The process of Iran joining the World Trade Organization is very complicated and controversial. On 19 July 1996, Iran submitted the official application to join the World Trade Organization. The problem is that Iran’s decision to become part of this global organization is 20 years old. It is one of the longest cases in the history of the World Trade Organization. Moreover, the dilemma is that the process of negotiations has not started yet. It means that other countries have doubts regarding seeing Iran as a part of the membership due to its nuclear program and tense relations with the USA. Iran has been preparing for entering the organization for 20 years implementing the economic reforms and tackling the diplomatic mobilization required for admission. As a result, the current essay intends to describe the process of Iran joining the World Trade Organization and the reasons for the rejection of the country by the organization.
The Peculiarities of the Process of Iran Joining
The process of Iran joining the World Trade Organization is related to many procedures that resulted in failure and lack of final decisions. As Iran applied for membership in 1996, it becomes evident that the country has been doing the necessary economic and political changes since the date of application. In 2005, the working parties were established to observe the economic and political situation in Iran (Alavi 139). In 2009, there was a memorandum devoted to the question of Iran joining the World Trade Organization (Alavi 138). The first request for participation as an observer was rejected in Singapore. The second rejection was related to the time when the USA made the decision not to support the consensus. It means that the trade and economic aspects of Iran-US relations have become a hindrance for political, strategic, and diplomatic considerations.
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The accession steps also included questions, replies, meetings of the Working Party, submitting the necessary documentation, and market access negotiations. However, Iran has only the observer status as the USA blocks its bid despite the consistent economic reforms and partnership with other countries. One should also mention that Iran showed its export growth in 2011 receiving praise from the World Trade Organization. By postponing the decision about accepting Iran, the World Trade Organization shows its doubts regarding the country’s place in the global area (Aslan & Bhala 1).
Iran believes that membership in the World Trade Organization is not a political process so the organization should not be influenced much by the USA. However, the members insist that the process of negotiation and the skills to negotiate are also crucial. Consequently, Iran needs experienced negotiators to overcome challenges in accession talks. The intensive negotiations lead only to bigger misunderstandings around Iran’s nuclear activities that deprive the opportunity for integrating more deeply into the global economy (Alavi 140). One should say that Tehran agreed to curb the sensitive parts of its program to receive an easing of international sanctions. However, the World Trade Organization does not do any action in its decision. The reasons for postponing the procedure and slowing the progress of the Iran integration are the following: high interest rates, low energy prices, and sanctions. Even the world’s biggest gas and oil reserves cannot increase a country’s economy, if it is not supported globally (Ahmad ad saee & Piltan 171).
Iran’s desire to become a member of the World Trade Organization is related to the hopes to attract billions of dollars of foreign investment to create a favorable investment climate and free trade zones. Iran has a powerful domestic economy. However, the World Trade Organization can provide the globalization of economy that presupposes expansion of scale, deepening social communication, and dimension growth. Iran needs such integration to have effective and constructive communication with the world. One should also mention that membership in the World Trade Organization will create collaboration between domestic and foreign producers and cause balanced growth in many areas.
The Reasons for the Rejection of the World Trade Organization
The reasons for the rejection of Iran joining the World Trade Organization are diverse. The country has received rejection six times and mainly due to the position of the USA. It means that Iran should receive approval from all participants to gain membership. The first reason is the political dispute with the USA that follows its geopolitical interest and regards Iran as a hostile and terroristic country. The second reason is that the obstacles still exist. Consequently, Iran’s membership in the World Trade Organization remains uncertain. Another reason for the rejection is that the country has not powerful economy to operate in the competitive world economy. Moreover, some economic experts state that present circumstances are not suitable for Iran’s membership. The members of the World Trade Organization postpone their decision as they will be able to affect only 70% of the Iranian society (Aslan & Bhala 1). However, they want to control the country.
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The reasons for the rejection of Iran by the World Trade Organization are also related to the requirements that cannot be fulfilled by Iran. The membership demands compliance with global free trade rules, tariff cuts, and trade deregulation. However, experts believe that they can harm domestic manufacturing industries. The private sector states that gaining membership will provide a rising market share for both domestic and foreign industries, increasing foreign investment, economic growth, and transparency of the economy and politics of Iran. Another reason for rejection by the World Trade Organization is the lack of a consensus-based decision-making process in the negotiations between Iran and the members of the World Trade Organization. It means that both legal and technical perspectives and delayed accession presuppose more expensive membership for Iran. The procedure of accession to the World Trade Organization is severe and long-lasting when it has to deal with such countries as Iran, especially when it refers to the relations with the USA (Ahmad ad saee & Piltan 171).
The members of the World Trade Organization believe that Iran’s production capacity does not reach a favorable level. It means that the country should adopt a certain strategy to utilize its potentials. Moreover, Iranian experts should not only penetrate the world markets but also be in a position to complete them. Iran should start from its industries improving and growing as it can result in an advantage over the rivals (Dombey & Dinmore 1). It means that most barriers are related to the economic potential of the country.
The Current State of Affairs of Iran
Iran has all perspectives to become a part of the global area and the World Trade Organization. First, Iran belongs to the 18th largest economy in the world, especially when it comes to GDP. Consequently, many countries see it as a competitor. Second, Iran tries to fulfill all demands and requirements of the World Trade Organization improving its trade status and political image. One can distinguish the internal and external challenges that prevent Iran from becoming a member of the World Trade Organization. One should say that the relationships with the USA are the main hindrance to Iran’s operation in the global environment. The disputes between Iran and the USA over Iran’s nuclear program create a cold and tense relationship between Washington and Tehran. It means that resolving political issues between both countries is the way to resuming Iran’s accession to the World Trade Organization.
The requirements of the World Trade Organization to Iran are the following: protecting the environment in member countries, sustainable development, expansion of production and trade, full employment, and raising living standards. Moreover, the World Trade Organization demands true non-discriminatory treatment through adherence to the obligations of GATT Articles I and III and reductions in tariff and non-tariff barriers. Moreover, the integration into the World Trade Organization presupposes the privatization of state-owned and state-trading enterprises.
However, one should say that many people of Iran are against its membership there as it can lead to the decline of the domestic industries as the country deals with poor manufacturing infrastructure. The integration into the World Trade Organization is necessary for Iran as it could be the catalyst for the liberalization of its economy. Moreover, it would be the way to deepen and broaden the integration of Iran’s economy into the world trading system. However, the problem is that the country does not want to lose its military defense. The USA believes that Iran wants to build a nuclear weapon to fear the Europeans. Indeed, Iran’s nuclear program is peaceful, and Iran also does not want to weaken its position remembering the past military experience.
Currently, Iran is seeking to diversify its economy. However, being outside the World Trade Organization means having higher tariffs on the products compared to its competitors in member countries. Iran’s key exports include carpets, petrochemicals, pistachios, steel, and many other metals. However, Iran should also open its economy to foreign services and goods. Iran should not rely on oil revenues only as oil prices are changing, and oil deposits are not everlasting. Consequently, the World Trade Organization demands non-oil foreign exchange revenues. Non-oil foreign revenues of Iran consist of engineering and technical services, tourism and cargo transit, and export of goods. It means that the country should develop these areas to become more competitive in the global market.
In conclusion, one should say that the process of Iran joining the World Trade Organization is full of challenges related to internal and external politics and the economy. Moreover, the procedure touches the military activity of the country, as well. The reasons for the rejection of Iran’s membership in the World Trade Organization are the following: the political disputes with the USA, lack of navvy negotiators, internal and external challenges, and economic issues. One should say that the impact of the USA on the World Trade Organization is the most crucial and determinant in the acceptance of Iran. Moreover, Iran has a nuclear program that is not acceptable for the USA and many other members of the World Trade Organization.
The current state of affairs in Iran is debatable as there is no unity even among citizens about Iran’s membership in the organization. Protecting the environment in member countries, sustainable development, expansion of production and trade, full employment, and raising living standards are the requirements of the World Trade Organization that create the challenges for Iran. Iran has all the economic possibilities to become a part of the global organization. The main issue is to change the strategy in negotiations and fulfill all the requirements. Moreover, the country should regulate its export and import processes.