The pact, which could lead to a free trade agreement between Washington and Baghdad, was signed during a meeting of the US-Iraq Joint Commission on Reconstruction and Economic Development in Amman, Jordan.

The trade and investment framework agreement, or TIFA, establishes a joint council to work on a wide range of commercial issues, USTR said on Monday.

"Iraq is making a major effort to reintegrate into the international economy and the meetings of the joint council should assist Iraq in this important endeavour," Assistant US Trade Representative Ashley Wills said in a statement.

Foreign investment

 

Abdullah Muhsin, Iraqi Federation of Workers' Trade Unions (IFTU), international representative told Aljazeera.net: "What is important for Iraq now is the need for foreign investment to build infrastructure and technology. Neglect for the last three decades focused investment on militarisation, and civil industry was destroyed.

 

"We see investment as something different from privatisation; privatisation is not beneficial or helpful to Iraqis. We need to encourage and welcome foreign investment be it American, European, Middle Eastern, from people who can bring skilled economies.

 

Some fear US privatisation of
the Iraqi oil industry

The IFTU is a trade union organisation that is an umbrella group for 13 national unions.

 

Sabah Jawad, the secretary of London based Iraqi Democrats Against Occupation (IDAO), told Aljazeera.net: "The US is trying to implement it's own economic policy on Iraq including privatisation of major companies and the oil industry."

 

Violence

 

"We defend Iraqi private assets, oil reserves, electricity, water, hospitals… we shall defend and keep them for public use... We want to use dialogue not violence, but we are not shy of using muscles in terms of holding protests or lobbying," Muhsin added.

 

Jawad does not believe violence in Iraq is a product of resistance to free trade agreements as some critics have suggested.

 

He said: "Violence in Iraq is from the people's resistance to US and British occupation coupled with a lack of security. I don't think it is related to free trade agreements.

Economic sanctions

The United States and members of the United Nations had economic sanctions on Iraq for more than a decade prior to the US-led invasion in March 2003 that toppled the regime of former President Saddam Hussein.

US exports to Iraq surpassed $856 million in 2004, in the first full year after sanctions were lifted. Major items were goods to help rebuild the country such as generators, telecommunications equipment and trucks.

Spare parts for the US military were another leading export, as well as consumer and household products such as cars, clothing, TVs, toys and sporting goods.

The United States imported $8.5 billion worth of mostly oil from Iraq last year.

Iraq was a major market for US agricultural goods before the first Gulf War in 1991.