EghtesadOnline: The remaining signatories to the landmark nuclear deal between Iran and six world powers, formally known as the Joint Comprehensive Plan of Action, announced in a statement that the EU mechanism for trade with Iran is up and running.
The statement, released at the conclusion of the 12th meeting of the Joint Commission on JCPOA, also said the long-awaited trade mechanism, dubbed INSTEX (Instrument in Support of Trade Exchange), is currently processing the first transactions.
“France, Germany and the United Kingdom informed participants that INSTEX had been made operational and available to all EU member states and that the first transactions are being processed,” reads an excerpt of the statement published on the official website of the European Union.
The meeting was chaired by Helga Schmid, the secretary-general of the European External Action Service, on behalf of the EU High Representative Federica Mogherini, and was attended by representatives of China, France, Germany, Russia, the United Kingdom and Iran, according to Financial Tribune.
INSTEX is aimed at facilitating trade with Iran by circumventing sanctions reimposed by the United States after US President Donald Trump pulled out of the 2015 nuclear deal last year and said he wants a new agreement on American terms.
It is said that the mechanism obviates the need for the international paying systems like SWIFT to carry out exchanges. Under mounting pressure from Washington, SWIFT decided to remove Iranian banks from its network last November.
In a recent talk with Financial Tribune, Simon Penney, the UK trade commissioner for Middle East, Afghanistan and Pakistan, said INSTEX will operate "simplistically on a netting basis" so the idea is to minimize the flow of physical cash or money across the border in and out of Iran and is predicated on having equal debits and credits on both sides.
The EU statement noted that ongoing complementary cooperation with the corresponding Iranian entity will speed up.
Iran set up a corresponding financial mechanism in March, two months after France, Germany and the United Kingdom [known as E3], announced the plan to create INSTEX to promote non-dollar trade with Iran.
The Iranian reciprocal entity, officially known as the Special Trade and Finance Institute, was officially registered in April as a private company based in Tehran.
The E3 confirmed in the statement that some EU member states are in the process of joining INSTEX as shareholders. They are also working to open INSTEX to economic operators from third countries.
The instrument is aimed at enabling legitimate trade between Iran and European countries in the first phase before expanding to third parties.
Observers believe that the second phase of the arrangement, which should link Iran to other countries, is more important for Tehran, given the low level of trade between Iran and EU.
Attempt to Save the Deal
Under the terms of JCPOA, the Joint Commission is responsible for overseeing the implementation of the landmark agreement. It is held on a regular basis to take stock and discuss the latest developments concerning both the abolition of sanctions and implementation of nuclear-related commitments.
In the face of rising tensions with the US and sanctions taking its toll on Iran’s economy, Iran has threatened to partially withdraw from the deal if other parties to the deal don’t take practical steps to save Iran’s economic interest as per the terms enshrined in the deal.
The EU reiterated that JCPOA remains a key element of the global nuclear non-proliferation architecture.
“Furthermore, in light of the recent tensions, its preservation continues to be essential for the regional stability and security,” the statement said.
“Participants recalled that the lifting of sanctions is an essential part of the agreement and reviewed their respective commitments in this regard. They also took stock of respective efforts aimed at mitigating the negative impact of US withdrawal and reimposed US sanctions, actions for which they have repeatedly expressed deep regret.”
Progress on Other Issues
Participants at the Joint Commission meeting also reported progress on other issues, including efforts to modernize Iran’s nuclear infrastructure.
“Participants noted good progress, among others, on the modernization of the Arak research reactor and the stable isotope production project as part of the conversion of the Fordow facility, as foreseen in the JCPOA,” the statement read.
“They underscored the importance of the projects in terms of nuclear non-proliferation.”
The participants particularly welcomed progress made by co-chairs China and the United Kingdom, including the signing of the contract between China and Iran on transient analysis.
The Joint Commission reaffirmed its firm commitment to fully support these nuclear projects, including the timely completion of the modernization of Arak Research Reactor and the supply of equipment.