Iran's WTO Membership Requires National Consensus

EghtesadOnline: Despite a seemingly firm intention in the government of President Hassan Rouhani to join the World Trade Organization, Iran’s membership process has had little progress since he took office in August 2013.

News ID: ۷۴۰۹۷۳

16 April 2017

Many attribute Iran’s 20-year-long waiting period to become a member of the international body to external reasons, mainly the opposition of the United States.

Following the nuclear deal with the world powers reached in July 2015, Iran was hoping for accession but a full membership still seems farfetched.

This is while senior economist Mohammad Mehdi Behkish, a leading free trade advocate and secretary-general of International Chamber of Commerce’s Iranian Committee, says the main reason for the slow progress in Iran’s accession bid should be sought inside the Islamic Republic.

“Imagine if there was no external factor, we would still not be ready to join the WTO,” he told Financial Tribune in an interview on Saturday. “The country is facing a dilemma in terms of liberalizing [the economy].”

Some of the policymakers, Behkish says, have accepted that to increase productivity and exports, the economy should become free and competitive so that industries can acquire new technologies, boost quality and lower prices.

“I am aware that Rouhani’s Cabinet members believe in free trade and a market-based economy, but in practice the country is not moving in that direction,” he said.

“There is no consensus [among influential groups]. It has to do, for the most part, with their economic interests.”

The economist says Iran has not pushed enough to pressure WTO to select a chairman for Iran’s working party.

WTO received Iran’s application for accession on July 19, 1996. It took the organization nine years to accept Iran as an observer member. In 2005, WTO eventually established a working party composed of a group of representatives tasked with assessing Iran’s accession bid. However, the chairman of the party has not yet been elected.

In fact, Iran submitted its memorandum of foreign trade regime a couple of times. But officials have said they need to review the regime and submit it again.

“The first thing they ask for is a foreign trade regime to compare them to WTO regulations and find the contradictions,” he said.

“But the problem with our foreign trade regime is we haven’t yet made up our mind about what we are planning to do, for example, about our tariffs.”

Behkish noted that the trade regime stipulated in Iran’s Resistance Economy “is not compatible” with the regulations of WTO.

Resistance Economy is a set of policies Iran adopted to protect the economy against sanctions amid political standoff with the West over the Islamic Republic’s nuclear program. Although the sanctions were removed on January as part of the nuclear pact, the policy still remains.

“The Resistance Economy says Iran should not import a commodity, if the country can produce it. But, economically speaking, that commodity should be able to compete in terms of quality and price. Otherwise its production would not be reasonable,” he said.

The economist believes that a shift in the stance of US President Donald Trump will lead to even more cautious approach among Iranian decision-makers.

Trump’s campaign rhetoric mainly focused on prioritizing the United States and its internal affairs, showing little intention to increase military interference in the Middle East or the Korean Peninsula.

After the recent US bombings of Syria and Afghanistan as well as threats issued to North Korea, many experts believe the Trump administration has been shifting its policy from what it suggested during the presidential campaign.

Behkish said concerns over the increased US military presence will make Iran “more introvert”.

“Even economists will be more cautious when advocating trade liberalization … until the international political situation is under control,” he said.