AUSTR DELANEY VISIT: GOI PROGRESS ON WTO ACCESSION

C O N F I D E N T I A L BAGHDAD 000482 SIPDIS NSC FOR SAMANTHA VINOGRAD USTR FOR DAWN SHACKLEFORD USTR FOR CHRIS DEANGELIS E.O. 12958: DECL: 02/17/2020 TAGS: ETRD PGOV EAID WTO ECON EINV IZ SUBJECT: AUSTR DELANEY VISIT: GOI PROGRESS ON WTO ACCESSION REF: A. BAGHDAD 177 ET. AL ¶B. MCFARLAND-DEANGELIS E-MAIL 02/14/2010 Classified By: EMIN John Desrocher for Reasons 1.4 (b, d). ¶1. (C) Summary: Government, parliamentary, and judicial officials expressed varying degrees of support for the GOI's World Trade Organization (WTO) accession ambitions during the February 7-11 visit to Baghdad of Assistant United States Trade Representative Michael Delaney. Delaney pushed all sides for forward progress on the GOI's Goods Offer, the primary hurdle to scheduling Iraq's next round of WTO negotiations. Officials told him that the Goods Offer had been completed in September 2009, cleared by the GOI's Interministerial WTO Accession Committee in October 2009, and approved by the Acting Minister of Trade in November 2009. Internal GOI hurdles, ranging from policy concerns about opening Iraq's borders to a flood of domestic production-crushing imports, to political concerns about the upcoming national elections, to an unscheduled review by the Council of Ministers, make it unlikely that the current government will take any further action on WTO accession before national elections March 7. Meanwhile, the Interministerial WTO Committee continues work on the GOI's Services Offer, legislative action plan updates, draft IPR legislation, draft SPS legislation, and other WTO requisites. Progress remains slow. End Summary. -------------- - AUSTR DELANEY'S FEBRUARY 7-11 VISIT TO BAGHDAD -------------- - ¶2. (C) Assistant United States Trade Representative Michael Delaney traveled to Baghdad February 7-11 and met with: Deputy Prime Minister Rowsch Shaways, National Investment Commission Acting Chair Dr. Sami al-Araji, Acting Minister of Trade Dr. Safaa al-Din al-Safi, Minister of Finance Bayan Jabr al-Zubaidy, Minister of Agriculture Dr. Akram al-Hakeem, Deputy Labor Minister Nouri Nasem al-Helfi, Council of Representatives Economic and Services Committee Chairman Haider al-Abadi, and Shura Council President Judge Ghazi Milo Ibrahim al-Janabi. Delaney also hosted a special meeting of the Strategic Framework Agreement (SFA) Trade and Investment Working Group that included Director General level officials from the Ministries of Trade, Finance, Industry and Minerals, Health, Labor, and Interior. In each of his meetings, Delaney discussed the importance of Iraq broadening its international economic engagement through the WTO accession process, which includes putting the legal regime in place to reduce trade and investment disincentives. Delaney reinforced these points in local and international media through a press conference hosted at the Embassy. -------------- TRADEMIN, NIC CHAIRMAN DEFEND WTO SLOW-ROLL -------------- ¶3. (C) In separate meetings, Acting National Investment Commission Chairman Dr. Sami al-Araji (February 7) and Acting Trade Minister Safaa al-Safi (February 8) told Delaney that protecting Iraq's struggling domestic industries from foreign competition outweighed any benefits of WTO accession in the near-term. "While we would all like to see Iraq as a member of the WTO one day, we're not prepared," al-Safi said. Al-Safi and al-Araji presented the same arguments, which they said supported their conclusion that WTO accession was not in Qsaid supported their conclusion that WTO accession was not in Iraq's immediate national interests: 1) Iraq's legal and regulatory systems were not yet up to WTO standards; 2) Iraq does not have adequate safeguards to protect domestic production from foreign competition; 3) Iraq does not have adequate safeguards to protect consumers from a flood of "inferior quality" goods that would be "dumped" on Iraqi markets by neighbors; 4) beyond oil, Iraqi exports are negligible, holding Iraq to international standards would only benefit its trade partners; and, 5) a perception among the electorate that WTO membership equates to a loss of sovereignty. Delaney responded that these concerns were best addressed during WTO negotiation rounds, where instruments like "import phase-ins, "countervailing measures on foreign subsidies," and import restriction "safeguards," are best employed. -------------- -------------- SLOW-ROLLING BUT STILL POSTURING FOR NEGOTIATIONS -------------- -------------- ¶4. (C) During the February 7 SFA Joint Coordinating Committee's Trade and Investment Working Group meeting, Senior Advisor to the Minister of Trade, Dr. Abdulhadi al-Hamiri, told Delaney that the GOI passed two specific laws -- a Customs Tariff Law and the Iraqi Products Protection Law -- through the Council of Representatives in January as the basis for future WTO negotiations. With respect to the Customs Tariff Law, "we passed it so that we could start to negotiate. No one would go to the WTO without published tariff rates," al-Hamiri said. NIC Acting Chairman Dr. Sami al-Araji added that the GOI would be prepared to defend WTO Working Party queries about possible violations of Iraq's standstill agreement on restrictive trade measures. Ministry of Industry and Minerals Director General Sinan al-Saidi claimed, however, that the GOI submitted the draft Products Protection Law to Iraq's Working Party, which signed off on the legislation in 2009. (Comment: Al-Saidi's assertion that the GOI had been engaged in ongoing dialogue with members of the WTO Working Party, including the Moroccan head, Ambassador Oman al Hilli, was news to us. If true, it would point to a more serious commitment to accession than we have previously credited to the GOI. End Comment.) Al-Saidi told Delaney that the GOI was also updating its legislative action plan. -------------- - DPM, FINANCE MINISTER SUPPORT QUICKER MOVEMENT -------------- - ¶5. (C) Others, who are further removed from the accession process, including Deputy Prime Minister Rowsch Shaways and Finance Minister Bayan Jabr al-Zubaidy, told Delaney that they fully supported Iraq's membership in the WTO and recognized the immediate benefits in increased trade and investment that WTO membership represented. When queried by Delaney, Shaways and al-Zubaidy both identified continued technical assistance in the WTO accession process as the most important role USG programs could play in developing bilateral and multilateral trade. "One of our main goals is to be members of the WTO," Shaways told Delaney. When advised that Iraq could take its next important step in the accession process by submitting its already-completed Goods Offer, Shaways acted surprised and criticized the Trade Minister for slow-rolling the accession process, "In my opinion, individual personality plays an important role." Econoff subsequently provided additional information about the accession process to Shaway's chief of staff. -------------- - SHRINKING MINORITY IN COR OPPOSE WTO ACCESSION -------------- - ¶6. (C) Council of Representatives' Economic and Services Committee Chairman Haider al-Abadi told Delaney that MPs who objected to Iraq's membership in the WTO usually did so on the basis of misunderstandings about WTO accession vis-a-vis Iraq's national interests. "Objectors will always be there," al-Abadi said, "the difference now is that they will be in the minority, even after a new parliament is elected." -------------- AGRICULTURE MINISTER UPBEAT ON WTO EFFORTS -------------- ¶7. (C) Minister of Agriculture Dr. Akram al-Hakeem told Delaney that he believed "the Iraqi economy was ready for WTO QDelaney that he believed "the Iraqi economy was ready for WTO membership." The Agriculture Ministry, which has representation on the GOI's National WTO Accession Committee, prepared the GOI's Agricultural Subsidy Offer, draft legislation on sanitary and phytosanitary measures (SPS) and animal health measures, and participated in the drafting of the GOI's tariff schedule. -------------- -------------- CAREFUL PROGRESS INDICATIVE OF HEALTHY DISCUSSION -------------- -------------- ¶8. (C) The variety of opinion on the way forward for Iraq's WTO accession indicates that at least some in government are taking the issue and, perhaps, Iraq's national interests seriously. While powerful policymakers are clearly taking a slow-roll approach to the accession process, enthusiastic support for WTO in other parts of the GOI may spill-over post March 7 national elections. Notwithstanding the concerns articulated by NIC Chairman Sami al-Araji and TradeMin Safaa al-Safi, the tone of discussion from Delaney's interlocutors was consistently "when, not if." Though slow, progress on key accession milestones is encouraging. Opposition at the Council of Representatives is shrinking, the Interministeral WTO Accession Committee continues to work down the accession checklist, and the judiciary is reviewing draft WTO-compliant laws. Perhaps most telling, however, Iraqi officials are gaming the accession process -- clearly padding Iraq's negotiating position by building technical barriers to trade that they likely intend to negotiate away. Nonetheless, progress will continue to be slow. FORD