Free zones and preferential trade agreements: The case of the Arab region - ESCWA

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Free zones and preferential trade agreements: The case of the Arab region

ESCWA Publication: E/ESCWA/CL3.SEP/2020/TP.1


Publication Type: Information material

Cluster: Shared Economic Prosperity

Focus Area: Trade & regional connectivity

SDGs: Agenda 2030

Keywords: Arab countries, Rules of origin, Trade agreements

Free zones and preferential trade agreements: The case of the Arab region

June 2021

Despite the proliferation of free zones (FZs), the number of which exceed 127 in the Arab region, products originating from these zones and traded between Arab countries do not yet benefit from the tariff preferences provided for by the majority of bilateral free trade agreements in particular under the Pan Arab Free Trade Area (PAFTA).

This issue is of particular importance for an increasing number of Arab countries where the majority of exported products come from free zones or whose exports have increased thanks to the contribution of these zones. This is an issue that is still debated within the League of Arab States. Free zones can help increase the volume of inter-Arab trade. Therefore, excluding their products from the tariff preferences affected the capacity of the concerned Arab countries to diversify their economies and promote exports.

This report aims to build an Arab position to better take advantage of the opportunities offered by free zones in a framework of Arab regional and global economic integration through a detailed assessment and analysis of the experiences of regional trade agreements (RTAs) and how products from free zones are treated. The report focus on various policy instruments that could facilitate intra-trade and reduce the risk of trade diversion and dumping from non-preferential trade. A special focus is given to rules of origins as a key trade regulation instrument to achieve the major objective of trade reforms which is promoting exports on a reciprocal basis.

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