Will Iran lose the Iraqi market? 20 million dollars is threatened with loss

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Economy News - follow up
Iran's Deputy Minister of Industry, Mines and Trade stressed the importance of the Iraqi market, saying that removing obstacles to exports to Iraq is one of the things emphasized by the country's president and that bilateral plans are underway to develop cooperation.
Iraq is one of Iran's most important trading partners, and it needs Iran in many aspects. For this reason, the two countries have opened a special account to develop exchanges and want to increase the value of bilateral trade by 100% to $20 billion by 2027. But Iran is not the only trader present in the Iraqi market, and for this purpose it has to compete with Turkey, as the oldest competitor, and even China and Saudi Arabia.
The issue of targeting $20 billion in trade between Iran and Iraq is not a new event, as this matter was previously raised in 2011. Even in 2018, when Iraq surpassed China in terms of imports from Iran and became its largest customer, it was believed that the dream of increasing bilateral trade to $20 billion will be achieved before 2021, but achieving this goal does not depend only on purchasing Iranian goods from Iraq, but must also take into account competition mechanisms in the Iraqi market, the country’s need for a trade balance and neutralizing the consequences of repressive Western sanctions.

The importance of Iraq for Iran?

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The importance of Iraq to Iran has been discussed from several perspectives. First, trade with this country is carried out mainly by private traders, and the share of manufactured goods with high added value is high. Therefore, the importance of trade with Iraq is greater than the importance of the UAE, whose trade with Iran is three times the value of its trade with Iraq. Why? Because the UAE is a trade base for Iran, and in view of the foreign embargo, it has found an important place in trade with Iran, while Iraq has become a strategic partner for Iran's trade through direct and unmediated exchanges.
A review of Iran's foreign trade statistics in 2023 indicates that among Iran's top four foreign trading partners, the country's trade balance without oil is negative with China, the UAE, and Turkey and positive with Iraq. In fact, Iraq is Iran's largest trading partner, but the bulk of the $9.8 billion in trade with that country has nothing to do with oil.
The other point is that a large share of trade with Iraq, directly or indirectly, is allocated to small and medium-sized enterprises, from greenhouses to small manufacturing companies, and strengthening them helps improve the real situation of companies.
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Solving the challenges of exporting to Iraq

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The Iranian export market in Iraq faces several serious threats. First, the banking and economic sanctions imposed by the West and the United States. Secondly, a strong competitor like Türkiye, and thirdly, unilateral trade with Iraq and their reluctance to develop relations.
In the first case, the Iranian private sector launched its innovative methods many years ago, but since the middle of last year, with the decline in the value of the currency in Iraq, Iran's trade through exchange shops has faced the challenge of increasing the final price. Although many began to feel compassion for the Iranian-Iraqi export line at that time, consultation at the head of the government was able to help merchants cross this difficult crossing.
In an interview with Hamshahri newspaper, the Deputy Minister of Industry and Head of the Iranian Trade Development Organization, Mehdi Daghami, said: Turkey is considered Iran’s oldest competitor in the Iraqi market, and developments related to the market share in the competition with Turkey are nothing new. But at the beginning of the new year 2024, problems occurred in the Iranian export market due to the Iraqi currency events, which are gradually being resolved through government measures and consultations.
He stressed: The country's president wanted to quickly deal with the issues that arose regarding the Iranian export market in Iraq. A high-level delegation, accompanied by the Minister of Foreign Affairs of our country, met with the Prime Minister of this country, Muhammad Shiaa Al-Sudani, during a visit to Iraq, and they discussed solutions to this issue.
Dhighami estimates that “Iran will not lose the Iraqi export market, and soon a comprehensive trade agreement will be implemented between the two countries with the aim of increasing the value of bilateral trade to $20 billion, which will also eliminate the current margins.”
The Iranian Deputy Minister of Industry stressed that “Turkey was and will remain a competitor to Iran in the Iraqi market,” and said: “It is natural that they are trying to have a stronger presence in the Iraqi market, and we will implement our plans on the basis of mutual benefit.”
Since last year, major efforts have begun for joint investment between the private sectors in Iran and Iraq, the purpose of which is; Bringing Iran-Iraq trade to the bilateral route, and achieving balance in exchanges between the two countries. If that happens, trade between the two countries could reach higher numbers such as $20 billion.[/size]

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Added 04/28/2024 - 12:20 PM
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