Iran-EU Trade Tumbles 75%
EghtesadOnline: Trade between Iran and European Union member states during the first seven months of 2019 stood at €3.01 billion to show a 75.89% plunge compared with last year’s corresponding period, latest statistics provided by the European Statistical Office show.
Germany, Italy and the Netherlands were Iran’s top three trading partners in the European bloc with bilateral exchanges standing at €933.66 million, €548.15 million and €286.16 million respectively.
Iran’s trade with Cyprus (€4.32 million) and Bulgaria (€51.38 million) increased by 66.94% and 50.82% respectively year-on-year, marking the highest increase among EU states.
Trade with Greece (€27.87 million), Spain (€163.17 million), France (€233.8 million), Luxembourg (€363,310) and Sweden (€45.33 million) saw the sharpest declines of 97.35%, 91.16%, 88.18%, 87.85% and 83.23% respectively, according to Financial Tribune.
Eurostat is a directorate of the European Commission located in Luxembourg. Its main responsibilities are to provide statistical information to EU institutions and promote the harmonization of statistical methods across its member states and candidates for accession.
Organizations in different countries that cooperate with Eurostat are summarized under the concept of the European Statistical System.
Exports Decline 93.67%
Iran exported €452.65 million worth of commodities to the EU during the seven months, indicating a 93.67% fall compared with the similar period of the previous year.
The main export destinations over the period were Germany (€118.34 million), Italy (€106.65 million), Belgium (€44.27 million), Spain (€41.41 million) and Romania (€25.18 million).
Iran’s exports to Latvia, Estonia and Bulgaria experienced the highest year-on-year growth rates of 531.45%, 175.31% and 16.05% respectively. This is while exports to France, Greece and Spain fell by 99.15%, 99.08% and 97.21% YOY respectively, which are the sharpest among EU member states.
The exported goods mainly included plastics and articles thereof worth €91.59 million; iron and steel worth €73.86 million; edible fruit and nuts, zest of citrus fruits worth €73.54 million; coffee, tea, maté and spices worth €23.94 million; pharmaceutical products worth €21.47 million; carpets and other textile floor coverings worth €19.76 million; iron or steel products worth €18.31 million; animal products, not elsewhere specified or included worth €17.75 million; lac, gums, resins and other vegetable saps and extracts worth €13.4 million; and nuclear reactors, boilers, machinery and mechanical appliances, as well as parts thereof worth €10.82 million.
Imports Fall 52%
Imports from the EU dropped by 52.13% to stand at €2.55 billion during the period under review.
The top five exporters from the European bloc to Iran were Germany with €815.31 million, Italy with €441.49 million, the Netherlands with €275.75 million, France with €221.43 million and Belgium with €137.2 million worth of shipments to Iran.
Exports of Bulgaria with €29.37 million, Cyprus with €4.09 million, Croatia with €4.36 to Iran registered the highest YOY increase (94.5%, 76.07% and 27.12% respectively).
Latvia with €533,920, Luxembourg with €327,313 and Sweden with €38.91 million experienced the sharpest YOY decline in exports to Iran (91.72%, 88.62% and 85.11% respectively).
The imports mainly included nuclear reactors, boilers, machinery and mechanical appliances, as well as parts thereof worth €633.65 million; pharmaceutical products worth €374.81 million; optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus, as well as parts and accessories thereof worth €326.24 million; cereals worth €145.18 million; electrical machinery and equipment, as well as parts thereof, sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles worth €117.53 million; organic chemicals worth €87.91 million; plastics and articles thereof worth €66.99 million; miscellaneous chemical products worth €64.11 million; oilseeds and oleaginous fruits, miscellaneous grains, seeds and fruit, industrial or medicinal plants, straw and fodder worth €51.77 million; and essential oils and resinoids, perfumery, cosmetic or toilet preparations worth €50.73 million.
Other imported products included paper and paperboard; articles of paper pulp, of paper or of paperboard worth €41.69 million; tanning or dying extracts; tannins and their derivatives; dyes, pigments and other coloring matter; paints and varnishes; putty and other mastics; inks worth €36.97 million; manmade staple fibers worth €31.09 million; miscellaneous edible preparations worth €29.88 million; mineral fuels, mineral oils and products of their distillation, bituminous substances and mineral waxes worth €28.54 million; tobacco and manufactured tobacco substitutes worth €26.56 million; iron or steel products worth €25.6 million; vehicles other than rail cars or tramway rolling-stock, and parts and accessories thereof worth €24.74 million.
US Walkout From JCPOA
The steep decline in Iran's trade with Europe came after the US decided in 2018 to withdraw from the nuclear deal Iran signed with world powers in 2015 and reimpose sanctions.
The nuclear deal, better known as the Joint Comprehensive Plan of Action, was reached between Iran and the five members of the UN Security Council as well as Germany. As per the terms of the agreement, years of international sanctions against Iran were lifted. In exchange, Iran agreed to limit the scope of its nuclear program.
Following the US withdrawal, according to The Brussels Times, the European Union and the other signatories want to pursue the implementation of JCPOA without entering into conflict with the United States. This is easier said than done.
As a result of the extra-territorial effects inherent in Washington’s sanctions, companies trading with Iran risk being excluded from accessing the American market.
Iran began in May to reduce its compliance with JCPOA in response to the United States' withdrawal and reimposition of sanctions and other parties' failure to safeguard its economic interests under the agreement.
It has demanded assurance for the sale of its oil, the country's main source of income, and "access to its revenues as completely ready for use and without any restriction", Deputy Foreign Minister Abbas Araqchi said.
A compensating mechanism, named INSTEX, was therefore conceived to bypass the impediment. It is based on an equalization between European importers and exporters and their Iranian counterparts. INSTEX is limited to the areas of health and food products.
A company to operate the mechanism was set up in Paris.
The EU's parliamentary foreign affairs commission on Tuesday approved a draft resolution supporting Belgium’s membership of INSTEX.
Other than Belgium, eight EU countries and Norway have said they are ready to use it.
Michael Bock, the new head of INSTEX, who was in Tehran last week, said some small European banks are willing to join the barter trade mechanism.
According to Bock, small banks in Italy, Germany and France have announced readiness to operate within the system and handle the barter trade between Iranian and European companies, IRNA reported.
Despite its creation almost nine months ago, INSTEX is not yet operational due to complex technical issues and the European fear of being targeted by hostile US sanctions.
France has proposed offering Iran about $15 billion in credit lines until the yearend if Tehran comes fully back into compliance with its 2015 nuclear deal, a move that hinges on Washington not blocking it, Reuters reported.
"Europe has to either buy oil from Iran or provide Iran with the equivalent of selling oil as a credit line, which is guaranteed by Iran's oil revenues and means a presale of oil in some sense," Araqchi said.
“In case an agreement is reached, Iran would either sell 100% of its oil over the next four months, or would receive [equivalent revenues] as a credit line and pre-sell [its oil]," he added.
Araqchi also said that after receiving $15 billion, Iran would be ready to negotiate with the five remaining parties to JCPOA, but "there are serious disagreements on the agenda of talks".