Iraq hikes duties as Arab states battle inflation

BAGHDAD: As other Arab states scramble to prevent Egypt and Tunisia-style uprisings sparked in part by rising prices, Iraq is going its own way by raising tariffs on a range of goods from bottled water to bayonets.

The new law, which takes effect on March 6, replaces a variety of past regulations, including some dating back to the time of the Coalition Provisional Authority (CPA), the occupation authority charged with administering Iraq after the 2003 US invasion.

Tariffs for rice, sugar and antibiotics will remain at five percent, while duties for cars will rise to 15 percent.

The 794-page list also includes items such as castanets and bayonets, which carry tariffs of 20 percent and 25 percent respectively, while bottled water and soft drinks will incur a maximum import duty of 80 percent.

"The new scheme aims to protect the economy and the Iraqi market," Hatem Hashem, head of international trade at the commerce ministry, told AFP.

"Many (local) industries have disappeared because they were not able to compete with cheap goods that have flooded the market after 2003," he said.

"Of course prices will go up, but we think it will be acceptable," said Hatem, arguing that the scheme would prevent low-quality goods from entering Iraq.

"The Iraqi government wants to stimulate industries which are going to employ people and decrease dependency on oil," he said. A UN report released to the press on Monday noted that the oil sector accounts for 65 percent of Iraq's economy but just one percent of jobs.

"Increasing tariffs may not be the best way to do so because the immediate transition period comes at a time of unprecedented unrest in the region, unrest that is fuelled by disenchantment surrounding high prices and rampant unemployment," he added.

Iraq's inflation last year was 3.3 percent, according to the ministry of planning. Saffar said that could rise to 5.6 percent -- even without accounting for the new tariffs.

"The government will have to consider how it will explain the price rise to the people," Saffar said.