|Iran deal opens door for businesses: article||
TEHRAN - When the details of the accord between Iran and the six major powers would be worked out, a handful of companies will be in a position to bulk up trading with Iran again, the Wall Street Journal wrote on Monday.
Following are excerpts of the text of the article:
While Western powers have identified a small group of sectors for Iranian sanction relief, a much wider set of European and U.S. companies--from pharmaceutical firms and medical-equipment makers to food companies and traders--also stands to regain lost Iranian trade as soon as relief measures are formally adopted next month.
Western governments singled out Iran’s automotive and aviation sectors for temporary sanction relief, while allowing petrochemical exports and trade in gold and other precious metals. But the fine print of the deal also clears the way for GlaxoSmithKline PLC and Sanofi SA, for example, to restart selling many of the drugs they had been forced to cut back on because of increasingly stiff financial sanctions. Siemens AG, meanwhile, may now also be able to send in more medical devices.
These and billions of dollars of other goods have long been classified as humanitarian in nature and not specifically subject to sanctions. But banking and insurance restrictions enforced as part of the overall sanctions regime prevented companies in many cases from getting paid, curbing European and U.S. exports to Iran of everything from wheat and chocolate bars to diabetes medicine.
A spokesman for Cargill Inc., of Minneapolis, for instance, said it sells agricultural commodities to Iran out of its Geneva office but declined to provide more details. Depriving ordinary people of basic foodstuffs “is a potential unintended consequence of the sanction,” he said.
Procter & Gamble Co. of Cincinnati, whose Oral-B mouthwash continues to be sold in Iran, declined to comment.
The value of exports from the European Union to Iran fell 45%--or by EUR3.4 billion ($4.6 billion)--in the first nine months of this year, compared with the same period in 2011, according to EU data. Because most other types of goods have long been banned from Iran, the large majority of this reduction in trade hit things like agricultural products, food or medical goods.
Last month, six international powers agreed to temporary sanction relief on some goods--like car and plane parts--in exchange for Iran’s cooperation in restricting its nuclear activities. But the EU and the U.S. also agreed to create a financial channel using specific banks to allow for payments for “humanitarian trade,” citing specifically food and agricultural and medical products. While such trading has been legal, it was extremely difficult because many banks refused to deal with Iran at all.
When the details are worked out, a handful of companies will be in a position to bulk up trading with Iran again--though it is unclear how quickly any of them will move.
The new trade could help executives re-establish ties in the Middle East’s largest consumer market, which has about 80 million people and a per capita income far above most developing countries.
Richard Bergstr M, director general of the European Federation of Pharmaceutical Industries and Associations, said the recent “easing of restrictions should help.”
German industrial company Siemens said in U.S. Securities and Exchange Commission filings covering the fiscal year ended September 30 that it realized sales into Iran of EUR49.8 million in the period, of which EUR7.5 million were from cancer scanners and other medical equipment. It said, though, it was forced in 2012 to halt new business for its health-care divisions and other sectors in Iran, and would only fill existing orders. It cited tightening financial sanctions and Iran’s economic crisis as making it harder to get paid.
Swiss food company Nestlé SA also has been forced to scale down its Iran business after banks refused to transfer revenue back from Iran, according to Iranian traders and a banking official familiar with the matter. Since Nestlé doesn’t have a U.S. listing, it isn’t required to disclose its Iranian sales to the SEC. Without commenting specifically on any difficulty it has getting paid in Iran, a spokesman for the company said it was “following closely the developments in this process, but it is too early to say how they will affect our operations.”
Pharmaceutical companies Glaxo and AstraZeneca PLC of the UK and Sanofi of France reported annual Iranian sales of roughly $32.2 million, $14 million and $13.9 million, respectively, according to their annual SEC reports.
A spokeswoman for Glaxo said “things are moving at the moment” with the proposed sanctions relief and that the company is “monitoring the situation, but it’s early days.” A spokeswoman for AstraZeneca said it works in Iran in “full compliance with the laws and regulations.” A representative for Sanofi couldn’t be reached for comment.
Affiliates of Switzerland-based commodities company Glencore Xstrata PLC sold as much as $111 million in agricultural goods and metals to Iranian state entities in the second quarter of this year, according to disclosures by one of these affiliates to the SEC. A spokesman for Glencore Xstrata declined to comment on its Iranian plans.
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