Domestic Economy

Iran, UAE Activate Business Council

Iran, UAE Activate Business Council
Iran, UAE Activate Business Council

The Iran-UAE Business Council held its inaugural meeting in the Iranian capital Tehran on the sidelines of the Iran Expo, which runs from May 7 to 10, the UAE’s Ministry of Foreign Affairs and International Cooperation announced on its website.
The Emirati side was chaired by Abdullah Mohammed Al Mazrouei, chairman of the Federation of UAE Chambers of Commerce and Industry and president of the Abu Dhabi Chamber of Commerce and Industry. The Iranian side was headed by Deputy Foreign Minister for Economic Diplomacy Mehdi Safari, with the participation of a number of leading businesspeople from both sides.
In his inaugural speech, Al Mazrouei commended efforts by the organizing committees of both sides in establishing and activating the council, which will greatly contribute to strengthening cooperation between the two countries' business sectors.

He said the establishment of the Iran-UAE Business Council comes at a time when bilateral relations are witnessing economic growth and provides notable opportunities for the private and public sectors of both countries to further enhance trade, investment and economic ties.
"The UAE is confident that the Business Council will serve as a vital platform to further enhance partnerships between the UAE and Iran’s business sectors," he said.

Al Mazrouei stressed that the launch of the business council "embodies the joint keenness of both sides to enhance and elevate economic and trade cooperation between the two countries to new horizons while widening engagement for the Emirati and Iranian business communities."

He explained that bilateral economic relations have experienced continued growth in various fields, pointing out that economic cooperation in these sectors has increased trade and investment exchange.
Addressing the gathering, Safari expressed his appreciation for the attendance of the UAE delegation and coordination in holding the council's inaugural meeting in Tehran, which represents an important step toward bolstering bilateral economic relations. He noted that the meeting will foster an environment for consultation and exchange of views on issues that serve the two countries' business communities.
The Emirati economic delegation, which includes representatives of various entities, held a series of meetings with officials from diverse Iranian economic institutions and sectors.
The Iran-UAE Business Council was established in accordance with the memorandum of understanding signed between the Federation of UAE Chambers of Commerce and Industry and the Iran Chamber of Commerce, Industries, Mines and Agriculture in 2014. It aims to explore avenues for mutually beneficial economic opportunities between the two sides in a range of fields, including food, health and tourism. The council also serves as a platform for senior business leaders in both the UAE and Iran to facilitate business partnerships.



Major Trade Partner

The UAE is the biggest exporter to Iran, as it sold $18.39 billion worth of goods to Iran in the fiscal 2022-23 to register an 11% rise compared to the year before.
The Arab country is also a major destination for Iranian exports. It ranked fourth in the list of Iran’s top export destination in the fiscal 2022-23 with $5.76 billion, registering a 28% rise.
Iran said recently it had appointed an ambassador to the UAE for the first time since 2016, amid a realignment of relations between Persian Gulf states and Iran.
The move comes after the UAE in August 2022 moved to upgrade ties and said it was returning its ambassador to Tehran, Reuters reported.
The UAE downgraded relations with Iran after Saudi Arabia severed ties with Iran in January 2016 after Iranian protesters stormed the Saudi Embassy in Tehran following Riyadh's execution of a prominent Shia cleric.
The UAE, which has business and trade ties with Iran stretching back more than a century, started reengaging with Tehran in 2019. Its Dubai emirate has long being one of Iran's main links to the outside world.
Iran's newly-appointed ambassador, Reza Ameri, had served as the director general of the Iranian Expatriates Office in the Foreign Ministry, Iranian state media said.
Amid serious global tensions, the Persian Gulf region recently received the good news of a bilateral agreement reached by Saudi Arabia and Iran, which was brokered by China. This was followed by a visit to the UAE by Ali Shamkhani, secretary of Iran’s Supreme National Security Council, and a meeting between the head of the Iranian parliamentary delegation and high-level officials in Bahrain, Gulf News reported.
Statements by Persian Gulf Arab states and Iranian officials highlight the importance of economic, trade and investment cooperation in the ongoing rounds of talks between the sides. 
Regarding Saudi-Iran agreement, UAE’s National Security Advisor Sheikh Tahnoun bin Zayed Al Nahyan said, “This agreement plays a constructive role in expanding peace, stability and sustainable security in the region,” adding that “developing friendly and brotherly relations between Abu Dhabi and Tehran is among the UAE’s priorities."
Ali Shamkhani highlighted that cooperation and rapprochement must replace differences and hostility. 
The composition of delegations participating in the talks, which included the governor of Iran’s Central Bank, demonstrated that economic and investment issues took center-stage in the talks.
Iran’s first trade center licensed by the Trade Promotion Organization of Iran was inaugurated in Dubai in 2021.
As Iran Chamber of Commerce, Industries, Mines and Agriculture reported, the center will help 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.  



Shortcomings in Trade Ties Despite Huge Potential

Despite the 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.

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