Domestic Economy

Undisputed Champion in Iraqi Market

Undisputed Champion  in Iraqi MarketUndisputed Champion  in Iraqi Market

Baghdad’s trade ties with Tehran in recent years, according to experts, have been exceptionally good.

According to Iran’s Customs Administration, Iran-Iraq trade value stood at about $7 billion last Iranian year (ended March 20, 2015), which mostly represents Iran’s non-oil goods’ exports to Iraq, excluding raw materials, electricity, oil products and military aid.

This figure accounts for 25% of Iran’s total non-oil exports, making Iran a major exporter to Iraq.  This is while Iraq, in the face of many challenges such as the IS onslaught, the skyrocketing military expenses and the plunging oil prices, has recently tripled import tariffs on certain key commodities, decreasing its total imports by 30%, IRNA reported.

Turkey has backed down in trade with Iraq due to the blockage of its main trade routes with the country and the IS militant group’s presence in the region. In addition, Iraq’s western borders with Syria and Jordan are closed and China, which is a force to be reckoned with in exports, has imported a substantial amount of oil and oil-related goods from Iraq.

Under the circumstances, Iran is currently the undisputed champion in the Iraqi market.

In fact, Turkey, Iran’s main rival in trade with Iraq, has recently taken more than a few blows. The IS assault and the fall of Mosul blocked Turkey’s main trade paths to Iraq and forced traders to take alternative routes, mostly through Iran. The hike in transportation costs and consequently the prices of traded products make it considerably hard for Turkey to hold its grip on the Iraqi market.

This is while Iran’s safe and extensive borders with Iraq have also raised the competitive advantage of conducting trade with Iran.

Add this to the fact that many in Iraq believe Turkey is supporting IS and advocate banning the import of Turkish products. All these factors have adversely impacted Turkey’s trade ties with Iraq. This can be seen in the decline in Turkey’s annual exports from about $12 billion in 2013 to Iraq to about $8 billion in 2014.

According to the National Bureau of Statistics of China, the trade behemoth’s export value to Iraq stood at an all-time high of $7.7 billion in 2014, actually surpassing that of Iran. However, China purchased more than $20 billion worth of oil and oil-related goods from Iraq in the same year, which dramatically tips the scale of trade balance over to imports, while China’s energy-hungry industries show no signs of reducing demand for oil.

This is while Iran has the upper hand in trade with Iraq, as its only imports from Iraq were about $50 million worth of scrap metal last Iranian year, according to the Iranian customs’ report.

Experts believe that Iran’s running start in trade with Iraq has turned into a fast-paced sprint that shows no sign of slowing down.

Currently, Iranian autos, home appliances and food products dominate the Iraqi market and are a common sight. Iran is also the number one destination for Iraqi tourists, as more than two million tourists annually visit Iran.