Fostering Better Trade Relations
Iran is regarded to be the most populous and the largest country in the southwestern portion of Asia. A major economic transformation was attempted in the 60's and the 70's by the monarchs of the country. This was to make the nation modernized and industrialized. Despite a booming economy, only the middle class prospered and cultural dislocation created a stir in society.
After the 1979 revolution, the government emphasized self-sufficiency for the whole nation. Industries like oil were nationalized though large-scale projects were forgotten. A worldwide oil glut was experienced due to the Iran-Iraq War from 1980 to 1988. Despite this however, oil exports in the country have been maintained at very high levels.
Manufacturing is very relevant to the economy that it contributes a larger share to the Gross Domestic Product (GDP) when compared with agriculture. The major industries concentrate on refining and petrochemicals. Domestic steel plays a vital role in the production of automobiles, buses, trucks, tractors electrical machinery and refrigerators. The country's oldest major industry concerns textiles.
Twelve percent (12%) of the land is arable and is devoted to agriculture. A large portion of its population raises sheep and goats. It was during the year 1962 when huge land holdings were redistributed to the poor in view of the major land-reform program of the government. This raised the standard of living for the rural communities. Irrigation dams were also built and mechanized commercial farms were established.
The trade relations between the US and Iran did not happen in a blink of an eye. There were many conflicts along the way that hindered the fostering of a friendship. However, when the Americans and Iranians became one in overthrowing the Taliban in 2001, the good deal started. Several discussions were made as to the prospering trade between the two nations.
Despite unending controversies and a not so concrete basis for the relationship, US continued to extend a good hand to Iran. In its role to support the cause of Iranian democracy, the US Congress allocated around $66 million. The proceeds of the said appropriation were to be used for the promotion of free media and personal freedom. It was also geared for the better understanding of the values and the culture of the western world.
Major Exports and Imports Between the Two Nations
In 2005, 80% of Iran's export commodities to other nations in world economy belonged to petroleum. Other primary goods sent to its comrades in global trade are chemical and petrochemical products, carpets, fruits and nuts. The imports coming from other countries to Iran include industrial raw materials and intermediate goods, consumer and capital goods, technical services and military supplies. Its major export partners are Japan, China, Italy, South Korea, Turkey, The Netherlands, France, South Africa and Taiwan while its major suppliers come from Germany, UAE, China, Italy, France, South Korea and Russia.
As of October 2008, the US Census Bureau have listed the trade balances between the US and Iran. The exports of the former to the latter already reached an amount of $537.7 million which is already highly commendable compared to its earnings of merely $145.61 million in 2007. The imports of the US from Iran on the other hand is totaled at $86.7 million which is around 50% lesser than what it made last year with an amount of $173.19. For the year 2007, the following data are available:
The Absence of Trade Agreement Between the Two Nations
- Iranian Exports to US. The total exports of Iran to US for 2007 reached $173.19 million. Of this total amount, 56.21% went to rugs and other textile floor coverings which is equivalent to $97.35 million. Other notable goods on the top spot were: Fruits and preparations including frozen juices; artwork, antiques, stamps and other collectibles; nuts and preparations; fish and shellfish; vegetables and preparations; tea, spices and preparations; bakery and confectionary products; alcoholic beverages except wine and related products; and cane and beet sugar. Cane and beet sugar garnered sales of $184 thousand which is only .0011% of the total exports of Iran to US.
- Iranian Imports from US. The total imports of Iran from US totaled $145.61 million for 2007. Corn led the charts at an amount of $54.98 million which is equivalent to 37.76% of the year's total. Joining corn on top of the list were: pharmaceutical preparations; pulpwood and woodpulp; medicinal equipment; unmanufactured agricultural farming products; plastic materials; other household goods; animal feeds; other foods; and other chemicals. Other chemicals joined the chart with earnings amounting to $558 thousand or .0038% of 2007's total under this category.
- Fastest-Growing US Exports to Iran. Goods from US to Iran made a remarkable turn from the sales it made in 2006. The list of these items was topped by other chemicals which despite the mere $558 thousand total earnings for 2007 have made an outstanding increase of 3,282.35% from what it made in 2006. Aside from other chemicals, other products included on the charts were: miscellaneous domestic exports and special transactions; other foods; nontextile apparel and household goods; and other manufactured agricultural products. The last item made sales of $169 thousand which is by far larger than how it faired in 2006 by 375.56%.
- Fastest-Growing US Imports from Iran. The prime commodities traded by Iran with US made impressive stints in the market as well. As evidence to this, the goods sold better in 2007 than in 2006. On the lead is cane and beet sugar with earnings of $184 thousand and is 1,082.35% higher than its total in 2006. The rest of the top five was completed by: food oils and oilseeds; dairy products and eggs; fruits and preparations including frozen juices; and bakery and confectionary products. The last commodity made $216 thousand worth of sales which is 251.16% higher than in 2006.
Iran's first free trade agreement with another nation was made with that of Venezuela. Other than this, it has not other pacts with other countries, not even with the United States. Although there is an absence of a trade agreement which should have been utilized for each other's support on trade, other vital issues made their dealings boom.
The Many Conflicts The Two Countries Went Through
- US's close relation with the Shah's regime. The Shah is the hereditary monarch of Iran. During the Shah's reign in the country, the political and economic policies were said to be pro-American. Under the ties made by the two governments in this regime, Iran's supply of oil to the US economy was secured. Iran on the other hand, was given access to the US military and civilian shipping in the Persian Gulf. The Shah was provided with massive and sophisticated weaponry thus enabling its people to train extensively for armed and security forces.
- Investment and other concerns. A large number of US companies saw opportunity in investing huge amounts of money in Iran's oil rich economy. This had been tantamount to American monopoly on Iranian grounds. Furthermore, the number of students and citizens of Iran living in the US contributed to the strengthening of the relations between the two nations.
Although the Shah regime of Iran marked good relations with the US, there were several incidences which led to some problems in their friendship. In fact and in paper, several legislations were made by the US congress which led to the prohibition of trading with Iran. The following issues destructed the ties of the two nations:
The Future That Lies Ahead
- Diplomatic relations broken. On November 4, 1979, militant Iranian students led by Ayatollah Khomeini occupied the US Embassy in Tehran. Around 52 Americans suffered the turf which lasted for more than a year - 444 days to be exact. The event led to the breaking of the diplomatic relations by the US with the Iranian government. The interest of the US in Tehran was represented by the Swiss government while the Pakistan government took over Iran's interests in the US.
- Sanctions imposed on Iran. Aside from prohibiting trade with most of Iran, the US also sanctioned the country for several other reasons. Nuclear proliferation concerns, terrorism and human rights violation formed part of the administering of the punishments. The American government also felt that Iran was a sponsoring state for terrorism thus it was a threat in locating and prosecuting terrorists.
The issues of concern for the foreign trade of US and Iran have been tackled over the years. There are still unsettled matters which need to be resolved. The determination to foster steadfastness may be the key to a more prosperous relationship in the future. This will surely help Iran gain a better standing in the legions of countries in international trade.
While there are still no trade agreements governing the two nations, a good focus for the days to come will be to have a talk on the prospects for US-Iranian trade. Analyzing the business climate in Iran as well as the US trade sanction laws will generate a vision for the coming years. Customs and freight forwarding issues are also focal points in the future trade opportunities.
Forums of discussion should also be made to tackle commercial and other issues of interests that will fulfill the dreams of the future of the two countries. The US-Iran Business Council is a good venue to start. The rapid development of Iran's natural resources is also a gateway to the hope of building better bonds between these countries.
US-Iran Trade References