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January 2020, No. 93


Foreign Trade

It Is the Duty of the Government
to Support Foreign Trade!


The biggest problem in governing the country is that any president or minister who takes office treats past regulations as if they were made by the enemies of the nation.


Mehdi Ghazanfari, former minister of industry, mine and trade, believes that the country’s foreign trade custodian should be based in a single place, with a single agenda and in harmony with all policy makers to expect foreign trade growth and prosperity. He says it is time for all senior government officials, from the president and first vice president to the ministers in charge of foreign trade, to stand firmly behind the Trade Promotion Organization of Iran.

Foreign trade in the country has faced many ups and downs in recent months. On the one hand, international restrictions on the sale of Iranian goods and foreign currency transfers are apparent, and on the other hand, domestic restrictions, some of which are referred to as domestic sanctions, are suffocating businessmen and economic activists. However, the issue of reviving the Ministry of Commerce and the formation of the Ministry of Trade and Commercial Services has recently been raised. In such a situation, which agency, in particular, is the main controller of the country’s foreign trade?

To answer this question, one has to look at the issue from a variety of dimensions. In general, if we are to measure the impact of the revival of the Ministry of Commerce with sub-divisions transferred from other agencies involved in foreign trade, including the Ministry of Agriculture Jihad to the Ministry of Industry, Mine and Trade, we should consider that any method resulting in more interaction between the agencies that work together in the field of foreign trade will definitely benefits the foreign trade, that is, the closer these decision-makers work together, the faster the pace of work will be and businessmen and activists would not wait for decision-making. But this issue does have one important point to make, and that is the quality of the decisions. This is in the context of foreign trade, which requires more and more interaction between executive agencies under the sanctions. Foreign trade in the export sector is the front line of the trade war, and in the managed import sector, it can meet the country’s needs in time.

Thus, in general, the issue of structure is one of the factors influencing the volume of foreign trade in the country; if it is a coherent and integrated structure and decides quickly, it will certainly have a positive effect on the management of affairs, but it must also be noted that foreign trade has two parts one of which is international relations; that is, to sell goods at export markets, the power of foreign currency transfer and marketing, are very important and this relates to external relations. Of course, one should not forget the part that goes back to the type of production, the finished price, the quality and convenient packaging, cheap and fast logistics and ignoring the customs.

Businessmen also know well that the business environment is important too, meaning that the more favorable this space is the more domestic and foreign investment will be attracted, and transparency and corruption would show more appropriate indexes. So we see that our foreign trade is not merely subordinate to structure; that is, foreign trade could be good or bad both in the discrete structure and in the integration structure.

So, the growth and prosperity of foreign trade follows parameters that are not very much related to the integration or discrete structure, and now that the Ministry of Industry, Mine and Trade is to be segregated and no matter the Guardian Council approves this decision or not, if the segregation provokes conflict in the agencies it will not be able to help the foreign trade, so conflicts should be resolved through the upstream authorities.

It is important to note that these conflicts and contradictions have so far hampered foreign trade and, in particular, the establishment of the Ministry of Commerce separately or in any way within the current structure of the ministry cannot have an extremely rapid impact on the foreign trade. In the current situation, the country’s foreign trade is being damaged because of other parameters involved in this area, not just the separation or integration of ministries. Overall, the frequent change of laws, foreign currency transfers, the difficulty of supplying raw materials, and the high prices of manufactured goods, are damaging the foreign trade itself.

Meanwhile, part of foreign trade plays a different role for commodities such as petrochemicals and related exports; that is, they may face problems under the sanctions and sometimes sell their goods easily. Therefore, whether the agency is the Trade Promotion Organization of Iran or not, or whether it is under the Ministry of Industry, Mine and Trade or the Ministry of Commerce, it will not have much impact on their business process because these manufacturers know their jobs well and have many applicants in world markets; so whatever the integration or discrete structure is ahead of them, if the market is favorable and the rules and regulations do not cause them worries then their work is going well, especially as the behavior of the customers is important to them, meaning that if the customers buy their products without fear of sanctions, the structure may not make much difference for them.

The biggest problem in governing the country is that any president or minister who takes office treats past regulations as if they were made by the enemies of the nation. This is what happened at the beginning of the 11th government when all the useful economic experiences and approvals were annulled by the incoming government. This is not a good approach; the wheels should not be reinvented, but rather the country should be run on the basis of accumulating experience and storing the gains of the previous governments.

Some governments dismiss the past experience as an honor and attack past achievements, even at their own expense. The 11th government ended its tenure by disrupting past achievements. The 12th government was forced to return to the rules of previous governments because of the country’s problems resulting from incorrect decisions. But there is not even the audacity to admit that the economy has gone the wrong way. These new policies have also affected Trade Promotion Organization of Iran; so if the Ministry of Commerce is formed, the issue of rising forex prices, foreign trade bottlenecks, and inefficiencies within sectors of the system will be problematic, which may not well go back to structure. So the principles of transcendent governance tell us to respect the experience of the past, to apply the good works and to learn from the bad works. This approach leads senior policy makers not to call themselves the God of science and respect the good past events and decisions. The Trade Promotion Organization of Iran has a similar situation. 

Finally, what to do about this hanging in the air situation of foreign trade?

The most important thing the government can do in the current situation to advance its economic objectives and the issues related to the growth and development of foreign trade is that senior officials stand behind foreign trade, all from the president and first vice president to economic ministers should support the integration of foreign trade, so that different agencies can even aggregate their opposing views and eliminate unnecessary regulations. On the other hand, these senior policymakers should consider a central role for the Trade Promotion Organization of Iran with chambers of commerce, guilds and cooperatives, and mining and industry houses continuing to operate. It is here that engagement with the private sector grows and the will to run the country gets stronger.

What is causing more concern for economic activists and businessmen in the current state of the Iranian economy is that some government officials and statesmen are frustrated with reforming the state of the affairs because they think they have no power to improve and change. They not only do not think about deep reforms but don’t even think about superficial improvements; in other words, they have started the countdown to reach the end of their mission. This frustrating and hopeless outlook cannot result in change and coherent meetings need to be held in order to use the power of the private sector and internal system experts; here is the motivation for the private sector to come back. The solution, then, is to make policy makers come out of the passive state and engage in improving the country’s foreign trade.

 

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