Origin, the outcome of the 2 nd round was adopted by COMCEC and presented to the signature and ratification of the members of the TNC.

RULES OF ORIGIN RULES OF ORIGIN lays down the rules for determining the origin of products eligible for preferential concessions under the Framework Agreement and PRETAS. RULES OF ORIGIN INCLUDE: -ORIGINATING PRODUCTS -WHOLLY PRODUCTS OR OBTAINED -NOT WHOLLY PRODUCTS OR OBTAINED -CUMULATING RULES OF ORIGIN -DIRECT CONSIGNMENT -Treatment of packing -Certificate of origin

SAFEGUARD MEASURES A Participating State shall be able to take safeguard measures to ward off serious prejudice or threats of a serious prejudice, which may arise as a direct consequence of unforeseen substantial rise of imports enjoying preferences under this agreement. Prejudices may be caused by: -Threats of prejudice to domestic products -Serious deterioration in the balance of payments. -Dumping applied by the exporting country -Export subsidies applied by the exporting country.

SHARIAA RULES As a rule: Products prohibited by virtue of the Islamic Shariaa shall not be covered by trade negotiations.

SETTLEMENT OF DISPUTES As per Article (15) of the agreement: Any dispute that may arise among participating States regarding the interpretation and application of the provisions of this agreement or any instrument adopted within its framework shall be amicably settled by agreement between the parties concerned. In the event of failure to settle a dispute, it may be referred to the Trade Negotiating Committee by a party to the dispute. The Committee shall review the matter and make recommendation in accordance with the appropriate rules which it will set for this purpose. I BELIEVE THIS IS NOT ENOUGH & MUST BE REVIEWED. THE DISPUTE SAHLL BE REFERRED TO DUBAI ISLAMIC CENTER FOR ARBITRATION WHICH IS AN IDB ORGANIZATION…

OTHER AGREEMENTS GENERAL AGREEMENT FOR ECONOMIC, TECHNICAL AND COMMERCIAL COOPERATION AMONG MEMBER STATES OF THE ISLAMIC CONFERENCE POINT FOR CONSIDERATION REGARDING THIS AGREEMENT: TO BE REVISED WITH THE AIM OF GIVING MORE SPECIFIC NECESSARY DETAILS

OTHER AGREEMENTS AGREEMENT FOR PROMOTION, PROTECTION AND GUARANTEE OF INVESTMENTS AMING MEMBER STATES OF THE ORGANIZATIONOF THE ISLAMIC CONFERENCE POINT FOR CONSIDERATION REGARDING THIS AGREEMENT: ARBITRATION RULES TO BE REVIEWD TO REFER TO DUBAI ISLAMIC ARBITRATION CENTER

OTHER AGREEMENTS AVIATION SECTOR METROLOGY, STANDARDS & SPECIFICATINS THERE ARE MANY OTHER ISSUES NEED TO BE COVERED SUCH AS BANKING & FINANCIAL SERVICES, ENVIRONMENT ISSUES, CULTURAL ISSUES……..

THANKS READY FOR YOUR QUESTIONS For contacts: Dr. AbdelGadir Warsama Ghalib