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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