Iraq, with its privileged geographical location, plans to improve the performance of its three free-trade zones. It also intends to establish new free-trade zones as part of efforts to diversify its imports and lessen its reliance on oil revenues.
Three "free zones" currently operate in Iraq: Basra in the south, Nineveh in the north and al-Qaem in the west. Trade has slowed in al-Qaem, which is adjacent to the Syrian border, since the armed Syrian conflict breached Iraq’s border.
Free zones are small districts within Iraq's political boundaries, but they are considered outside the country’s customs border. As a result, everything that comes in and out of the free zones is not subject to import and export controls and duty.
Earlier this year, Iraq agreed to a contract designed to create the first free zone in Baghdad. Some hope that these plans will help stem the tide of growing unemployment in Iraq.
The Free Zone Law in Iraq affords extensive privileges to investors. These include industrial production and consumption activities, including the assembly, manufacturing, packing, warehousing, re-export, trade and transportation, banking activities, which include insurance and reinsurance, and professional support services.
The Free Zone Authority, part of the Iraqi Ministry of Finance, is reported to have signed an investment contract for public transport and civil aviation affairs in the free zone in Khor al-Zubair in the Basra province.
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