Doing business with Iran
New Zealand updated its regulations for doing business with Iran in February 2016, in line with United Nations Security Council changes to sanctions.
On 16 January 2016 the International Atomic Energy Agency (IAEA) reported to the United Nations Security Council that Iran had taken a series of measures called for by the historic nuclear agreement between Iran, the Five Permanent (P5) members of the United Nations Security Council, and Germany (known as the “Joint Comprehensive Plan of Action”).
As of May 2018, however, the US has announced that it will withdraw from the JCPOA and re-impose all of the US sanctions that had previously been lifted or waived. More information on US sanctions is available below.
New Zealand was pleased to play a role as UN Security Council president in passing UNSC Resolution 2231 (external link) endorsing the comprehensive agreement. Resolution 2231 (2015) provides for the termination of the provisions of previous Security Council resolutions on the Iranian nuclear issue and establishes new specific restrictions that apply to all States without exception.
This historic development has been welcomed (external link) by New Zealand and Foreign Minister Murray McCully has announced (external link) the domestic process for implementation has been completed through the United Nations (Iran – Joint Comprehensive Plan of Action) (external link) Regulations 2016. These regulations have removed the requirement to register with the Ministry of Foreign Affairs and Trade before doing business with Iran.
In the long term it is hoped that the lifting of sanctions will allow for a stronger trade and economic relationship between New Zealand and Iran.
New Zealand has had an Embassy in Tehran since 1975 making it New Zealand’s longest-standing mission in the Middle East. During the 1980s Iran was one of New Zealand’s top five export markets. In 2016 the value of New Zealand exports to Iran was NZ $151 million.
Restrictions remain on the trade in nuclear-related material, equipment or technology, ballistic missile related technology and conventional arms specified in the following lists:
- Information Circular Number 254 of the Chair of the Nuclear Suppliers Group, Part 1 [INFCIRC/254/Rev.12/Part 1] (external link).
- Information Circular Number 254 of the Chair of the Nuclear Suppliers Group, Part 2 [INFCIRC/254/Rev.9/Part 2] (external link).
- Missile Technology Control Regime – Equipment, Software and Technology Annex [S2015/546] (external link).
- United Nations Register of Conventional Arms (established by resolution A/RES/46/36 L) (external link).
Dealing with the items specified in these lists is permitted with the prior approval of the Security Council and, in some cases, acceptance by the Secretary of Foreign Affairs and Trade of an appropriate end-user guarantee. Given that an application for approval from the Security Council will need to be made by the Member State on behalf of the importer/exporter, if you are considering importing or exporting any of the specified sensitive items, you should contact the Ministry of Foreign Affairs and Trade in the first instance at firstname.lastname@example.org.
Some further information on the practical arrangements in the Security Council for the implementation of SCR 2231, including the procurement channel for nuclear-related material, equipment or technology is available on the Security Council’s dedicated webpage (external link).
New Zealanders doing business with Iran must still comply with the regulations regarding the export of strategic goods (military and dual-use goods as listed in the New Zealand Strategic Goods List).
Under the new regulations, the asset freeze and travel ban on individuals and entities designated on the 2231 List (external link) remains.
Some countries, such as Australia, Canada, the European Union, the United States, and others, can impose restrictive measures unilaterally. These may be in addition to, or in the absence of, sanctions adopted by the UN Security Council. Such measures are often known as “autonomous sanctions”. New Zealand businesses trading with countries subject to autonomous sanctions are advised to seek independent legal advice to ensure that their business does not contravene other sanctions regimes including remaining US and EU sanctions.
What sectors are affected by US sanctions?
On 8 May 2018 President Trump announced (external link) that the United States would withdraw from the JCPOA (Joint Comprehensive Plan of Action) - known as the “Iran nuclear deal” over the next 90-180 days and reinstate autonomous sanctions against Iran. By 4 November 2018, all previous US sanctions will have been reimposed and in effect.
The United States Treasury has released guidelines (external link) explaining how the US will reinstate sanctions it had previously eased as a result of the JCPOA.
New Zealanders doing business with Iran should note the potential impact of US sanctions, including planned reinstatement in the next 90-180 days of “secondary” sanctions that apply to non-US persons.
New Zealand businesses, particularly those doing business in the US or with links to the US, should be familiar with the impact of US sanctions, particularly as they apply to Iranian oil, gas, petrochemicals, shipping, financial, insurance, gold and precious metals and automotive sectors.
It is essential that you get independent legal advice if you are contemplating doing business with Iran. New Zealanders currently doing business with Iran may also wish to seek independent legal advice on possible consequences of the re-imposition of US sanctions.
Other factors for New Zealand exporters to consider
The lifting of sanctions offers the prospect of real economic opportunities in Iran as the country opens up to the world.
But Iran will remain a challenging market to do business in. An opaque regulatory environment, weak commercial law and IP protection, very high tariff levels and problems with corruption mean that New Zealand companies looking to do business in Iran will need to do their homework. Finding the right local partner will be critical.
New Zealand companies are advised to consult their banks to confirm comfort levels with facilitating Iran-related trade prior to making any commitments.
Get legal advice
New Zealanders must fully comply with these regulations. Given the technical nature of the regulations, and the penalties for non-compliance, it’s essential you get independent legal advice if you are contemplating doing business with Iran. This guidance material does not constitute legal advice. MFAT is not responsible for any loss or damage caused to any person relying on this material.
If you have questions about the requirements imposed by the United Nations (Iran – Joint Comprehensive Plan of Action) Regulations 2016 (external link) or doing business with Iran, email: email@example.com or call New Zealand Trade and Enterprise on 0800 555 888.
There is also at LinkedIn group for Kiwi exporters looking to do business in Iran. Click here (external link) to apply to join the group.
Media and resources
- United Nations (Iran-Joint Comprehensive Plan of Action) Regulations 2016 (external link)
- UN Resolution 2231 - Joint Comprehensive Agreement on Iran's Nuclear Programme (external link)
- US Treasury Iran Sanctions (external link)
- United Nations Security Council website on Resolution 2231 (external link)