Members of the Iranian Parliament have voted to avoid double taxation in trade between Iran and Switzerland, which is expected to boost bilateral economic ties.
“We have secured our foothold in the Swiss market, exporting carpets and other types of flooring, different kinds of fruit and saffron. In return, our main exports from this western European country include field corn, soybeans, soymeal and unrefined vegetable oils,” Hadi Qavami, deputy economy minister, was quoted as saying by Mehr News Agency.
Sharif Nezam-Mafi, chairman of Iran-Switzerland Chamber of Commerce, said, “We have good reason to be happy with the parliament’s decision. It goes to show that our MPs view Switzerland as a long-term trade partner. This is good news,” the official was quoted as saying by ILNA.
Noting that Switzerland is among Iran’s top trade partners in the European Union, he said, “After the reimposition of economic sanctions on Iran under former US president, Donald Trump, many European companies left Iran, but not the Swiss. This also shows that our Swiss partners view Iran’s economy with long-term perspective. This new measure to avoid double taxation treaty eliminates the main bottlenecks Iranian and Swiss businesspeople have been facing.”
Iran-Switzerland bilateral have traded $1.1 billion worth of goods since the beginning of the current Iranian year on March 21, 2021, such that Iran exported a total of $93 million worth of goods to its European partner and imported $1.09 billion in return during the period.
“Since the nuclear deal was agreed upon in 2015, Switzerland has been trying to reactivate its economic and trade relations with Iran,” Christian Blickenstorfer, former Swiss ambassador to Saudi Arabia, the United States and Germany, who was also political counsellor at the Swiss Embassy in Tehran in the 1980s, was quoted by Swissinfo.ch as saying last year.
“After the nuclear deal and the gradual lifting of the sanctions, several European countries were hoping to expand their relations with Iran.”
Even though Switzerland adhered to the sanctions imposed by the United Nations on Iran in 2007, it only partially observed the sanctions put in place by the European Union a few years later. After the implementation of the nuclear deal in 2016, Switzerland even lifted some of its sanctions.
“It was clear that Switzerland had to adhere to the sanctions imposed by the UN, but not to the sanctions imposed by the US or the EU,” Blickenstorfer said.
The problem with the US sanctions was that companies and banks that did not observe these sanctions were at risk of being prosecuted in the US. "Companies doing business in the US as well as banks are not prepared to take such risks,” he added.
Switzerland managed to find a partial solution to the problem. In February 2020, a payment mechanism for the delivery of humanitarian goods to Iran came into force. Under the “Swiss Humanitarian Trade Arrangement”, Swiss firms in the food, pharmaceutical and medical sectors have a secure payment channel with a Swiss bank for their exports to Iran.
“The payment channel for the delivery of humanitarian goods and pharmaceuticals to Iran could only be launched with the agreement of the US. It was conceived for purely humanitarian reasons to avoid a shortage of essential goods in Iran,” Blickenstorfer explains.
It is not by chance that Switzerland managed to broker this payment mechanism in cooperation with the relevant authorities in the US and in Iran. Switzerland has nurtured good diplomatic relations with Iran for 100 years and through its protecting power mandate has represented US interests in Iran since 1980.
“This mandate to represent US interests … allows Switzerland to maintain normal relations with Iran,” says Blickenstorfer, adding that relations were not always easy. “In Iran, we are dealing with a government that is completely different from ours.”
During his election campaign, Joe Biden pledged to reactivate the nuclear deal with Iran.
“If Biden were to seek dialogue with Iran just like Bill Clinton did, the well-functioning Swiss payment channel could be of use to him,” says Blickenstorfer.
Switzerland acts as an intermediary between the United States and Iran.
