Brazilian agricultural exports reached $ 7.33bn in July, representing growth of 16.6 percent as compared to the same month last year. With a similar yardstick, the sales to the Arab countries grew by almost 40 percent, a growth rate second only to shipments to the Latin American Integration Association (Aladi) member states.

The data shows that four countries from the Arab region have featured in the list of leading 20 export destinations of Brazil. They are – Iran at 5th place behind China, the US, the Netherlands and Russia, and Saudi Arabia in the 10th position, Egypt at13th and the UAE at No.17 appeared on the new list.

Over the past few years’ trade between Brazil and Arab countries have witnessed enormous growth after Lula administration reached out to the Arab world in a stand out manner. It should be recalled the Brazil’s Minister of Agriculture Wagner Rossi informed last month that “President Lula holds the Arab countries in very high esteem. Our trade relations are increasing and will surely develop a lot, because we are complementary economies.”

Brazilian agribusiness exports to the Arab countries increased by 17.2 percent in the first half of 2010 over the same period of 2009, having gone from $2.9bn to $3.4bn. The most shipped products to the Arab region were sugar and meat, whose combined sales constituted 84 percent of Brazilian agribusiness exports.

Last month’s Brazilian exports of sugar and ethanol recorded growth of 44.3 percent, meat at 22.4 percent, forestry products 21.9 percent, coffee 32.4 percent, leathers 31.7 percent and livestock 65 percent. In the first two quarters, export revenues totalled $ 42.3bn, 12.1 percent more than of the same period of last year. The highlights pointed out by the ministry include greater exports to two Arab countries – Egypt 54.4 percent and the UAE 22 percent. While imports from the region, largely fertilizers, too recorded huge growth at $ 1.13bn, a rise of 42 percent over the same month of 2009.

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Iran’s Oil Minister Massoud Mirkazemi met the Chinese vice Premier Li Keqiang in Beijing last week, and agreed on enhancing relations between the two nations, especially in the oil and gas sector. Li Keqiang is reported to have told the visiting Iranian oil minister that Beijing would maintain co-operation with Tehran on existing projects.

It should be recalled that last month, the Deputy Oil Minister Hossein Noghrekar Shirazi told the state-run Mehr news agency the Chinese companies were already involved in energy exploration and production projects in Iran worth about $29bn, and in refining and related activities at about $10bn.

Interestingly, some reports say that even Russia is not far behind China in cashing in on Iran embargo. Rajab Safarov, head of the Iran Commission of the Moscow Chamber of Commerce and Industry informed Russian companies were discussing “serious deliveries” to Iran in late August or September.

The US and the EU had made repeated requests to China and Russia to comprehensively honor sanctions against Iran. However, despite approval to sanctions both countries have differences on the scale of punitive measures slapped on nuclear interests of Iran.

“Sanctions are not considered an effective tool… and they will only complicate the situation” was the reaction from foreign ministry spokesman Ramin Mehmanparast last month as quoted by the state news agency IRNA. Likewise, Mirkazemi has also told at that point “European oil companies has no presence (in Iran’s energy sector) and so they cannot have any impact on us”, in a response to the EU’s recent oil sanctions.

If China and Russia continue trade with Iran, sanctions not only become meaningless but also jeopardize business prospects of other countries, including that of India which has massive ongoing and some in the pipeline oil trade deals with Iran. Bloomberg reported sanctions were forcing refiners such as India’s Reliance Industries to pay higher costs to ship gasoline to more distant markets. According to Simpson, Spence & Young Ltd., the world’s second-largest shipbroker, India to the US shipping costs, at $1.9mn, are almost five times higher than those to the Persian Gulf.

“It’s boom time for Russian and Chinese oil traders,” said Michael Swangard, a London-based international trade lawyer at Clyde & Co., which counts BP and Lloyds of London among its clients. It’s “practically impossible” for Europeans to buy Iran’s oil or sell it, he said.

According to Chinese customs data, in the first half of 2010, Iran held its place as China’s third biggest supplier of crude with shipments of 9mn tons of oil, putting it behind Saudi Arabia and Angola.

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The five-day trip will largely focus on non-oil exports from Iran as such products are in great demand in Iraq for its quality and low prices. Iraq imports a wide variety of goods from Iran, including air conditioners, construction materials, office furniture, carpets, clothes, medicines, fish, spices and fruits.

Mousavi said that the 45-member delegation comprised of merchants of repute from various fields including food industry, home appliances, medical equipment and technical and engineering services. According to him, exports from Iran to Iraq reached $2.5bn during the first eight months of the Iranian calendar year (ended November 21).

Since the collapse of the Saddam Hussein regime in 2003, exports from Iran to Iraq have witnessed massive growth, and currently Iraq is Iran’s second-largest, non-oil export market. It should be noted that even vegetables are being imported from Iran as well as poultry, meat, canned foods, carbonated drinks, and dairy products particularly as they are cheaper and offer better quality than the local stuff.

Post Saddam era was also able to open up a wide range of trade opportunities between both countries providing a lopsided advantage to Iran through its exports and several contracts including $1.5bn housing construction in Basra and electrification of several cities and towns of Iraq. Apart from non-oil exports Iraqis sought healthcare facilities of Iran since that country offered cost efficiency against other nearby countries such as the UAE, Jordan and Egypt. Religious tourism is something which Iraq largely benefits through the exchanges; around 500,000 Iranian Shi’ite pilgrims visit Iraq every year.

The trade representatives besides meeting local merchants were also expected to meet Iraq’s acting minister of trade Safaa Al Deen Al Safy, said Mousavi. It is forecasted that Iranian exports of products to Iraq will soon go up to $4bn and exports of technical and engineering services and energy will reach $2bn.

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It should be noted that despite the three-decade old sanctions in effect, during the Bush administration, since 2001 the US has exported goods worth $546mn to Iran till 2007 until it dwindled down last year. In comparison to $8.3mn of Bush’s first year of the first term in 2001, the US exported goods valued at $146mn in 2007 to record a tenfold growth in exports to Iran. Under the US sanctions, only exporting of goods pertaining to basic humanitarian needs such as medical supplies and food items are allowed.

Going by the Obama’s soft diplomatic stance on the dispute over the re-election of Ahmadinejad as the president of Iran and the ongoing unrest one has to assume that the new US administration does not want to tamper with their business opportunities anywhere in the world. Though the trade with Iran is of negligible amount as compared to its chief trading partners, the US is well aware of the fact there are several countries more than willing to do business with Iran. Moreover, it does not make business sense as it is common for Iran and other sanctioned countries to use trans-shipment points such as the UAE to obtain US goods undetected.

China with $8bn, Germany with $5.7bn, Italy with $3.2bn, France with $2.6bn and Japan with $1.9bn are major exporters to Iran. Exports from the US were largely agricultural products and medical supplies, but brassieres, fur clothing, sculptures, perfume, musical instruments and military apparel were also other merchandise which found their way to Iran. However, a sizeable decrease in cigarette exports, a major product of export from the US to Iran in the last decade has been witnessed owing to the increased presence of the American cigarette companies in Iran and Turkey.

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Export based economy of Japan has been devastated recently by the global economic crisis. The Japan’s exports dropped by 50 percent triggering a 5.4 percent plunge in its GDP due to falling demand for its merchandise from the US and the EU, its major trade partners.

During the meet, Iran invited Japan to set up branches of their banks in Iran, and apprised of the opportunities in fields such as, marine transportation system, oil projects, and construction of marine structures. Another major area of investment brought to the notice by Iran was national railway network project including construction of railroads for express trains and other related projects.

Currently, Japan is the third largest importer of Iran’s industrial and mining products, and about 22 percent of its total oil output is exported to Japan. The two-way trade between both countries is about $20bn in 2008.

With renewed ties, Iran is expecting to triple the trade volume in the coming years through increased economic participation by Japan. Iran’s non-oil exports to Japan include carpets, pistachios and dry fruits.

After concluding the Tokyo visit, Nahavandian informed he had assurances by several Japanese authorities including Japan’s MP, Kotaro Tamura that a Japanese delegation would soon visit the country to review the trade possibilities in Iran. Tamura is one of the strong supporters in fostering better ties with Iran that extend to all spheres of bilateral co-operation. Iran’s anti-American stance and Japan’s US ally status often vexed the relations between both countries for the past several decades.

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The bilateral trade agreements with Venezuela and Uruguay in particular have benefitted Iran to augment their growth in the region at a faster pace. MOUs on preferential trade tariffs with Cuba and Venezuela, holding of several trade shows, and constant interactions with the trade delegations are also regarded as other factors which allowed Iran in establishing a better trade relationship with these countries.

Afqahi stated that Iran exported $179mn worth of non-oil merchandise to South America in 2005 and the same in March 2009 stood at $577mn to record a growth of 3.2 times as compared to four years ago. According to Iran’s Customs Administration (IRICA), Iran’s annual overall non-oil exports reached $15.2bn during 2007-08 fiscal. Though the percentage share of non-oil exports of the country to the Americas is miniscule, it is showing steady growth in the recent years.

A huge chunk of Iran’s non-oil merchandise is exported to the Asia & Oceania region, and it is estimated about 83.3 percent. Among them the UAE, Iraq and China take away the larger country-wise pie share with 14.2 percent, 10.5 percent and 8.1 percent respectively. However, the Iran’s non-oil export share to the South American region is just 1.5 percent as of March 2008. The major export commodities by Iran to the Americas are identified as pistachio and dried nuts, carpets, handicrafts, tractors and other agricultural machinery, cars and spare parts, construction material, and home appliances.

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