Home
IRAQ: ECONOMIC DEVELOPMENT, THE OIL SECTOR, AND MEMBERSHIP OF THE WORLD TRADE ORGANIZATIO (WTO).
Iraq’s development and the development of its oil sector are interwoven and should be viewed in a wider perspective. The Iraqi economy will, for a foreseeable future, depend on oil revenues to finance its investments and buttress its operations. In the longer term, Iraq’s stability and prosperity will depend on how successful it is in establishing a sustainable base in agriculture, in industry, and in services, and on how efficient it has been in utilizing its natural resources.
War reparations, accumulated debts, building the damaged infrastructure and meeting the basic needs of a population deprived for a long time, would undoubtedly weigh heavily in the present economic policy decisions. But considerations for the development and stability of the economy, for meeting the need of the growing population, and its aspiration for a sustainable higher standard of living, call also for concentrating on the fundamentals of growth and development.
A lost decade of sanctions, and decades of one party rule, militarism, wars, and perpetuate internal and external conflicts, coupled with an erroneous development strategy anchored on the omnipresent of the public sector in the economy, have resulted in an economy totally inadequate; an economy that has failed to meet the needs and aspirations of its population, and be integrated in the world economy.
The country may, on the surface, look strongly linked to the world economy. It exports most of its crude oil and imports most of its foodstuffs, raw materials, and capital goods. But, its domestic production sectors (goods and service producing sectors) make very little if any contribution to this trade. The inadequacy of Iraq’s economy was well illustrated during the sanction under Saddam Hussein regime. After four decades of investments in agriculture, in manufacturing, and in services, the greater part of the country’s need for goods and services were met from foreign supplies through the Oil-for-Food Program
The inadequacy and inefficiency that characterized Iraq’s economy and its performance extended also to the performance of its oil sector and utilization of its other natural resources. For example, in the period 1999-2001, the volume and value of Iraq’s oil was close to the record level, averaging 2.5 mbpd. This production level, it is reported, was relatively high, and was, contrary to the common perception, only exceeded during five years in Iraq’s entire history of oil production before the regime change. Yet this level, when expressed as a percentage of Iraq’s 112.5 billion barrels proven reserve, results in a production yield amounting just to 8% of the well production-capacity. This is the lowest compared to the average of around 20% well production-capacity in other oil producing countries of the Middle East, for example.
This unsatisfactory economic performance was man made. It was the result of dictatorship, dogma, centralization, inaptitude, and easy excess to funds. But, it can, as experiences elsewhere have shown, be redressed through democracy, transparency, decentralization, higher productivity of production factors, and efficient management of the economy.
The experiences of 160 countries in the world, including most of Iraq’s neighbors, show that the way to create the right economic environment is to seek membership in the WTO. Membership of the WTO usually takes a long time (5 to 7 years). Applying for accession helps therefore to put the economy on the right course to set up the prerequisites for creating the right economic environment. These prerequisites constitute the fundamentals of modern economic system and are also the necessary conditions for integrating the Iraqi economy in the global economy.
Membership of the WTO has a number of other important advantages for Iraq. First, it would guaranty access to the markets of all 160 WTO members. Unless a member, Iraq’s exports will not enjoy fair and non-discriminatory treatment in these countries. Membership helps to secure “most favored nation” treatment and avoid arbitrary tariff and non-tariff measures against Iraq’s export. Second, it would remove unjustified export restrictions on Iraqi imports, as countries may, for one reason or another; impose arbitrary restrictions on non-WTO members. Last but not least, by forcing the existence of a domestic business environment conducive to competition (one of the requirements of WTO membership), Iraq would make its economic system more efficient. It would send a signal to international investors that the Iraqi economy provides the necessary guarantees for investments, protects intellectual property rights, and promotes transfer of technology and application of modern business and production practices. It would, therefore, induce development of local technological capabilities and institutional capacities, both by Iraqis and by foreign investors.
Membership of the WTO therefore should be made an essential part of Iraq’s development strategy. So long as Iraq remains outside the WTO system its competitors among the WTO members would have an advantage, and Iraq would be denied the opportunity to gain experience in trading under WTO rules. In addition, the Iraqi government will have no say in shaping the future WTO rules to safeguard its interest in such issues as oil supply, and environmental regulations.
The timing of the accession to the WTO would also coincide with laying down the economic foundations of a free, federal, and democratic Iraq. Most of the old institutions, laws, legislation, and rules that governed the Iraqi economy for more than half a century would have to be reviewed and updated. Some may have to be replaced by new ones based on best international and business practices. This is necessary to reduce bureaucracy, create a cost-efficient business environment, and attract investments. Iraq, which is in need of implementing such major policy reforms, could use the WTO rules as a model, which in turn could provide an enforcement mechanism to support the rule of law, reduce corruption, limit discretionary authority, ensure accountability, and promote transparency.
In addition, the current members of the WTO are becoming more demanding of new members, increasingly determined to secure deeper and broader access to their markets. It is therefore highly recommended that Iraq prepare for application to the WTO as soon as possible to play its role in shaping future trade rules and in safeguarding local producers from unfair trade practices. It is also important to note here that the WTO rules do allow countries to retain their rights to safeguard local producers from unfair trade practices. The scaling down of protection and subsidies in a country is an issue subject to negotiation.
Regarding the oil sector, as we know OPEC is established to coordinate and unify the oil policies of its members. It recommends measures to protect the individual and collective interests of its members. It works to stabilize oil prices in the international market against price fluctuations, to ensure stable revenues for the members, and maintains stable supply of oil for the consumers, with a fair income for investors in the oil industry.
Contrary to the generally held view, oil and gas are very much part of the GATT and the WTO Agreements. If they have not, until recently, been brought up to the WTO negotiation, it is because there has been a “gentlemen agreement” between some powerful interest groups in the WTO, who believe that oil, as a natural resource with a limited supply, should not be subjected to the same competitive market mechanism as other goods. Soon however several aspects of trade in oil are likely to be the subject of WTO negotiations.
Membership of the WTO, it should be stressed, does not permit selectivity. In other words, the WTO Agreements are binding in their interity. In addition, not being a member in the WTO is not a guarantee to protect against what may be considered as “unfavorable” implications. More than 90 per cent of the international trade is already conducted under the Agreement.
There is, therefore, a consensus among the oil producers that it is advantageous to seek the WTO membership. WTO Memberships, it is argued, strengthens the negotiation position of the oil producers and enable them to form a strong block within the WTO to counterweigh the consumer countries. Thus, Iraq’s membership in the WTO would allow her to pursue its own interest inside OPEC and the WTO, and strengthen OPEC member’s position inside the WTO.
The following are some of the key reforms that may have to be introduced to bring Iraq’s foreign trade regime into full conformity with the WTO rules to allow accession.
Under Trade in Services, the law on Foreign Investment should be amended. New laws on competition policy and on regulating natural monopolies should be enacted. Gradual compliance with the “most favored nation” principle should be ensured. All regulations governing services should be revised to conform to GATS conditional obligations.
Regulations on customs valuation would have to be updated. New regulations on broader enforcement of intellectual property rights to be adopted and implemented. All trade-related fees should be assessed and relevant legislation amended to reflect the approximate cost of services. Subsidies that may not be in line with the country’s commitment to WTO membership would have to be reduced according to the Agreement. The legislation on standards should be updated. All technical regulations should be reviewed and the unjustified ones discarded.
Under trades in intellectual property rights, the laws on copyrights, on patents, and on trademarks should be amended. The laws on industrial designs, on variety protection, on commercial secrets, on integrated circuit, and on unfair competition should be enacted, and enforcement infrastructure is established for all the above mentioned laws. Under institutional requirements, all institutional requirements involved in operationalizing the above-mentioned commitments need to be attended to, including, judicial, arbitral or administrative tribunals to review and correct administrative actions relating to customs matters, central government standardization body. Authorities and administrative tribunals to review the administrative actions need to be established.
In conclusion, Iraq remains one of the main oil producers in the Middle East {aside from Iran (and Syria- not a major oil producer)} that has not joined the WTO. (After the regime change in 2013, Iraq has been given an observer status). The delay in membership of WTO has been at a considerable disadvantage to Iraq. Failing to integrate its economy effectively in the world economy is both the cause and the result of Iraq’s economic stagnation and inefficiency. Full integration in the world economy should constitute the base for Iraq’s development strategy. Membership of the WTO and integration in the global market would call for reviewing and updating many of the rules and regulations that govern the Iraqi economy. It would provide the needed solid foundation for its sustainable development.
[You must be registered and logged in to see this link.]
Iraq’s development and the development of its oil sector are interwoven and should be viewed in a wider perspective. The Iraqi economy will, for a foreseeable future, depend on oil revenues to finance its investments and buttress its operations. In the longer term, Iraq’s stability and prosperity will depend on how successful it is in establishing a sustainable base in agriculture, in industry, and in services, and on how efficient it has been in utilizing its natural resources.
War reparations, accumulated debts, building the damaged infrastructure and meeting the basic needs of a population deprived for a long time, would undoubtedly weigh heavily in the present economic policy decisions. But considerations for the development and stability of the economy, for meeting the need of the growing population, and its aspiration for a sustainable higher standard of living, call also for concentrating on the fundamentals of growth and development.
A lost decade of sanctions, and decades of one party rule, militarism, wars, and perpetuate internal and external conflicts, coupled with an erroneous development strategy anchored on the omnipresent of the public sector in the economy, have resulted in an economy totally inadequate; an economy that has failed to meet the needs and aspirations of its population, and be integrated in the world economy.
The country may, on the surface, look strongly linked to the world economy. It exports most of its crude oil and imports most of its foodstuffs, raw materials, and capital goods. But, its domestic production sectors (goods and service producing sectors) make very little if any contribution to this trade. The inadequacy of Iraq’s economy was well illustrated during the sanction under Saddam Hussein regime. After four decades of investments in agriculture, in manufacturing, and in services, the greater part of the country’s need for goods and services were met from foreign supplies through the Oil-for-Food Program
The inadequacy and inefficiency that characterized Iraq’s economy and its performance extended also to the performance of its oil sector and utilization of its other natural resources. For example, in the period 1999-2001, the volume and value of Iraq’s oil was close to the record level, averaging 2.5 mbpd. This production level, it is reported, was relatively high, and was, contrary to the common perception, only exceeded during five years in Iraq’s entire history of oil production before the regime change. Yet this level, when expressed as a percentage of Iraq’s 112.5 billion barrels proven reserve, results in a production yield amounting just to 8% of the well production-capacity. This is the lowest compared to the average of around 20% well production-capacity in other oil producing countries of the Middle East, for example.
This unsatisfactory economic performance was man made. It was the result of dictatorship, dogma, centralization, inaptitude, and easy excess to funds. But, it can, as experiences elsewhere have shown, be redressed through democracy, transparency, decentralization, higher productivity of production factors, and efficient management of the economy.
The experiences of 160 countries in the world, including most of Iraq’s neighbors, show that the way to create the right economic environment is to seek membership in the WTO. Membership of the WTO usually takes a long time (5 to 7 years). Applying for accession helps therefore to put the economy on the right course to set up the prerequisites for creating the right economic environment. These prerequisites constitute the fundamentals of modern economic system and are also the necessary conditions for integrating the Iraqi economy in the global economy.
Membership of the WTO has a number of other important advantages for Iraq. First, it would guaranty access to the markets of all 160 WTO members. Unless a member, Iraq’s exports will not enjoy fair and non-discriminatory treatment in these countries. Membership helps to secure “most favored nation” treatment and avoid arbitrary tariff and non-tariff measures against Iraq’s export. Second, it would remove unjustified export restrictions on Iraqi imports, as countries may, for one reason or another; impose arbitrary restrictions on non-WTO members. Last but not least, by forcing the existence of a domestic business environment conducive to competition (one of the requirements of WTO membership), Iraq would make its economic system more efficient. It would send a signal to international investors that the Iraqi economy provides the necessary guarantees for investments, protects intellectual property rights, and promotes transfer of technology and application of modern business and production practices. It would, therefore, induce development of local technological capabilities and institutional capacities, both by Iraqis and by foreign investors.
Membership of the WTO therefore should be made an essential part of Iraq’s development strategy. So long as Iraq remains outside the WTO system its competitors among the WTO members would have an advantage, and Iraq would be denied the opportunity to gain experience in trading under WTO rules. In addition, the Iraqi government will have no say in shaping the future WTO rules to safeguard its interest in such issues as oil supply, and environmental regulations.
The timing of the accession to the WTO would also coincide with laying down the economic foundations of a free, federal, and democratic Iraq. Most of the old institutions, laws, legislation, and rules that governed the Iraqi economy for more than half a century would have to be reviewed and updated. Some may have to be replaced by new ones based on best international and business practices. This is necessary to reduce bureaucracy, create a cost-efficient business environment, and attract investments. Iraq, which is in need of implementing such major policy reforms, could use the WTO rules as a model, which in turn could provide an enforcement mechanism to support the rule of law, reduce corruption, limit discretionary authority, ensure accountability, and promote transparency.
In addition, the current members of the WTO are becoming more demanding of new members, increasingly determined to secure deeper and broader access to their markets. It is therefore highly recommended that Iraq prepare for application to the WTO as soon as possible to play its role in shaping future trade rules and in safeguarding local producers from unfair trade practices. It is also important to note here that the WTO rules do allow countries to retain their rights to safeguard local producers from unfair trade practices. The scaling down of protection and subsidies in a country is an issue subject to negotiation.
Regarding the oil sector, as we know OPEC is established to coordinate and unify the oil policies of its members. It recommends measures to protect the individual and collective interests of its members. It works to stabilize oil prices in the international market against price fluctuations, to ensure stable revenues for the members, and maintains stable supply of oil for the consumers, with a fair income for investors in the oil industry.
Contrary to the generally held view, oil and gas are very much part of the GATT and the WTO Agreements. If they have not, until recently, been brought up to the WTO negotiation, it is because there has been a “gentlemen agreement” between some powerful interest groups in the WTO, who believe that oil, as a natural resource with a limited supply, should not be subjected to the same competitive market mechanism as other goods. Soon however several aspects of trade in oil are likely to be the subject of WTO negotiations.
Membership of the WTO, it should be stressed, does not permit selectivity. In other words, the WTO Agreements are binding in their interity. In addition, not being a member in the WTO is not a guarantee to protect against what may be considered as “unfavorable” implications. More than 90 per cent of the international trade is already conducted under the Agreement.
There is, therefore, a consensus among the oil producers that it is advantageous to seek the WTO membership. WTO Memberships, it is argued, strengthens the negotiation position of the oil producers and enable them to form a strong block within the WTO to counterweigh the consumer countries. Thus, Iraq’s membership in the WTO would allow her to pursue its own interest inside OPEC and the WTO, and strengthen OPEC member’s position inside the WTO.
The following are some of the key reforms that may have to be introduced to bring Iraq’s foreign trade regime into full conformity with the WTO rules to allow accession.
Under Trade in Services, the law on Foreign Investment should be amended. New laws on competition policy and on regulating natural monopolies should be enacted. Gradual compliance with the “most favored nation” principle should be ensured. All regulations governing services should be revised to conform to GATS conditional obligations.
Regulations on customs valuation would have to be updated. New regulations on broader enforcement of intellectual property rights to be adopted and implemented. All trade-related fees should be assessed and relevant legislation amended to reflect the approximate cost of services. Subsidies that may not be in line with the country’s commitment to WTO membership would have to be reduced according to the Agreement. The legislation on standards should be updated. All technical regulations should be reviewed and the unjustified ones discarded.
Under trades in intellectual property rights, the laws on copyrights, on patents, and on trademarks should be amended. The laws on industrial designs, on variety protection, on commercial secrets, on integrated circuit, and on unfair competition should be enacted, and enforcement infrastructure is established for all the above mentioned laws. Under institutional requirements, all institutional requirements involved in operationalizing the above-mentioned commitments need to be attended to, including, judicial, arbitral or administrative tribunals to review and correct administrative actions relating to customs matters, central government standardization body. Authorities and administrative tribunals to review the administrative actions need to be established.
In conclusion, Iraq remains one of the main oil producers in the Middle East {aside from Iran (and Syria- not a major oil producer)} that has not joined the WTO. (After the regime change in 2013, Iraq has been given an observer status). The delay in membership of WTO has been at a considerable disadvantage to Iraq. Failing to integrate its economy effectively in the world economy is both the cause and the result of Iraq’s economic stagnation and inefficiency. Full integration in the world economy should constitute the base for Iraq’s development strategy. Membership of the WTO and integration in the global market would call for reviewing and updating many of the rules and regulations that govern the Iraqi economy. It would provide the needed solid foundation for its sustainable development.
[You must be registered and logged in to see this link.]
» Parliamentary Finance Committee discusses amending the three-year budget
» utube 11/26/24 MM&C MM&C Iraq News-Central Bank Iraq-Monetary Stability Excellent-Budget Law 2023,
» "Rich Iraq" seeks "money" to combat methane emissions: internal and external obstacles
» Increase in foreign remittance sales at the Central Bank of Iraq auction
» Its area is 2.5 million acres, and these are its details.. Work begins on a "large" residential city
» Kurdistan Finance delivers employees' salary schedule to the federal government
» Beggars are sweeping the streets of Iraq.. Their numbers are "large" and 90% of them receive welfare
» Settling tax trust claims
» Launching the National School Health Strategy
» Approval to implement service projects in Babylon
» New container handling berths at ports
» Work: Demand for registration in social security
» Reconstruction: Land Bank to be completed next year
» Aiming to enhance services in schools and prevent diseases, the National School Health Strategy for
» Karmian Festival witnesses the conclusion of commercial and industrial contracts
» Focus on the banking sector
» Minister of Trade: Studies Center is a turning point that serves the Iraqi economy
» Economists: Census is a roadmap for development
» Today's newspapers are interested in Al-Sudani's announcement that the population of Iraq exceeds 45
» International Development Bank: Today's incident was an extortion attempt that did not affect our wo
» thirty-sixth session, chaired by the Minister of Planning
» Closed meeting of the Parliamentary Finance Committee to discuss seven files
» The demographic boom in Iraq: an economic opportunity or a social burden?
» Al-Sudani confirms to Russian delegation Iraq's desire to establish a mechanism that brings mutual b
» Parliament holds its session headed by Al-Mashhadani and attended by 168 MPs
» The Iraqi government deducts 1% of the salaries of employees and retirees to donate to Gaza and Leba
» Iran announces its commitment to continuing gas exports to Iraq
» Iraq, Russia discuss energy cooperation
» British Home Secretary to visit Iraq tomorrow
» The next parliament will have 450 members.. Officially, Al-Sudani announces that the population of I
» US Ambassador Warns of 'Frightening Actions': Iraq Does Not Want to Be Drawn into Regional Conflict
» Planning: The announced census results are not preliminary and the number will increase
» Election “hype” begins early.. Al-Maliki insists on holding it and Al-Sudani prepares
» “No more delays”.. Parliament changes the mechanism of holding sessions: “Controversial” laws are re
» Al-Mashhadani to the heads of the blocs: I prefer to vote on the general amnesty law before anything
» Iraq ranks 8th in the Arab world in achieving work-life balance in 2025
» Labor announces issuance of more than a quarter of a million national cards for social protection be
» Iraqi-Chinese research on accelerating combined cycle power projects
» Al-Maliki praises the decision of the International Criminal Court and demands the resolution of the
» Al-Mashhadani calls for voting on the general amnesty law for the “oppressed” before other laws
» Yazan Mishaan Al-Habouri revolts against his "leak": There are those who obstruct the government's e
» US Ambassador: Ending the presence of the international coalition in Iraq is being implemented and w
» Al-Mashhadani directs to raise the suspended laws to the Presidency of the House of Representatives
» "His general situation is unbearable" .. Parliamentarian: Political consensus to keep Iraq away from
» Al-Sudani agrees to launch the “For Her” initiative to support Iraqi women
» Development Bank condemns extortion attempts: It will not affect our workflow
» Iraq-China oil-for-reconstruction deal faltering: A geopolitical shift in the Middle East
» Planning reveals the next step of the census: We will visit these families
» Parliamentary Finance Committee calls on the government to expedite sending the budget tables
» OPEC+ may extend oil cuts at its meeting next Sunday
» Parliamentary Integrity Committee discusses with the Director of Central Oil the file of contracts a
» Government notice regarding the legal status of foreign workers
» House of Representatives holds "important" session today.. Expectations of extending the legislative
» Slight rise in dollar prices against the dinar in Iraqi stock exchanges
» Baghdad "softens" and Kurdistan oil prepares to continue its global journey
» "For 5 million dinars or in installments" .. Iraqi electric cars soon on the streets
» Where did the Intelligence Bill get to in the House of Representatives?
» "Contract Suspicions Series"... What are the loopholes in the Korean air defense system contract in
» MP reveals latest developments in the formation of the new Kurdistan government
» Personal status: imposing a vision or turning Iraq into a copy similar to the Iranian religious regi
» Oral question to the governor.. Parliamentary movement regarding the “Basra, the Economic Capital of
» MM&C 11/25/24 Parliamentarian: We need to extend the legislative chapter to 8 sessions and the bud
» Al-Alaq: The monetary situation in Iraq is excellent and our reserves support the stability of the e
» utube 11/25/24 MM&C MM&C Iraq News-CBI Building Final Touches-Oil Exports-Development Road-Turkey-B
» Parliamentary movement to include the salary scale in the next session
» Parliamentary Finance Committee reveals the budget paragraphs included in the amendment
» Al-Maliki calls on the Bar Association to hold accountable members who violate professional conduct
» Politician: The security agreement with America has many aspects
» Kurdistan Planning: More than 6 million people live in the region, the oldest of them is 126 years o
» Al-Alaq: Arab consensus on the role of central bank programs in addressing challenges
» Economics saves from political drowning
» Agriculture calls for strict ban on import of "industrial fats" and warns of health risks
» Iraq is the fourth largest oil exporter to China
» Railways continue to maintain a number of its lines to ensure the smooth running of trains
» Parliament resumes its sessions tomorrow.. and these are the most important amendments in the budget
» Bitcoin Fails to Continue Rising as It Approaches $100,000
» Minister of Planning: There will be accurate figures for the population of each governorate
» Popular Mobilization Law is ready for voting
» Mechanisms for accepting people with disabilities into postgraduate studies
» Government coordination to create five thousand jobs
» Transport: Next month, a meeting with the international organization to resolve the European ban
» Census is a path to digital government
» Calls to facilitate loans and reduce interest rates for the private sector
» The launch of the third and final phase of the "population census"
» Al-Sudani: We have accomplished a step that is the most prominent in the framework of planning, deve
» Justice discusses modern mechanisms to develop investment in real estate and minors’ money
» Dubai to host Arabplast exhibition next month
» Al-Tamimi: Integrity plays a major role in establishing the foundations of laws that will uphold jus
» Reaching the most important people involved in the "theft of the century" in Diyala
» Transportation: Completion of excavation works and connection of the immersed tunnel manufacturing b
» Between internal and regional challenges... Formation of the Kurdistan government on a "slow fire" a
» Kurdistan Region Presidency: We will issue a regional order to determine the first session of parlia
» The Minister of Foreign Affairs announces the convening of the Ambassadors Conference tomorrow, Mond
» Al-Sudani: Iraq must always be at the forefront
» Al-Mashhadani: We support the Foreign Ministry in confronting any external interference that affects
» Al-Sudani chairs meeting with Oliver Wyman delegation
» Half a million beggars in Iraq.. 90% of them receive welfare salaries
» Sudanese announces preliminary results of the general population and housing census in detail