# Presentation: 449461

## DOING BUSINESS IN IRAQ

**Mercedes Carmela Fitchett**
***Former U.S. Commercial Officer, Baghdad, Iraq***

## U.S. Commercial Service in Baghdad, Iraq

**Established in July 2004 with opening/transition of Coalition Provisional Authority (CPA) to U.S. Embassy. **
**Purpose**
- Primary U.S. Embassy liaison with U.S. business community in Iraq.
- Supports the U.S. Embassy efforts to improve the commercial environment in Iraq.
- Coordinate our work with the Iraq Task Force in Washington, DC, local U.S. Export Assistance Centers (USEACs) and Overseas Offices

## U.S. Commercial Service Baghdad

- Structure of Office
- Senior Commercial Officer:  Greg Wong for a minimum one year tour
- Deputy Senior Commercial Officer:  David Brantley, for a 3 to six month tour (on detail from Technology Administration)
- Four CS staff – Foreign Service Nationals (FSNs)
- Dahir:  Oil, gas, transportation
- Firas:  Information Technology
- Havel:  Medical equipment/service, Kurdistan
- Warka: Commercial Clerk

## CS Baghdad in the Making

-   Since July, office in ramp-up/hiring/training mode.
-   Four of six positions filled
-   Iraqis are dynamic, committed and learning very quickly
-   In-house training program
-   AmChams
-   Iraqi company regisration
-   English Tutoring
-   Training in Regional offices (Kuwait) and HQ

**Notes:**
Entering the Market: serious travel advisory in effect by the U.S. Dept. of State.  If you are traveling to Iraq:	(1) Hire security
	(2) Secure appropriate Insurance
	(3) Hire a guide/translator – a “must” to get around safely
	(4) Register your presence with the U.S. Consul General in Iraq.

## CS Baghdad Services & Products

** ****Working closely with our USEACs and their clients**
**  ****Not yet providing full scale of services – ICP, ADS, Gold Key services**
**  ****Case by case review of requests – prioritizing for the future **
** ****Majority of requests thus far are the following:**
**  ****Ministry Tender Advocacy**
**  ****Iraqi company due diligence**
**  ****Identification of agents and distributors**
**  ****Individual counseling/meetings in Baghdad**

##  Kurdistan

- Kurdistan, what is it?
- Area of northern Iraq run autonomously from Baghdad since Gulf War I
- No U.S. Embassy offices in Kurdistan – it’s safe in Kurdistan so no U.S. troops, hence, no U.S. Embassy
- U.S. military takes its R&R in Kurdistan
- Two regional power centers in Erbil and Sulamaniyah
- Erbil is run by the KRG and Barzani’s group
- Sulamaniyah is run by the PUK and Talibani’s group
- Each has an office in Washington, DC
- Working more closely together for political necessity (civil war in mid-90s) – establishment of Kurdish slate for the upcoming elections
- Because of stability and safety, economic activity in these areas is booming
- Additional reconstruction activities from Oil For Food monies (approximately $1.3 B), foreign/domestic investment.
- Opening of airports in each city, hopefully Spring 2005, with international links – breaks current geographical isolation of Kurdistan
*U.S. Embassy paying more attention commercially to Kurdistan – highest levels now recognize this.*

**Notes:**
On September 19th, 2003, the CPA and Iraqi Governing Council put into effect a new Foreign Investment Order (CPA Order #39 – Amended by Order 46), Tax Order (CPA Order # 37), and Tariff Order (CPA Order # 38 – Amended per order 70).
Investment - intended to attract new foreign investment to Iraq – excluded sectors include insurance and oil.  Foreign firms may wholly open and own companies, or buy 100 percent of Iraqi businesses, receive national treatment, and have an unrestricted right to remit profits and capital.  Foreigners may not own Iraqi property, but can lease it up to 40 years or duration of foreign investment. 
Taxes - the highest marginal tax rate on personal and corporate income tax is 15 percent.  
Tariffs - CPA Order 54 (amended by Order #70) introduced a 5 percent reconstruction levy on most goods imported into Iraq.  Revenue generated by the levy will be deposited in the general fund to be used for the betterment of the Iraqi people.  Certain goods, including food, medicines, medical equipment, books, clothing, and goods imported for humanitarian assistance are exempt, as are public and private organizations involved in the reconstruction of Iraq.  People entering the country with goods valued under 500,000 Iraqi Dinars (intended for personal use and not for sale), are also be exempt. 
IPR - The Coalition Provisional Authority, with the concurrence of the Governing Council, issued Order No. 80 ("Amendment to the Trademarks and Descriptions Law No. 21 of 1957"), Order No. 81 ("Patent, Industrial Design, Undisclosed Information, Integrated Circuits and Plant Variety Law"), and Order No. 83 ("Amendment to the Copyright Law). These orders are designed to bring Iraq's laws on patents, trademarks, copyrights, industrial designs, undisclosed information (trade secrets), integrated circuits and plant varieties up to current internationally-recognized standards of protection, in particular those required by the World Trade Organization.
Banking Order #40 *(Rescinded and replaced by Order 94)*:  Foreign banks are free to enter Iraq and will receive equal treatment with Iraqi banks. On October 15th, Iraq launched a new currency, the New Iraqi Dinar (NID), which is floated against the world's currencies.
The Trade Bank of Iraq (TBI) was established to finance purchases by the Iraqi Ministries.  JP Morgan Chase & Co. serves as the consortium operator.
	* As of late July, the TBI has issued 325 letters-of-credit, totaling $1.28 Billion, covering imports from 45 countries. At least 21 LOC under oil-for-food.  
	* One letter of credit insured by Export-Import Bank.
Business Centers operating in Baghdad, Kirkuk and Mosul provide an array of services to foster business relationships between Iraqi firms and international and regional partners.
Iraq Stock Exchange (ISX) started trading at 10am on June 24, 2004.  Foreigners are allowed to hold stock.  The exchange is open for 2 hours a day twice a week.

## Thank You!Questions Welcome

***Mercedes Carmela Fitchett***
***U.S. Commercial Service***