The US might neglect the hundreds of billions of dollars in export revenue that American businesses are missing due to Washington’s anti-Iran policy, but not world businesses.
Just as US President Donald Trump seems to be hell-bent on scuttling the nuclear deal Iran reached with the country, as well as five other countries in 2015, other parties engaged in nuclear talks are planning long-term business cooperation made possible by the accord.
Trump has reportedly assigned a team to gather evidence to make the case for declaring that Iran is violating the terms of the deal—known officially as the Joint Comprehensive Plan of Action. New York Times reported on July 28 that American officials have already notified “allies” about Trump’s intention to reopen negotiations with Iran; or walk out of the deal unilaterally. Iran has said renegotiation of the deal is out of the question.
Other parties to JCPOA do not seem to be concerned about the US move. France, China and Russia have signed billions of dollars of deals with Iranian firms in the past few weeks, demonstrating their plan for business ties that could go on for decades.
French automaker Renault signed a contract on Monday to set up a €660 million joint venture with Iranian firms for increasing car production inside the country by 75%. The European firm will work with Industrial Development and Renovation Organization of Iran and local trader Parto Negin Naseh Company to manufacture 150,000 vehicles per year.
The contract—which is said to be Iran’s biggest ever auto deal with a foreign company—comes days after a €2.5 billion contract between Russia’s CJSC Transmashholding and IDRO to establish facilities for the joint manufacture of rolling stock in Iran. France’s Alstom is a major stakeholder in Transmashholding.
French energy giant Total, together with Chinese state-owned China National Petroleum Corp, signed a $5 billion deal with Tehran last month to develop Phase 11 of Iran’s South Pars, the world’s largest gas field.
China’s Exim Bank also signed a contract last month to provide $1.5 billion in loans for a project to electrify a 926-km railroad from Tehran to Mashhad, as part of its initiative to establish rail corridors from China to Iran, paving the way for a long-term $600 billion annual trade target.
$203-271b Loss in Export Revenue
Trump signed into law last week a legislation the US Congress had approved to impose sanctions on Iran, North Korea and Russia, just before Iran’s engagement-seeking president was sworn-in for a second four-year term in office.
Independent trade group US-Iran Chamber of Commerce seized the opportunity to highlight how much US businesses are missing out in the presence of legal hurdles pertaining to doing business with Iran.
“The start of President Rouhani’s second term coincides with the second year of implementation of JCPOA. President Rouhani has indicated that he would like to continue the current positive trends under JCPOA in a peaceful and mutually respectful manner in his second term,” the chamber said in a press release.
“It is estimated that sanctions on Iran cost the United States $203-271.8 billion in export revenues. As the only chamber of commerce devoted to US-Iran trade relations, the chamber utilizes its expertise to provide guidance on doing business in Iran in a way that maximizes compliance and minimizes risk. The chamber’s Iran-specific compliance and due diligence knowledge, business research and strong network allow it to provide vital information in the context of evolving US-Iran trade relations,” it added.
The USIRCC is a nonprofit, nonpolitical and nonpartisan organization based in Washington, DC. The chamber engages with a variety of individuals and entities, both domestic and international. Responding to an email enquiry by Financial Tribune, the chamber said it focuses exclusively on business, trade, and legal issues that may flow from those issues.
“The chamber does not become involved in political matters, nor does it provide statements on political matters,” it said.
Bilateral trade between Iran and the US is currently negligibly low. The figure stood at $77.2 million during January-June 2017, dropping 29% year-on-year, according to the US Census Bureau.
Despite his promise to revive exports and create jobs, Trump has been ignoring a huge potential for doing business with Iran—one exception being contracts between Boeing and Iranian airlines, which are said to support 118,000 US jobs.
USDA Push to Promote Trade
In a report published last month, the US Department of Agriculture urged the US government to “restart economic activity between the two countries”.
“With the concurrent removal of most sanctions by the European Union and the United Nations, Iran is poised to revive its antiquated petroleum sector and reenter important energy markets, changes likely to lead to added growth and investment throughout its economy,” reads the report.
“On the supply side, Iran’s farm sector also stands to benefit from these important changes, as new investors and technologies gradually lift productivity to higher levels. Such changes are expected to fuel growth of consumer demand for different food varieties, particularly higher value animal products.”
The new US sanctions have drawn criticism on the part of Europe and Russia. The French government says it will adapt “national mechanisms and update European mechanisms” to protect “extraterritorial effects” of the legislation.
Total and French auto companies were among the international firms that left Iran after the sanctions. But, this time round, experts are doubtful of the possibility of the US being able to persuade Europe to re-impose sanctions while Iran is fully complying with the nuclear deal.
In the energy sector alone, there are billions in investment opportunities up for grabs, which, as Iran’s Oil Minister Bijan Namdar Zanganeh earlier said, is not off limits to US companies.
“After Trump took office, US companies are afraid to invest in Iran. There are no limitations from our side, but they can’t,” he said.
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