Despite the signing of a nuclear agreement between the permanent nations of the United Nations (UN) Security Council and Iran, which is expected to lift sanctions on the country, tea exporters and experts point out that uncertainty would continue to prevail till at least December until sanctions are actually lifted, which also depended on the level of Iran’s commitment towards the agreement.
The UN Security Councils permanent nations (P5+1), namely China, France, Russia, United Kingdom, United States—plus Germany, signed the agreement with Iran on July 14 and a two month time frame had been given for its implementation.
The signing was considered a positive move for Sri Lanka’s tea sector, whose exports were hampered owing to the penalties issued by the United States. However, experts said that even though the deal has been signed, it could still be vetoed if the United States Congress refuses to lift its penalties against the country.
In addition, a team of energy experts would also visit Iran to ascertain whether the country conforms to conditions spelt out in the agreement with the UN. “Therefore, it all depends on whether Iran conforms to the conditions, and whether the UN and USA are happy with the progress. So the entire process would take three to four months. We should know the outcome by December or January next year,” Executive Director, Sri Lanka Tea Brokers, Waruna de Silva told The Nation Gain.
Currently, Sri Lanka is in discussions with the US on possibilities of obtaining relief for tea exporters through the country’s Joint Plans of Action (JPOA) until sanctions on Iran are removed.
Even though the US had signed a nuclear agreement with Iran which had paved way for removal of sanctions imposed on the latter, the sanctions would be officially removed after the approval of the US Congress.
“We are looking at possibilities of obtaining relief through their joint action plan,” General Secretary, Tea Exporters’ Association (TEA), Ranjith Abeykoon said.
Accordingly, the JPOA at the moment does not look at Sri Lanka but includes countries such as India, Japan, China and Korea.
“Discussions are currently underway between the External Affairs Ministry and officials of the US Embassy on possibilities of including Sri Lanka in the list,” Abeykoon said.
Iran was the second largest buyer of Sri Lankan tea importing 50 million kilogram per year which amounted to revenue of US$ 350 million. “However, the amount has reduced to 30 million kilograms after the sanctions were imposed,” he told The Nation Gain.
As of last year, Iran was the fifth highest buyer of Sri Lankan tea. Accordingly, the tea sent to Iran during this period was through third party, which had resulted in additional cost to both the countries.