The Iraqi economy between the politics of dumping and the obstacles to international integration
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The Iraqi economy faces a number of economic challenges that threaten political and social stability, such as poverty, unemployment, inflation and destructive infrastructure, high production costs, administrative and financial corruption, environmental pollution, water problems, deterioration of agricultural and industrial production, and so on.
Adding to the seriousness of these challenges, they are complicated, overlapped and widened without any corresponding preventive measures by the State, or to develop strategies that would provide appropriate solutions to solve these challenges because of its preoccupation with the issue of security and terrorism, which requires the development of an integrated strategy through which these challenges are addressed.
Obstacles to Iraq’s accession to the World Trade Organization:
Iraq is witnessing a transition in its economic policy, and the transition from the central oriented economy to the market economy, it has decided to join the World Trade Organization according to the following stages:
-On February 11, 2004, Iraq submitted its application for accession as an observer in the World Trade Organization (WTO) and was approved by the General Council.
– But is Iraq eligible to join the World Trade Organization (WTO)? And what are the advantages and disadvantages of accession after 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 – supply and demand – after an economic siege that lasted more than a decade.
It was marginalized on the map of the world economic system and its deprivation from investment opportunities, progress, development and technological knowledge that it should have enabled it to cope with the rapid developments in the international market and to change its competitiveness in the last two decades.
-Iraq suffered international isolation in a world that was swept by the currents of integration of its companies, liberalization of its markets and integration, especially financial ones, and the supremacy of the neo-liberalism, which required extensive economic transformations in the field of informatics and financial services and the increase of the competitive advantage of the products that the world markets have started to generate.
– However, in the integration of financial markets with assets of more than $850 trillion has become the most prominent title of financial globalization, the focus of the main domination in global neoliberal economy, and the introduction of the transition from the JATT agreement signed in a year 1948 to (WTO).
The latter was concerned with organizing a wide range of trade in services, particularly financial services, in which its annexes were named (GATS) in 1994, based on the Uruguay Round.
– At a time when global gross domestic product did not exceed 70 trillion dollars per year in 2013, and the value of world trade in goods and services annually is only less than one-third of this world output, we see that the trade in currency conversion and speculation is about four and a half Trillion dollars a day in the international monetary and financial markets, a trade of financial speculation that exceeds the annual total of more than fifty times than the total world trade in the activity of goods and services.
-In light of international trade and financial exchanges, Iraq has moved to important regulatory levels in the transition to a market economy, to break the effects of its international isolation, progress in financial services and improve the foreign investment environment, through banking and investment law, the Central Bank Law and amendment of companies law which allows foreign banks to work in Iraq and allows the transfer of capital and currency in a way that serves the openness of Iraq to the world, in the conditions of a central rent economy difficult to understand the liberal market, which nevertheless provided positive opportunities and legal and regulatory promising foundations for Iraqi Business environment.
-The situation of Iraq will not allow it to be in the course of international economic competition, as there are still more than five thousand text of the legislative texts that are impediment to economic freedom and market activity, which the legal circles are studying them today, which need to be amended, so that Iraq can integrate into International trade and investment and to prepare it to join the World Trade Organization, according to the terms of membership, so that our country obtains the condition of the most favored state and the principle of national treatment.
Problems and obstacles to Iraq’s accession to the World Trade Organization:
At a time when oil production dominates more than 60% of GDP, it employs only 2% of the Iraqi labor force, which accounts for only 22% of the total population who are able and willing to work, which means a huge imbalance in the composition of human productive wealth, and the ability to invest it, especially the female labor force, which complains from 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, the revenues of the general budget and the country’s foreign exchange earnings.
In addition, the World Trade Organization (WTO) rules out crude oil as a commodity within the internationally traded commodity group, the matter which is still constitute the essence of the contradiction in Iraq’s accession to that organization, which excludes crude oil.
– If the World Trade Organization allows oil to be included into the account , price will 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 the impact on prices, which put price restrictions and the amount of a commercial commodity, but the political strategy is the driving force of Iraq’s foreign trade.
-The agricultural sector, which comprises one-third of the population of Iraq and about 22% of the actual labor force, contributes to the GDP at a rate of only 5-7% at best.
This makes Iraq almost an importer and does not have the necessary resources to provide grain food security, or agricultural inputs, after the decline of productive agricultural areas by desertification and salinity and weak infrastructure that it leads to disrupt more than 80% of the arable land, and the percentage of local security of grain exceeds 40% of the wheat crop in the best cases, and little mention of other varieties which are fully covered by imports, such as rice field and other crops.
– The agricultural sector structurally contradicted with the oil sector in the direction of openness to the global market and in two different ways, in terms of the impact of trade benefits and costs, the global market forces or supply and demand have become strong to control, both in the demand for oil and its impact on the value of Iraqi exports, or the supply of Food and its impact on the cost of Iraqi imports.
– With reference to the philosophy of reducing customs restrictions by 24% and abolishing non-tariff restrictions, which are imposed by the World Trade Organization on the member country of the developing countries to work and implement them within six years from the date of accession, as well as the reduction of agricultural subsidies by 13.3% within ten years of 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.
Iraq will need a green revolution like Mexico and many other Latin American countries especially there are companies between three and six major monopolies in the world control 80-90% of the agricultural trade, controlling prices and quantities such as wheat, sugar, tea, coffee, cotton, jute and other products, while ten multinational companies still dominate one third of seed and pesticide production and its trade in the world.
-In spite of the above, the entry of Iraq, regularity in the global economic space through the WTO, and its dealings 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 advanced industrial center countries and the developing world .
-The status of Iraq under Chapter VII of the UN Charter since 1990 until its completion on 30 June 2013, made Iraq in a negative economic environment hostile to development, and perhaps a barrier to natural integration in the global market, which has been banned for decades over the past because of restrictions on Iraq until recently, that it was a high-risk country, a threat to world peace, and allowing the use of force against it, despite the elimination of the objective reasons under which the economic sanctions were imposed on Iraq in due course.
-The accession of Iraq to regional economic zones, such as the Greater Arab Free Trade Area and other economic agreements within the League of Arab States, or other forms of regional integration, should take into account the implementation of the provisions of the WTO Agreement, GATT, which have both become bound by the implementation of trade agreements, so any commercial facilities within the framework of regional agreements, become useless or without value if they are without facilities provided within the framework of the World Trade Organization.
– On the other hand, the survival of Iraq is isolated from its international environment without a climate of interaction with markets and international organizations, especially the World Trade Organization, it will cost a lot because of the loss of the advantages and regulatory opportunities, technological and legal benefits, and other areas of investment and arbitration and ensure intellectual property rights and address dumping commodity, and others, they are opportunities in which the isolation from the organized world does not provide, and can’t transform gradually into a group of stable and low-risk countries that aspire to a shift towards openness to the world and can only be achieved by the availability of capacityof the formal integration of Iraq into the global trading system and its institutions of the World Trade Organization and in accordance with the fair negotiated foundations.
Despite the organization’s interest in dumping, which started many laws that prevent dumping, we find that some of the member states of the organization adopt this policy to achieve their interests at the expense of the interests of others, as the United States did when large quantities of maize crop were exported to the Philippines, and the sale of one ton at a price of less than 30% of the world price, which caused the biggest harm to more than two million farmers living on maize production in the Philippines.
In Iraq, the Iraqi market was opened to global markets after the US occupation in 2003, and was flooded with agricultural commodities, some of them are of poor quality and sold at low prices, which led the consumer to go towards them, because of his low income and weak knowledge of the negative effects on health, society and economy, and they have negative impact on local production, because of the inability of the local producer to compete with the importer, for the high costs of its production, especially after the lifting of agricultural support, which has made the peasant to leave his land.
Consequently, the dumping policy negatively affected agricultural production and destroyed it, and led to increased unemployment in the countryside.
It is expected when Iraq joins the organization:
1. The continuity of negative impact of this policy on domestic production for the following reasons:
-Poor laws and regulations related to the quality.
– Poor health control.
-Weak tariff efficiency.
– The need for the Iraqi market for agricultural crops due to low domestic production.
-The absence of a technical team specialized in dispute resolution. Most of the disputes between developing and developed countries have been resolved in favor of developed countries because of the weak capacity and capabilities of negotiators from developing countries.
2. Intellectual property rights:
Iraq has gone a long way in producing some components of the agro-technology package, such as improved seeds and fertilizers, which have played a major role in increasing agricultural production, as well as the possession of Iraq’s scientific expertise and research centers.
This has positively affected agricultural production and reached the relative self-sufficiency of some crops Such as fruits, vegetables, eggs and chickens, and the rise of strategic and industrial grain production to nearly 43% of the actual need.
After the occupation in 2003, Iraq has become totally dependent on importing the components of the technological package from abroad, because of the killing, displacement and arrest of most of its research cadres, as well as the destruction of most, if not all, research centers on the pretext that they are for military purposes, and others under the pretext that it produced weapons of mass destruction, which negatively affected agricultural production.
The negative impact of IP is expected to continue even after Iraq’s accession to the Organization for the following reasons:
– According to the agreements of the regulator on intellectual property, the prices will rise in the world markets, which cost Iraq very large sums of money when imported, and private activity can’t import it due to the weak financial possibilities on the one hand, and ignorance of what technology is on the other hand.
-The weakness of the education of farmer towards modern technology due to his ignorance and weak financial capabilities.
-reluctance of developed countries and monopoly companies owning agricultural technology to export to Iraq, so as to keep it a market for the disposal of agricultural goods produced in developed countries.
We conclude from this that the World Trade Organization is operating in a time of Unipolar and the United States’ dominance of global political and economic conditions,
which has served the interests of the United States and its allies because the objectives of the Organization to lift the protection, reduce and eliminate tariffs for free trade, and lift the government subsidies to the economic sectors will not serve the economies of the developing countries because they don’t have good industrial and agricultural products and low prices, in order to compete goods and commodities coming from developed and newly industrialized countries, such as China, South Korea, Taiwan and others., which indicates that membership in the Organization requires great political and economic measures and reforms in order to achieve justice and promote the global economy.
Developed countries should take into consideration the political and economic conditions of developing countries, especially Iraq, and the difficult economic and political conditions that Iraq is going through assisting him to get the fundamentals of development.
Economic Studies Unit
Rawabet Center for Research and Strategic Studies