Iran's Trade With OIC Tops $41 Billion

EghtesadOnline: Iran traded 81.83 million tons of goods (excluding crude oil exports) worth $41.63 billion with the Organization of Islamic Cooperation’s member states during the current fiscal year’s first 10 months (March 21, 2021-Jan. 20), latest data released by the Islamic Republic of Iran Customs Administration show.

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09 March 2022

The UAE with 19.22 million tons worth $16.84 billion, Turkey with 15.29 million tons worth $8.76 billion and Iraq with 27.03 million tons worth $8.22 billion were Iran’s main trade partners among OIC members during the period.

Iran’s exports totaled 64.47 million tons worth $21.96 billion.

Iraq with 25.04 million tons worth $7.29 billion, Turkey with 12.07 million tons worth $4.53 billion and the UAE with 9.03 million tons worth $3.8 billion were the top export destinations.

Imports stood at 17.36 million tons worth $19.67 billion. The UAE with 10.19 million tons worth $13.04 billion, Turkey with 3.22 million tons worth $4.23 billion and Iraq with 1.99 million tons worth $920.47 million were the main exporters.

Founded in 1969, the Organization of Islamic Cooperation is an international entity consisting of 57 member countries, including Iran, with 47 countries being Muslim majority countries. Some, especially in West Africa, have large Muslim populations that necessarily do not form a majority.

Iran’s trade with OIC members stood at 82.86 million tons worth $36.66 billion in the fiscal 2020-21 with Iran’s exports at 70.49 million tons worth $21.05 billion while imports stood at 12.37 million tons worth $15.61 billion.

Strong Commercial Ties With UAE Without Trade Deal

Despite the significance of the UAE in Iran’s foreign trade, the two countries have yet to forge an agreement to avail themselves of preferential trade tariffs, Farshid Farzanegan, former chairman of the Iran-UAE Chamber of Commerce, said recently.

“Due to geographical locations, cultural, trade and historical relations between Iran and the UAE, as well as the volume of annual imports, this country offers a golden opportunity for Iranian economic players,” he was quoted as saying by Fars News Agency.

“In 2019, the UAE’s exports reached $248 billion while its imports hit $235 billion and as the world’s 24th largest exporter and 22nd largest importer, it has a significant position in the international economy and global value chains.”

According to the official, the UAE’s average trade volume with Iran since fiscal 2010-11 stands at $16 billion and from the fiscal 2010-11 to fiscal 2018-19, the figure stands at $13 billion.

The average annual trade volume for the eight-year period stands at $13 billion with China, $5.5 billion with South Korea, $5.5 billion with Turkey and $5 billion with Iraq, indicating that the UAE has been the leading trade partner of Iran over the years.

According to Farzanegan, Iran’s major exports to the UAE are vegetables, lead, melon, grapes, spices and cemen,t with each Iranian product having an over 10% share in the Emirati market.

Noting that the most important hurdle in the way of trade between the two countries is related to banking and money transfer, he said the ceiling for insurance coverage of trade between the two sides is insufficient.

“It is not possible for traders to open letters of credit while lack of consortiums for exporting technical and engineering services poses another problem. This is while the trade infrastructure in the UAE is very strong. Therefore, in order to develop trade relations with this country, we must upgrade and develop our infrastructure accordingly,” he said.

He noted that Iran’s geopolitical and geoeconomic advantages allow for transport of goods from Turkey and the CIS states to the UAE.

The UAE-Turkey transit corridor through Iran became operational with the first shipment from the UAE port of Sharjah en route to the Turkish port of Mersin docking at the Iranian Shahid Rajaee Port in November 2021 before reaching Turkey through the Bazargan border crossing in northwest Iran.

Mohammad Hossein Rezaeian, an expert in the field of transit, told told Mehr News Agency that the consignment entered the port of Shahid Rajaee in south Iran along the Persian Gulf from the UAE and reached the Turkish port of Mersin.

The expert noted that the new route shortens the former transit route by 12 days, meaning that it will take eight days for the shipments to reach Turkey's port through Iran from the UAE's Sharjah while the previous route had to cross the Bab al-Mandeb Strait, the Red Sea and the Suez Canal and all the way to Turkey, which would take 20 days.

Noting that the UAE has zero tariff on imports of almost all types of commodities, except Iranian cement with a 5% tariff, Farzanegan said it is necessary for Iran to facilitate import from the UAE by establishing preferential tariffs.

Iran levies high tariff rates on imports to the country, which reaches as high as 40% on certain commodities.

“We have no preferential tariff agreement with any country. An agreement has been concluded with Turkey, negotiations have been held with Pakistan and during a recent visit of UAE’s Minister of Industries, Mining and Trade, negotiations have been held to this end, but an agreement has yet to be reached.

An Iranian delegation led by Industries Minister Reza Fatemi-Amin visited the UAE earlier in February.

President of Iran Chamber of Commerce, Industries, Mines and Agriculture, Gholamhossein Shafei, and the head of Trade Promotion Organization of Iran, Alireza Peymanpak, also accompanied the visiting mission, who took part in a joint forum titled “Business and Investment Opportunities” on Feb. 8.

Iran’s first trade center licensed by Trade Promotion Organization of Iran was recently inaugurated in Dubai.

As Iran Chamber of Commerce, Industries, Mines and Agriculture reported, the establishment is aimed at helping Iranian companies find a foothold in the UAE, Dubai in particular which happens to be one of the main hubs of Iran’s trade in the region.

It also seeks to use advanced information technology to create a platform that facilitates business activities of Iranian firms in the Emirati market by providing technical advice and consultation services.

Iran Gives Boost to Imports From Iraq

Iran has dramatically increased imports from Iraq as the neighboring country exported a total of 1.99 million tons of goods worth $920.48 million to Iran during the 10 months under review, registering a staggering rise of 2,414% and 793% in weight and value respectively compared with the similar period of last year, according to the spokesperson of the Islamic Republic of Iran Customs Administration.

“During the same period of last year, we imported close to 80,000 tons of goods worth $103 million from this western neighbor of ours. In talks with Iraqi officials, we agreed to balance our bilateral trade, therefore Iran is taking measures to meet a bigger part of its domestic demand from Iraq,” Rouhollah Latifi was also quoted as saying by ILNA.

The official noted that last year, Iraq was the 26th biggest exporter to Iran but, given the above figures, it has now become the ninth supplier of goods to Iran after the UAE, China, Turkey, Germany, Switzerland, Russia, India and the UK.

“Our main imports from Iraq during the period [March 21, 2021-Jan. 20] were essential goods with more than 1.86 million tons worth $734 million, accounting for 93% and 80% of the overall weight and value of imports from Iraq respectively,” he said.

Also known as necessity or basic goods, essential goods are products consumers will buy, regardless of changes in income levels.

Latifi said basic imports from Iran included $329 million worth of wheat, $159 million of field corn, $101 million of soy cake, $55 million of barley, $44 million of unrefined vegetable oils and $36 million of sugar.

Iran exported 25.04 million tons of goods worth $7.29 billion to Iraq during the same period, registering a 12% and 14% rise in volume and value respectively compared with the corresponding period of last year.

According to IRICA, the exports mainly included seafood, livestock, dairy and agrifood products with a total of  2.66 million tons worth $1.22 billion

They also included industrial machinery, minerals and construction materials.