Azernews.Az

By Sara Rajabova

Iran would greatly benefit from joining the World Trade Organization (WTO), professor of economics at U.S. Northeastern University, Kamran Dadkhah told AzerNews.

Commenting on the Iranian government's intention to join the WTO, Dadkhah said that such membership would allow the country's products to have access to the markets of other member countries and to compete on equal terms (with some exceptions) with their competitors.

He not that Iran, which became WTO observer member in 2005, would enjoy the most favored nation status.

"Furthermore, should a dispute arise, Iran can resolve the issue through the WTO," Dadkhah said.

Iran officially submitted an application to join the WTO on 19 July 1996. From July 1996 to May 2001, Iran's application had not been considered, mainly as a result of the U.S. objections and the U.S. veto power in the WTO Council.

Head of Institute for Trade Studies and Research, Mehdi Fat'hollah said recently that joining the WTO is among the top priorities of Iran's Industry, Mine, and Trade Ministry.

"Indeed, it is imperative for Iran to join the WTO. Further development and growth of the Iranian economy is contingent on export promotion. In addition, to lessen the dependence on oil revenues, Iran has to diversify its exports," Dadkhah said.

He went on to say that joining the WTO is a necessary condition for the export promotion and diversification.

Dadkhah said Iranian industries are inefficient and operate under tariff protection.

"Joining the WTO will open the door for imports to compete with protected industries," the Iranian expert added.

However, he noted that in the short run this could cause problem, but the Iranian economy cannot be viable unless it is integrated into the world economy.

Obstacles on Iran's way to join WTO

U.S. Northeastern University professor says the sanctions imposed on Iran are seemed as one of obstacles for the country regarding the issue, thus this problem is needed to be solved before joining the WTO.

Dadkhah noted that the sanctions could be an obstacle for Iran's joining the WTO, saying the country could not enjoy the benefits of the organization if it is under sanctions.

"Indeed, the United States or other countries may prevent it from joining unless the current nuclear issues are settled and sanctions are lifted," he said.

Commenting on the United States' position regarding the issue after reaching an interim deal with Iran in Geneva over its nuclear program, Dadkhah said it takes more than an interim deal for Iran to join the WTO.

"We should note that the process to join the organization may take many years. Thus, the United States may allow the process to start but serious progress would be contingent on a permanent solution, which would result in the lifting of sanctions, and establishment of constructive relations between Iran and the United States," Dadkhah said.

Iran not ready for joining WTO, needs to transform industry

Dadkhah further explained that Iran is not currently ready to join the organization.

"When Iran joins the WTO it has to accord other countries the same most favored nation status that it would enjoy in those countries," he noted.

"Furthermore, once foreign goods pass through the customs and enter the Iranian market, they have to be treated the same as domestic goods. The problem is that Iranian industries are heavily dependent on import of raw material, semi-finished goods, spare parts, and capital goods using artificially cheap foreign currency. In addition, many of them are dependent on government protection and subsidies, and are unable to compete on equal terms with foreign products. Thus, should Iran join the WTO today, many of its industries would go bankrupt," Dadkhah said.

He said Iran needs to devise a plan to transform its industries and the economy.

Dadkhah noted such a plan should reduce and ultimately eliminate industries dependence on government subsidies and protection.

"In particular, a free market for foreign currencies should be formed. The government should refrain from manipulating the exchange rates using oil revenues," the expert said.

Iran has long way ahead to gain WTO membership

After 12 years of negotiations between the member states, the World Trade Organization finally signed a deal intended to boost global trade on December 6.

By simplifying customs procedures, the pact would reportedly boost global trade by $1 trillion, and create job opportunities for 21 million people.

Mohammad Reza Sabzalipour, Head of Iran World Trade Center, said to Azernew that Iran will not benefit from this global opportunity, unless it joins the organization.

"The world powers and the 159 member states of WTO will not consider Iran as a reliable partner. I believe that it's nearly impossible for Tehran to join the organization in the next 10 years," Sabzalipour said.

He noted that the most important obstacle is the United States' negative vote which will surely affect the other members' decisions.

"A realistic approach will show us that the United States' strong economy gives the country a special position, which brings other WTO member states under Washington's influence," Sabzalipour explained.

He added that the sanctions imposed on Tehran are also another cause for the delay and Tehran needs to accept harder conditions to join the organization.

"The World Trade Organization always advises the countries that want to join the organization to first gain political support of the member states. So as long as Iran has political disputes with other countries, especially the world powers, the country will lack their political support," Sabzalipour said.

"Therefore, if we think that they'll put aside the political disputes and just focus on the economic aspects during the negotiations, we certainly have a wrong attitude," he said.

Sabzalipour went on to note that the new deal has facilitated transactions between WTO member states, so the volume and value of inter-organization trades will rise significantly in future.

He said, however, the member states just trade with each other and will gradually avoid trade transactions with non-members such as Iran.