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Business | U.S.-Iran Trade Still Thrives

by ANNIKA FOLKESON

11 Apr 2012 01:46Comments
ahmadinejad-wheat_1421184i.jpg[ big picture ] Trade is still thriving between the United States and Iran, despite harsh international sanctions. In 2011, Iran imported $229 million worth of American goods, everything from beauty products to bull semen, according to U.S. Census Bureau statistics.

And sales have continued into 2012. In the run-up to tighter sanctions, Iran announced its intention in March to purchase 120,000 tons of wheat from the United States.

But it's mostly one-way trade. In 2011, U.S. imports from Iran -- largely artwork and antiques -- totaled only $888,000. They dropped substantially from $94 million in 2010, due mainly to the 2010 Comprehensive Iran Sanction, Accountability, and Divestment Act limiting commercial imports from Iran.

Iran's new wheat purchase is not unusual. In 2008 and 2009, Tehran bought 177,000 and 231,000 tons of U.S. wheat after a drought cut Iran's own wheat production by one-third. In 2008, wheat accounted for more than 70 percent of U.S. exports to Iran. In 2009, agricultural goods -- such as soybeans, wheat and corn -- accounted for 57 percent of U.S. exports to Tehran, according to the Census Bureau. Economists suggest that Iran's new wheat order could be due to expectations of another poor Iranian harvest or impending new sanctions, leading Iran to stock up.

U.S. trade with Iran fluctuates significantly from year to year. At its peak after the revolution, Iranian imports of U.S. goods reached $747 million in 1992. But by 1998, Iran bought only $28,000 worth of U.S. products, mainly newspapers and books, while U.S. imports of Iranian goods reached a record low of only $26,000, mainly organic chemicals, according to the Census Bureau.

Trade often reflects the state of relations. Trade dipped in 1998 after the Clinton administration imposed new sanctions in 1996. In 2000, trade increased slightly after Secretary of State Madeleine Albright announced the lifting of sanctions on carpets, pistachios and caviar in a modest attempt at outreach to Tehran's reformist government at the time.

U.S.-Iran trade today is significantly lower than before the 1979 revolution, however. In 1978, the United States was Iran's second largest trading partner, after Germany. U.S. goods -- mainly arms, industrial equipment and technology -- accounted for 16 percent of Iranian imports. Trade decreased dramatically after the United States imposed sanctions when the U.S. Embassy was seized in 1979.

6a00e39332d00988340120a96fd1a8970b-500wi.jpg Current U.S.-Iran trade is small compared with Iran's top five trading partners, which are all in Asia. In 2011, the largest export markets included China, Iraq, the United Arab Emirates, India and Afghanistan according to the Global Trade Atlas. Over 18 percent of Iran's exports went to China. Almost 12 percent of Iran's imports came from China. Tehran's largest European trading partner is Germany, but it ranks only 13th in terms of Iranian export markets.

Sanctions limit U.S. trade with Iran to humanitarian, medicinal or educational goods. But the two countries trade a surprising array of products, including insulin and chewing gum. Until 2006, cigarettes made up a large share of Iranian purchases of American goods. In 2011, the largest single food product was butter but wheat may reportedly become Iran's largest American import in 2012.

Iranian imports of U.S. goods in 2011

Butter $11,204,167

Bull semen $7,247,147

Insulin $6,670,859

Ultrasonic scanning apparatus $1,180,369

Vaccines for veterinary medicine $452,775

Artificial teeth $297,340

Milk and cream $260,000

Antibiotics $192,149

Chewing gum $164,228

Gymnasium or other exercise items $96,333

Hearing aids $91,850

Beauty and skin care items $78,028

Kidney beans $50, 000

Perfumery and cosmetics $40,987

Toothpicks $40,553

Batteries $33,316

Vitamin A $25,636

Cranberries $18 000

Salad dressings $5,666

Blood pressure apparatus $4,050

Paintings and drawings $3,750

Source: U.S. Census Bureau, the Global Trade Atlas and U.S.A. Trade Online.

This article is presented by Tehran Bureau, the U.S. Institute of Peace, and the Woodrow Wilson International Center for Scholars as part of the Iran project at iranprimer.usip.org.

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