Iraqi Government’s Export Restrictions: Sulaimani’s Factories Impacted

Ongoing Trade Restrictions Affecting Kurdistan’s Factories

Seven months have elapsed since the Iraqi government imposed restrictions on the export of goods produced by factories in the Kurdistan Region, affecting their ability to deliver products to central and southern Iraq.

A representative from the Sulaimani Chamber of Commerce indicated that while there has been a limited reopening for certain factory exports, it comes with stipulations requiring compliance with Baghdad’s terms. "Only those willing to agree to Baghdad’s conditions will be allowed to export," he remarked.

In early August, the Iraqi government initiated a halt on the exportation of goods from Kurdistan to the lower and central provinces. The Sulaimani Chamber of Commerce noted that some factories possessing industrial licenses could resume operations. However, the Erbil Chamber of Commerce stated that factories in the region must first secure an official license from Iraq.

"We have participated in numerous discussions with Iraqi trade officials, including a representative of Prime Minister Mohammed Shia Sudani. Ultimately, a decision was made to permit the export of some goods from the Kurdistan Region; however, restrictions remain in place for others," said Aram Baban of the Sulaimani Chamber of Commerce.

Baban emphasized that the products now eligible for export are from factories that contribute significantly to the region’s industrial output, accounting for approximately half of the total production in Kurdistan.

Notably, Baban highlighted a challenge: "Factories that hold licenses issued by the Kurdistan Regional Chambers of Commerce are still barred from exporting, despite these establishments generating a substantial number of jobs."

In recent comments, Gaylan Haji Saeed, president of the Erbil Chamber of Commerce and Industry, affirmed that Iraq continued to impose requirements: "Initially, Iraq demanded that factories obtain licenses from the Iraqi government, and this demand persists without any substantial change."

According to Haji Saeed, only those products that have adhered to Baghdad’s regulations—including obtaining required licenses and export codes—are being permitted for trade. "To date, I have not learned of any factories in the Kurdistan Region that have been authorized to export products to central and southern Iraq," he stated.

Over seven months ago, the Iraqi government mandated that all factories in the Kurdistan Region present their documentation to establish ownership and validate their status. The rationale behind this move is to differentiate between authentic Kurdistani products and imported goods.

The Kurdistan Regional Government (KRG) has resisted these demands, asserting that they undermine the legitimacy of Kurdistan’s institutions. The KRG argues that granting licenses to factories in Baghdad would render its own Ministry of Commerce and associated departments ineffective.

Baban pointed out the competitive disadvantage facing local manufacturers, as "it is currently easier for Iraqi businessmen to source Turkish and Iranian products over those from the KRG, which could severely impact the operational viability of factories in the Kurdistan Region."

Concerns among factory owners are mounting, as the imposition of trade barriers is expected to negatively affect production levels and potentially lead to factory closures, as noted by Haji Saeed.

According to data from the chambers of commerce, the Kurdistan Region is home to 3,521 factories distributed across the provinces as follows:

The enduring restrictions illustrate a challenging landscape for the Kurdistan Region’s industrial sector, emphasizing the need for a resolution that balances trade requirements with local economic interests.