IRAQ - Focusing On The Non-Oil Sector - Part 12 - Iraq To Join WTO?

Baghdad has made several steps towards joining the World Trade Organisation (WTO) which would help improve Iraq's once-isolated and now devastated economy. This was disclosed on Feb. 6 by Iraqi and US officials in Baghdad.

Iraq's economic system, which until the US invasion in March 2003 used to be state-controlled and similar to that of the Soviet Union, has now started moving towards a free market economy. Senior Iraqi ministry officials have held several meetings in Baghdad to bring Iraq's old trade regulations in line with those of WTO standards, with the country's application for WTO membership seen as an opportunity to revamp its old trade regulations which have been in place since the 1980s.

Dow Jones Newswires on Feb. 6 quoted Baljit Vohra, vice-president of the American Chamber of Commerce-Iraq, as saying: "It is a great opportunity for Iraq to revamp its trade legislations and become part and parcel of the world trading community".

Years of UN sanctions and wars have isolated Iraq from the rest of the world and have meant that Iraqis lack the expertise on how to change their outdated trade and customs rules. Several US organisations have been helping the Iraqis to change such regulations. Among these are the US Agency for International Development (USAID) and its affiliated programme called Izdihar, the Arabic word for prosperity.

Dow Jones Newswires quoted USAID adviser Greg Howell as saying: "Our staff has been helping in the reform process including individual property, customs, technical trade barriers and others. The process [of Iraq joining the WTO] will take a long time but that isn't a negative implication".

No one is able to give a definite assessment about how long Iraqi membership might take to achieve because the working party will hold a meeting every six months and it will depend on the progress made at such meetings. Best estimates are that it will be shorter than China and closer to the five years it took Jordan.

Dow Jones quoted Dale W. Larson, an economic adviser at Izdihar, as saying: "It took China 15 years to join the WTO and Russia hasn't yet joined although it applied several years ago".

While Sunni/Neo-Salafi bombs and Shi'ite death squads have been murdering dozens of Iraqis every day and US and Iraqi forces have recently begun a new security plan in Baghdad to try to staunch the bloodshed, Iraqi officials have been involved in discussions on what they should do to accelerate Baghdad's accession to the WTO. In Amman on Feb. 1, Iraqi and US officials met ahead of a forthcoming meeting of WTO's working party on Iraq taking place in Geneva by the end of March on Iraq's accession to the WTO. The seminar was organised by the American Chamber of Commerce-Iraq, USAID and Microsoft.

Officials from Iraq's ministries of trade, finance, planning and foreign affairs and the Central Bank of Iraq presented papers on Iraq's moves towards WTO's membership. In his paper, Trade Ministry Director-General Abdul Hadi al-Hameri said his ministry had set up a special office to encourage the private sector in trade dealing. He said the ministry had eased its procedures for setting up private companies.

USAID adviser Howell said: "The WTO's working party meeting is an important step as it is the first official meeting that would kick off the process [of Iraq's accession to the WTO]". Membership requires countries adapting their national laws in areas like customs procedures to WTO standards and negotiating individual deals with any WTO member-state which asks. The process usually takes several years. Howell said the whole process was meant to "help promote economic reforms and liberalisation in Iraq". It also aims to give the Iraqi private sector - which has lacked funding and business expertise - a greater role in the economy.

Today, the widely-held view is that all restrictions of the past regime - a Ba'th socialist dictatorship - will be lifted. Economic reform based on the premise of a free market economy is expected.

The Baghdad government has already amended a number of laws. It has enacted a foreign investment law which allows foreign companies and individuals to start investment in Iraq for the first time. The new investment law gives Iraqi and foreign investors the right to hold equal shares in investment projects, except in land ownership. It allows investors to move money in and out of Iraq and enjoy residency. It facilitates their entry and exit visas. That law meets the WTO standard. Hameri said: "We have been amending trade laws and customs in order to make them fit with international standards".

Iraq applied for WTO membership in early 2004. In February 2004, Baghdad was granted WTO observer status. By the end of that year, the WTO set up a working party to examine Iraq's accession. In late 2005, Iraq formally submitted its memorandum on a foreign trade regime to the WTO working party - a comprehensive factual account of its trade regime which sets the framework for the WTO working party's analysis and discussions with Iraq.

Baghdad responded in December 2006 to more than 200 questions raised by various members of the WTO. Senior Iraqi ministry officials have held several meetings in Baghdad to bring Iraq's old trade regulations in line with those of WTO standards.

Years of sanctions and wars have meant that Iraqis lacked the expertise on how to change their outdated trade and customs rules. Another hurdle for Iraq to become a member could be the fact that a number of other countries from the region are still waiting to start membership negotiations with the WTO.

Iran applied in September 1996, but its request was not discussed until recently. Since 2001 the issue has come up on the agenda of the WTO's ruling General Council at every meeting and on each occasion has been blocked by the US, which maintains that Iran is a terrorist state trying to develop nuclear weapons. Tehran insists its nuclear programme is for peaceful purposes and has recently shown flexibility in dealing with the atomic issue and in its regional policies, boosting its relations with Saudi Arabia (see news8Palestinians&IranFeb19-07).

Howell said European members of the WTO were expected to play a constructive role in the forthcoming meeting in Geneva in March which would start the official discussions of Iraq's accession. The WTO, which replaced GATT in 1995, currently has 150 members. Another 24 countries are in the processes of joining the WTO. Saudi Arabia was the last country to join - in December 2006.