Western sanctions affects Iran's trade relations

An illegible situation has been observed in Iran's foreign trade for some time. Iran's foreign trade situation has been traced illegible as it periodically imposes restrictions on export-import operations in response to the U.S. and European sanctions which aggravates the situation.

In early November, the Iranian government banned the import of luxury and other goods into the country in order to save money. The list of prohibited goods included 77 items from cars and computers, watches, home appliances, mobile phones to coffee and toilet paper. People in the country were called on to abandon the purchase of items produced abroad and enjoy similar products produced locally. Presumably, the ban on imports of the Iranian government would save some $4 billion.

Prior to that, the Iranian government withdrew all imports into 10 categories according to their need. The first category consists of goods and mainly food products, particularly meat, butter, sugar, milk, corn, and barley. The second group includes drugs and materials for the manufacture of medicines and medical technologies. The third category covers livestock and poultry, cereals, matches and agricultural fertilisers. With each number belittled, the importance of the goods, although their importance is no less important: furniture, soft drinks, cocoa, coffee, sweets, some petroleum gas, candles, plastic products, washing machines, carpets, shoes, umbrellas, construction materials (bricks, tiles , mosaic), jewellery and ornaments, hand tools (pliers, wrenches), bicycles, some toys, car batteries and aluminium products. Mobile phones, computers, cars, pictures, clothes, cosmetics and handbags complete this list.

The company which was involved in the import of items from the first two categories of necessity received the opportunity to buy U.S. dollars at a reduced price; that is at the official exchange rate of 12,260 rials. Goods with an investment focus were bought for dollars at the exchange rate of 15,000 rials, but the importers of goods from the latter category such as VIP goods have to pay for the U.S. currency over the price on the open market.

This measure has already helped to create dissatisfaction and the voluntary refusal of local people from imported non-consumer goods because of their incredible cost. On the other hand, the prohibition and new requirements for import transactions contributed to the growth of smuggling of prohibited goods from neighbouring countries.

The Iranian government had to exclude a number of goods, such as spare parts for computers, from its prohibited items list. These goods are either not produced in the country, or if they are, do not meet set requirements. Several days later, Iran lifted the ban on the import of cars, cell phones and computers.

However, this did not remedy the situation and the companies that previously legally dealt with the import of now banned products are still without work. Partnership relations with foreign companies were also threatened.

Apart from the recently weakened ban of some imported products, the export of certain goods is also prohibited in Iran as a measure to 'support domestic production'. A total of 50 industrial and agricultural products are included in the list of goods banned for export. Petrochemical products, including varieties of polymers, are listed among the banned products. However, some time later, Iranian Oil Minister Rostam Qasemi lifted the ban on the export of petrochemical products, and ordered the settlement of the issue. According to this decision, the export of a number of Iranian petrochemical products, meeting the requirements of the domestic market, is now allowed. As for oil, although the export of oil from the country was reduced, it was never stopped.

In short, in its export policy, Iran decided to prioritize the needs of the domestic market by exporting only surplus. As a result, importing countries cut off from a steady supply of Iranian goods faced a number of internal problems. Subsequently, the confidence of countries in Iran as a reliable trading partner was undermined.

As consequences of international sanctions against the country, the restrictions, imposed on Iran's foreign trade by the country itself, the lack of funds allocated to pay for imports, the inability to pay for imports through bank transactions, and transfer to barter operations have radically changed the country's trade relations. Although Tehran says that, in spite of everything, turnover in the country is growing and the number of trading partners is stable, analysis of Iran's foreign trade shows that this sector has undergone significant changes: the volume of trade with Europe has fallen, while trade turnover with Asian countries has increased. Moreover, Iran has to carry out barter trade operations with a number of Asian countries, even though that this is sometimes not in the interests of Iran. As for trade cooperation between the Arab States of the Persian Gulf and Iran, according to the latest news, chambers of commerce in these countries have decided not to renew trade agreements with Iran, citing Western sanctions adopted against Iran, and a sharp depreciation of the Iranian Rial as the reason.


Ellada Khankishiyeva /Trend/