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Between January 1995 and December 1999, 134 countries embraced membership in the World Trade Organization (WTO). While WTO’s share in the global trade amounts to 80% at the moment, other countries, like China, which play a considerable role in the world trade, persistently follow up their accession to the Organization. It seems that in a near future, all governments have to consider WTO membership not just as a choice, but as an inevitable necessity for their economic survival. The following article focuses on the outcomes of Iran’s membership in the Organization, a topic that has attracted the attention of economic experts for quite a long time:

Raison D’être: Until the end of the eighteenth century, most economists emphasized that countries should try to export more of their goods and refrain from importing commodities made in other countries. With the Industrial Revolution and the acceptance of Adam Smith’s belief that “neither gold nor silver, but work would create wealth”, the idea of expanding, and removing barriers in the way of exports, was strengthened. During the Great Depression of 1920’s and 1930’s, it was believed that trade barriers deepen the depression and some even say that such barriers were a reason behind the World War II. Based on this concept, the GATT [General Agreement on Trade and Tariff] was founded in 1947 and WTO was born in line with the same policy of trade liberalization. Therefore, the raison d’être of WTO is actually the removal of trade barriers among member countries based on the belief that such an approach would improve economic conditions and welfare of all nations.

Iran’s WTO Membership: Membership in WTO is not obligatory for any country, but is a voluntary measure for benefiting from the advantages of free trade with other member countries. What sort of outlook should a country like Iran adopt about its joining WTO and what strategies should it devise for benefiting from those advantages? When a country accepts the whole WTO’s Articles of Association, there is no obstacle in the way of its membership in the Organization and there is no need for negotiation. Talks are only necessary when a country wants to join WTO and keeps its protectionist polices such as tariff and import limitations for some time. As a developing country, Iran also enjoys the right of negotiating with other WTO members in case it wants to continue its protectionist policies. Despite the fact that issues related to foreign policy may cause some certain countries to oppose granting concessions to a new member, for a complete membership, a country may be given some temporary concessions. There are three perspectives with respect to Iran’s membership in WTO: According to the “trade perspective”, Iran should submit its application for WTO membership as soon as possible, because should it fail to do so, it would become isolated in the global trade.
Based on the “development perspective”, while more countries are joining WTO, it would be to the detriment of the Islamic Republic to remain out of the Organization. At the same time, this perspective does not insist that Iran should submit an application very soon. Before considering the membership, this country should devise a comprehensive plan for its development and defines its long-term development goals.
The third perspective – or “managerial perspective” – is, in fact, a combination of the first two opinions. It believes that Iran’s industrial manufacturing units should be able to enter into competition in a free trade environment, but they should enjoy effective management and optimal organization for producing competitive products.
Rare is a person who denies the necessity of Iran’s membership in WTO; however, there is no consensus over the prerequisites for such a membership. Based on what was said above, the answer to the question of Iran’s WTO membership can be positive provided that the grounds – necessary economic structures and effective management – are prepared for it. Otherwise, Iran’s joining the World Trade Organization may bring about technological and economic backwardness and if Iranian companies cannot compete with foreign rivals, their survival, as well as the current employment opportunities, may be endangered.

Strategic Planning: Membership in the World Trade Organization means destruction of all trade barriers including positive and negative ones. Positive barriers are the concessions given to domestic companies, so that they can compete with the imported goods or services. Negative barriers are the regulations applied by foreign countries against the commodities which have been produced in other nations. For Iranian products, positive barriers are tariffs and bans against the import of foreign goods; there are also some protectionist policies for exportable Iranian goods.
Regarding negative barriers, one may refer to governing regulations in the transfer of export forex. Joining WTO means accepting the principle of free commerce and elimination of all arrangements aimed at protecting domestic industries. One concession that may be given to a new WTO member is the gradual removal of trade barriers. This may also be granted to Iran, if it is admitted as a member and other members agree to give such a concession. It means that Iranian companies have an opportunity to increase the quality and quantity of their products in order to compete with foreign rivals for which they need a strategic plan. This strategic plan can be used in two fields: First in new investments and the second in planning by operating companies.
The problem with operating companies, especially public joint stock businesses, is that they usually do not enjoy an effective management. These companies, which survive on oil revenues, cannot overcome the challenges of a free trade, including competition with foreign companies. These enterprises are among the first victims of Iran’s membership in WTO, unless their management becomes aware of its responsibility for preserving the company’s interests before membership. All Iranian companies should adopt strategic plans and prepare themselves for future imperatives.
In a nutshell, trade liberalization may lead to the closure of many Iranian manufacturing units, if they cannot realize the above prerequisites and review and improve their structures and management styles. Another issue which Iran’s membership in WTO may set forth is marketing. A WTO member should not expect to benefit from the free trade within the Organization unless its companies start to market their products effectively. It should not be forgotten that competitive conditions are not an opportunity for selling goods to consumers who have access to products made by rival companies. Such competitive climate is not only a guarantee for the success of companies, but poses a challenge to all companies, which should constantly adapt themselves to the market conditions and fight with their rivals.
Unfortunately, Iranian companies, which have been protected by government policies for a long time, seem to be unable to market their products at the international level. With the advances in technology in the past decade, global companies use the state-of-the-art methods in marketing. The most recent example of these high-tech methods is e-commerce, e-finance, etc. Iranian companies have not yet explored many of these methods. If the membership in the World Trade Organization is to increase the export of Iranian-made products and enable the companies to enter into competition globally, corporate management should be fully familiar with such methods, and they should be included in companies’ strategic planning. Meanwhile, it is advisable for the government to modernize the trade, provide soft- and hardware facilities in banking, commerce and other economic fields.