“Exports (excluding crude oil) and imports during the period stood at $39 billion and $40 billion respectively,” Minister of Economic Affairs and Finance Farhad Dejpasand said on Tuesday in a meeting with representatives of Tehran Chamber of commerce, Industries, Mines and Agriculture, Financial Tribune reported.
Noting that capital goods account for 85% of imports, the minister added that at present, exporters are the main suppliers of foreign currency needed for imports, ILNA reported.
Mehdi Mir-Ashrafi, the head of Islamic Republic of Iran Customs Administration, who was also present at the meeting, said maritime transport accounts for more than 90% of global trade; countries with access to high seas have considerable potential to benefit from foreign trade.
“In the 1960s, the United Nations Conference on Trade and Development announced that Iran enjoys excellent geographical leverage for maritime trade, thanks to its thousands of kilometers of sea borders. We are the only country located along the route of the International North-South and East-West transport corridors,” he said.
“Each day of delay in customs equals 1% of the final price of the item. This is while IRICA does not have access to shipping data, once they arrive at the customs and the ports. Customs procedures should become electronic, as forgery mostly takes place during paperwork.”
Oil and petrochemical products are included in IRICA's export data. In fact, petrochemicals and gas condensates constitute the greater share of total exports.
Monthly Perspective
An analysis of IRICA data shows Iran’s total trade reached its highest level ($10.29 billion) in the second Iranian month (April 21-May 21).
This is while the country’s trade hit its lowest level ($4.88 billion) in the first Iranian month (March 21-April 20).
Exports also hit the highest level ($5.86 billion) in the second fiscal month and registered the lowest level ($2.54 billion) in the first fiscal month.
Imports, too, hit their highest level ($4.42 billion) in the second month and their lowest level in the first month ($2.33 billion).
Neighbors in Focus
Amid trade restrictions resulting from sanctions, the country has been eying exports to neighboring countries.
“The Ministry of Industries, Mining and Trade aims to raise Iran's annual exports to its neighboring countries to $48 billion by the fiscal 2021-22,” says deputy minister of industries, mining, and trade, Hossein Modarres Khiyabani.
According to the official, Iran currently has a 2% share in the neighboring countries' total imports and if the target is realized, the share will rise to 4%.
“Neighboring states have $1.2 trillion worth of imports [per year] while Iran’s share is only $24 billion,” he added.
Khiyabani believes Iran’s exports to its 15 neighbors—namely the UAE, Iraq, Turkey, Afghanistan, Pakistan, Russia, Oman, Azerbaijan, Turkmenistan, Kuwait, Qatar, Kazakhstan, Armenia, Bahrain and Saudi Arabia, have the potential to reach $100 billion per year.
According to the deputy minister, the average value of Iran's exported commodities hovers around $400 per ton while it is $1,200 per ton for imported commodities.
“The gap between the average value of exported and imported commodities indicates that a wrong strategy has been mapped out, meaning that raw materials are exported while processed products are imported instead of importing raw and intermediate goods and exporting processed products with high value added,” he said.
“Increasing the average value of exported commodities is possible by processing raw materials, turning them into finished products with high value added, and diversifying the range of exported goods.”
Preferential Trade With EEU
The ministry is pursuing plans to expand exports to the five member states of Eurasian Economic Union, namely Russia, Kazakhstan, Armenia, Kyrgyzstan and Belarus.
Iran and EEU signed a three-year provisional agreement in Astana, Kazakhstan, on May 17, 2018, for the bloc to welcome Iran into EEU.
The deal became operational on Oct. 27 and now Iran has three years to negotiate an all-out free trade agreement with the Eurasian bloc.
The average tariff set by the union on Iranian goods as part of the agreement stands at 3.1%, while the figure is 12.9% for EEU goods exported to Iran.
Iran and EEU have listed 862 types of commodities in their provisional agreement, based on which Iran will enjoy easier export terms and lower customs duties on 502 items and the same goes for 360 items from EEU member states.
“Of the 862 items mentioned in the agreement, 639 are industrial commodities and the remaining 223 items are agricultural goods,” the deputy head of Iran Chamber of Commerce, Industries, Mines and Agricultures, Mohammad Reza Karbasi, said.
Director General of the International Affairs Bureau with the Islamic Republic of Iran Customs Administration Hossein Kakhaki announced last week that Iran and EEU had traded more than $1 billion worth of goods since Oct. 27, when the preferential trade agreement between the two sides came into effect, $620 million of which were under the PTA.
Iran's exports under the PTA stood at $87 million while EEU’s exports to Iran under the preferential trade agreement was at around $533 million.
“Iran’s total exports and imports to and from the five EEU member states have hit $347 million and $655 million respectively,” he was quoted as saying by IRNA.
The above figures show more than 25.1% of Iran's export to the EEU and 81.37% of imports from the bloc into Iran were carried out under the trade agreement.
Kakhaki noted that due to the significance of the country’s trade agreement with EEU, IRICA has taken an array of measures to ease trade procedures for exporters to the bloc by cutting red tape.