Trade Agreement with Turkey or Economic Misstep?

The preferential tariff agreement between Iran and Turkey, set to be implemented in January 2015, raises significant concerns about its fairness and long-term impact. While presented under the banner of globalization and free-market economics, a closer look reveals several potential disadvantages for Iran:

1. Limited Gains for Iranian Exports

The tariff reductions primarily benefit goods where Turkey already dominates as a major exporter, such as biscuits, chocolates, and other food products.

2. Industrial Advantage for Turkey

Turkish exports consist mainly of industrial goods like refrigerators, washing machines, stoves, furniture, and gas valves, giving Turkey a competitive edge in these sectors.

3. Tariff Disparities

Turkish exporters enjoy average tariff reductions of 30% annually, further eroding the competitiveness of Iranian producers in the long run.

4. Payment System Challenges

The reliance on Turkish banks and payments in Turkish lira—necessitated by international sanctions—creates additional hurdles for Iranian exporters. Exchange rate disparities, high transfer fees, and unconventional banking costs make it difficult for Iranian businesses to compete internationally.

The agreement highlights the complexities and challenges of international trade arrangements, underscoring the need for careful evaluation to ensure equitable outcomes for all parties involved.