New Zealand updated its regulations for doing business with Iran in February 2016, in line with United Nations Security Council changes to sanctions.

Changes to doing business with Iran

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”).

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. With the latest sanctions New Zealand commodity exports to Iran have declined to less than NZ$90 million in the year ending September 2015, down from over NZ$163 million in 2014.

Remaining measures

Restrictions remain on the trade in nuclear-related material, equipment or technology, ballistic missile related technology and conventional arms specified in the following lists:

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 iranenquiries@mfat.govt.nz

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).

Additional Requirements

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?

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 and the US Treasury guidelines (external link)  about Iranian oil, gas, petrochemicals, shipping, financial, insurance, gold and precious metals and auto sectors that non-US persons may now engage in.

The way has now been cleared for direct shipping to return to Iran’s main port (Bandar Abbas) and the main container terminal (Al Rajaie Terminal at Bandar Abbas).

New Zealand companies will no longer need to ship goods via other ports, but the speed at which direct shipping returns to Iran will be a decision for the large shipping companies.

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.

While the lifting of US financial/banking sanctions against non-US banks is expected to facilitate trade between New Zealand and Iran over time, the speed at which New Zealand banks opt to re-enter the market will be a function of bank decisions around the risk profile they attach to Iran. 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.

Contact us

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: iranenquiries@mfat.govt.nz 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.

 

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