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Iran's Trade With EU Drops To One Quarter Of Last Year

Visitors browse the exhibition stand of Iran at the International Tourism Trade Fair (ITB) in Berlin, March 9, 2016. File photo

New figures released by the European Commission indicate that bilateral trade between 28 EU members and Iran has dropped to one quarter during the first six months of 2019 compared with the same period in 2018.

During January-June 2019, trade between Iran and EU reached €2.558 billion, which is 25 percent of the figure for similar period in the previous year.

Based on the report released by the European Commission on its official website on August 19, EU's exports to Iran during the period dropped by 53 percent and reached €2.14 billion, while its imports from Iran during the same period plummeted by 93 percent and reached €416 million, showing a 14.6-fold decrease.

EU Iran export and import in the first half of 2017-2019( billion of Euros)
EU Iran export and import in the first half of 2017-2019( billion of Euros)

The reason for the dramatic drop in Iran's exports to Europe is U.S. sanctions on Iranian oil. European companies have stopped purchasing oil from Iran to comply with U.S. sanctions imposed on Iran following the Washington’s withdrawal from the nuclear deal with Iran in May 2018.

However, Germany still remains the biggest European exporter of goods to Iran. Nevertheless, it has exported only €677 million worth of goods to Iran during the first 6 months of 2019, which is half the figure in the same period last year.

Italy, the second biggest European exporter to Iran has also halved its exports, selling only €375 million. Meanwhile, Italy remained the biggest importer of Iranian goods in EU. But even in this case there is a huge drop. Italy used to purchase €1.78 billion worth of goods, mainly oil from Iran in previous years, however, the figure dropped to around €94 million during the first half of 2019.

Iran's exports to its main trading partners in Europe in billions of Euros
Iran's exports to its main trading partners in Europe in billions of Euros

During the same period, France imported €10 million worth of Iranian goods. During the same period in 2018 France had imported €1.18 billion worth of goods from Iran. This means France is now buying just one percent of what it used to buy before U.S. sanctions.

Iran has been calling on EU for months to make the financial mechanism INSTEX operational to help Iran sell oil to Europe, but the United States has been putting pressure on Europe to refrain from circumventing sanctions. The U.S. says it has no problem with INSTEX if it is used only for trading goods that are not subject to U.S. sanctions, such as medication.

Infographic:The Instrument in Support of Trade Exchanges (INSTEX)
Infographic:The Instrument in Support of Trade Exchanges (INSTEX)

Germany's former ambassador to Iran Bernd Erbel who had been appointed as head of INSTEX resigned after a short while, further delaying the launch of INSTEX operations.

Iran has threatened Europe that it will step back from fulfilling its commitments under the nuclear deal if its financial rewards recognized under the agreement do not materialize.

Since May 2019, Iran has suspended some of its voluntary commitments under the Joint Comprehensive Plan of Action (JCPOA) by exceeding the 3.67 percent enrichment and 300-kilogram stockpile of Enriched Uranium in two stages, and has threatened to take a third step in this direction if it cannot sell oil in the international market.