Iranian Exporters Question Future Viability of Iraq Market

EghtesadOnline: In an unexpected turn of events, Iraqi officials have blocked the entry of truckloads of Iranian watermelon, melon, tomato and potato at the border, inflicting a huge loss on Iranian exporters.

News ID: ۷۷۸۲۹۹

13 August 2017

Speaking to Hamid Hosseini, a member of Iran-Iraq Chamber of Commerce, Financial Tribune attempted to shed light on the August 7 incident.

Hosseini explained that the Iraqi Ministry of Agriculture suddenly banned the import of these five items without prior notice to boost Iraq's domestic production.

The Iraqis say since they are in harvest season and the import of these agro products is not beneficial for their country.

To solve the issue, Iran-Iraq Chamber of Commerce authorities entered into negotiations with Iraqi authorities, which resulted in the ban's removal on Friday by which time loads of Iranian watermelon, melon, tomato and potato had gone bad at Mehran border terminal in Ilam Province before reaching the Iraqi market.

Hosseini noted that in the absence of coordination with the central Iraqi government, each of the country's governorates on their own changes the rules anytime they want, causing much instability and losses.

The official said the Iraqis would not compensate the loss, as trading of fruits and vegetables with Iraqi businessmen is usually made without any firm contract or written agreement.

"Iraq is not a member of any international convention regarding customs and transportation, which makes it impossible to file complaints against the country," Hosseini said.

This is not the first time Iraq makes snap decisions in its trade with Iran.

According to Hosseini, the Iraqis suddenly decided to increase import tariffs on Iranian cement from 17% to a staggering 130% about three months ago, claiming that the decision was an anti-dumping measure.

The huge increase in duties levied on truck drivers upon entry is another example of trade obstruction by the Iraqis.

Hosseini said the Iraqis increased the duties for each truck by 30% about two or three months ago.

What is more, the Iraqis stopped importing clinker from Iran about a month ago. As Hosseini noted, Iran has ceased exporting cement and clinker to the neighboring country, although he thinks the export might resume in the near future as war in Iraq has come to an end and the country is planning to rebuild and start reconstruction activities.

According to Hosseini, Iran's export of goods to the neighboring country has fluctuated around $6 billion per annum in the last three years, but he hoped that the figure would increase by 15-20% in the current Iranian year (March 2017-18) since Iraq has rid itself of war and the country is expected to increase imports.

Referring to a study on Iran-Iraq trade in the six years to March 20, 2016, Hosseini pointed out that cement with $2.7 billion, yogurt with $1 billion, ice cream with $1 billion, tomato paste with $900 million and tomato with $900 million were the major Iranian commodities exported to Iraq during the six years.

He said Iran has a 55% share in the $2 billion Iraqi construction market, while Iranian mineral oils and refinery products constitute 48% of the Iraqi market, followed by chemical products with 28%, food products with 18% and auto and home appliances with 5%.

Iran exported 4.135 million tons of non-oil commodities worth $2.05 billion to Iraq during the four months to July 22, registering a 13.71% decrease in volume and a 6.54% increase in value compared with the corresponding period of the preceding year, during which 4.792 million tons worth $1.926 billion were exported.

In the fiscal 2016-17, Iran's exports to the neighboring country stood at $6.1 billion, registering a 1.84% and 1.59% decrease year-on-year, according to Iran Customs Administration and Trade Promotion Organization.