Joining the WTO would bring benefits to Iraq
Created on February 12, 2014
In the last quarter of 2013, HSAD, together with ICARDA and the International Food Policy Research Institute (IFPRI), contributed to a report on the acceptance of Iraq into the World Trade Organization (WTO) at the request of USAID. The report concluded that if Iraq were to succeed in gaining full membership, there would be a number of both positive and negative impacts on different sectors. With regard to the agricultural sector, in becoming a member of the WTO, Iraq would be able to gain access to technical assistance in terms of expertise, technology, mechanization and seeds, seedlings and fertilizers.
Overall, membership would have a number of positive effects – Iraq would not only gain international credibility and cooperation as a trading nation, but the move would also incentivize the government to advance their reform agenda. Due to the effect of free trade, resources could be more accurately allocated across economic sectors, and the private sector could see more high quality foreign investment. However, the rise of foreign investment would increase the competition on local communities and businesses, potentially leading to a loss of jobs.
Also, by joining the WTO Iraq would lose its food and fuel subsidies – which amount to over 20 trillion Iraq Dinars per year, almost 14% of the country’s GDP. However, these subsidies can have negative impacts on the economy themselves. Often, the subsidies are not well targeted, and so have the potential to increase malnutrition, and can even lead to the smuggling of food aid. In addition, providing fuel subsidies can lead to increases in CO2 emissions and discourage investment in, and uptake of, renewable energy.
Overall, HSAD, ICARDA and IFPRI agree that full membership to the WTO would result in a rise in jobs, economic growth, and specifically increased support and technology for the agricultural sector. The move could also help to increase good governance. While there will inevitably be some sectors negatively affected, the government should have a contingency plan and be ready to reallocate resources to help those affected by the short term economic instability.
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