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EghtesadOnline: The issue of Iran’s continued presence in Iraq’s market after the reinstatement of US sanctions was discussed in the 14th session of Tehran Chamber of Commerce, Industries, Mines and Agriculture’s Trade Facilitation and Export Promotion Commission.

The US administration withdrew from the 2015 nuclear deal struck between Iran and world powers, including the United States, in May and announced its decision to reimpose sanctions. The first phase of the sanctions is set to come into force on August 6.

“Considering the difficulty facing Iran in international trade after the return of sanctions, the commission aims to promote trade with neighboring countries by consulting joint chamber delegates,” said chairman of the commission, Mohsen Bahrami Arz-Aqdas, TCCIM’s news portal reported.

“Iraqi exports stood at $56 billion in 2017 while imports amounted to $36 billion,” Hamid Hosseini, a member of the board of directors and secretary-general of Iran-Iraq Chamber of Commerce, said.

India, South Korea, China, Greece and Italy were Iraq’s top export destinations. China, Turkey, Iran, the UAE and Russia also accounted for the largest share of the Iraqi market, according to Financial Tribune.

China, with 23.5%, held the lion’s share of the market, followed by Turkey with 23%, Iran with 20% and the UAE with 17%. 

According to Hosseini, in the last Iranian year (March 2017-18), Iran’s export to Iraq was worth $6.2 billion, while its import from Iraq stood at $77 million.  He added that the main non-oil exports to Iraq over the past years have been cement, water coolers, tomato paste, cheese, ice cream, yogurt and agricultural products such as tomatoes and apples.

“The high commission of the two countries has not held a meeting since 2014 and the Committee on Economic and Commercial Cooperation has not convened since 2012. Instability in laws and regulations, particularly customs regulations and mismatched tariff and customs procedures at entry checkpoints, lack of banking, insurance and laboratory infrastructures, lack of familiarity with reputable Iraqi merchants and craftsmen, unfavorable business environment in Iraq and the absence of a common trade gate, the non-entry of Iraqi customs into international conventions and the temporary entry of goods are among these problems.

The secretary-general of Iran-Iraq Chamber of Commerce believes measures must be taken to fix the problems facing Iranian traders in Iraq: First and foremost, visas should be abolished between the two countries. 

He called for signing a preferential tariff agreement, setting standards of goods and services, forming joint shipping and engineering companies, establishing a mutual banking and insurance route, in addition to creating a joint trade gate between the two countries.

    Fragile Exports

Senior consultant and manager of TCCIM’s Iraq and Syria Project, Mohammad Mehdi Rasekh, pointed out that 25% of Iran’s exports to Iraq are based on imported raw materials, including yogurt and cheese.

“The export of agricultural products to Iraq is also going to take a hit, as watermelon exports are not justifiable considering Iran’s current state of water stress. Food exports fare much better,” he said.

Rasekh bemoaned the lack of variety in Iranian products exported to Iraq, with the first 100 items on the list accounting for 75% of the entire exports.

“Iranian merchants should establish networks with Iraqi businessmen and focus on controlling the quality of exported goods and after-sale services,” he added.

“TCCIM, ICCIMA (Iran Chamber of Commerce, Industries, Mines and Agriculture) and Iran-Iraq Chamber of Commerce should help exporters boost interactions with Iraq, and even provide them with facilities,” he said.

Rasekh underscored the need to strengthen trade relations with the neighboring country, in the face of looming US sanctions.

“Producers must be encouraged to play an active role in the Iraqi market, especially in developing its infrastructure,” he concluded.

 

US sanctions Iraq market Tehran Commerce Chamber Trade With Iraq