Iraq and the application of the ASYCUDA system
Iraq and the application of the ASYCUDA system
1-10-2026
The launch of the latest package of customs measures, which included the implementation of the ASYCUDA system, the pre-calculation of customs tariffs, and the collection of tax deposits, along with the activation of quality control procedures, coincided with a number of challenges facing the general budget, most notably the decline in public revenues. This timing has led some to believe that the main objective of these measures is to increase non-oil revenues to compensate for the shortfall in oil revenues.
However, this perception does not reflect the essence of customs policies or the fundamental purpose of regulating international trade. The true objective of any effective customs policy revolves around four main pillars: protecting domestic products, improving the trade balance, guiding consumption patterns in line with the state’s economic goals, and increasing non-oil revenues as a secondary outcome, not an end in itself.
Therefore, the belief that these measures are intended to compensate for the shortfall in oil revenues is unrealistic, as customs tariff revenues are not expected to exceed 8–10 trillion dinars annually at best—an amount that covers only one month’s budget expenditure. Indeed, a five-dollar drop in the price of a barrel of oil would completely wipe out these additional revenues.
The primary objective of these measures is to regulate imports and redirect consumption patterns towards alternative economic activities that contribute to stimulating non-oil sectors and increasing GDP. While the idea is sound in principle, the implementation mechanism has resulted in a clear economic shock, the effects of which have not been limited to citizens but have extended to merchants and private sector employees, particularly those working in commercial companies that now face the risk of declining revenues. This may force them to reduce their expenditures, primarily by cutting staff, thus threatening job security.
What should have happened to avoid this shock was a phased approach to implementation, rather than imposing all the measures at once. The ASYCUDA system, pre-assessment, tax deposits, and quality control were applied to all goods simultaneously, whereas it would have been more appropriate to start with the highest-value and most impactful goods, then gradually expand to include the rest. Furthermore, some systems, such as tax deposits and quality control, could have been postponed to later stages, after ensuring the effective and stable implementation of the ASYCUDA system.
As for customs tariffs and their calculation mechanisms, these also require a comprehensive review, particularly in the electrical and electronic appliances sector. It is impossible to impose uniform rates on all these devices without considering their importance to Iraqi citizens or the possibility of manufacturing them locally in the future to meet increasing demand.
It was essential to form a specialized customs tariff committee tasked with developing a clear and publicly declared vision for customs policy. Based on this vision, tariff rates would be determined for each product, and even for each country of origin. The same logic cannot be applied to countries with which Iraq has a trade surplus, such as China, India, Europe, Japan, and Korea, and to countries with which it suffers a significant trade deficit, such as the UAE, Turkey, Iran, and Jordan.
The success of a tariff policy is not achieved through rigidity or automatic application, but rather depends on the ability to continuously adapt to market changes, interpret economic indicators, and assess the policy’s impact on other sectors. If this policy remains rigid and unalterable according to its established vision, its failure to achieve its objectives becomes almost certain.
Engineer Manar Al-Obaidi
rawabetcenter.com
