EghtesadOnline: As long as there is demand, there will be supply, and if demand is not met through official channels, it will be met by smuggling.
Mehrad Ebad, a member of Iran Chamber of Commerce, Industries, Mines and Agriculture, added that the imposition of restrictions on the inflow of foreign products leads to an increase in inbound smuggling.
“A list of banned imports, including 1,600 items, was released by the government a few years ago to economize on foreign currency reserves in the wake of the US reimposition of sanctions. The number of these items increased to 2,262 last [fiscal] year [ended March 20, 2021],” he said in a write-up for the news portal of Tehran Chamber of Commerce, Industries, Mines and Agriculture.
“Today, tariff barriers are the favorable tool to manage imports across the globe, but Iranian policymakers opt for imposing restrictions and bans to regulate the country’s international trade on grounds that such measures buttress domestic production,” Ebad added.
Minister of Industries, Mining and Trade Alireza Razm-Hosseini noted that ongoing restrictions or a total ban on imports will continue even if sanctions against Iran are lifted.
“These measures are aimed at giving a boost to domestic production. Production of parts in many industries have been localized such that domestic manufacturers account for 75% of home appliances and 80% of car production,” he was quoted as saying by IRNA.
The ICCIMA member noted that a ban on the import of some products indirectly inflicts losses to local production and people.
A large number of items have been omitted from the list, despite having worthy domestic counterparts, such as carpets and polymers.
“On the other hand, prohibiting the import of products that have domestic counterparts is not a sound argument for promoting local production because first the products might be of different qualities and the move breaches consumers’ rights, and second the domestic production capacity might be limited and consequently the ban on imports would result in an increase in the prices of local products,” he added.
Ebad believes that severe restrictions on the inflow of products into the country also lead to an increase in inbound smuggling.
“The aforementioned list of banned imports includes purebred livestock and 125 species of fish. One might question how the country doesn’t need the genetic modification of livestock? Sadly, fish is not a significant component of Iranians’ diet. In the absence of these restrictions, the price of this source of food could have been more reasonable to account for a bigger share in people’s diet and accordingly reduce demand for chicken and red meat,” he said.
“Imports of moisturizing facial tissues are apparently banned but contraband is easy to find in shops. Forex reserves will not come under strain by the import of such commodities but import bans would definitely pave the way for the entry of substandard items and produce a big windfall for smugglers.”
Ebad stressed that although such bans are against the spirit of competition, the government needs to review the list with regard to people’s fundamental needs, consumer rights, support for domestic production, preventing smuggling and eliminating the so-called ‘golden’ signatures (a metaphor used in Farsi to suggest influence peddling) if it intends to proceed in that direction.
“The list of banned imports must be put together after a thorough appraisal of the real production capacity of local enterprises and the quality of their output, and how well they meet consumers’ needs. Seeking counsel from specialized associations in the process of revising the list of banned imports could be more apropriate,” he concluded.