Iran-EU Trade Plunges 74%

EghtesadOnline: Trade between Iran and EU member states during the first 10 months of 2019 (January-October) stood at €4.31 billion to register a 74.83% decline compared with last year’s corresponding period, latest data provided by the European Statistical Office show.

News ID: ۷۴۹۲۳۲

21 December 2019

Germany, Italy and the Netherlands were Iran’s top three trading partners in the European bloc with bilateral exchanges standing at €1.37 billion, €817.56 million and €422.86 million respectively.

Iran’s trade with Cyprus (€6.48 million) and Bulgaria (€77.68 million) increased by 77.71% and 34.1% respectively year-on-year—the highest among EU states.

Trade with Greece (€34.73 million), Spain (€237.74), Luxembourg (€623,514), France (€329.53 million) and Finland (€20.89 million) saw the sharpest declines of 97.08%, 90.68%, 90.48%, 85.99% and 84.18% respectively, according to Financial Tribune.

Eurostat is a directorate of European Commission located in Luxembourg. Its main responsibilities are to provide statistical information to EU institutions and promote the harmonization of statistical methods across its member states and candidates for accession.

Organizations in different countries that cooperate with Eurostat are grouped under the European Statistical System.

Exports Decline 93%

Iran exported €586.26 million worth of commodities to EU during the 10 months, indicating a 93.58% fall compared with the similar period of previous year.

The main export destinations over the period were Germany (€161.39 million), Italy (€134.47 million), Spain (€63.94 million), Romania (€32.27 million) and Belgium (€30.81 million).

Iran’s exports to Latvia, Estonia and Luxembourg experienced the highest year-on-year growth rates of 460.16%, 79.3% and 11.22% respectively.

This is while exports to Greece, France and Austria fell by 99.06%, 99.04% and 97.39% YOY respectively, which are the sharpest among EU member states.

The exported goods mainly included iron and steel worth €101.82 million; plastics and articles thereof worth €95.7 million; pharmaceutical products worth €29.38 million; coffee, tea, maté and spices worth €28.42 million; carpets and other textile floor coverings worth €27 million; products of animal origin, not elsewhere specified or included worth €24.13 million; articles of iron or steel worth €22.95 million; lac, gums, resins and other vegetable saps and extracts worth €19.65 million; and nuclear reactors, boilers, machinery and mechanical appliances worth €13.65 million.

Imports Fall 53%

Imports from the EU dropped by 53.44% to stand at €3.72 billion during the 10 months under review.

The top five exporters from the European bloc to Iran were Germany with €1.21 billion, Italy with €683.08 million, the Netherlands with €400.1 million, France with €314.98 million and Belgium with €196.55 million worth of shipments to Iran.

Cyprus with €6.22 million, Bulgaria with €48.92 million, Croatia with €8.32 were the EU countries with the highest YOY increase in export (89.43%, 60.56% and 51.39% respectively).

Luxembourg with €479.38, Latvia with €822,018 and Finland with €20.45 million experienced the sharpest YOY decline in exports to Iran (92.53%, 87.52% and 84.43% respectively).

Imports mainly included nuclear reactors, boilers, machinery and mechanical appliances, including parts thereof worth €939.58 million; pharmaceutical products worth €552.46 million; optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus, including parts and accessories thereof worth €472.5 million; sound recorders and reproducers, television image and sound recorders and reproducers, including parts and accessories of such articles worth €183.07 million; and cereals worth €160.22 million; organic chemicals worth €132.27 million; miscellaneous chemical products worth €96.67 million; plastics and articles thereof worth €95.49 million; oilseeds and oleaginous fruits; miscellaneous grains, seeds and fruit; industrial or medicinal plants; straw and fodder worth €82.02 million; essential oils and resinoids; and perfumery, cosmetic or toilet preparations worth €71.15 million.

Other imported products included paper and paperboard; articles of paper pulp, paper or of paperboard worth €58.3 million; tanning or dyeing extracts; tannins and their derivatives; dyes, pigments and other coloring matter; paints and varnishes; putty, other mastics and inks worth €54.89 million; manmade staple fibers worth €45.9 million; miscellaneous edible preparations worth €44.07 million; tobacco and manufactured tobacco substitutes worth €44 million; articles of iron or steel worth €39.09 million; vehicles other than rail or tramway rolling-stock, including parts and accessories thereof worth €38.13 million; albuminoidal substances; modified starches; glues; enzymes with €35.81, and residues and waste from the food industries; prepared animal fodder with €35.18.

US Walkout From JCPOA

The steep decline in Iran's trade with Europe came after the US decided in 2018 to withdraw from the nuclear deal Iran signed with world powers in 2015 and reimpose sanctions against Iran.

The nuclear deal, formally known as the Joint Comprehensive Plan of Action, was reached between Iran and the five members of UN Security Council as well as Germany. As per the terms of the agreement, years of international sanctions against Iran were lifted. In exchange, Iran agreed to limit the scope of its nuclear program.

Following the US withdrawal, according to The Brussels Times, the European Union and other signatories want to pursue the implementation of JCPOA without entering into conflict with the United States.

As a result of the extra-territorial effects inherent in Washington’s sanctions, companies trading with Iran risk being excluded from accessing the American market.

Iran began in May to reduce its compliance with JCPOA in response to the United States' withdrawal and reimposition of sanctions and other parties' failure to safeguard its economic interests under the agreement.

It has demanded assurance for the sale of its oil, the country's main source of income, and "access to its revenues as completely ready for use and without any restriction", according to Deputy Foreign Minister Abbas Araqchi.

Fate of INSTEX

A compensating mechanism, known as the Instrument in Support of Trade Exchanges, was conceived to bypass the impediment. It is based on an equalization between European importers and exporters, and their Iranian counterparts. INSTEX is limited to the areas of health and food processing.

A company to operate the mechanism was set up in Paris.

Despite its creation almost nine months ago, INSTEX is not yet operational due to complex technical issues and European companies’ fear of being targeted by hostile US sanctions.

Finland, Belgium, Denmark, Netherlands, Norway and Sweden agreed to join the INSTEX mechanism for trade with Iran, the six countries declared in a joint statement on Nov. 29, EURACTIV reported.

“In light of the continuous European support for the agreement and the ongoing efforts to implement the economic part of it and to facilitate legitimate trade between Europe and Iran, we are now in the process of becoming shareholders of the Instrument in Support of Trade Exchanges subject to completion of national procedures,” the joint statement said.

German president of INSTEX, Michael Bock, will arrive in Tehran on Jan. 12, Abbasali Ghazi, the head of Iran-Germany Chamber of Commerce, said.

"Bock visits Iran each two or three months to investigate financial transactions of traded non-sanctioned goods, including food and medicine, with Iran," the Iranian official informed.

“This is his second visit to Iran,” he added.

On Sept. 6, Bock was appointed as the new chairman of the EU trade mechanism with Iran.

Following talks between the German Foreign Ministry and other European partners, the former 66-year-old German ambassador to Colombia, Egypt and Sweden was elected as the new head of INSTEX.

Meanwhile, a humanitarian channel to help Iran import food and medicine could be up and running within months, senior Swiss and US officials told Reuters earlier this month, helping supply Swiss goods to the struggling population without tripping over US sanctions.

“Our role is really to be able to provide food and health goods to the Iranian people. And therefore we are working hard on establishing that humanitarian channel,” Pascale Baeriswyl, Swiss state secretary for foreign affairs, was quoted as saying.

“Ultimately that depends on companies and banks wanting to participate ... We have made progress recently,” he added.

Asked whether the mechanism could be operational in the first half of 2020, she said, “I hope so, but it is very difficult to predict since it is not entirely in our hands.”