Hossein Tanhaee, the chairman of Iran-South Korea Chamber of Commerce, told IRNA news agency on Saturday that the mechanism will act very much like a barter system. He further explained that the mechanism will help the two countries continue bilateral trade in the face of re-imposed US sanctions on Iranian oil exports.
Tanhaee further noted that South Korean goods will be exported to Iran in exchange for oil imports from Iran.
“According to the mechanism, South Korea will ship goods to Iranian importers and the prices for the South Korean goods will be subtracted from the amount of exported oil, then importers will pay the price of the imported goods to the Iranian government,” the chairman of Iran-South Korea Chamber of Commerce said.
He continued, “if the central banks of the two countries were unable to cooperate in financial transactions, private-sector economic relations could continue trade ties through a mutual fund for bartering.”
In 2017, Iran's exports to South Korea (including crude oil) were $8 billion and South Korea exported $4 billion worth of goods to Iran. However, the bilateral trade sharply dropped this year, standing at $5.7 billion in the first 10 months of 2018, with Iran’s exports to the East Asian country valued at $3.2 billion.
Tanhaee went on to say that Iran mostly exports crude oil and petrochemical products to South Korea while imports household appliances from the East Asian country, adding the two countries can diversify their trade relations.
“For example, Iran can export foodstuff, lead and zinc to South Korea and instead import paper and cosmetic products,” he added.
The chairman of Iran-South Korea Chamber of Commerce had earlier said in a joint economic seminar in Tehran that “South Korea is Iran’s third largest economic partner after China and the UAE, and given the fact that many of the goods we import from the UAE are manufactured in other countries in the meantime, South Korea can be said to be Tehran's second-largest trading partner.”