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Smuggling Causing More Harm Than ‘Excessive’ Imports
Economy, Domestic Economy

Smuggling Causing More Harm Than ‘Excessive’ Imports

Concerns are mounting over the possible flood of imports once the sanctions against Iran are lifted as part of the nuclear agreement reached in July with the P5+1 countries.

Minister of Industries, Mining and Trade Mohammadreza Nematzadeh recently voiced concern in his public speech at Friday prayers in Tehran and assured the public that increased international cooperation following the removal of sanctions would not lead to excessive imports, Persian daily Forsat-e Emrooz reported.

What remained unsaid by the minister, however, was the exact category of products that may comprise excessive imports in the eyes of the government.

Chairman of board of directors at the Association of Importers of Cosmetics, Toiletries and Perfumery, Mohammad Reza Boutorabi believes that fighting smuggling should be given higher priority than fighting excessive imports, noting that smuggling is causing greater harm to domestic industries.

“Traders regulate their imports based on market demand as no one wants losses or a market glut. Therefore, the root cause of excessive imports should be identified,” he said.

Noting that higher import tariffs in the past led to increased smuggling, he said: “It is obvious that as long as importing through formal channels is expensive and time-consuming, imports through unofficial channels remains a more attractive option.”

Head of the High Council of Imports at Iran’s Chamber of Commerce, Industries, Mines and Agriculture, Mohammad Hossein Barkhordar also believes that to combat excessive imports, the issue of smuggling should be targeted. “Import tariffs, particularly on consumer products, should be set with due care to help curb smuggling,” he said.

He called on the government to place the campaign against smuggling on top of its agenda, noting that smuggling generates zero revenues for the country and adversely impacts employment.

He also urged the media to educate the people on the negative consequences of using contraband products including health-related risks and the adverse impacts on domestic production and employment.

As part of his speech, Namatzadeh urged the people to purchase domestically-manufactured products and asked retailers and distributors to avoid selling smuggled products.

The minister’s call on the public to stand up against smuggling implies that the government does not yet have a comprehensive and practical plan to combat smuggling and that instead of focusing on the entry points for smuggled goods, the government has targeted the end-users.

While there is no reliable data on the exact amount of goods smuggled into the country, statistics by the Central Taskforce to Combat the Smuggling of Goods and Foreign Currency puts the figure at over $20 billion a year. This is while unofficial sources estimate the actual figure to be at least twice as much.

The government appears to be passive in fighting this phenomenon which has overshadowed a large part of the economy. While some analysts are hopeful that smuggling will lose its vigor once sanctions imposed by the US, EU and the UN over Iran’s nuclear energy program are lifted, there is a group that believes illegal business is too deep-seated and lucrative to wish it away.

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