Iran-EU Trade Dips 66% (Nov 2018)

EghtesadOnline: Trade between Iran and the 28 European Union member states declined by 66.02% year-on-year to stand at €679.55 million in November 2018.

News ID: ۷۴۶۵۲۲

20 January 2019

Iran’s exports during the one-month period amounted to €209.98 million, registering a 78.12% downfall as imports fell by 54.86% to reach €469.56 million, Eurostat reported.

Notably, Iran exported €716.17 million (84%) less mineral fuels, mineral oils and products of their distillation, bituminous substances and mineral waxes to its EU destinations in November compared with the same month of 2017. The above-mentioned category encompasses Iran’s top export commodities to EU states.

Imports of nuclear reactors, boilers, machinery and mechanical appliances and parts—EU’s top exported product category to Iran—plummeted by 53% to reach €168.51 million during the same period, according to Financial Tribune.

The United States began to impose the second tranche of sanctions described as "toughest sanctions ever" against the Islamic Republic in November after the first wave hit in August, effectively impeding Iran's trade with major countries.

The sanctions were implemented after US President Donald Trump announced in May his country's unilateral walkout from the nuclear deal it signed together with five other world powers, namely the UK, Germany, France, China and Russia.

The deal, better known as Joint Comprehensive Plan of Action, was signed in 2015 and implemented a year later. It saw the removal of years of international sanctions in exchange of the Islamic Republic limiting the scope of its nuclear program.

11-Month Perspective

Total trade between Iran and European Union members from Jan. to Nov. 2018 amounted to €17.25 billion, which shows a 1.66% fall compared with the similar period of last year.

Iran’s top five trade partners over the period were Italy, Germany, Spain, France and Greece with more than €4.48 billion, €2.88 billion, €2.54 billion, €2.39 billion and €1.26 billion worth of commercial exchanges respectively.

Trade with Croatia (€65.38 million), Hungary (€92.62 million) Latvia (€6.45 million), Austria (€696.05 million) and Spain (€2.54 billion) saw the highest growths of 1,146.89%, 125.47%, 90.86%, 79.54% and 52.11% respectively.

Iran experienced the sharpest decline in trade with Portugal (58.24%),  Cyprus (54.26%), Malta (54.21%), Bulgaria (40.57%) and Romania (38.43%). It exported more than €9.09 billion worth of commodities to EU member states during the 11-month period, which shows a 6.43% rise YOY.

The main destinations of Iranian exports in the European bloc were Italy with €2.91 billion, Spain with nearly €2.02 billion, France with €1.52 billion, Greece with €1.23 billion and Austria with €449.49 million of imports from Iran.

Trade Promotion Organization of Iran has called on Europe to cut down to zero the tariffs imposed on the import of Iranian goods, saying the move would send a message that Europe is serious about expanding trade with Iran

Iran’s exports to Croatia, Hungary and Austria experienced the highest rise, while exports to Bulgaria, the Netherlands and France saw the sharpest decline.

The top 10 exported commodities included mineral fuel, mineral oil and products of their distillation, bituminous substances and mineral waxes (€7.95 billion), iron and steel (€249.35 million), edible fruit and nuts, zest of citrus fruit and melons (€226.72 million), plastics and related articles (€175.61 million), fertilizers (€53.4 million), organic chemicals (€44.57 million) and coffee, tea and spices (€37.88 million).

Carpets and other floor coverings (€32.6 million), animal products (€32.38 million) and nuclear reactors, boilers, machinery and mechanical appliances and parts (€26.25 million) also constituted a considerable volume of exports.

As for Iran's imports from the EU during the 11 months under review, they decreased by around 9.34% YOY to stand at more than €8.15 billion.

The top five European exporters to Iran during the period were Germany with €2.49 billion, Italy with €1.57 billion, France with €870 million, the Netherlands with €630.2 million and Spain with €525.78 million worth of shipments.

Iran’s imports from Latvia, Spain and Finland saw the highest growths whereas those from Malta, Portugal and Cyprus experienced the sharpest decline.

Imported commodities mainly included nuclear reactors, boilers, machinery and mechanical appliances and parts (€3.02 billion), electrical machinery and equipment, sound recorders and reproducers, television image and sound recorders and reproducers and parts (€759.35 million), pharmaceutical products (€678.73 million) and optical, photographic, cinematographic, measuring, checking, precision, medical and surgical instruments and apparatus (€590.82 million).

Vehicles other than rail and tramway rolling stock and parts (€502.83 million), iron and steel products (€292.26 million), miscellaneous chemical products (€274.92 million), plastics and related articles (€189.55 million), essential oils and resinoids, perfumes, cosmetic and toiletries (€137.16 million) and organic chemicals ($130.96 million) constituted other imported commodities.

TPO Calls on Europe to Abolish Import Tariffs

Trade Promotion Organization of Iran has called on Europe to cut down to zero the tariffs imposed on the import of Iranian goods, saying the move would send a message that Europe is serious about expanding trade with Iran.

Mohammad Reza Modoudi, the acting head of TPO, recently made the remarks in a meeting with Swiss Ambassador to Iran Markus Leitner, Mehr News Agency reported.

“We expect European governments to take full advantage of their capacities to develop trade ties with Iran, and we propose that they reconsider their tariffs on the import of Iranian goods,” he said.

“This move may not make much difference to their trade figures with Iran, but it can send a message to the world, especially the US, that Europe is committed to its cooperation with Iran within the framework of JCPOA.”

The official noted that the economic war waged by the US does not only target Iran, but also marks the start of future economic wars that could affect the rest of the world.

Modoudi said that the EU’s promised payment system for facilitating trade with Iran is still inactive, adding that Iran is awaiting the result of talks between Swiss officials with the US about the fate of the payment mechanism.

Frustration Growing at SPV

The TPO official was referring to the 'Special Purpose Vehicle', a mechanism conceived by the EU as a clearinghouse that could be used to help match Iranian oil and gas exports against the purchase of EU goods, circumventing US sanctions based on the global use of the dollar for oil sales.

Iran's criticism about Europe's delay in launching SPV has increased in recent days. The crucial mechanism was meant to be in place before the start of the New Year but nothing has happened yet.

Officials in Tehran have expressed frustration with European procrastination in launching SPV.

Foreign Minister Mohammed Javad Zarif has said that while Europeans ascribe the delays to the claim that they want to really make the mechanism "operational", the underlying reason is that “they are not yet ready to pay the cost of defying the US”.

During his recent trip to India, Zarif said Iran will not wait for Europe and build relations with its traditional partners like India, China and Russia.

EU officials this month plan to approve and register in France a "special purpose vehicle" aimed at helping European companies continue doing business with Iran and circumvent the sanctions Trump unilaterally reimposed on Tehran last year, Politico Europe wrote on Saturday.

Final preparations for the special purpose vehicle will be discussed by EU foreign ministers in Brussels on Monday, where they are also working to develop broader conclusions on Iran to be adopted at an EU leaders' summit in March.

The EU's ability to push back on the US sanctions is limited, as many companies are already complying for fear of losing access to the bigger and more lucrative US market.

But SPV will preserve at least some economic activity, officials said, and it is viewed as an extremely important symbolic step for the Iranian government, allowing it to answer domestic critics who want Iran to retaliate by abandoning the deal.

Some US diplomats have mocked EU's efforts to preserve the Iran deal, saying it is only a matter of time before the agreement collapses. European officials insist that the deal is serving its intended purpose of keeping Iran's nuclear program in check and cite more than a dozen inspections by the International Atomic Energy Agency that have found Iran in compliance.