Will Iraq succeed in quest to join World Trade Organization?
Iraq’s 19-year-long push to join the World Trade Organization (WTO) is gathering pace. Baghdad initially submitted a request to join the international trade body back in 2004. It currently sits as an observer member, while it works through the process of implementing regulations, strategies, and internal policies necessary to meet the conditions for full membership.
Israa Al-Jabari, the international trade coordinator at Iraq’s trade ministry, last summer told state media that her ministry is in charge of working to prepare the required documents for joining the WTO. “Iraq has the industrial, agricultural, and trade exchange qualifications. However, it needs to study and develop the applicable policies to align with the organization’s regulations,” Jabari said, adding that the country is “currently in the middle of the road to join.” The official insisted that it is important for Iraq to join the WTO to improve its access to global trade, industry, and economic opportunities, as well as aligning national economic and commercial policies with international standards.
As part of its efforts to join the WTO, the trade ministry has also held a workshop to coordinate with representatives of other key stakeholders, including the Iraqi Contractors Federation, the Iraqi Businessmen Union, and the Iraqi Private Banks League.
Suha Al-Kifaee, managing director of the International Islamic Bank who attended the workshop, told Amwaj.media that the meeting resulted in a number of recommendations that will help facilitate Iraq’s full participation in the WTO. Kifaee said accession to the organization “would contribute to the development and expansion of progress achieved in some financial services and would also ameliorate the foreign investment environment through the passing of a banks and investments law and the central bank law.” Such steps would open up Iraq’s isolated banking system to investment from foreign banks and help to transition the country away from a centralized model dependent on oil rents towards a more liberal, market economy.
Difficult road
The WTO was established in 1995 as the successor to the General Agreement on Tariffs and Trade (GATT). Headquartered in Geneva, the organization helps set the ground rules for international trade agreements between states and regional trade blocs. It also facilitates dispute resolution.
The WTO’s 164 member states account for most international trade and include all of the world’s largest economies. The last country to join the organization was Afghanistan in 2016. There are 25 countries which currently have observer status, including Iran, Iraq and Syria. Iraq’s other neighbors—Jordan, Kuwait, Turkey, and Saudi Arabia—are members.
Mazhar Mohammad Salih, an advisor to the Iraqi government on economic affairs, told Amwaj.media that remaining isolated from the global trade regime comes at a great cost to Iraq. In his view, Baghdad loses out on involvement in decision making, investment opportunities, and dispute resolution facilitated by involvement in the WTO. Full membership would enable Iraq to mitigate risk by trading and benefiting from investment in ways that are governed by internationally-recognized rules.
Speaking to Amwaj.media, Salih highlighted the need for “Iraq’s entrance and regularity in the global economic sphere through the World Trade Organization and through dealing with international groups under terms which formally apply to all at a time when the world is still divided between northern and southern countries, or advanced industrial countries and developing countries.”
Iraq’s failure to join the WTO is partly a legacy of former leader Saddam Hussein’s regime (1979-2003). For instance, an international trade embargo and sanctions levied under Chapter VII of the UN Charter were imposed following the 1990-91 Gulf War, Salih said. “Iraq is still grappling with the repercussions, which leave the country with a negative economic development environment which hampers its natural integration within the global market,” he added.
Chapter VII sanctions are applied to countries deemed to threaten international peace and security. The penalties were initially applied to Iraq in 1990 following its invasion of Kuwait. They were only removed by the UN Security Council in 2013, with Iraq fully exiting Chapter VII status in Feb. 2022 pursuant to its final compensation payments to Kuwait. The latter should give Iraq a boost in its efforts to join the WTO.
Mindful of the changing regional context, Salih also argued that WTO accession is important for Iraq to facilitate economic integration with its neighbors and Arab League member states. This is particularly vital since many of these states are members of the WTO and, therefore, bound by its rules. “Any trade facilitation within the framework of regional agreements become ineffective if they are less than the facilitation under the World Trade Organization framework,” he underscored.
Going beyond signatures
The benefits of joining the WTO are evidenced in the ambition of successive Iraqi governments since 2004to pursue accession to the organization. But finding the political will to implement the policies and reforms that will allow the country to reach that goal are another matter.
Iraqi economist Haider Al-Rubaie noted that Iraq has since the fall of Hussein’s regime in 2003 faced “international obligations towards specialized agencies, entities, and organizations…Finding the right ground to implement these international obligations represents a first step towards adopting any new consensual international obligation.”
“The core of the issue is not signing international agreements…but rather in the state’s ability to implement and comply with them and the size of the advantages and benefits the country will accrue as a result,” Rubaie told Amwaj.media. Iraq has been working on WTO accession for nearly two decades now, holding discussions with the organization and other stakeholders, but has been unable to complete the process. This has held Iraq back, he argued.
“We realize the importance of Iraq joining the World Trade Organization,” Rubaie said, while also acknowledging “its dangers for countries whose economic, financial, and political structures are incomplete or fragile at times.” Putting aside the advantages, and possible pitfalls, Iraq has a long road ahead in its quest to join the trade bloc. Whether that ambition will be realized any time soon remains to be seen.
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