International Trade Secretary speech at second Iranian trade conference

Speech delivered by International Trade Secretary Liam Fox at 'New Prospects for British-Iranian Trade and Investment' conference in London.

The Rt Hon Liam Fox MP

Good morning.

Thank you, Sir Richard [Dalton, President, British-Iranian Chamber of Commerce] for those opening remarks. A warm welcome to those gathered here today.

…Ambassador [Hamid] Baeidinejad [Bay-din-e-jad] …Distinguished ladies and gentleman

The nuclear deal, agreed last summer, has given the world an opportunity to move forward in the spirit of cooperation and engagement – with trade as a key pillar.

Iran completed the necessary steps for the deal to be implemented by the 16th of January 2016, lifting many of the economic and financial sanctions which had closed the economy.

The United Kingdom played a key part in getting us to that point and we continue to play a leading role as a member of the Joint Commission; the body set up to ensure the deal remains on track. And so far it has.

Relations between the UK and Iran have a long and complex history; and it is no secret that we have further work to do.

We remain deeply concerned about a number of British-Iranian dual nationals who are being detained in Iran.

…and on human rights.

But let us be clear;

We are now presented with an opportunity to put Anglo-Iranian relations on a new footing.

The government has made steady progress in improving our relationship with Iran since we agreed the nuclear deal and reopened our embassies in August last year.

Upgrading to Ambassador-level representation on the fifth of September was the next step in increasing the dialogue between our 2 countries, and the practical and symbolic importance of this milestone cannot be understated.

After years of applying one of the most wide-ranging and stringent sanctions regimes ever imposed, the international community is now beginning to re-engage with Iran.

This developing relationship has the potential to be a mutually beneficial and prosperous one.

As the UK forges a new trading role for itself following the vote to leave the European Union, we place a great deal of importance on being able to trade with the rest of the world.

For Iran, this will be a vital part of its re-integration into the international community. We must never underestimate the power of commerce to form bonds and build bridges between nations.

As Britain recasts its own place in the world, we will continue to work with Iran on the future expansion of our trading relationship.

The sanctions that have closed the Iranian economy are being lifted, and there will be new export opportunities for UK companies.

The Iranian government has regularly stated its desire to attract foreign direct investment to meet the country’s ambitious growth targets, and private firms around the world, including the UK, will soon have new business opportunities that will also prove to be increasingly beneficial for Iran and her people.

This represents a once in a generation investment opportunity, as Iran is the biggest market to enter the global economy since the fall of the Soviet Union.

It is the second largest economy in the Middle East, with an estimated nominal Gross Domestic Product (GDP) of USD 397 billion for 2015.

The purchasing power parity figure is higher still, ranking 18th globally.

So it should come as no surprise that the commercial appetite is there.

Companies are attracted by the long-term opportunities across Iran’s highly diversified economy, with particular prospects existing for UK companies in the oil and gas sector.

Iran boasts the second-largest gas reserves and fourth-largest oil reserves in the world, yet it is estimated that over USD 100 billion of investment is required if the industry is to perform.

The country also possesses the world’s seventh largest mineral reserves, a large consumer market and a strong industrial manufacturing base; with a young and highly educated population.

Iran’s intrinsic strengths are many and the potential great.

Slowly, but with increasing enthusiasm, British companies are starting to do business with Iran again.

Nine months after implementation day, we are seeing the first signs of growing trade between the UK and Iran.

The return of British Airways on the first of September is the most obvious outward manifestation of this trend, but other British companies are also now finding their way back.

A number have now established a permanent presence in Iran.

In September, Lotus opened a show-room, selling cars that are hand-built in the village of Hethel in Norfolk. In October, BP opened an office, and British telecommunications company Vodafone recently announced a partner agreement with local operator HiWeb.

Companies, such as Croda International – a Yorkshire based chemicals-company listed on the London Stock Exchange – are increasing their footprint in market.

Others like Debenhams, who have maintained a presence in Iran, are also expanding their operations.

Across the Iranian economy, there are opportunities for bold and pioneering British exporters.

Retail, healthcare, water, advanced manufacturing, mining, airports and aviation – These are just some of the sectors that my department – the Department for International Trade – is prioritising.

Building on successful earlier visits by the Prime Minister’s Trade Envoy Lord Lamont earlier in the year, as well as a ministerial mission focusing on aviation earlier in the year, in December we are sending a mining sector delegation to Tehran.

The Iranian Mines and Mining Industries Development and Renovation Organisation will present USD 14.5 billion of possible investment opportunities. The potential for British exporters is simply vast.

Since implementation day, trade with Iran has grown steadily. However, it cannot yet reach its full potential.

The banking sector’s on-going concerns about facilitating payments or providing financial services means that the benefits of sanctions relief are not yet being fully realised.

Resolving these problems remains a priority of this government, and of my department.

Not only is this necessary for UK business, but financial integration will also help Iran, its institutions and the private sector benefit fully from the rules-based, international system.

We are continuing to engage with the banking sector, to understand their concerns and to work with them towards finding a financial channel solution for Iranian payments.

We are continuing to work with our international partners on this, including the USA. Thanks to our efforts to bring European banks and the US financial authorities together, the US has several times revised its guidance on Iran, to provide further clarity on the scope of the sanctions.

Iranian banks and related entities lost touch with modern financial regulation during the years of sanctions, and improvements are required to systems and processes if they are to work effectively with international counterparts.

A number of private Iranian banks – including some in the audience today – already have ambitious modernisation plans in hand.

As a leading centre for financial and professional services the UK is well placed to facilitate this process, and to offer the benefit of our experience in areas such as supporting compliance with international regulatory standards.

The Department for International Trade – both here in the UK and in the British Embassy in Tehran – will continue to play an important role in supporting trade and investment between our 2 countries.

Iran does remain, however, a challenging place to do business, and needs to do more to meet international banking standards and instigate reform if it is to enjoy a post-sanctions dividend.

UK businesses looking to trade or invest in Iran should be aware of those sanctions that remain in place, trade regulations and export controls, and ensure all trade activity is fully compliant.

Recognising the complexities of doing business in Iran – and in the spirit of living up to our end of the nuclear deal – we have set up a cross-Whitehall team to help support UK businesses with their commercial deals.

After all, as soon as sanctions were lifted, it was UK Export Finance (UKEF), the UK’s export credit agency, that became the first to reintroduce cover for Iran.

UKEF stands ready to work with banks to support UK exports in all sectors, including priority industries such as aerospace, financial and professional advisory services, infrastructure, technology and energy sectors.

It is right that the United Kingdom should continue to engage with Iran and endeavour to rebuild relations, not only through increased trade and investment but also through wider cooperation and greater understanding on a range of issues.

Iran stands poised to re-join the global economy, and it is vital that we work together to capitalise on the diplomatic and commercial opportunities.

In this, we all have a role to play.

It is vital that we approach trade in the spirit of openness and cooperation. Iran’s resources are vast and its advantages many.

Britain stands ready to work towards an open commercial relationship, uphold the principles of free trade, and share with Iran in the prosperity that it will bring.

Published 2 November 2016