Iran’s trade with the member states of the Organization of Islamic Cooperation, excluding Iranian crude oil exports, reached 33.67 million tons worth $21.01 billion during the first five months of the current fiscal year (March 21-Aug. 22), registering a 4.14% decline in weight, but a 18.93% growth in value year-on-year, latest data released by the Islamic Republic of Iran Customs Administration show.
The UAE with 9.6 million tons worth $8.85 billion was Iran’s top trade partner among OIC member states, registering a 0.86% and 19.28% growth in terms of weight and value YOY, respectively.
It was followed by Turkey with 4.84 million tons (up 57.93%) worth $4.49 billion (up 46.53%) and Iraq with over 8.7 million tons (down 30.91%) worth $3.03 billion (down 11.98%).
Iranian exports reached 26.58 million tons worth $11.39 billion during the five-month period, registering a 2.59% decline in weight, but a 25.07% increase in value compared with the same period of last year.
Iraq with 8.65 million tons (down 28.78%) worth $2.96 billion (down 8.05%) was the top export destination during the period.
It was followed by the UAE with 5 million tons (up 3.88%) worth $2.78 billion (up 57.24%) and Turkey with 3.68 million tons (up 161.88%) worth $2.32 million (up 102.62%).
Imports reached 7.08 million tons worth $9.62 billion to register a 9.55% decline in weight, but a 12.4% growth in value year-on-year.
The UAE with 4.6 million tons (down 2.23%) worth $6.07 billion (up 7.41%) was the top exporter to Iran during the period.
Turkey with 1.16 million tons (down 30%) worth $2.16 billion (up 12.93%) and Pakistan with 383,455 tons (up 169.76%) worth $429.33 million (up 216.11%) came next.
Founded in 1969, OIC has 57 members, including Iran, with 47 Muslim majority countries. Some, especially in West Africa, have large Muslim populations that necessarily do not form a majority.
According to IRICA, Iran traded 100.15 million tons of goods (excluding crude oil export) worth $52.6 billion with OIC states in the fiscal 2021-22 (ended March 20), which volume was 43% higher than in the year before.
The UAE with 23.48 million tons worth $21.46 billion, Turkey with 19.46 million tons worth $11.39 billion and Iraq with 32.58 million tons worth $10.11 billion were Iran’s key trading partners last year.
Iran’s exports reached 78.67 million tons worth $27.68 billion.
Iraq with 29.88 million tons worth $8.92 billion, Turkey with 15.74 million tons worth $6.09 billion and the UAE with 10.76 million tons worth $4.93 billion were the top export destinations.
Imports stood at 21.47 million tons worth $24.92 billion. The UAE with 12.72 million tons worth $16.53 billion, Turkey with 3.73 million tons worth $5.3 billion and Iraq with 2.7 million tons worth $1.2 billion were among the main exporters.
UAE a Key Partner
Despite the role and significance of the UAE in Iran’s foreign trade, the two neighbors have yet to sign an agreement on preferential trade tariffs, says Farshid Farzanegan, a former chairman of Iran-UAE Chamber of Commerce.
“Due to geographical, cultural, trade and historical relations between Iran and the UAE, as well as the volume of annual imports [from the Emirates], that country offers an opportunity to Iranian companies,” he was quoted as saying by Fars News Agency, noting that the Arab neighbor plays an important role in international trade and global value chains.
Farzanegan, who is a member of the joint chamber’s Board of Directors, said the UAE’s average annual trade with Iran from the fiscal 2010-11 to fiscal 2018-19 amounted to $13 billion. It was $13 billion for China, $5.5 billion for South Korea, $5.5 billion for Turkey and $5 billion for Iraq.
Iran’s exports to the UAE include vegetables, lead, melon, grapes, spice and cement, with each Iranian item having a nearly 10% share of the Emirati market.
Noting that a major constraint in two-way trade is banking and money transfer, Farzanegan said insurance coverage for bilateral trade is insufficient.
“It is not possible for traders to open letters of credit. The lack of consortiums for exporting technical and engineering services is another problem. This is while trade infrastructure in the UAE is robust. Therefore, to develop trade with this country, we must upgrade and develop our infrastructure. Iran’s geopolitical and geoeconomic advantages allow for the transport of goods from Turkey and the CIS states to the UAE,” he said.
The UAE-Turkey transit corridor through Iran became operational with the first shipment from the UAE port of Sharjah to the Turkish port of Mersin docking at Iran’s Shahid Rajaee Port in November 2021 before reaching Turkey through the Bazargan border in northwest Iran.
Mohammad Hossein Rezaian, an expert on transit trade, told Mehr News Agency that the cargo entered Shahid Rajaee Port in southern Iran along the Persian Gulf coast and reached the Turkish port of Mersin.
The new route shortens transportation time by 12 days, meaning that it takes eight days for the shipment to reach Turkey via Iran from Sharjah. In the past, ships had to cross the Bab al-Mandeb Strait, the Red Sea and Suez Canal to reach Turkey after 20 days.
Noting that the UAE has zero tariff on imports of almost all goods, except Iranian cement with a 5% tariff, Farzanegan said it is crucial for Iran to forge a preferential tariff agreement with the UAE to be able to boost trade.
Iran’s import tariffs are among the highest in the world, with some items carrying a tariff as high as 40%.
“We have no preferential tariff agreement with any country. A deal has been concluded with Turkey and negotiations have been held with Pakistan. During a recent visit by the Minister of Industries, Mining and Trade Reza Fatemi-Amin to the UAE, the two sides discussed the prospects of enforcing preferential trade and tariffs, but an agreement is pending.
Iran’s first trade center licensed by the Trade Promotion Organization of Iran was inaugurated in Dubai, the UAE, in December 2021.
Iran Chamber of Commerce, Industries, Mines and Agriculture reported that the center should help Iranian companies find a foothold in the UAE, particularly Dubai that is one of the hubs of Iran’s trade in the strategic region.
It also seeks to use advanced information technology to create a platform that facilitates Iranian businesses in the Emirati market with technical advice and consultation.
Iran’s Foreign Ministry has said it supports closer ties with neighbors, including the UAE, calling for regular consultations between the two neighbors.
The UAE recently declared that its ambassador to Iran, Saif Mohamed Al-Zaabi, would return to Tehran “in the coming days” more than six years after the Persian Gulf Arab state downgraded its diplomatic relations with Iran in 2016 in solidarity with Saudi Arabia after the storming of the Saudi Embassy in Tehran by Iranian demonstrators in protest at the Saudi execution of the prominent Shia cleric Nimr Al-Nimr, reads an article in Al-Ahram.
The UAE decision to return its ambassador in Tehran is in line with efforts to strengthen relations with its regional rival “to achieve the common interests of the two countries and the wider region”, the UAE Foreign Ministry said in a statement.
