Iran-Afghan Economies Tied by One-Way Trade

A review of trade between Iran and Afghanistan over the past decade shows the neighboring country has mainly been an importer of Iranian goods.

Iran’s exports to Afghanistan have been on a general uptrend starting at $497 million in the March 2005-6 fiscal year and reaching $2.87 billion in the fiscal 2012-13. The exports decreased slightly in the fiscal 2013-14 but bounced back to $3 billion in 2016-17.

Afghanistan’s exports to Iran have been as little as a dozen million dollars on average over the years, which peaked at $32 million in the fiscal 2013-14.

Secretary-General of Iran-Afghanistan Chamber of Commerce, Industry, Mines and Trade Mozaffar Alikhani has told Financial Tribune that Afghans are unhappy about the ongoing trend in bilateral ties which, in his opinion, is expected to harm Iran’s economic ties with the neighboring country in the long run.

In a meeting with Hassan Rouhani on the sidelines of his swearing-in ceremony as Iran’s president for the second term, Alikhani said Afghan President Ashraf Ghani Ahmadzai expressed concern and dissatisfaction with the current trend of economic exchanges between the two nations, stressing the importance of doing trade in a more “bilateral” and “balanced” manner.

The following table lists the value of commercial exchanges between the two countries from 2005-6 to 2012-13. Last year’s (March 2016-17) data were provided by Alikhani who put Iran’s exports at $3 billion and Afghanistan’s at $10 million.

 Trade Barriers

Referring to hurdles in the way of Afghans to boost their exports to Iran, Alikhani said the main issue revolves around technical health certificates. He believes Iranian authorities are super strict when it comes to issuing the Certificate of Veterinary Inspection to allow the import of livestock and related products, noting that Afghan products often do not meet the requirements set out by Iran Veterinary Organization.

A CVI, also known as a health certificate, is an official document issued by a federal, state, tribal or accredited veterinarian certifying that the animals identified on the document have been inspected and were found to satisfy the regulations pertaining to their intended movement–within the same state, between states, or internationally.

Problems related to visa issuance are another major impediment for Afghan businessmen as well as their Iranian counterparts.

Alikhani believes cutting the red tape and costs should certainly become a priority for Iranian and Afghan authorities before they can improve and ease bilateral trade.

He believes Iran should not view Afghanistan only as a consumer market, if the two countries’ economic ties are to be strengthened.

“Trade is about mutual exchanges. Both sides must benefit,” he said.

 Help Thy Neighbor

The top executive at the joint chamber noted that one of the most effective ways for Iran to expand and sustain long-term economic ties with its neighbor is to provide aid to Afghans for their country’s development. He suggests joint investment in Afghanistan, saying it leads to job creation, higher revenues, transfer of knowledge/technology and sustainable security, among others.

However, Iranian investors have a general tendency to stay away from Afghanistan, citing risks associated with the security and stability situation in the neighboring country. Moreover, legal infrastructures are not well-established in Afghanistan, which also leads to heightened trade risks.

Alikhani strongly believes that development of Afghanistan would benefit Iran in the long run, as the two countries’ security and economic growth would be tied tightly together.

“In addition, I believe helping them grow and develop is an absolutely human and Islamic deed,” he added.

According to Alikhani, since the two neighboring countries have a lot in common with regard to language, religion, culture, history and literature, Iranian cultural products such as books, music, films and software applications are very popular among the Afghan people.

Many developed countries in the world, he noted, have set customs duty exemptions for the import of Afghan products into their countries as an initiative to support the struggling war-stricken country.

Alikhani suggest Iran should also consider this as it would help bilateral ties grow stronger.

According to Alikhani, Afghans have invested about $2.5 million in Iran in the current fiscal year in the areas of stonemasonry, flooring, hotel construction, bottled water, agriculture and oil.

Last year, their total investment in the Islamic Republic stood at $5 million.