Trade

Under the Hussein regime, all trade with Iraq was subject to government licensing. Under CPA Order # 12, all tariffs, duties and fees for goods entering or leaving Iraq were suspended through December 31, 2003. The same Order prohibits several exports from Iraq, including many foods products and machinery parts. (Manifests are checked for contraband goods.) A List of these products can be found in the Department of Commerce's Iraq Frequently Asked Questions
(http://www.export.gov/iraq/commercialenv/faq.html).

CPA Orders #38 and #47 address the current trade regime. At the earliest, the end of March 2004, will see the beginning of a five percent Reconstruction Levy on all goods imported into Iraq. Exemptions from this import duty include food, medicine, clothing, humanitarian assistance, and UN Oil-For-Food program imports. Products for the CPA, Coalition Forces, and reconstruction contractors are also exempt. Order #38 contains the full list of exemptions.

CPA Order #16 details current regulations with respect to Iraqi borders, points of entry, and current Iraqi passports. CPA Public Notice #3 authorizes Iraqis to establish direct relationships with international trading agencies and companies.
United States export licensing requirement for products entering Iraq can be found in the Frequently Asked Questions document (http://travel.state.gov/iraq.html).

Trade Finance

While the U.S. Export Import Bank (Ex-Im) is still closed to routine trade finance transactions with respect to Iraq, it will consider applications for exports to Iraq that involve buyers or letters of credit from banks located in third countries.

Ex-Im also is accepting applications under its Working Capital Guarantee Program for subcontractors providing goods and services to Iraq under U.S. Government reconstruction contracts.

The CPA established the Trade Bank of Iraq (TBI) as a separate Iraq government entity and export credit agency to facilitate the import and export of goods and services to and from Iraq. The TBI provides expertise and a point of contact within Iraq to bolster confidence between trading partners that funds will be received in exchange for goods delivered. The TBI will work with Iraqi commercial banks and the Operating Consortium, led by J.P. Morgan Chase with the participation of 15 countries. The Trade Bank of Iraq has issued over $175 million in letters of credit to international suppliers in order for ministries to import essential goods and equipment. There are over $120 million more in letters of credit pending issuance.

TBI will also cooperate with other export credit agencies, such as Ex-Im and the Export Credits Guarantee Department of the United Kingdom. Ex-Im approved a $500 million facility that will provide short-term insurance for TBI to cover imports from U.S. suppliers. The TBI is discussed in detail in CPA Order #20.