A high-profile Iraqi delegation visited London last week to make the case for
investing in the country. Mike Pullen explains what is at stake for the
Last week's visit provided a reminder of the trade and investment opportunities in Iraq, a country currently achieving GDP growth rates of 7.8pc - rates to which many countries can only aspire.
As part of Iraq's continued reintegration into the global economy, the UK must consider what more it can do to support Iraq's World Trade Organisation (WTO) accession process.
World leaders should cooperate to encourage Iraq into the WTO, not just as a major benefit to Iraq but also to the rest of the world. For internal reform and economic development, membership is vital for Iraq itself but it is also crucial in broader geopolitical terms.
The WTO has, however, been notably absent from the headlines since the collapse of the latest Doha Round of trade liberalising talks last December. With the attention of world leaders now focused on the financial crisis it could be questioned whether there is the time or the will to make a compelling case for trade liberalisation.
Furthermore, the current economic climate begs the question whether countries that remain outside the 153-member Geneva-based WTO club, such as Iraq, should continue their journey on the road to membership. I believe, unequivocally, that they should.
The benefits of WTO membership stem from the cumulative impact of the hundreds of legislative, policy and institutional changes that countries make in order to join. Those reforms provide applicant countries with an operating system that's ready to be integrated into the global economic system.
Membership of the WTO serves to discipline Governments in their dealings with the private sector, and, since WTO commitments are binding, creates a more predictable, secure and enticing business environment for the internal and external investors alike.
The economic benefits of membership are well documented; in Saudi Arabia the extensive process of legal and institutional reforms that took place in the 10 years proceeding the country's WTO accession in 2005 stimulated record GDP growth rates and huge increases in international trade and investment.
Accession provided Saudi businesses and consumers with access to a broader range of competitively priced goods and services, and also enabled them to benefit from greater competition and investment in the local market. This continues to stimulate innovation and the more efficient allocation of capital throughout the economy.
Given the reciprocal nature of the WTO, Saudi businesses are now subject to fewer export and investment restrictions and have a more stable and secure business environment in which to operate. This is safeguarded by their access to the WTO's dispute settlement system, which can provide an effective means for resolving trade-related disputes that cannot be settled through normal commercial and diplomatic channels.
While economic development is critical, the broader geopolitical benefits of Iraq's integration into the global economy are what should prompt world leaders to expedite the country's accession. If Iraq, one of the largest countries in the Middle East, were to follow Saudi Arabia into the WTO, it would send a powerful and positive signal to the region that it would be hoped would resonate in both Tehran and Kabul.
And it is not just the Middle East that would benefit. For Europeans, it can only make sense to encourage the country that shares the largest border with Turkey - an applicant for EU membership - into the WTO. Iraq's accession would reinforce Europe's security and allow for the development of a safe and effective trade gate between Europe and the Middle East.
WTO membership would represent an important step towards Iraq’s integration into the global trading system and restore its position within the international community after decades of isolation.
If Iraq is to accede to the WTO, world leaders will need to demonstrate the political will to overcome many of the problems associated with entering into negotiations with countries previously subject to trade embargos and sanctions regimes.
Negotiations with countries such as Libya, Iran, Syria and Sudan have been held back while negotiators and politicians debate the merits of engaging in dialogue. The results of an apparent softening of tone emanating from the new Obama administration remain to be seen. However, it is imperative that negotiators and politicians find a way to put past differences behind them.
World leaders must ensure that WTO accession negotiations can proceed within a wider framework of a constructive international dialogue. Without this a key step towards integrating countries, previously left on the margins, into the global community is unlikely to succeed.
The interests of the Iraqi people and of the Middle East region more generally affect us all and it would be a huge disservice to the future if our leaders failed to encourage Iraq into the WTO fold.
Mike Pullen is a Partner at DLA Piper (and also a Member of the British/Saudi Business Council).
Why Iraq deserves membership of the WTO - Source
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