Domestic Economy

UK Trade Delegation Plans October Visit

UK Trade Delegation  Plans October VisitUK Trade Delegation  Plans October Visit

Director general of the British-Iranian Chamber of Commerce Martin Johnston is hoping to lead the UK's first trade delegation to Tehran in years this October.

The delegation will include 15 top managers and experts from energy, law, engineering and other sectors, who will look at opportunities in the emerging Iranian market, the Sunday Guardian reported.

While members of the delegation have not yet been specified, former British ambassador to Tehran Richard Dalton is expected to accompany the delegation.

Strong prospects for pharmaceuticals, medical exports, agricultural and general engineering products are likely to be reviewed, and it is understood that Shell and BP are interested in investments that would offer opportunities in the British oil and gas supply chain.

However, UK companies are already falling behind French, German and Italian rivals to enter Iran. UK-based Telegraph newspaper wrote in late July that, “Britain’s biggest trading rivals in Europe have wasted little time in gaining a head start in the race to win billions of pounds worth of business in Iran.”

Germany, France and Italy sent high-level officials to visit Iran with the aim of reviving economic relations soon after a historic nuclear agreement was reached between the Islamic Republic and the P5+1 group including Britain, the US, Russia, China, France and Germany in Vienna on July 14.

British companies, especially in the oil and gas sector, are aching to get back. Royal Dutch Shell has already held talks with Iranian officials about the way forward and BP chief executive Bob Dudley spoke at length about the importance of Iran during the company’s earnings briefing in July.

But the British government is reluctant to offer any diplomatic help to British businesses to be reestablished in Iran before the International Atomic Energy Agency (IAEA) has verified that Iran will comply with its nuclear commitments agreed in Vienna.

The UK Foreign and Commonwealth Office said in a statement: “If Iran adheres to its commitments under the comprehensive deal and sanctions are lifted, then the UK government will help business take advantage of the opportunities that arise. Until the IAEA has verified Iran’s actions on its nuclear program, sanctions will remain in place, and we will continue to enforce them rigorously.”

Westminster's strong backing of sanctions against Iran has resulted in the UK losing 84% of its exports to Iran. The nuclear deal offers plenty of scope to recover Britain's historic trade position with the country. Previously, the UK had between £400-500 million ($600-700 million) in direct exports, and about as much in indirect exports.

> Technical Issues Pending

Iran imported $614 million worth of goods from Britain during the past Iranian year (ended March 20), while it exported commodities worth $72 million, according to data provided by Iran’s Customs Organization. Iran’s imports from the UK included medicine, medical equipment and grains, while exports included steel and iron products, hand-woven carpet, saffron, date and raisins.

As the UK does not presently have an embassy in Tehran, British businessmen have to obtain visas through the Iranian consulates in Paris, Dublin or elsewhere. The old embassy building is waiting to be reopened, as the operations of businesses that trade with Iran rely on critical embassy support.

UK Foreign Secretary Philip Hammond expressed hope in July that the British embassy in Iran will reopen before Christmas. He, however, noted that “there are some technical issues on both sides that will have to be resolved before it can be done.”

The additional serious matter of the EU's informal banking boycott against Iran will also need to be resolved before actual trade can commence. Presently, most UK and EU banks will not provide banking services for trading with Iran as they have previously been penalized by US agencies. "Although there is much work to be done to normalize trade with Iran, the Joint Comprehensive Plan of Action signed in July is a most important step," says Johnson. "It is something we welcome and with goodwill will be the springboard for a better future between the UK and Iran."

Tehran-London relations became tense in 2011 when the UK embassy in Tehran was ransacked by a group of angry Iranian students, following London’s decision to impose sanctions on the Central Bank of Iran.

Following the incident, Britain withdrew its diplomatic staff from Tehran on November 30 and told Iran’s diplomats in London to leave within 48 hours.

Iran and Britain agreed in October 2013 to appoint non-resident chargé d’affaires as a first step towards normalizing the often tense relations.