October 2022, No. 101

Trade & Business

Our International Trade Is Mainly Street Trader Type

In Iran, we do not have any agreements to determine the path of the trade of Iranian merchants. I mean, of course, the legal path and regulations.

The volume and value of trade in Iran is not commensurate with the geographical capacities of the country. The geographical coordinates require that the business situation in Iran be improved. However, many cases, including policymakers� reluctance to go together with the global economic trends, have prevented the expansion of free trade in Iran. In the past decades, the expansion of trade has brought more prosperity to the people of other countries: An opportunity the Iranian people have missed. Iranian policymakers are keen to restrict trade in the country.

For example, they describe the trade activities of border dwellers �smuggling� and dealt with it: Sometimes these settlers are arrested and imprisoned or fined. These actions ultimately lead to the border people getting poorer.

Economist Mohammad Tabibian speaks about the consequences of trade restricting policies for the Iranian economy. According to him, history will ask the economic authorities why they have deprived the Iranian people of the economic opportunities available in the world.  

Iran has common water and land borders with 15 countries and many believe this geographical location can be an opportunity to boost trade. However, statistics suggest that as our geography deserves, the development of trade between Iran and neighboring countries has not yet been realized. What is your evaluation? Why Iran fails to take advantage of the opportunities that geography offers?

In the first place, I should point out that when a country wants to expand its trade relations with other countries, these business relations must follow contractual courses: In this way, for example, the task of the businessman, the buyer and the seller, as well as tasks, such as how to settle and pay.

Let me give you an example. During the election, when the United Kingdom left the European Economic Union, it had to regulate its trade relations with Europe. The United Kingdom had to trade with these countries separately, and such an action needed to create various contracts and agreements. At that time, the United Kingdom, with centuries of business, announced that he did not have enough manpower to prepare these contracts.

Under these circumstances, New Zealand volunteered to provide a number of experts to the UK to regulate the necessary business contracts with countries such as France, the Netherlands and Germany, etc. that the UK has been commercialized for years. As you know, we do not have such agreements with our neighbors. In Iran, we do not have any agreements to determine the path of the trade of Iranian merchants. I mean, of course, the legal path and regulations. In fact, there are no necessary rules and regulations and to determine the position of an Iranian businessman in the international markets. There is no path that has defined the rights of the Iranian businessman against the rights of those countries or vice versa.

So let me answer your question thus: given that we do not have the necessary legal and contractual infrastructure in Iran, so our businessmen cannot easily trade with other countries, including neighbors. As a result, global trade does not exist in Iran. Most of our international trade is from retail trade. For example, how many trucks take the cargo of goods from our country to neighboring countries and examine what they can buy and sell them to Iran. I emphasize that in Iran there is no concept of organized international trade.

Since the beginning of the revolution, however, the issue of international trade under the leftist slogans has been considered obscene. It was supposed to be government trade, but it was not and it was provided to specific collections. The second point to note about the issue of underdevelopment of trade in Iran is that Iran�s trade capacity with neighboring countries is limited.

This is because we import goods and our neighboring countries import the same goods. Take Turkey, for example. Turkey�s main trade is with European countries. If we want, we have to import goods from the same countries. Unless we place Turkey as an intermediary, which is also not correct, because, for example, Turkey imports goods from Europe and sells those goods to us at higher prices as it has done in the past.

In fact, in a situation where we have set limits for ourselves and do not trade with the West we see that in practice the same goods are bought through middlemen and at a higher price. This situation also applies to Iran�s trade with the United Arab Emirates. We procure the goods imported from other countries to the UAE from this country at a higher price. How can we trade with these countries in such a way that both our needs are met and the production of those countries is their own? The number of these goods is limited and in many cases those countries do not produce the goods we need. 

In Iran, mainly from the authorities, there is a contemptuous view towards the activities of importers. Many call them importers and they tend to limit the activities of importers and have prioritized the increase of export goods. What analysis do you have on this approach? What is your assessment of the government�s methods in this regard?

Export cannot be the goal alone. If we are going to export only the food of the Iranian people or their clothes without receiving anything in return, this cannot be good. Export is good when import is also done and the result of these two economic activities creates value for the country. I emphasize that export alone does not bring any virtue. If export takes place in a situation where import is not done, it can be problematic even for the country. As during the First World War in the years 1916 to 1918, the Russians bought many goods from the markets of Iran and took them to their country, and finally we saw that Iran was faced with famine.

We should know that the mere increase in exports not only is not pleasant for the country, but also a cause for concern. Not long ago, some economic officials announced with satisfaction that exports have increased under the incumbent government. While first of all one should ask where is the destination of Iranian goods that are exported? The next point is what will enter the country instead of those goods that are exported? I emphasize that increasing exports is not an art in itself, but it is very important what is imported into the country in exchange for the goods that are exported. The country�s foreign trade must be balanced.

If the goods of a country are exported but the foreign exchange earned does not enter the country or is deposited and invested outside of Iran, then the export is not useful. Why should certain livestock products leave Iran without bringing the currency back to the country? Exports are valuable when they are replaced by imports and help to increase the welfare of the people. This relationship is important. One cannot celebrate the increase of any one alone. Neither the mere fact that more goods have left the country nor the mere fact that more goods have entered the country is happy news in itself. Whenever exports and imports are adjusted in such a way that the result is an increase in prosperity of the people of Iran, we can be happy and celebrate the occasion.