Given its oil potential, Iraq seeks a larger role in Organization of the Petroleum Exporting Countries (OPEC) and to strengthen its ties with its Arab neighbours. Iraq is a member of the League of Arab States and the Great Arab Free Trade Agreement. In 20013, Iraq ratified a Trade and Investment Framework Agreement (TIFA) and Partnership and Cooperation Agreement with the European Union in 2012.
Non Tariff Barriers
Non-tariff barriers include inadequate infrastructure and trade capacity, significant customs processing delays, security considerations and some specific import and export bans.
Customs Duties and Taxes on Imports
According to the Ministry of Finance of the Republic of Iraq, the customs average rate was around 10% in 2016. As of December of 2016, Iraq amended customs duty rate on certain imported goods such as cigarettes (75% duty rate), juices (25%), televisions (35%), alcoholic beverages (100%), air conditioners (25%) and sedan cars (25%). As of the 1st of January of 2018, customs duty rates on other imported goods were amended to reach 30% for some of them.
Iraq is a member of the World Customs organisation and does comply with the harmonised customs system.
Private sector imports generally require licenses, although there are limited exceptions. In order to import goods, the following documents must be submitted to the customs authorities: a commercial invoice (including a description of the product, indication of the country of origin and the details of the manufacturer); a certificate of origin (although generally not required, the statement of origin should appear on the invoice); two copies of the packing list; three copies of the bill of lading. For shipments to Erbil, an authorization letter from the origin agent is required. For more information, click here.
There are no specific procedures for samples shipments. Sample shipments require the same set of documents as a normal shipment. The value of goods should still appear on the commercial invoice indicating "for customs clearance purpose only'' on the invoice. Zero value invoices are not acceptable.
Iraq is divided into two main regions; the semi-autonomous north administered by the Kurdistan Regional Government (KRG) and the central government administered center and south of the country. Iraq’s retail sector is dominated by the public sector, especially for food products. In tandem with strong economic growth there is a growing demand for modern, western-style supermarkets especially in Iraqi Kurdistan. Iraq’s Ministry of Trade (MOT), through the Public Food Distribution System (PFDS), continues to provide the Iraqis with five basic food commodities at subsidized prices.
With agricultural production in decline, food imports have become critical. State-owned companies channeling imported foodstuffs to consumers have in the process become the major operators in the Iraqi food retail sector. Iraq’s Foodstuff Trading Co., imports and markets basic food items such as sugar, vegetable oil, and infant formula. Similarly, the Grain Board of Iraq (GBI) imports and distributes rice. The State Company for Grain Processing mills GBI wheat and distributes flour to the Iraqis through state programs. Fresh milk is collected and processed by the State Diary Company; dairy products are marketed in retail outlets in Baghdad and neighboring areas.
To help combat the import of low quality product, the Central Organization for Standardization and Quality Control (COSQC) implemented in 2011 a new pre-shipment inspection program. The Pre-Importation Inspection, Testing and Certification (PITC) program inspects products at origin and issues certificates of conformity for qualifying products imported by the private sector. The PITC program has however contributed to increased exporter and importer costs, which are transferred to consumers. Reportedly, the PITC program adds $5,000 per container for beef and poultry shipments. Retail food prices have doubled since May 2011. Iraq’s largest food trade partners are Turkey (mainly processed foods, fruits and vegetables, and wheat flour) and Iran (livestock, vegetables and fruits) followed by Saudi Arabia, Egypt, Jordan, and Syria.
According to The Iraqi Chamber of Commerce, there are some 100,000 registered private food retailers in Iraq, and around 200,000 unregistered small retailers. Retailers purchase mainly from wholesalers. The main stores channels are: Carrefour Hypermarket ; City Center Hypermarket (Hewa owned stores); Warda Supermaket ; World Mall Supermaket. The major wholesaler is Khudairi Group. Nationwide, there are several thousand government-supplied Public Food Distribution System (PFDS) stores where the Iraqis receive subsidized basic foodstuffs, such as rice, flour, vegetable oil, and sugar. Product quality and availability in these stores is highly variable. The Public Food Distribution System stores are not authorized to sell food products outside of the government’s ration card program.
Iraq has a population of almost 40 million people, with an internet penetration rate estimated at 48.3% in 2017. According to Newzoo's 2017 Global Mobile Market Report, the smartphone penetration in the country is estimated at 19.9%. Google is the most popular web search engine in Iraq, though no reliable detailed data is available.
Although e-commerce could generate several benefits for the Iraqi consumers – like the possibility to compare goods and prices, receiving foreign goods and commodities otherwise not available, etc. – the market is not well developed yet. One of the key barriers to e-commerce is the low internet penetration rate and lack of technology infrastructure. Generally, internet connections are slow and expensive, with serious restrictions on service providers. Another great problem contributing to the slow growth of e-commerce is the low level of IT literacy among the Iraqi population. However, the greatest problem hindering e-commerce is perhaps the fact the Iraqi consumers prefer to use cash, both due to fiscal and technical reasons (distrust in Iraqi banks, scarcity of credit card products, etc.). Among the main e-commerce websites active in Iraq there are: Kurdshopping.com, Opensooq.com, Dasy2.com, Mredy.com and Kurdsale.com. When it comes to social media, Iraqi citizens prefer to use YouTube, with a 66.1% penetration rate among internet users, followed by Instagram (15.7), Facebook (15%) and Twitter (2.4%). Due to protests in central and southern Iraq over the lack of public services, the Iraqi National Security Council decided to ban the use of social media for two weeks in July 2018.
According to the World Bank, Iraq's largely state-run economy is dominated by the oil sector, which provides more than 90% of government revenue and 80% of foreign exchange earnings and is a major determinant of the economy's fortunes. Traditionally, most of Iraq's manufacturing activity has been closely connected to the oil industry. The major industries in that category have been petroleum refining and the manufacturing of chemicals and fertilizers. Industry represents 40,6% of the total GDP (with 18,7% of the workforce), whereas services sector accounts for 54,6% (with 59,8% of the workforce). Agriculture comes last with 4,8% of the GDP and 21,6% of the workforce.
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