Tehran-Berlin trade rises 4% in 10 months: Chamber head
Shahin Asghari, head of the Iran-Germany Chamber of Commerce and Industry, told ILNA on Saturday that trade between the two sides reached $1.24 billion in the first 10 months of 2024 (January to October), marking a 4% increase compared to the same period in 2023.
During this time, Iran’s imports from Germany grew by 7%, while its exports to Germany declined by 9%. The trade balance remains heavily skewed in Germany’s favor, with Iran importing significantly more than it exports.
Asghari noted that while Iran has the potential to supply raw materials for German industries, it has yet to fully capitalize on this opportunity and remains a consumer of German products.
Industrial machinery and chemicals are the primary goods Iran imports from Germany, while food and livestock are the main exports from Iran to Germany.
Persian carpets; a luxury in German homes
Reflecting on the history of trade relations, Asghari said that 50 years ago, when the Iran-Germany Chamber of Commerce was established, Iran was the second-largest destination for German exports after the US.
Even after Iran’s 1979 Islamic Revolution, Germany maintained its trade ties with Iran, consistently ranking as Iran’s top European trading partner.
Over the past century, cultural and commercial relations between the two nations have remained strong, with Iran being a familiar market for German industrialists and merchants.
Much of Iran’s industrial infrastructure was built using German machinery. However, in recent years, bilateral relations have somewhat weakened.
Asghari emphasized that trade between Iran and Germany continues, with exports from Iran consisting of non-sanctioned goods.
He added that Iranian carpets and handicrafts once held a prominent place in the German market, with Persian carpets being considered as a luxury item and a source of pride for German households.
However, this market has significantly shrunk, with Indian and Turkish exporters now dominating Germany’s carpet market.
While Iranian pistachios, dates, walnuts, and saffron are still present in Germany, Iran’s share of these markets is declining. For instance, Afghanistan is increasingly capturing the global saffron market, including in Germany.
Challenges in Iran-Germany trade
Asghari attributed the decline in trade to a combination of domestic and external factors.
He explained that these challenges are not unique to Iran-Germany trade. For example, in Iraq, a key export destination for Iran, non-Iranian traders sell goods using one-year letters of credit (LCs), while Iranian traders are forced to deal in cash.
This puts Iranian traders at a competitive disadvantage, as Iraqi buyers prefer LCs over cash transactions. Additionally, Iranian traders face currency conversion costs at exchange offices.
Similar challenges exist in Iran’s trade with Europe, Asghari stressed, adding that when Iran is unwilling or unable to comply with international trade norms, it loses its share of the global market.
Domestic currency challenges
Asghari highlighted that national currency regulations further burden Iranian traders. Exporters are required to repatriate foreign currency earnings, a practice uncommon elsewhere in the world.
This is particularly challenging given the significant gap between the official exchange rate and the free market rate.
He also discussed the impact of Iran’s recently launched negotiated currency market, aimed at reducing trade challenges.
Asghari emphasized the importance of narrowing the gap between the free market and official exchange rates, noting that the negotiated market is rooted in the policy of unifying exchange rates.
The current multi-tiered exchange rate system has led to racketeering by importers who overstate their import values.
Asghari said the success of the negotiated currency market depends on its ability to move toward a single exchange rate.