After 20 years, is Iraq making progress in bid to join WTO?

Iraq announced on Monday that it has resumed negotiations to join the World Trade Organization (WTO) for the first time since 2008, a move that could benefit the Iraqi economy but will take considerable time.

Iraqi negotiating teams began “preparatory meetings” at the WTO headquarters in Geneva. The Iraqi delegation included officials from ministries in both the federal government and the autonomous Kurdistan Regional Government (KRG). Another meeting will be held at an unspecified date to review Iraq’s accession to the WTO, the official Iraqi News Agency reported, citing a Trade Ministry statement.

The WTO is an intergovernmental organization that aims to foster international trade. It provides a platform for governments to negotiate trade rules and disputes with one another. Major decisions are made by the member states. The WTO has 164 members that it says are responsible for 98% of global trade.

Background: Iraq first applied to join the WTO in 2004, the year following the US invasion that toppled longtime ruler Saddam Hussein. A “working party” was subsequently established, but there has been little progress since then. The last time the party met formally was in 2008. An informal meeting was held in 2017, according to the WTO website.

The process has gained momentum recently. In January, a WTO delegation visited Baghdad to “galvanize political support for the resumption of Iraq’s WTO accession process.” The discussion focused on Iraqi economic reforms and was led by Saqer bin Abdullah Al-Moqbel, Saudi Arabia’s ambassador to the WTO and head of the working party for Iraq’s accession, the organization said in a release at the time.

A key requirement for joining the WTO is consistent trade policies throughout the country, including tariff rates and customs procedures. The differences in tariff structure between the federal government and the KRG were therefore an obstacle to Iraq’s efforts to join the WTO. Iraq decided to harmonize the two customs regimes in 2019, and the federal Ministry of Finance finally approved the unified tariff framework in February of this year, the United Nations’ team for Iraq said in a release last week.

The KRG administers northern Iraq’s Kurdistan Region and has a significant degree of autonomy from Baghdad, including its own security forces.

Why it matters: Joining the WTO could benefit Iraq. According to an April 2023 report from the Council on Foreign Relations, the WTO has been “largely successful” in expanding free trade. The dollar value of international trade has quadrupled since the WTO’s inception in 1995, and tariffs average just 3%, the council noted.

There are also downsides to the WTO, according to the Council on Foreign Relations.

“Globalization and free trade have their drawbacks. These include the potential for economic inequality and job loss,” the council noted in the report.

The WTO has been especially criticized regarding enforcing rules vis-a-vis China.

“The WTO also struggles to perform its third job — rule enforcement — particularly with China. Since joining the WTO in 2001, China has flouted global trade rules by providing extensive support to its domestic industries and stealing technology and other intellectual property. It has faced few, if any, consequences for its actions,” said the council.

China has a growing presence in Iraq, and there has been significant Chinese investment in Iraqi oil and infrastructure in recent years.

The WTO says it has helped facilitate the alleviation of poverty in developing economies by fostering trade.

“Over the past generation, market-oriented reforms in places including Eastern Europe, India and China, combined with the open global economy anchored in the GATT/WTO system to turbocharge growth and trade and help lift more than a billion people out of extreme poverty,” WTO Director General Ngozi Okonjo-Iweala told the Center for Strategic and International Studies in September 2023.

The GATT refers to the General Agreement on Tariffs and Trade, a predecessor of the WTO.

Iraq’s trade is dominated by oil. Crude petroleum accounted for 90% of Iraq’s $123 billion in exports in 2022. Iraq imported $67.1 billion that year, with the top imports being refined petroleum, broadcasting equipment and cars. These figures gave Iraq a trade surplus of more than $50 billion in 2022, according to the Observatory of Economic Complexity.

What’s next: Iraq could be in for a long wait to join the WTO. Timor-Leste joined the organization in February after seven years of negotiations. Comoros joined at the same time — a process that took 17 years, Arabian Gulf Business Insight reported at the time.