Despite the significance of the UAE in Iran’s foreign trade, the two countries have yet to forge an agreement to avail themselves of preferential trade tariffs, says Farshid Farzanegan, former chairman of Iran-UAE Chamber of Commerce.
“Due to geographical locations, cultural, trade and historical relations between Iran and the UAE, as well as the volume of annual imports, this country is a golden opportunity for Iranian economic players,” he was quoted as saying by Fars News Agency.
“In 2019, the UAE’s exports stood at $248 billion while its imports hit $235 billion and as the world’s 24th largest exporter and 22nd largest importer, it has a significant position in the international economy and global value chains.”
According to the official, who is a member of the joint chamber’s board of directors, the UAE’s average trade volume with Iran since fiscal 2010-11 stands at $16 billion. From the fiscal 2010-11 to fiscal 2018-19, the figure stands at $13 billion.
The average annual trade volume figure for the eight-year period stands at $13 billion with China, $5.5 billion with South Korea, $5.5 billion with Turkey and $5 billion with Iraq, indicating that the UAE has been the leading trade partner of Iran over the years.
Data released by the Islamic Republic of Iran Customs Administration show the UAE tops the list of exporters to Iran.
According to IRICA caretaker, Alireza Moqaddesi, the UAE exported 8.9 million tons of goods worth $11.5 billion to Iran during the current Iranian year’s first nine months (March 21-Dec. 21).
Iran’s total imports hit 30.1 million tons worth $37 billion during the period, registering a 20% and 37% year-on-year growth in weight and value respectively, IRNA reported.
“The UAE was followed by China with 2.5 million tons worth $8.4 billion, Turkey with 2.9 tons worth $3.7 billion, Germany with 593,000 tons worth $1.4 billion and Switzerland with 1.6 million tons worth $1.3 billion,” Moqaddesi was quoted as saying by IRNA.
The Arab country was also among Iran’s top export destinations during the period.
China was Iran's biggest export destination with 21.3 million tons of imports worth $10.2 billion, followed by Iraq with 23.5 million tons worth $6.8 billion, Turkey with 11.7 tons worth $4.1 billion, the UAE with 8.3 million tons worth $3.4 billion and Afghanistan with 3.3 million tons worth $1.4 billion.
Iran’s total trade (excluding crude oil exports) stood at 122.5 million tons worth $72.1 billion during the three-quarter period, registering an 11% and 38% year-on-year growth in weight and value respectively.
Exports hit 92.3 million tons worth $35.1 billion to register an 8% and 40% increase in weight and value respectively compared with last year’s corresponding period.
Petrochemicals had the lion’s share of exported items with 42.4 million tons worth $14.7 billion in the period, accounting for 46% of total exports’ weight and 42% of value.
Imports hit 30.1 million tons worth $37 billion during the period, registering a 20% and 37% growth in weight and value YOY respectively.
According to Farzanegan, Iran’s major exports to the UAE are vegetables, lead, melon, grapes, spice and cement, with each Iranian product having a 10% share in the Emirati market.
Obstacles Faced by Traders
Noting that the most important hurdle in the way of trade between the two countries pertained to banking and money transfer, the former chairman of the joint chamber said the ceiling for insurance coverage of trade between the two sides is insufficient.
“It is not possible for traders to open letters of credit. Non-existence of consortiums for export of technical and engineering services is another problem,” he said.
"This is while trade infrastructure in the UAE is very strong, therefore, in order to develop trade relations with this country, we must upgrade and develop our infrastructure accordingly.”
Farzanegan noted that Iran’s geopolitical and geoeconomic advantages allow for transport of goods from Turkey and CIS states to the UAE.
The UAE-Turkey transit corridor through Iran became operational with the first shipment from the UAE port of Sharjah en route to the Turkish port of Mersin, as it docked at the Iranian Shahid Rajaee Port in November 2021 before reaching Turkey through the Bazargan border crossing in northwest Iran.
Mohammad Hossein Rezaian, an expert in the field of transit, told Mehr News Agency on the new transit route that the consignment entered the port of Shahid Rajaee in southern Iran on the Persian Gulf from the UAE and reached the Turkish port of Mersin.
The expert said the new route shortens the former transit route by 12 days, meaning that it will take eight days for the shipments to reach Turkey's port through Iran from UAE's Sharjah while the previous route had to cross the Bab al-Mandeb Strait, the Red Sea and the Suez Canal and all the way to Turkey, which would take 20 days.
Noting that the UAE has zero tariff on the import of almost all types of commodities, except for Iranian cement that had a 5% tariff, Farzanegan said it is necessary for Iran to facilitate the import from the UAE by establishing preferential tariffs.
Iran levies high tariff rates on imports, which reaches as high as 40% on certain commodities.
“We practically have no preferential tariff agreement with any country. An agreement has been concluded with Turkey, negotiations have been held with Pakistan and during a recent visit of Iran’s minister of industries, mining and trade [Reza Fatemi-Amin] to the UAE, negotiations have been held to this end, but an agreement has yet to be made.
An Iranian delegation led by Fatemi-Amin visited the UAE earlier in February.
President of Iran Chamber of Commerce, Industries, Mines and Agriculture Gholamhossein Shafei, and the head of the Trade Promotion Organization of Iran, Alireza Peymanpak, also accompanied the visiting mission, who took part in a joint forum titled “Business and Investment Opportunities” on Feb. 8.
Iranian Trade Center in Dubai
Iran’s first trade center licensed by Trade Promotion Organization of Iran was recently inaugurated in Dubai.
As Iran Chamber of Commerce, Industries, Mines and Agriculture reported, the center is aimed at helping Iranian companies find a foothold in the UAE, Dubai in particular, which happens to be one of the main hubs of Iran’s trade in the region.
It also seeks to use advanced information technology to create a platform that facilitates business activities of Iranian firms in the Emirati market by providing technical advice and consultation services.
The inauguration came after a senior Emirati official recently said the UAE would soon send a delegation to Iran as part of efforts to improve ties with Tehran.
"I hope that it is the sooner the better and all our friends are aware of it," Anwar Gargash, diplomatic adviser to the UAE president, told reporters when asked when a UAE delegation would hold talks in Tehran.
The idea was to "turn over a new page" in relations, he was quoted as saying by Reuters.
Iran’s Foreign Ministry has voiced the administration’s determination to broaden relations with neighbors, including the UAE, calling for regular consultations between Tehran and Abu Dhabi.
The UAE’s top national security adviser, Sheikh Tahnoon bin Zayed Al Nahyan, paid a visit to Iran earlier last month for high-level talks that are seen as a possible sign of thawing relations between the two countries.
He expressed Abu Dhabi’s readiness to expand cooperation with Iran, hoping that a visit by Iranian President Ebrahim Raisi would open a new chapter in the two countries’ relations.
“We are the children of this region and share the same fate, so expansion of bilateral relations is on our agenda,” Sheikh Tahnoon said in a meeting with Raisi in Tehran, President.ir reported.
He also extended the Emirati president’s official invitation to Raisi to visit the Persian Gulf Arab country.
The Emirati advisor also met his Iranian counterpart, Ali Shamkhani, and held detailed negotiations which he said would be a turning point in bilateral relations, helping improve the overall security in the region.
“Iran, as a great and strong country in the region, enjoys a unique geopolitical position as it is the gateway between the east and the west,” he said.
Aaccording to Sheikh Tahnoon, the development of brotherly relations between Abu Dhabi and Tehran is a priority of the UAE.
“It is essential to establish expert working groups to work out areas for joint cooperation in various economic sectors and identify the impediments to remove them,” he said.
Shamkhani also expressed hope that the Emirati official’s visit would be the beginning of a new era of mutual relations and pave the way for the expansion of ties in all sectors.
Iran and the UAE have had business ties stretching back over a century, but they have been on different sides on certain issues, including the war in Yemen.
Sheikh Tahnoon’s visit comes amid Abu Dhabi’s efforts to de-escalate tensions with Iran as part of a policy choice toward diplomacy and away from confrontation.
