LACK of political will, cross-border disputes and mistrust are major factors hampering the development of trade among OIC (Organisation of Islamic Cooperation) countries which, according to the Islamic Development Bank, accounts for less than six per cent of the global trade.
Trade among OIC countries has gone up to 16.7 per cent of the total trade of the 57-member states in 2009 from 14.5 per cent in 2004. Still, the economic experts and businessmen insist, the target of increasing the share of trade among OIC member-states under the 10-year Plan of Action agreed at the third extraordinary Islamic summit to 20 per cent of their total trade by 2015 will not be possible.
“The current level of trade among the member countries of the OIC is disappointing given the close geographical proximity of many Muslim countries to each other, religious and cultural ties and similarities and huge potential for trade,” says Irfan Qaiser Sheikh, president of the Lahore Chamber of Commerce and Industry (LCCI) that organised an OIC Ambassadors Conference in collaboration with the foreign ministry in Bhurban on April 14.
The objective of the conference was to bring home to the representatives of the OIC member states the need to escalate work on dismantling tariff and non-tariff barriers that are stalling growth in trade and investment. In his opening speech at the conference, Irfan Sheikh underscored the need for promoting intra-OIC trade.
There is huge potential for increasing the share of the intra-OIC trade to address the issues of poverty, low economic growth and investment in the member states provided the problems restricting interaction and cooperation between private sector of the member states are removed, according to the LCCI president.
Diplomats at the moot agreed that the lack of political will to push trade between the OIC nations is a major factor responsible for the small size of trade between the Muslim nations.
“If the 57 OIC countries had the political will, the Muslim world would have a lot stronger economic relationship than ever before,” a diplomat from a smaller Gulf country told Dawn on the sidelines of the conference.
He was disappointed to note that majority of the Muslim countries preferred to trade with the United States or Europe rather than other OIC states. “Improvement in trade within the OIC group can be a lot beneficial for the weaker economies,” he noted. Out of the 49 least developed countries, 22 are members of the OIC.
Economist Qais Aslam agrees. “Lack of political and economic will in many OIC countries and governments for signing bilateral and multilateral preferential or free trade agreements with each other is stopping meaningful development on trade and investment relations within the OIC states,” he pointed out in his presentation at the conference.
Dr Asif Saeed in his presentation drew attention toward dismal trade statistics across Muslim countries. “The truth is that Muslim countries do not trade with each other or invest in each other’s economies as they do with the industrialised and developed countries. Even in post-9/11 era, the direction of trade flows and investment from Muslim countries have not been encouraging - some of the new flows have been away from the US, but most have been towards the GCC and MENA countries, East Asia and the EU,” he said.
This shows lack of interest amongst the OIC members, for political or other reasons, to move towards the attainment of the goal of a common market as suggested at the Islamic Summit in 1974.
“In order to attain the goal of the OIC Common Market, the member states should start from lower levels of integration such as preferential trade agreements, free trade areas and Customs unions.
Moving in this direction can help them toward the shared goal of the common market while taking into account their different degrees of development,” said Dr Saeed.
A Strategic Framework for Enhanced Facilitation of Intra-OIC Trade prepared by the LCCI’s research and development department led by its chief economist Dr Amjad Bashir says establishing a common market is a long-term project. “This has been the case with the other leading economic blocs.”
The OIC has adopted a Road Map for Enhancing intra-OIC Trade in Ankara in 2008 for achieving the objectives of economic integration among the member states.
The member states are being encouraged to adopt the roadmap for increasing trade flows among each other by dismantling all artificial barriers in favor of free movements of goods within the group.
This includes the elimination of all tariff, para-tariff and non-tariff barriers.
But, the report says, the slow ratification of preferential trade scheme by the member countries is impeding free movement of goods, investment and labour within the bloc.
“This has partly been responsible in motivating regional economic blocs within OIC including West African Economic and Monetary Union (WAEMU) and Economic Cooperation Organisation (ECO) as well as D-8.”
One way of developing closer business, economic and trade relations within the group, some of the participating diplomats agreed, is to encourage private sector to interact more closely and regularly. In view of this, the LCCI, says Irfan Qaiser Sheikh, has decided to set up an OIC Trade Coordination Centre to facilitate contacts between the businessmen of the OIC member countries.
“The OIC ambassadors have also recommended organisation of an economic summit of the member countries involving private sector in three to four months to consider setting up a single currency, a common bank and a trading bloc on the pattern of the European Union.” However, he says, the OIC members should ratify and make operational the preferential and free trade agreements and facilitate trade within the group.
But few believe that it could happen in the near future. The economic bloc of Muslim countries, as the Gulf country’s diplomat said, would remain a pipe-dream for a long time to come.