A critique of the Iranian Chamber of Commerce Research Center’s view of trade with its neighbors

According to Fars News Agency, the Research Center of the Iranian Chamber of Commerce has recently criticized the 13th government’s policy of prioritizing its neighbors in economic diplomacy in a report containing irrational and untrue statements, and has called for a change in this policy.

In this memo, first the most important reasons for the need to adopt a policy of prioritization of neighbors are stated and then criticisms are made of the statements based on the Chamber’s argument.

Benefits of trading with neighbors

Developing economic interactions with neighbors can be the least costly way to develop a country’s foreign trade. Neighboring countries are within the shortest distance, so the costs of transporting goods and traders are cheaper for economic interaction with these countries.

Regarding Iran’s neighbors in particular, it can be acknowledged that due to the development of these countries, competition for the supply of consumer goods in these countries for Iranian companies will be easier than in the markets of developed countries such as European countries.

Obviously, the more stringent Iran’s export destinations are in terms of trade standards, the lower our country’s exports will be, and in fact, export costs will increase. In this regard, Iran’s neighbors are significantly different from developed countries in Europe or East Asia, and from this perspective, trade with neighbors has an advantage.

Another component of the superiority of neighborhood-based economic diplomacy is the cultural commonalities and numerous interactions between people and businessmen in these countries. It should be noted that there is a traditional network of merchants between neighbors, and market development, despite the socio-cultural ties of the neighborhood, will be easier than penetrating the markets of distant countries.

In addition to the mentioned benefits, trade in the markets of neighboring countries can be considered as a training environment that promotes the growth and promotion of business capabilities of Iranian firms and businessmen. Successful countries seem to rely on their neighbors in the first step to boost exports and expand foreign trade. For example, 70% of Turkey’s exports are destined for its neighborhood, and after succeeding in this step, Turkey has made a policy to reach more distant markets within a radius of 8,000 km. Interestingly, a report by the Iran Chamber Research Center covers this point about Turkey, but ignores why it has such extensive economic ties with its neighbors.

The sum of these advantages can be summarized in the fact that the first step in the development of trade is the growth of economic interactions with neighboring countries in which competition and trade costs in these markets are much less and more easily accessible.

Review of the report of Iran Chamber Research Center

The content published by the Chamber of Commerce in the field of economic diplomacy, in its conclusion, considers the government’s self-centeredness of its neighbors as a strategic mistake due to its small size, low technology, marginalization and regularization of its neighbors compared to the global economy.

The most important criticisms of the Chamber of Commerce report are as follows:

Regarding the marginal economy of Iran’s neighbors, it should be noted that the total value of imports of these countries in a year is about 1,200 billion dollars. This number is significant compared to Iran’s $ 40 billion non-oil exports. Acquiring only 4% of the market share can double the country’s non-oil exports. Although the market of neighboring countries is a small part of the world economy, but it is an attractive market and a target available for the Iranian economy.

The statement that Iran focuses on only 5% of international trade is incorrect; the government, while pursuing economic diplomacy with its neighbors, seeks to pursue and implement a 25-year agreement with China as one of the strongest and emerging centers of the global value chain. The government’s relationship with European countries is also subject to US sanctions rules, and it is unwise to pursue such an interaction because it is unstable. However, the government has put the Vienna talks on its agenda.

The fact that the economies of the Southwest Asian region are mainly suppliers of raw materials and commodities is, incidentally, an advantage. Trade with small and medium economies and low level of technology can not necessarily be negative and to the detriment of Iran’s economy, but it is one of the advantages of neighbors.

The notion that the region’s small economies are regularized and that regulating economic giants is very general and cannot be a guide in trade policy. In this regard, it should be noted that Iran’s exports to its neighbors exactly in 1397 and 1398 and at the peak of maximum US pressure, not only has not been disrupted, but has also increased. Statistics show the fact that Iran’s trade with its neighbors during the sanctions period was a vital artery of the country’s economy and had the least impact on the rules set by the West. On the other hand, during the same period, the economic giants of Europe and Southeast Asia significantly reduced their imports from Iran and accepted the US unilateral sanctions rules against their will.

Iran is only among its main trading partners, including Iraq, Afghanistan, Turkmenistan and Oman, and our country’s economic interaction with other countries in the world is not significant. Therefore, if the chamber’s argument about the importance of this in the neighbors’ attitude is correct, the view of non-neighboring countries towards Iran will be much worse.

It seems in the analysis of the Iran Chamber Research Center on the subject What has been neglected has been the inaction of the Iranian government in trying to benefit the region’s economy. The current state of economic relations with the region is not as good as expected due to this passivity. For the past eight years, our country has placed Europe and the United States at the center of its diplomacy, and in such circumstances, it is natural for Iran’s position to seem insignificant from the neighbors’ point of view.

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