Main Characteristics of Bilateral Trade between Iran and South Korea: Focusing on Trade Diversification

Abstract

South Korea and Iran enjoy economic ties covering many sectors and activities. Iran is one of Korea’s largest trade partners in the Middle East and its fourth-largest supplier of crude oil. In recent years, South Korea has imported 87 percent of its oil from the Middle East, and Iran has become one of its top suppliers. Although bilateral trade between Iran and South Korea reached a maximum of more than US$12 billion in 2017, the US’ withdrawal from the Iran nuclear deal on May 2018 and its new plans for re-imposing sanctions on Iran may affect Iran-Korea bilateral trade. This demonstrates how earnings from Iran’s trade relations are somehow fragile against sanctions, and due to this fact the expansion of non-oil exports on the basis of an export leap strategy can be considered as a major goal of Iran’s development plans in trade and business. In this situation, it will be essential to identify areas with good prospects to enhance exports and diversify trade between Iran and its trading partners like South Korea. South Korea should play a volunteering and constructive role in collaboration with Iran. The long-standing relations and existence of several bilateral economic and trade agreements between the two nations indeed require a careful and in-depth study of the economic and trade positions of both countries.