Iraq and the World Trade Organization: Between the ambition of accession and the reality of the economy,

Iraq and the World Trade Organization: Between the ambition of accession and the reality of the economy,

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The World Trade Organization (WTO) is one of the  world’s youngest organizations. It emerged in 1995 as the successor to the General Agreement on Tariffs and Trade (GATT) in the wake of World War II.
The organization is composed of indigenous members, the contracting parties that signed and ratified the Marrakesh Charter (Morocco) and the trade agreements annexed thereto in 1994, they are more than 140 members representing more than 90% of world trade, including some 85 developing countries.
The World Trade Organization (WTO) is the only international organization dealing with international laws in trade between nations. Its main task is to ensure the smooth and free flow of trade in defined and known quantities, control of trade disputes, review national trade policies and assist developing countries in matters related to trade policies through technical assistance and training programs, and cooperation with other international organizations.

The past 20 years have witnessed exceptional growth in world trade. As the cargo exports have increased by an average of 6% per year and the GATT and WTO have helped to establish a strong and prosperous trading system, contributing to unprecedented growth.

The Organization takes decisions unanimously by Member States and then approves them later on through the Parliaments of States. Any trade disputes are referred to the Organization’s Dispute Settlement Mechanism where agreements and treaties are invoked to ensure that the trade regulations and policies of States are compatible with them.
Among the objectives of the WTO:
• Creating an economic world of prosperity and peace.
• Achieving security and trust. Both consumer and producer know that it is possible to enjoy ensuring continuous supply of goods while ensuring a wider choice of finished products, its components and raw materials as well as its production services. Both producers and exporters ensure that foreign markets are always open to them, to reach a prosperous and peaceful economic world.
• To raise the standard of living and raise the national income levels of the Contracting State.
• Creating a prosperous, peaceful economic world, more responsible for decision –making in WTO by consensus of Member States and ratified by parliaments of Member States. When differences occur, objections are made through the WTO Dispute Resolution Mechanism and the negotiation process to resolve the problems arising from them where the focus is on the interpretation of agreements and commitments and how to ensure the adherence of trade policies of countries to them, here to ensure not to extend differences to political or military conflicts, and reducing trade barriers, the WTO system also removes barriers among individuals and States.
• Reduce and eliminate barriers and tariff barriers so as not to impede trade movement and open markets to competition, which makes it easier for:
.The movement of international capital and investments and its accessibility to markets and sources of raw materials.
• Oversee the implementation of agreements regulating trade relations among member states.
Among the principles of the World Trade Organization:
• The principle of transparency; that is, the obligation not to impose non-tariff restrictions such as the quota system to restrict imports except within certain limits and the principle of national treatment; that is, the obligation not to apply non-tariff restrictions to protect the national product and to distinguish between it and similar imported products.
• The Member State, which grants any advantage or preferential treatment to any other party, shall grant the same benefit and the same treatment unconditionally to all other Member States, except in the case of regional arrangements such as customs unions and free zones.
• resort to prevention measures in case of emergency , such as in the case of sudden and massive inflow of imports of certain goods that may cause serious harm to the domestic product or threaten to cause such harm. These measures must be applied without discrimination and must be rescinded when emergency conditions cease.
• The quantitative restriction of trade in the event of a crisis in balance of payments or to face a serious reduction in the cash reserves, provided that these restrictions are relaxed and eliminated gradually when the reasons are eliminated, and on the principle of mutual reduction of tariffs is applied at specified levels and provide compensations to the parties affected from lifting the tariffs when it necessary .
• Do not dump markets with goods; that is, the obligation not to export products at prices that are abnormally lower than their domestic prices and production costs, which may cause serious damage to local producers in importing countries.
• Refrain from supporting exports, as grants for national export subsidies causing damage to another Contracting Party.
• preferential treatment for developing countries, or the so-called empowerment rule, where developing countries may take additional protection measures to achieve flexibility in modifying its tariff and obtaining commercial benefits from developed countries under specific arrangements, including exemption from the most-favored nation clause.
• Trade negotiations; that is, the obligation to settle disputes between Member States through consultation and negotiation within the Organization; with a view to achieving a just and effective settlement.

There is no doubt that the accession to the World Trade Organization and the application of its principles in all transparency and accuracy will contribute to the long-term stability of prices and the development of domestic production as a result of the gradual adoption and elimination of tariffs. This will also help counter counterfeiting, intellectual property rights and increase the productive efficiency resulting from the increasing pace of international competition, leading to the recovery of some productive sectors of developing countries, and the accessibility of exports to world markets, and then increase the volume of international exchanges.
One of the drawbacks and failures of the WTO:
The gradual reduction of tariffs contributed to the increase in the budget deficit and the increase in production costs, and then the increase in prices. The liberalization of international trade, as stipulated in the WTO agreements, is focused on a specific proportion of the commercial sectors and extends over long periods, which has created difficulties for developing countries to address the competition of imported products of better quality and lower cost; which increased social burdens and the rise of the Unemployment rates, in addition to the reduction of government subsidies for some products and goods, which negatively affects the balance of payments and high inflation rate. Some developed countries took advantage of exceptions to impose trade restrictions in some cases to circumvent the WTO charter, and many of these countries did not commit to grant preferential treatment for developing countries.

World Trade Organization and its implications for the economies of Arab countries:
The agreements of the Organization include obligations and mutual rights. It is important to consider joining the Organization according to an economic criterion. This may lead to higher prices for agricultural products, especially food, which is considered the most important Arab export after oil; then the high costs of development programs; and some Arab countries importing food will face large difficulties in providing their food needs in world markets and may face financial problems due to the loss of some of the resources resulting from the reduction and elimination of tariffs. However, the removal of barriers and the elimination of quotas will provide a better opportunity for expansion in the petrochemical and textile industry, due to the fierce competition for cheap Asian products. This requires a concerted confrontation through the establishment of joint Arab economic blocs and coordination of Arab positions that seek to join the Organization.
Iraq and the World Trade Organization:
In line with the immediate requirements of the gradual transformation of Iraq in its economic policy and the transition from the central economy to the market economy, Iraq decided to join the World Trade Organization
On 11 February 2004, Iraq submitted its application for accession as an observer to the World Trade Organization (WTO) and was approved by the General Council.
But is Iraq eligible to join the World Trade Organization? What is the most important advantages of accession and its disadvantages, and whether non-accession will affect the Iraqi expatriate labor force , estimated at more than one and a half million employed all over the world and the possibility of not protect Iraqi expatriate capital and the possibility to expose to the narrow legal opportunities to defend its rights, The economic adviser to the prime minister Mudher Mohammad Salih explains the reality of accession to that organization
Since 2003, Iraq has adopted wide open policies towards the world and sought to establish important economic and legislative bases that operate according to the mechanisms of the market system that is the supply and demand system after an economic siege that lasted more than a decade and was marginalized on the map of the world economic system and deprived of investment opportunities, progress development and technological knowledge that should enable it to cope with the rapid developments and developments in the international market and to change its competitiveness radically in the last two decades.
Iraq suffered international isolation in a world that was swept away by the currents of the integration of its companies and the liberalization of its markets and their integration, especially financial ones and the rule of the neo-liberalism, which required large economic transformations in the field of informatics and financial services that are harmonized and international production activity through the role played by multinational companies and the increasing competitive advantage of products that started to be Generated by world markets.
However, in the integration of financial markets with more than $ 850 trillion in assets, it is the title of financial globalization, the main focus of the global neo-liberal economy, and the introduction of the transition from the GATT in 1948 to the World Trade Organization (WTO) The latter has organized a broad spectrum of trade in services, especially financial services, which its annexes were named as GATS agreement in 1994 based on the Uruguay Round.

While global gross domestic product has not exceeded 70 trillion dollars per year in 2013, and the world trade in goods and services has not been more than one-third of the world’s output, the trade in currency conversion and speculation is about $ 4 trillion and a half trillion a day in the international monetary and financial markets. It is a speculative trading trade that has an annual total of more than fifty times than the total world trade in the activity of goods and services.

Under international trade and financial exchanges, Iraq has moved to important organizational levels in the transition to a market of economy to break the effects of its international isolation and progress in financial services and improve the foreign investment environment through banking and investment law, the Central Bank Law and the amendment of the Companies Law, allowing foreign banks to work in Iraq and allows the transfer of capital and currency in a way that serves the opening of Iraq to the world in the conditions of the central Rentier economy which is difficult in the understanding of market liberalism, which nevertheless provided positive opportunities and legal and regulatory foundations promising for an Iraqi business environment .

Saleh said that this was not enough to put Iraq on the path of international economic competition, as there are still more than five thousand of the legislative texts impediment to economic freedom and market activity, the legal circles are studying them today, which should be modified so that Iraq to integrate into trade and international investment and to prepare it to join the World Trade Organization in accordance with the terms of membership in order to get our country the condition of the most favored state and the principle of national treatment.
And the problems and obstacles to Iraq’s accession to the World Trade Organization:
While oil production dominates more than 60% of the GDP, it employs only 2% of the Iraqi labor force, which makes up only 22% of the total population who are able and willing to work, which means there is a huge imbalance in the composition Human productive wealth and the ability to invest it, especially the female labor force, which complains neglect, ignorance and illiteracy on a large scale.

The country’s exports of crude oil and its revenues constitute the absolute majority of total exports and revenues of the general budget and the country’s foreign exchange earnings. In this regard, the World Trade Organization (WTO) rules out crude oil as a commodity within the internationally traded commodity group, which remains the core of the contradiction in Iraq’s accession to that organization, which excludes crude oil.
If the World Trade Organization allowed oil to be included in the price, it would be determined by global supply and demand away from the cartel of producer groups represented by the Organization of the Petroleum Exporting Countries (OPEC) or consumer groups represented by the International Energy Organization and its lines and programs in rationalizing oil demand and its role in rationing production and Prices, which put price restrictions and the amount of a commercial commodity but a political strategy is the driving force of Iraq’s foreign trade.
The agricultural sector, which comprises one-third of Iraq’s population and about 22% of the actual labor force, contributes to the GDP at a rate of only 5-7% at best, making the country almost sub-imported and does not have sufficient resources to provide food security from cereals or agricultural inputs after the decline of agricultural productive areas as a result of desertification and salinity and weak infrastructure, which led to the disruption of more than 80% of the arable land, and the proportion of domestic security of grain exceeds 40% of the wheat crop in the best cases and hardly mention of other items covered by imports almost exclusively such as the rice and other field crops.
Here, the agricultural sector with the oil sector is structurally opposed in the direction of openness to the global market and in two different ways in terms of the impact of trade benefits and costs.
Global market forces or supply and demand have become strong, both in demand for oil and its impact on the value of Iraqi exports or in the supply of foodstuffs and its impact on the cost of Iraqi imports. In reference to the philosophy of reducing customs restrictions by 24% and abolishing non-tariff restrictions, which are imposed by the World Trade Organization (WTO) on the member country of the developing countries group to work and implement it within 6 years from the date of accession, as well as the reduction of agricultural subsidies by 13.3% within 10 years of the accession, these conditions collide with the conditions of the agricultural market and food stock exchange.
The world is living in agricultural monopolies, offset by a deterioration in Iraqi agricultural development, posing a real threat to food security unless it is preceded by an agrarian program for self-sufficiency and Iraq will need a green revolution like Mexico and many other Latin American countries noting that there are 3 to 6 major monopoly companies in the world control 80-90% of agricultural trade and control prices and quantities such as wheat, sugar, tea, coffee, cotton, jute and other products, while ten multinational companies still dominate one third of the production of seeds and pesticides and trade in the world .

Despite the above, Iraq’s entry into the world economic space through the World Trade Organization and its dealing with international groups on conditions that apply to all formally at a time when the world is still divided between the North and South or the advanced industrial center countries and the developing world,
We should not forget that the situation of Iraq under Chapter VII of the United Nations Charter since 1990 until its completion on 30 June 2013 made Iraq in a negative economic environment hostile to development and possibly hindered to natural integration in the global market. Where it has been banned for decades because of the imposition of restrictions on Iraq until very recently as a high-risk countries and threats to world peace and the use of force against it , despite the removal of the objective reasons under which economic sanctions imposed on Iraq on time.
The accession of Iraq to regional economic zones, such as the Greater Arab Free Trade Area and other economic agreements within the Arab League or other forms of regional integration , must take into account the implementation of the provisions of the WTO Agreement and then the GATT, which both became two constraints on the implementation of trade agreements.
Therefore, any commercial facilities within the framework of the regional agreements become useless or invaluable if they are without the facilities provided under the WTO.
For its part, the survival of Iraq isolated from its international environment without providing a climate of interaction with markets and its international organizations, especially the World Trade Organization, which will cost it a lot because of its loss of regulatory advantages and opportunities, technological and legal benefits and other areas of investment and arbitration, guaranteeing intellectual property rights and addressing dumping of commodities and others, they are opportunities not provided by isolation from the organized world and can not gradually transform into a group of stable, low-risk countries that aspire to a transition to openness to the world, it can only be achieved by the capacity to integrate of Iraq in the global trading system and its institutions represented by the World Trade Organization and on a fair negotiating basis.
We conclude from the foregoing that the WTO operates in a time of polar exclusivity and the dominance of the United States on the global political and economic situation, making it serve the United States and its allies. As the Organization’s objectives of free trade, lifting government subsidies on economic sectors, lifting protection and reducing and eliminating tariffs will not serve the economies of developing countries because they do not have good industrial and agricultural products and low prices to compete goods and commodities coming from developed countries and newly industrialized countries such as China and South Korea Taiwan, and others. It is also clear that membership in the organization requires political and economic measures and reforms that affect the sovereignty of the state. In order to achieve justice and promote the global economy, developed countries must take into account the political and economic conditions of developing countries, especially Iraq, and the difficult economic and United Nations conditions of it that will help it to obtain the elements of development and give them flexibility in protecting its emerging agricultural and industrial products.

Shatha Khalil
Researcher in Economic Unit
Rawabet Center for Research and Strategic Studies