Directorate-General for Trade

Iraq

The EU is a major trading partner for Iraq - second after the USA. Total bilateral trade amounted to over €10billion in 2008. This trade shows a huge surplus in favour of Iraq due to oil imports, amounting to up to 99.9% of all EU imports from Iraq. The EU is the biggest source of Iraqi imports after Syria and Turkey.

The EU sees closer trade ties as an important part of the reconstruction and development of Iraq. There is very substantial potential for bilateral trade between the two economies and investment from the EU would have a highly beneficial effect on Iraq's development.

Commission strategy for Iraq

The European Commission's strategy for Iraq was set out in the 2004 Commission Communication "The EU and Iraq: a framework for engagement " , reinforced by the 2006 Commission Communication "Recommendations for renewed engagement with Iraq " .Both documents aimed to support Iraq's political transition to democracy and the establishment of a market economy. They also support Iraq's integration into the international community and within the region. In the area of trade, the Communication proposed the negotiation of a Trade and Cooperation Agreement (TCA) as an appropriate first step to develop a partnership between the EU and Iraq. until the EU has a contractual relationship with Iraq and as Iraq is not a member of the WTO, trade between the two economies is conducted in accordance with our general import regime. Iraq requested WTO accession in September 2004 and the EU supports of Iraq's accession to  the WTO.

PCA Negotiations

The negotiation of a Partnership and Cooperation Agreement (PCA) between the EC and Iraq was concluded on 13 November 2009. The Commission had been negotiating this Agreement with Iraq since November 2006 on the basis of a mandate from the Council of 10 March 2006. As regards trade issues the (PCA) is a non-preferential agreement that incorporates basic WTO rules (though Iraq is not yet a Member of the WTO) with substantial market access for to EU and preferential elements namely in public procurement  and services and investments.

The text of the Agreement should be initialled in 2009. Signature and provisional application should take place in the first semester of 2010.