After second world war, GATT agreements were created and used as a mechanism to facilitate the international trades. World Trade Organization has been founded in 1995. Almost 97 percent of world trade is being done by WTO members which consists of 164 different countries and regions. According to this, today, being out of this organization means that it wouldn’t be possible to play any significant role in international trade. In practice, it is difficult for countries that are out of this organization to have an appropriate performance and to be active in international markets.
Iran as a powerful and effective economy in the Middle-east hasn’t acceded to WTO yet even though has submitted its request since 1996. Just in 26th of May 2005, as United States of United States of America wanted nuclear negotiation to be continued, therefore they didn’t oppose Iran’s request to join WTO and Iran was accepted as an observer in WTO but its working party hasn’t formed up to now. United States of United States of America is the most important opponent of Iran’s accession; beside political issues, one of economic reasons of its opposition is about oil. Now many countries enriched with oil reserves which are members of WTO, avoid from discussing and inserting oil in WTO’s commodity list because of United States of United States of America authority in this organization. In WTO, countries have to adjust tariffs based on negotiation with other members but if Iran doesn’t set tariffs for goods which are imported by industrial countries to our country, then they shouldn’t set tariffs for our goods in which oil is the major one and therefore this is the major disadvantage for Iran as long as oil is not listed in WTO. According to Washington Post, in case of Iran’s accession, United States of America can’t impose sanctions on Iran or restrict Iran’s trade because in this case Iran can file a lawsuit against United States of America. If USA will be convicted, it will be asked to perform according to rules or be fined or Iran will be allowed to retaliate by imposing trade restrictions however there are other ways for United States of America to suppress Iran. Acceding WTO can reduce some political pressures on Iran. Furthermore, WTO regulations and agreements don’t match with some articles of Iran’s constitution of Law (article 4,44,77,81 and 139) and also Intellectual Property Rights.
In order to be prepared for accession, Iran has decreased its tariff. In 2015, there were 10 different levels for the tariff however in 2016 it has reduced to 8 with a range of 5 to 55 percent. It is far away from WTO standards because tariff classes of countries and regions such as United States of America, European Union and Japan are 1434,1163 and 447. In addition, 2.7, 5.1 and 3.7 percent of tariffs are upper than 15% in these countries respectively. Moreover, the tariffs are various among different goods which means they have the authority of bargaining. All in all, these differences between Iran and WTO members, can’t cause any significant problem for Iran because there is an opportunity for new members between 5 to 10 years in order to modify tariffs.
As many specialists recognize, several advantages and opportunities exist for Iran regarding accession to WTO:
- Removal of obstacles, restrictions and sanctions.
- Creating new careers, exchange of workforce with other members and lower cost of resources.
- Iran’s share in international markets will be increased
- Getting benefits of WTO’s consultation and supportive systems in order to find a solution for commercial disputes will be possible.
- Improving Intellectual Property Rights condition.
- Attaining up to date technologies and technical knowledge in different sectors of economy.
- Increasing non-oil export.
- Foreign fund raising.
- Removal of inefficient industries
- More access to international financial institution’s loan and financial facilities
On the other hand, we may face several problems such as:
- Need to modify some political and microeconomics policies.
- Necessary changes in traditional governmental trade rules
- Transferring governmental ownership to private sector.
- Higher inflation rate.
- Possibility of trade deficit caused by increase in import.
- Many domestic corporates will be deal with bankruptcy as they won’t be able to compete anymore with international corporates.
Finally, there are some requirements that Iran needs to meet in order to accede WTO:
- Improvement in economic infrastructure through recognizing our strengths and advantages in different economic sectors
- Passing rules in order to comply country’s laws such as work, foreign investment, insurance, costumes and tax with WTO obligations.
- Improvement in quality of goods produced by domestic manufacturers with competitive prices.
- Increase in export’s share of industrial products and non-oil goods
- Establishing free zones and economic zones.