Iran and Iraq traded 11.62 million tons of goods worth $4.14 billion during the first eight months of the current Iranian year (March 21-Nov. 21), according to the spokesperson of the Islamic Republic of Iran Customs Administration.
Iran’s exports hit $4.02 billion, registering a 26.5% fall compared with the corresponding period of last year.
“Exports to Iraq declined by 42% [in terms of weight] compared with the last year’s same period,” Morteza Emadi was quoted as saying by IRIB News.
Ceramic products, dairy products and light oils were the main exported products.
Iran’s imports from the neighboring country stood at $111.84 million during the period to register an 82% decline in terms of value.
According to the official, imports from Iraq have declined by 99% in terms of weight.
The main imported products were auto tires, cement and fabrics.
Reasons for Decline in Exports
Hamid Hosseini, a board member of Iran-Iraq Chamber of Commerce, says the decline experienced in Iran’s exports to Iraq is to blame on several factors, including the change of government in the neighboring country, Abaeen commemorations that caused a temporary suspension in trade and the abolition of subsidized imports in Iran.
“We have tried hard over the years to find a foothold in the Iraqi market. At present, China and Turkey are extensively active in Iraq, but the products offered by them do not overlap. Turkey mainly exports gold, plastic and apparel to Iraq while China sells electronic devices, home appliances and turbines. We are not prominent exporters in any of these goods so there is no competition there,” he said.
Iraq is one of the main destinations for Iran’s agricultural and food products as well as mineral and mining industries’ exports.
According to an official with the state-owned mining holding company, Iranian Mines and Mining Industries Development and Renovation Organization, Amir Sabbagh, Iraq accounted for about one-fifth of Iran’s total steel exports during the first half of the current Iranian year (March 21-Sept. 22).
Behnam Aziz-Zadeh, the head of Tile and Ceramic Manufacturers Association, said that in the last Iranian year (2021-22), Iraq was the main destination of Iran’s ceramics and tiles, as the neighboring country accounted for 70% of total exports.
“Iraq meets 84% of its tile and ceramic demand from Iran,” he was quoted as saying by IRIB News.
According to a customs expert, Rouhollah Latifi, Iraq alone accounted for 37% of Iran’s total exports of agricultural and food product exports in terms of tonnage in the last Iranian year (March 2021-22).
“Historical, cultural and religious commonalities between the two nations of Iran and Iraq and the development of political and economic relations have increased Iran's non-oil exports from $145 million in the fiscal 2001-02 to $9 billion in the fiscal 2019-2020. And again, last year’s [2021-22] exports hit 30 million tons worth $8.92 billion. In recent years, Iraq has become the second-largest export destination of Iranian goods in the world and the topt destination among Iran's neighbors,” Latifi, a former spokesman of the Islamic Republic of Iran Customs Administration, said.
He explained that Iran registered its first jump in exports to Iraq in the fiscal 2005-06 with $1.22 billion worth of shipments. The figure reached $2.76 billion in the following years.
“Iran’s imports from Iraq, which mostly included essential goods, reached a record high of 2.7 million tons of goods worth $1.2 billion in the last Iranian year [March 2021-22],” he added.
Iran's total imports during 2000-20 stood at 1.31 million tons worth $1.33 billion. In other words, imports in the fiscal 2021-22 were higher than the volume registered during the two decades.
Construction materials, petroleum products, electronics, medical equipment and medicine, automobiles and spare parts, clothing, bags, shoes, iron products and nuts were the main goods exported from Iran to Iraq, besides agrifood products.
Essential goods such as wheat, barley, oil, corn, soybean, rubber, paper, and cereals, along with machinery, scrap metal, home appliances, electronic equipment and measuring devices, were among the most important goods imported from Iraq.
Kermanshah Province in western Iran shares around 371 kilometers of borders with Iraq and the Kurdistan Region.
The province accounts for around half of Iran’s annual non-oil exports to Iraq.
$4b Engineering Agreement
Iran signed a $4 billion contract related to the export of technical and engineering services with Iraq last week.
The purpose of the agreement is to make up for the decrease in Iranian non-electricity exports to Iraq, Al-Monitor reported.
From March to November of this year, such exports decreased by $1.4 billion to $4.7 billion. The reason for the decrease was the delay in forming an Iraqi government, the Iranian state-run Press TV reported.
There have been numerous developments in Iran-Iraq relations recently. Iraqi Prime Minister Mohammed Shia al-Sudani finally took office in late October — a year after Iraq’s last election.
Sudani visited Iran recently and discussed cooperation related to the economy, security and religious tourism with Iran’s Leader Ayatollah Ali Khamenei, according to a tweet from the prime minister’s official account.
Iran is a major export partner of Iraq and provides its neighbor with electricity. However, Iran cut its electric exports to Iraq earlier this year, blaming issues related to US sanctions. Iran’s main exports to Iraq in 2021 were agricultural products, engineering services and construction materials, in addition to electricity. These exports increased by 21% that year, according to the Iraqi Kurdish news outlet Rudaw.
Iran’s Oil Ministry has also announced the opening of an office in Baghdad.
Al-Sudani thanked Iran for its continued deliveries of gas and electricity, which have been in short supply in Iraq, while he also pointed to discussions on a “mechanism” to enable Iraq to pay Iran for these services, Iraqi News reported.
Iran’s President Ebrahim Raisi said banking, finance and business issues were also discussed and that talks between the two allies “will help resolve bilateral problems”.
