News ID: 210548
Published: 0352 GMT February 24, 2018

An analysis of Iran-EU trade's increasing trend in post-JCPOA era

An analysis of Iran-EU trade's increasing trend in post-JCPOA era

Iran-European Union trade showed an increasing trend in 2017. Last year, Iran's total transactions with the eurozone witnessed a 53-percent growth year-on-year to reach €21 billion.

Clearly, these figures indicate the positive impacts of the Joint Comprehensive Plan of Action (JCPOA), signed between Iran and the P5+1 in July 2015, which have led to an improvement in the country's trade balance and the greater prosperity of the domestic economy.

Iran's increased exports and trade transactions with Europe was the country's top economic news last week. Given the importance of the issue, Iranian economic newspapers analyzed the level and condition of Iran’s exports and rising foreign trade.

In the past few decades, Iran's economic relations with the EU have been subject to a great deal of ups and downs. However, what has always constantly refrained from undergoing any change has been the country’s negative trade balance in its transactions with this part of the world, which of course, demonstrated relative improvement in 2017.

According to a report by Eurostat, a news agency affiliated to the European Commission, the growth witnessed in the EU's imports from Iran in 2017, exceeded that of the Eurozone's exports to the Middle Eastern state. This comes as the trade balance between the two sides is still €600 million in favor of the EU.

The report added that Iran's trade with the 28 member states of the EU in 2017 reflected a growing trend standing at €21 billion posting a 53-percent growth year-on-year.

The year 2017 marked the second 12-month period since the implementation of the JCPOA in January 2016. In 2016, trade between Iran and the EU had reached €13.74 billion indicating a 78-percent growth compared to the figure for the preceding year.

The EU's imports from Iran in 2017, however, experienced an 85-percent increase compared to the amount for 2016 to stand at €10.2 billion. In 2016, European states had purchased goods worth €5.5 billion from Iran. The overseas sales of mineral fuels has been the dominant factor in the growth in Iran's goods exports to Europe.

An analysis of trade transactions between Iran and the EU during the past two years also confirms the growing trend in the two sides' economic relations. In 2015, this figure stood at €7.68 billion in 2015 but reached €13.74 billion and ‌€21 billion in 2016 and 2017 respectively.

The EU's imports from Iran in 2016 grew 5.4 percent compared to a year before that to stand at €4.49 billion. In 2015, the EU had imported goods worth €1.23 billion from the Islamic Republic. The removal of Western sanctions on Iran's oil exports which was followed by the EU's resumption of oil purchases from the country was the main reason for the rise in the eurozone's imports from the Islamic Republic in 2016.

The Eurostat report said France was the biggest importer of Iranian products in 2016. Its imports from the Middle Eastern state witnessed a twofold growth compared to the figure for 2015 to reach ‌€1.35 billion. France was followed by Italy and Spain which purchased ‌products valued at €1.49 billion and ‌€870 million, respectively, from Iran in 2016.

 

 

Exports prosper

Donya-Eqtesad, a Persian economic daily newspaper, analyzed the latest figures released by the Trade Promotion Organization (TPO) of Iran in a report which said during March 21, 2017-January 20, 2018, industrial goods constituted the biggest part of Iran's exports. Industrial products appear to be the main stimulator of the growth in the overseas sales of the Iranian goods to Europe, given the fact that Iran's exports during December 22, 2017-January 20, 2018 indicated increases of 18 percent and 17 percent in weight and value respectively compared to the figures for the 30-day period ending December 21, 2017.

Although value-wise, there other Iranian export items in this time-span to have experienced increases greater than 17 percent, industrial products are the only group of goods whose export has also posted an 18-percent growth weight-wise in the same period. In addition, intermediate goods constituted the biggest part of Iranian imports in the said period, followed by consumer and capital products.

The head of the Industry, Mine and Trade Organization of the northwestern Iranian province of West Azarbaijan, Jafar Sadeq Eskandari, earlier said since March 2017, Iran has exported 17,996 tons of products valued at $6.5 million. He added more than 7.11 million tons of minerals were mined in the province during March-December, 2017, whereas, during the same period last year, the figure stood at 7.23 million tons.

Eskandari put the number of active decorative stones mines in the province at 100, adding during the nine-month period to December 21, 2017, a total of 430,683 tons of decorative stones were mined in the province.

Another Persian daily 'Tejarat', analyzed exports of textiles and clothing items, and quoting Afsaneh Mehrabi, the director general of the weaving office of the Ministry of Industry, Mine and Trade, and wrote that Iran's overseas sales of textile and clothing items during March 21, 2017-January 20, 2018, amounted to $805 million indicating a 15-percent growth compared to the figure for the corresponding period of last year.

Since the beginning of President Hassan Rouhani's second term in office in 2017, Iran's exports have gained momentum. During the five-month period to January 20, 2018, exports grew 28 percent compared to the figure for the same period of last year. Production of goods in this timespan also reflected an increasing trend, posting a 10-percent growth.

 

 

Export incentives

Earlier, TPO head, Mojtaba Khosrow-Taj, said $282.6 million has been allocated in Iran's budget bill for the year to mid-March 2019 to export incentives.

Putting the country's imports during March 2017-January 2018 at more than $42 billion, 50 percent of which were conducted in the form of banking transactions, he said the remaining 50 percent of the imported goods in this period were purchased using non-subsidized foreign currency.

"This is while, if opening letter of credit and banking facilities can be used for imports, the condition should be ripe for exports."

   
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