Iran, Iraq Determined to Bolster Economic Relations

EghtesadOnline: Iran's exports to neighboring Iraq will reach $12 billion by the end of the current Iranian year on March 20, 2019, the president of Iran-Iraq Chamber of Commerce said.

News ID: ۷۸۴۳۵۰

24 November 2018

"Iran's exports to Iraq stood at $6.6 billion during the first six months of the current year (March 21-Sept. 22) and will reach $12 billion by the [fiscal] yearend," Yahya Al-e Es'haq told IBENA.

He referred to political will as a reason behind this, referring to Iraqi President Barham Salih's visit to Tehran earlier this week.

The Iraqi president held a meeting with his Iranian counterpart Hassan Rouhani during the visit, in which Rouhani said he wants to raise trade between the two countries from the current $12 billion to $20 billion in the coming year, Financial Tribune reported.

Al-e Es'haq also believes that the $20 billion target for bilateral trade "is achievable based on the type of investments required to rebuild Iraq and the country's economic conditions".

The latest official figures released by the Islamic Republic of Iran Customs Administration for the first seven months of the current Iranian year that ended on Oct. 22 show that Iraq overtook China as Iran's top export destination.

Iran’s exports to Iraq during the period surged by 55% in value and more than 65% in weight to reach $5.73 billion and account for 21% of the total value of Iran’s exports during the period.

Iran mainly exports liquefied gas, hydrocarbons, mineral products, fresh or frozen tomatoes and evaporative coolers to Iraq.

Accordion to Secretary-General of Iran-Iraq Chamber of Commerce Hamid Hosseini, as Iraq is beginning to rebuild the destroyed infrastructure left by terrorists, a number of its cities, especially Mosul and Kirkuk, can become a suitable market for Iranian construction materials and foodstuff.

"Iraq has six million displaced citizens, four million of whom have returned after Daesh was defeated. Iranian products can be the best option to provide for these people, however our share in markets of Mosul and Kirkuk is relatively low at the moment and we need to increase it," he told IRNA recently.

Daesh refers to the self-styled Islamic State terrorist group.

Hosseini said the visit of a trade delegation from Mosul that recently visited Tehran for the first time in 15 years is a testament to Iraq's increased attention to Iranian goods.

Agreement to Establish Joint Free Trade Zone

During the state visit to the Iranian capital, Iraqi President Salih also announced that his country has agreed to establish a free trade zone along its border with Iran. He did not provide details about the FTZ.

Al-e Es'haq said the Iraqi government's new approach is based on joint investments and producing goods that are in demand in Iraq.

"Based on the long-term plan that is in the works for Iran-Iraq relations, instead of exporting goods to Iraq, we will participate in the joint manufacture of goods," he said.

The Iranian official elaborated that Iranian investments in Iraq at present have been largely made in fields such as dairy production, but investing in a border FTZ will be much more suitable.

"Several locations have been identified for the construction of industrial parks along the two countries' border regions and FTZ rules will reign over them, meaning that there will be no customs tariffs for entry and exit of goods," he said.

According to Al-e Es'haq, the industrial parks will employ the strength of both countries for manufacturing and benefit from the freedom and lower bureaucracy inherent in free trade zones.

"At present, Iraq mostly needs construction materials, food industries and general consumer goods such as appliances," he said about the nature of goods that will be produced by the industrial parks in the planned FTZ.

Rouhani and Salih also discussed electricity and gas swap, cooperation on petroleum products and oil exploration, in addition to building a 35-km railroad linking the two countries.

In the Context of US Sanctions

Salih's two-day visit came less than two weeks after the United States reimposed the second and final tranche of its stringent economic sanctions against Iran after US President Donald Trump unilaterally withdrew from Iran's nuclear deal with world powers.

In November, the US granted Iraq a 45-day waiver to import natural gas and energy supplies from Iran.

Salih said Iraq is still currently negotiating with the United States over the fate of Iran-related sanctions after the waiver period.

Some of the paths discussed publicly by Iranian and Iraqi officials for the purpose of avoiding US sanctions is the use of the dinar instead of the dollar among others, according to Al-Monitor.

MoU to Boost Transportation

Earlier this month, Iran and Iraq signed a memorandum of understanding to promote cooperation in road transportation and facilitate tourism. The agreement was reached during the meetings of Iran-Iraq Road Transportation Commission held in Tehran.

The transportation ministries of the two countries agreed to announce all fees and payments they receive at border terminals and inform each other of any changes in the prices or working hours in advance.

Agreements on facilitation of the procedure for issuing visas for frequent drivers, resolving the problems associated with the insurance of international transportation fleet involved in accidents, renovation of border terminals and expansion of roads leading to border terminal, as well as the launch of cargo and passenger transportation at all border terminals of the two countries were also agreed upon during the two-day meetings of the commission.

Iran's Strong Presence in Baghdad Fair

The Iraqi capital recently hosted Baghdad International Fair 2018.

With 60 companies taking part in the event, Iran had the strongest presence among 17 countries. The number of Iranian exhibitors was 40% more compared to that of last year, according to Iran’s commercial attaché to Iraq, Nasser Behzad.

The Iranian participants were active in the fields of food, construction materials, toiletries, carpet, saffron, steel, auto parts, pipes and profile, plastic, agricultural and processed products, as well as technical and engineering services

The fair, which ran from November 17 to 19, also saw exhibitors from Syria, Pakistan, Japan, Jordan, France, Germany, Indonesia, Italy, Palestine, South Korea, Taiwan, Hungary, Ukraine, Spain, India and Tunisia.

Iran Eyes Boost in Tourism From Iraq

Iran is increasingly focusing on citizens from neighboring Iraq to boost its tourism sector.

Iraqi citizens have traditionally constituted a major share of total inbound tourists to Iran, but their main purpose of travel to the Islamic Republic has mostly been to visit religious and holy sites.

However, Iranian authorities have been increasingly focusing on helping expand the itinerary of Iraqis traveling to Iran in recent months.

Iran Cultural Heritage, Handicrafts and Tourism Organization's figures show that 1.63 million Iraqi tourists entered Iran during the first six months of the current fiscal year that ended on Sept. 22. This indicates a significant 102% surge compared with the corresponding period of the year before when Iran hosted about 812,000 Iraqi visitors.