Iran traded 50.08 million tons of goods (excluding crude oil exports) worth $29.22 billion with the Persian Gulf’s six littoral states, namely Iraq, Kuwait, Qatar, the UAE, Bahrain and Saudi Arabia, during the first 10 months of the current Iranian year (March 21, 2022-Jan. 20), registering a 0.08% and 15.43% year-on-year rise in terms of weight and value respectively, latest data released by the Islamic Republic of Iran Customs Administration show.
The UAE was Iran’s top trade partner among the countries under review with 20.27 million tons (up 5.48%) worth $19.77 billion (up 17.42%). It was followed by Iraq with 24.33 million tons (down 9.97%) worth $9.08 billion (up 10.47%) and Kuwait with 4.57 million tons (up 62.98%) worth $181.01 million (up 32.45%).
Iran’s non-oil exports to the six countries hit 38.93 million tons worth $14 billion during the period, to register a 2.9% and a 23.91% increase in terms of weight and value respectively.
The main export destination was Iraq with 24.21 million tons (down 3.27%) worth $8.92 billion (up 22.45%), followed by the UAE with 9.26 million tons (up 2.63%) worth $4.82 billion (up 26.91%) and Kuwait with 4.57 million tons (up 63.4%) worth $171.05 million (up 36.65%).
Imports stood at 11.14 million tons worth $15.17 billion during the 10 months, registering an 8.59% decline in terms of weight, but 8.56% growth in terms of value.
The UAE topped the list of exporters to Iran among Persian Gulf states with 11 million tons (up 8.01%) worth $14.95 billion (up 14.66%). It was followed by Iraq with 112,610 tons (down 94.34%) worth $153,790 million (down 83.29%) and Qatar with 18,240 tons (up 859.5%) worth $59.12 million (up 716.69%).
Iran traded 60.87 million tons of goods worth $31.9 billion with the Persian Gulf littoral states in the fiscal 2021-22, up from $22.36 billion in the year before. Exports totaled 45.43 million tons worth $14.15 billion while imports stood at 15.43 million tons worth $17.76 billion.
Total Foreign Trade at $93.8b
Iran’s total foreign trade, excluding crude oil exports, stood at $93.8 billion during the period under review.
Iran’s exports of fuel oil, kerosene, technical and engineering services and electricity stood at 103 million tons worth $45.3 billion during the 10 months, registering a 2.93% and 17.66% rise in terms of tonnage and value respectively compared with the corresponding period of last year, according to the head of the Islamic Republic of Iran Customs Administration.
Mohammad Rezvani-Far told IRNA that the average value of each ton of exported products increased by 14.31% to $440 during the period under review from $385 in the corresponding period of last year.
China with $12.6 billion, Iraq with $8.9 billion, Turkey with $6.6 billion, the UAE with $4.8 billion and India with $1.6 billion were Iran’s main export destinations.
“These five countries accounted for 73.96% and 76.3% of the weight and value of the total export, respectively,” he added.
The IRICA chief noted that liquefied natural gas with $6.8 billion was the main commodity exported during the period, as it accounted for 15.4% of total exports in terms of value.
Rezvani-Far said imports during the same period reached 31 million tons worth $48.5 billion, registering a 7.6% decline in tonnage but a 16.86% rise in value.
“The average value of each ton of imported goods grew by 25.74% to $1,571 during the period from $1,249 in last year’s same period,” he said.
Top exporters to Iran during the period were the UAE with $15 billion, China with $12.7 billion, Turkey with $5.1 billion, India with $2.4 billion and Germany with $1.5 billion. These countries accounted for 65.19% and 75.6% of the total imports’ weight and value respectively.
Essential goods such as corn, rice, soybeans, wheat, sunflower oil, barley and soymeal were the main goods imported during the period, as they accounted for 57.6% and 21.2% of total imports in tonnage and value respectively.
“The import of cellphones stood at $2.28 billion, accounting for 4.7% of the total imports’ value,” he said.
Rezvani-Far said a total of 11 million tons of foreign goods were transited from Iran during the same period, registering a 7.4% year-on-year rise.
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, Farshid Farzanegan, a former chairman of Iran-UAE Chamber of Commerce, has said.
“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.
“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 stood at $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 vegetable, 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 export of 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 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,” he added.
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. However, 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, Dubai in particular, which 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.
Restricted Trade Portfolio
According to Majid Reza Hariri, chairman of the Iran-China Chamber of Commerce, the lion’s share of Iran’s foreign trade is with five countries, namely China, the UAE, Iraq, Turkey and Afghanistan.
“A limited number of trading partners is not a good idea for a country whose export destinations are limited. Each of these countries could become a risk if and when they get a greater share of Iran’s trade and dominate,” he told Persian daily Ta’adol.
“We are likely to get into trouble for whatever reason, including political issues, with these countries, which account for more than 15% of our trade each. All said, market diversity is a must for import and export. Now that Iran is under sanctions and cannot forge ties with Europe and the US, we need to concentrate on other markets, namely Southeast Asia, South Asia, Central Asia, Africa and Latin America.”