The framework agreement on the Trade Preferential System (TPS) among
Islamic countries, - which covers products originating in member countries of the
Organization of the Islamic Conference (OIC) - has entered into force following its
ratification by ten member states, and trade negotiations among members have
started. A total of 12 members signed and ratified the TPS-OIC namely Cameroon,
Egypt, Guinea, Islamic Republic of Iran, Jordan, Libya, Morocco, Pakistan, Senegal,
Tunisia, Turkey and Uganda in 2002.
In this paper, the products and goods in which each country has a comparative
advantage are determined based on RCA index at 6-digit level of HS Code during
1997-2001. The Simple Potential method is then used to identify bilateral trade
potentials between member countries and Iran.
The findings of the study demonstrate that Irans non-oil export to member
countries accounts for 204 million dollars on average during the period, while it may
be increased up to 400 million dollars. On the other hand, Irans import from TPS
members accounts for 409 million dollars while it also can be increased up to 1
billion dollars, and implies a 60 percent un-used capacity. Thus, around 60 percent
of trade potential between Iran and these countries has not been fulfilled yet.
Moreover, based on RCA, the major exporting (importing) products of Iran have
been identified and compared with each members importing (exporting) goods.
Strong emphasis should be made on these items during the process of negotiations
based on the principles of mutuality of advantages.