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Iran May Block Sale of Apple Phones

Iran May Block Sale of Apple PhonesIran May Block Sale of Apple Phones

Iran's Central Taskforce to Combat the Smuggling of Goods and Foreign Currency has given Apple Inc. an ultimatum to either set up legal representation in Iran in no more than a week or face a sales ban.  

Abbas Nakhaei, the taskforce's secretary-general, has said that a directive has been communicated to all provinces stipulating that Apple iPhones will be removed from the market once the mobile registration plan takes effect, Tasnim News Agency reported.  

To combat the imports of contraband cellphones, the taskforce has recently devised a "mobile registration plan" that is supposed to be executed as of July 22 after a two-month delay. Nakhaei had previously said that details on mobile phones legally entering Iran were being registered in a database and a system has been prepared exclusively for this purpose.

"With the execution of the plan, only smartphones that have entered the country via legal channels could offer telecoms services," he said.

The plan had been devised by the taskforce in collaboration with Iran's Customs Administration, Ministry of Communications and Information Technology and Iran's mobile phone operators.

No official has elaborated on how exactly the plan will be implemented.

In his latest comments, Nakhaei stressed that mobile phones that have legally entered Iran via official border crossings are allowed to be traded on the market and those that do not have legal representations in Iran will not be registered in the new system.

Also, the new measure will not be enforced retroactively to currently used phones.

  Old Trick

Mehdi Mirmehdi, the head of Iran's IT Union, has criticized the recent measure and said "forcefully tackling such an issue will only result in more contraband phones entering the country".

"There are many such phones in the market and confiscating all of them will not be easy," he said.

Mirmehdi assured that iPhones that manage to make their way to Iran's market hereafter will also find a way to bend the new regulations.

Reports from different cities across Iran say that several shop owners have started removing or hiding the iPhones from their shops. They reportedly activate the phones with an Iranian SIM card so that they are registered and can be easily sold in future.

"This is an old trick borrowed from the customs playbook," a market expert told the Financial Tribune on condition of anonymity.

"Usually when such remarks are made, the expected outcome is that the market will be monopolized by one local company," the expert said.  

There have been cases of crackdowns on Apple products in the past. In 2014, a series of Apple products were taken from stores and it was announced that Vaghaye Gostar Fars is the legal and exclusive representative of Apple in Iran.

However, it was revealed that the company's documents were not genuine and its permits were revoked.

  Conflicting Laws     

Setting up legal representations in a country has many benefits but it is impossible to do so in a week.

Instead of adopting intractable rules, Iranian officials should address the "legal void" in Apple's case.

The UAE's approach in amending laws for Apple to purchase land and operate there should serve as a good example.

Even before Iran and the West arrived at an agreement over the country's nuclear energy program last year, Apple explored the Iranian market and hired lawyers to register the company brand and logo in Iran.

It had also filed complaints against stores in Iran that were illegally using the company's logos and had designed their stores to look like official Apple stores.

In the past three years, over 200 Iranian tech firms announced readiness to set up official representations on behalf of Apple in Iran.  

What is clear, however, is that Apple does not want to negotiate with private firms and would rather strike a straight deal with the government itself.  

Apple also needs to receive the US Office of Foreign Assets Control's permission, which would need to offer an exceptional license to the company to enter Iran.

US sanctions bar American corporate entities from entering the Iranian economy or partnering with local businesses.  Even if the company was granted a US license, it has its work cut out in Iran. It must get the green light from the government to operate without any interference from unofficial entities totally opposed to all things American.

Financialtribune.com