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All tagged trade
In these interviews, two Iranian pharmaceutical executives detail an acute need for some medicines and shed light on some of the regulatory, operational, and integrity risks that foreign pharmaceutical companies face on the ground.
INSTEX alone cannot save the JCPOA, the future of which essentially depends on US-Iranian relations. INSTEX can nevertheless help maintain the nuclear agreement until, or even after, diplomatic solutions are found.
The Rouhani administration has lofty goals to grow Iran-Iraq trade as Iran seeks to expand its non-oil exports. But dysfunction at the border and a lack of government support have frustrated many Iranian exporters.
The Germany foreign ministry has announced that INSTEX, the trade mechanism backed by nine European states to facilitate humanitarian trade with Iran, has completed its first transaction.
The European Commission has announced a new regulation that will establish export controls for Personal Protective Equipment (PPE), a category of goods that includes the face shields, gloves, masks, and other protective gear. The new policy could make it more difficult for Iran to source the equipment necessary to protect doctors and nurses fighting COVID-19.
For the first time in 60 years, Iran has requested a loan from the International Monetary Fund (IMF), seeking emergency financing to support its efforts to combat COVID-19. If the IMF fails to provide Iran financial assistance that it makes available to countries in similar situations, the fund’s reputation will take a hit, as the fact of effective American control over its operations is laid bare.
In the first two weeks of December, Iranian government officials and business leaders participated in bilateral economic summits with counterparts from Tajikistan, Kyrgyzstan, and Uzbekistan—the highest-level economic exchanges with these countries in several years. Iran is expanding its “neighborhood policy” to Central Asia as it seeks to grow its non-oil exports.
As the Trump administration’s “maximum pressure” sanctions campaign rolls on, it might seem like Europe not only lacks the means to defend its trade with the Islamic Republic, but also that there’s little left to defend. But even with significant barriers, Europe continues to export billions of dollars of parts, machinery, and transport equipment to Iran.
◢ New data from China’s customs administration show a significant drop in purchases of Iranian oil. The declared value of September imports was just USD 254 million, down 34 percent from August and down 80 percent from the same month last year. But observed exports from Iran remain high, suggesting that the customs data is not capturing the full value of Iranian oil sales to China.
◢ A free trade agreement between Iran and the Eurasian Economic Union (EAEU) will come into force on October 27, enabling preferential trade between Iran and a trading bloc comprised of 183 million people. But a leading research body has cautioned that the “low level of Iran’s commercial complimentary” with the EEAU market will temper prospects in the short term.
◢ Since the year 2000, Iran has about doubled its annual imports of pharmaceutical products from the European Union, reflecting both advances in Iranian healthcare and the growth in Europe-Iran trade ties. But a distortion in the value of trade relative to quantity means that Iran is paying significantly more than the likes of Russia, Turkey, and Pakistan for each kilogram of medication.
◢ A recent report from the London-based publication Petroleum Economist offers a cautionary tale of “fake news.” The claim that China will extend a $400 billion credit line to Iran is poorly sourced and inconsistent with both recent trends in China-Iran trade and the scope of China’s Belt and Road Initiative.
◢ Trump may have exempted Iran’s Chabahar port from sanctions, but India has struggled to realize its ambitions for the major infrastructure project. Recent government data confirms that no Indian investment has been made in the port in two years. As one Indian official involved with the project since its origins put it, “This was not what we hoped to achieve. Chabahar is only about photo-ops now, not substance.”
◢ The state-owned company at the center of European efforts to save the Iran nuclear deal is entering its next phase of development. In a push to process transactions more quickly, INSTEX is rolling out a new factoring service for European exporters. The company is also making new hires that will enable it to expand operations more quickly in the coming year.
◢ Last week, Iran’s economic minister was in Beijing for talks on bilateral trade and investment. An official readout of the discussions from China’s commerce ministry describes China and Iran as “comprehensive strategic partners.” Unfortunately for Iran, the data tells a different story from the official rhetoric.
◢ Following weeks of speculation, France, the United Kingdom, and Germany (the E3) have formally registered a special purpose vehicle (SPV) to help facilitate trade with Iran – trade that the return of US sanctions has significantly hampered. Companies in Europe and Iran are eager to know if the system can be of practical use. The assessment below lays out INSTEX’s likely structure.
◢ An examination of the nature of Europe-Iran trade and the impact of this trade on Iran’s currency markets, suggests that the SPV could have a significant and stabilizing impact on Iran’s economy by helping to fight runaway inflation, the foremost economic challenge facing Iran’s leadership—even if the mechanism is initially limited to humanitarian trade.
◢ With just two weeks until Trump reimposes secondary sanctions on Iran, administration officials are under increasing pressure to prove that the returning sanctions will not adversely impact humanitarian trade. Looking to US Census Bureau export data, a clear pattern emerges—the export of humanitarian goods like food and medicine remains significantly lower than average monthly values registered during the Obama years.
◢ On Tuesday, the US Treasury Department’s Office of Foreign Assets Control (OFAC) applied new sanctions on “at least 20 corporations and financial institutions” associated with Bonyad Taavon Basij. While the designation of bonyads has been a common feature of US sanctions policy for over a decade, yesterday’s action reflects a significant break with sanctions policy under the Obama administration. Included among the targeted entities is Parsian Bank, one of Iran’s leading private sector banks and a vital conduit for trade with Europe, especially humanitarian trade.
◢ The second and final sanctions deadline of November 4 is drawing near. After this date, unilateral US sanctions on Iran’s financial sector will once again come into force. According to Iranian bankers and government officials, this could mean that Iran struggles to import humanitarian goods, including basic foodstuffs, despite longstanding exemptions for trade in these goods.
