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EghtesadOnline: Iran's exports to EU member states in March registered a growth of 69%, indicating an acceleration of trade ties in recent months.

Trade with 27 members of the European Union reached €1.05 billion worth of goods and commodities in the first quarter of 2020, to post a 3.15% decline compared with the previous year's corresponding period.

This is while Iran's trade with European states grew by 5.62% during the month to €369.3 million. 

As per data extracted from Eurostat's datasets, Iran exported €74.6 million worth of goods to EU partners in March, up about 69%. Imports from the green continent declined by 3.51% to €294.7 million during the third month of the year.

Germany remained the top trading partner of Iran during the first quarter, as the two countries exchanged €416.8 million worth of goods, 11% less than the year before. 

Italy came next with €147 million worth of trade with Iran. A year-on-year comparison of the figures indicates 12.8% decline in trade between Iran and Italy. 

The Netherlands with €129.3 million (up 56.8%), Spain with €72 million (up 12%) and France with €54.1 million (down 3%) were Iran's other major European trading partners.

The Czech Republic registered the highest growth of 152.4% in trade with Iran during the three months. Romania with 133% and Croatia with 115% came next.

France and the Netherlands recorded the highest jump among Iran's major trade partners in Europe, during the month of March, with 83.1% and 30.07%, respectively. 

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.

Iran exported €194.1 million worth of commodities to the EU in Q1, indicating a 5.3% growth compared with the similar period of previous year.

The main export destinations over the period were Germany (€70.1 million), Italy (€46.6 million), Spain (€19.3 million) and Netherlands (€8.5 million). 

Exports to Estonia saw the largest increase during the said period of 320% year-on-year.

Top exported goods included edible fruit and nuts; fruit zest; mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes; plastics and articles thereof; pharmaceutical products; coffee, tea, mate and spices n; products of animal origin, not elsewhere specified or included; iron and steel; organic chemicals; carpets and other textile floor coverings.

Iran’s imports from the EU member states declined by 4.86% to €863.2 million during the period under review. Germany accounted for the largest portion of exports to Iran with €346.6 million, down 14%, followed by Netherlands (€120.8 million), Italy (€101.07 million) and Spain (€52.9 million).

The imports mainly included nuclear reactors, boilers, machinery and mechanical appliances; parts thereof; pharmaceutical products; optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof; cereals.

Electrical machinery and equipment and parts thereof; and sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles; organic chemicals; miscellaneous chemical products; oilseeds and oleaginous fruits; miscellaneous grains, seeds and fruit; industrial or medicinal plants; plastics and articles thereof; essential oils and resinoids; perfumery, cosmetic or toilet preparations, constituted the other imports.

Trade between Iran and 27 EU member states in 2020 stood at €4.24 billion to register a 13.35% decline compared with €4.89 billion in 2019.

Iran exported €618.03 million worth of commodities to EU during the 12-month period, indicating a 7.18% fall compared with €665.8 million in 2019.

Imports from EU dropped by 14.32% to stand at €3.62 billion during 2020.



Factors Behind Trade Decline

The decline in Iran-EU trade is mainly due to the United States’ sanctions against the Islamic Republic.

The intensification of sanctions in the fiscal 2011-12 led to, on the one hand, a sharp decline in exports of Iran’s main exported commodities like chemicals and petrochemicals, petroleum products as well as nuts and dried fruits, and on the other, government restrictions on imports in a bid to economize on foreign currency until the fiscal 2015-16.

Amid heavy sanctions against the Islamic Republic, the government has placed an all-out ban or restrictions on imports of commodities into the country.

“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 US reimposition of sanctions. The number of these items increased to 2,262 last year [ended March 20],” Mehrad Ebad, a member of Iran Chamber of Commerce, Industries, Mines and Agriculture, said in a write-up for the news portal of Tehran Chamber of Commerce, Industries, Mines and Agriculture. 

“The ongoing restrictions or total ban on imports will continue even if sanctions against Iran are lifted,” says Minister of Industries, Mining and Trade Alireza Razm-Hosseini. 

“These measures are aimed at giving a boost to domestic production,” he was quoted by IRNA as saying. 

The minister said the production of parts in many industries has been localized such that domestic manufacturers account for 75% of home appliance and 80% of car production.

Iran and P5+1 signed the Joint Comprehensive Plan of Action on July 14, 2015, which culminated in the removal of international sanctions in January 2016.

Former US president, Donald Trump, announced the United States’ withdrawal from JCPOA on May 8, 2018, and reimposed sanctions and restrictions on Iran’s economy once again.

“The withdrawal of the United States from JCPOA in May 2018 and the intensification of restrictions, especially in the field of currency transfer, caused a severe contraction in foreign trade. Under the circumstances, in addition to severe restrictions on the exports of oil and petroleum products, non-oil exports also faced many problems. The reduction of foreign exchange resources due to the decline in exports naturally affected the volume of imports. However, in the fiscal 2019-20, despite the 7% decline in non-oil exports, due to the necessity of meeting the needs of the country and handling the domestic market, imports increased by 1.2%,” Marjan Faqih Nassiri, the head of the Institute for Trade Studies and Research, was quoted as saying by ILNA.

Restrictions related to the Covid-19 pandemic have also negatively affected Iran’s foreign trade.

Referring to the impact of Covid-19 pandemic, Nassiri said, “The fiscal 2019-20 coincided with the outbreak of coronavirus and it caused a decline in world trade and naturally our country was also affected by it; the existence of sanctions and the resulting restrictions exacerbated the impact of the outbreak on our country. Restrictions and sanctions led trade planners to focus on exports to 15 neighboring countries, as well as India and China.”

Data released by the Islamic Republic of Iran Customs Administration show Iran’s 15 neighboring countries accounted for about half of its total non-oil trade in the last Iranian year that ended on March 20, 2021.

The pandemic led to the closure of borders and restrictions on transfer of goods and it was an effective factor in overall decline of Iran’s foreign trade.

As indirect negotiations are underway between Iran and the US in Vienna, there is a possibility of improvement in Iran’s foreign trade.

US officials returned to Vienna this week for a fourth round of indirect talks with Iran on how to resume compliance with the deal.

JCPOA limited the scope of Iran's nuclear program. In return, the Islamic Republic received relief from the US and international sanctions. 

“In any case, the lifting of sanctions will have a significant impact on reducing trade risks and investment development in the country in order to stabilize the markets and create positive sentiments for investment," Nassiri said.

The European Union's political director said on Wednesday that he was "quite sure" that there would be a final agreement to revive the Iran nuclear deal.

"We have made substantial progress over the last 10 days but there are still things to be worked on and we will reconvene next week and we will continue working," Enrique Mora, who is coordinating indirect talks between Iran and the United States, was quoted as saying by Reuters at the end of a fourth round of negotiations in Vienna.

Talks resumed on May 7 with the remaining parties to the deal - Iran, Russia, China, France, Britain and Germany - meeting in the basement of a luxury hotel, and the United States based in another hotel across the street.

"I am quite sure that there will be a final agreement," Mora said. "I think we are on the right track and we will get an agreement."

Asked if he was saying there would be a deal in the next round: "I cannot venture such a prediction. What I can venture is that there will be an agreement, yeah, sure."


Eu Iran trade