JEDDAH, 7 December 2005 — There are two important international events taking place this month in which Islamic countries are participating. One event is political while the other is economic. The Third Extraordinary OIC Summit is the political event; it precedes the economic one, the WTO Hong Kong Ministerial Conference (HKMC).
There is a strong link between the two events in that the outcome of the OIC summit might influence the future of Muslim countries in the World Trade Organization. Without doing a political analysis, it is possible to understand the nature and the importance of the OIC summit by being aware of the challenges that WTO imposes on the economic and political future of Islamic countries. In other words, to understand the political it is essential to understand the economical.
Saudi Arabia and other Muslim countries face significant challenges in the WTO because its rules impose limitations on the interaction of Islamic member countries. The major principle affecting the presence of Muslim countries in the WTO is trading without discrimination. Under WTO most-favored-nation (MFN) treatment, a country cannot discriminate between its trading partners by granting some nations special favors (such as lower tariffs) and not granting them to others. According to this principle, Muslim countries that are WTO members cannot grant each other special favors. Moreover, Muslim countries should treat all member nations equally; this of course includes Israel, which many Muslim countries boycott. Forming a regional trade agreement, however, between Muslim countries might solve the problem of the (MFN) treatment. Under Article 24 of the General Agreement on Tariffs and Trade — GATT was the forerunner of WTO — countries are allowed to form regional trading arrangements as a special exception even though this might sometimes violate WTO’s principle of equal treatment.
The formation of a Muslim multilateral trading bloc as an adjunct to OIC membership could pave the way for those Muslim countries not already WTO members to join the organization. Countries that are not WTO members such as Afghanistan, Algeria, Iraq, Iran, Lebanon and Libya could be easily absorbed into the multilateral trading system once they became part of an Islamic regional agreement. If the OIC were an internationally effective body, it could provide solid ground for negotiating WTO membership for non-member Muslim countries. It would thus be easier to negotiate with one body instead of having to engage in bilateral negotiations with several different states. Moreover, if the non-member countries are part of a free trade agreement with WTO member countries, then the benefit to all WTO members is obvious. In such a case, the tariffs imposed by the non-members will be more or less on a par with those of WTO members so that accession would not create problems in that area. Secondly, most OIC countries are members of WTO and they could exert pressure within the organization for the admission of non-members.
There is plenty of evidence to suggest that Muslim leaders realize the importance of reinventing the OIC as a political and economic organization.
At the present extraordinary summit, OIC countries are considering the establishment of a common market. This is evidence that they have realized the power they could exert on the WTO if they were a unified market. The announcement by Saudi Foreign Minister Prince Saud Al-Faisal that increasing trade and economic integration between Islamic countries are major issues at the summit testifies to their importance. Currently, inter-Muslim trade accounts for only 13 percent of their total trade and the aim is to increase this figure as much as possible.
The strength of the European Union comes primarily from its being a common market; by forming an Islamic common market, the OIC’s role in a multilateral trading bloc could enhance the standing of its member countries already in the WTO. The attendance of the newly elected Iranian president and the announcement of Libya’s participation in the summit are strong indications that leaders have finally been able to abandon their disputes in order to pursue their economic and political interests.
