A Strategy for Iraqi Accession to the World Trade Organization

The Future of Trade Liberalization of the

Republic of Iraq

Lauren WygonskiApril 29, 2009

Table of Contents

• Research Question• Background• Analysis• Recommendations• Questions and Answers

Research Question

Whereas the Republic of Iraq began accession to the WTO in 2004, what benefits will the

Republic of Iraq gain from membership to the WTO?

What costs are implied with the Republic of Iraq’s membership and how can those costs be

minimized?

Robust Expansion AheadReal GDP Growth & Per Capita GDP

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

0%

10%

20%

30%

40%

50%

60%

$1,335

$1,791

$2,290

$2,966

$4,434

$3,432

$3,903

$4,727

$5,687

$6,39155.6%

2.4%

11.2%

0.4%

10.9%

6.1% 6.0% 7.4%7.2%

4.9%

GDP per capita Real GDP growth % change y-o-y

Source: Business Monitor International: The Republic of Iraq 2nd Quarter 2009 Report

Primary Commodities Exported by the Republic of Iraq in 2008

Mineral Fuel, Oil99.175%

US/CA: Special Import Provisions, Nesoi

0.351%

Special Classification Provisions, Nesoi

0.289%

Salt; Sulfur; Earths and Stone

0.185%Approximate Growth in Exports from 2007 to 2008

Mineral Fuel Oil= 100%

Salt, Sulfur; Earths and Stone=23,400%

Background

• Nature of the Accession Process

• The Republic of Iraq Accession status

• Economic Status of the Republic of Iraq

Article XII of the Marrakesh Agreement

1. Any State or separate customs territory possessing full autonomy in the conduct of its external commercial relations and of the other matters provided for the in the Agreement and the multilateral trade Agreements may accede to this Agreement, on terms to be agreed between it and the WTO. Such accession shall apply to this Agreement and the multilateral Trade Agreements annexed thereto.

2. Decisions on accession shall be taken by the Ministerial Conference. This Ministerial Conference shall approve the agreement on the terms of accession by a two-thirds majority of the Members of the WTO.

3. Accession to a Plurilateral Trade Agreement shall be governed by the provisions of that Agreement.

John H. Jackson, William j. Davey, and Alan o. Sykes, Jr. “Legal Problems of International Economic Relations: Cases, Materials and Text on the

National and International Regulation of Transnational Economic Relations, Fourth Edition,” (American Casebook Series: St. Paul, 2002), 233.

Nature of the Accession Process (terms to be agreed)

• Preparations for Application• Formal Application and Notification• Working Party Formation• Preparation of the Foreign Trade Regime Memorandum by the

Acceding Country• Questions and Comments from Existing Members• Negotiations

– Market Access– Membership Status– Transition Rules

• Draft Protocol and Vote

Timeline

Request for Accession

Working Party Established

Memorandum on Foreign Trade Regime

Questions & Answers

Negotiations• Market Access• Transition

Rules• Membership

Status

Approx. Ten Years

Timeline of Jordan

Request for Accession

Working Party Established

Memorandum on Foreign

Trade Regime

Questions and Answers

Negotiations• Market Access• Transition Rules• Membership

Status

January 1994 September 1996 1999 to 2000

Seven Years

Timeline of Saudi Arabia

June 1993 July 1994 to July 1996September 1997 to September

2005

Request for Accession

Working Party Established

Memorandum on Foreign

Trade Regime

Questions and Answers

Negotiations• Market Access• Transition Rules• Membership

Status

Twelve years

Timeline Of the Republic of Iraq

September 2004 September 2005 December 2008

Request for Accession

Working Party Established

Memorandum on Foreign

Trade Regime

Questions and Answers

Negotiations• Market Access• Transition Rules• Membership

Status

Five years +

Analysis

• WTO Accession of Developing Countries

• Current Iraqi Trade Policy & Negotiation Strategy

Minister of TradeDr Abdel Falah Hassan Hamadi al-Sudani

WTO membership and Developing Countries

• creation of strong domestic trade policies and institutions to conduct internationally acceptable trade

• develop an inviting atmosphere for market access to major export markets

• gain access to a dispute settlement mechanism to protect international trade rights.

Constantine Michalopoulos, “Developing Countries in the WTO,” (Palgrave, New York: 2001), 177

Accession and Developing Countries

Country (WTO members in 1995)

Number of Commitments Made in Services

Bahrain 1

Egypt 5

Israel 5

Kuwait 8

Qatar 6

United Arab Emirates

6

Average Commitments Made

5

Country (Acceded to the WTO after 1995)

Number of Commitments Made in Services

Jordan 11

Oman 10

Saudi Arabia 12

Average Commitments Made

11

12 broad service sectors at the first tier

Accession and Developing Countries

Country (WTO Members in 1995) Tariff Binding Coverage RateBahrain 72.9%

Egypt 98.8%

Israel 76.3%

Kuwait 100%

Qatar 100%

United Arab Emirates 100%

Jordan 100%

Oman 100%

Tariff Binding Coverage Rate: defined by the number of (HS) subheadings containing at least one bound tariff line divided by the respective total number of HS subheadings of the corresponding version of the HS nomenclature

The Republic of Iraq Trade Policy

• Coalition Provisional Authority (CPA)• Tariff Schedules• Reconstruction Levy• Licensing Procedures• Intellectual Property rights• Services

Primary Imports for the Republic of Iraq in 2008

Electrical Machinery, Etc.; 19.55%

Cereals; 16.88%

Machinery; Reactors, Boilers; 12.32%

Vehicles, Not Railway; 11.38%

Iron and Steel Products; 5.39%

Aircraft, Spacecraft; 3.87%

Optical, Medical Instruments; 2.88%

Dairy, Eggs, Honey; 2.63%

Meat; 2.19%

Pharmaceutical Products; 2.11%

US/CA: Special Import Pro-visions, Nesoi; 1.98%

Tobacco; 1.92% Fats and Oils; 1.69% Sugars; 1.45%

Source: Global Trade Atlas Navigator, Imports of all Commodity Chapters Iraq 2006-2008

Recommendations

Negotiation Recommendations with regards to:– Commitments made in Services Sectors– Tariff Binding Coverage

• Diversification of Exports– Intellectual Property Rights

• Saudi Arabia– Investment Law

• Join the New York Convention• UNCITRAL

Questions or Comments Please