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    Trade for Peace: Case for Iraq

    Improving trade policy has the potential to transform Iraq’s economy. Could it also help in building peace and security? 

    By Juneyoung Lee, Derek Carnegie and Eric Buchot

    Years of conflict in Iraq have killed tens of thousands, displaced millions, and impeded economic and social development. The country’s post-conflict reconstruction is complex and challenging. The main goal of expanding trade will be improving broad-based economic growth. Additionally, diversifying the economy, expanding exports and committing to rules-based trade may play an important role in peacebuilding. By supporting improvements to trade policy and WTO accession, increased predictability, stability, and transparency could therefore be among SAAVI’s indirect benefits for Iraqis.

    Despite longstanding theoretical disagreements, there is a growing body of empirical evidence that trade and peace are closely connected. Liberal economic thinking has typically emphasized how deeper trade ties make peace more attractive by raising the opportunity costs of conflict. This position suggests that countries and groups engaging in mutually beneficial exchange have a strong incentive to maintain good relations. While often discussed with states as the primary unit of analysis, the same logic also suggests that increased exchange between regionally or otherwise fragmented groups is a disincentive to conflict between non-state actors.

    And at an individual level, trade-driven growth and the expansion of income-generating opportunities (including by attracting new inflows of foreign direct investment) can discourage involvement with armed groups. Trade that builds young peoples’ hope by creating jobs and entrepreneurship opportunities may therefore be particularly important in fragile countries such as Iraq with many unemployed young people. In targeting youth (among other groups) and in reinforcing social and economic cohesion, SAAVI’s components on developing agriculture and agri-food value chains also help to encourage peacebuilding.

    Furthermore, engagement in international trade both requires and motivates the establishment of effective and coordinated institutions, including rules-based governance. Such institutions, in turn, provide alternative means of managing disputes and are essential to preventing the escalation of tensions and to peacebuilding in post-conflict contexts.

    WTO membership is an excellent example of participation in a rules-based global/multilateral system that fosters the emergence of resilient institutions and modern legal frameworks, and promotes good governance. Accession is essentially an institution-building process and is based on the principles of non-discrimination, transparency, and the rule of law. The WTO also provides a platform for cooperation among and assistance for fragile and conflict-affected states, such as through the Trade for Peace Programme launched in 2017, which advocates the WTO accession process as a pathway to economic growth, development, and security.

    SAAVI’s Expected Result 4, which aims to improve trade policy for enhanced performance and value chain competitiveness, is thus highly relevant to peacebuilding through institution-building. This is to be implemented through direct support to WTO accession, legislative and regulatory reform, capacity development, and fostering inclusiveness and participation not only for the public sector but also the private sector.

    At the same time, it must be acknowledged that trade is not a cure for all ills. Realizing the potential of trade in reducing the risk of conflict through inclusive growth, economic integration, and improved governance is a long-term project in post-conflict contexts. Nevertheless, rethinking trade policy in Iraq can contribute to these efforts.

    This is a joint ITC-WTO sec article.

     

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