Analysis of Iran-South Korea trade (Emphasis on identifying alternative markets for major items imported from South Korea)

South Korea began its development process in the 1960s and with integrated planning has been able to establish itself as one of the most successful Asian examples in forming value chains and vertical specialization (VSI) and connecting to global value chains.

According to the International Trade Center, in 2019, the total value of trade in goods and services in South Korea amounted to 1275 billion dollars, of which 1045 billion was related to trade in goods and the rest (228 billion dollars) was related to services, of which 126 billion dollars Exports and $ 102 billion were allocated to imports.

The diversity of South Korea's industrial production and exports and its need to import raw materials and intermediate goods on the one hand; Iran's possession of oil and mineral raw materials, as well as the need for industrial intermediate goods, on the other hand, led to the formation of a high degree of trade between the two countries.

The development of trade relations between the two countries began ten years after the victory of the Islamic Revolution. After the end of the imposed war and before the escalation of sanctions in 2012, South Korea was promoted to the level of Iran's fourth trading partner; In some years, it was the third largest importer and the fourth largest exporter in Iran. Also in 2011, the value of trade between the two countries reached the highest level in the history of trade relations between the two countries and about $17 billion with a trade surplus of $5.3 billion for Iran.

Also, during the embargo period, despite severe restrictions, the level of trade between the two countries never stopped, so that even in 2015, the value of trade between the two countries was about six billion dollars. Since then, the export route of traditional Iranian and mineral products to South Korea has been opened. Following the Joint Comprehensive Plan of Action Agreement in 2015 and the openings that have taken place, trade between the two countries has increased since 2016, reaching $12 billion in 2017, which included $8 billion in exports and $ 4 billion in imports. South Korea ranked sixth as Iran's trading partner in exports and third in imports.

The practical composition and technological structure of Iranian goods imported from South Korea indicate the significant role of the country in the structure of Iran's trade and economy; According to studies, about 90% of Iran's imports from South Korea are related to intermediate goods and capital required by Iranian industries, while about 100% of exports are mainly intermediate goods, including oil, petroleum products and gas condensate; In addition, the study of the technological structure of imports from South Korea shows that about 75% of imports are related to goods with medium to high technology level, as well as high technology related to optical instruments and devices, electrical machines and their components, pharmaceutical supplements and It is an electronic calculating machine that indicates the high quality of goods imported from this country. Over the past decade, Iran has imported from South Korea in a wide variety of products of nearly more than 1,200 goods (at the level of six-digit HS codes).

 The country provided an average of about 5.6 percent of the country's needs in these items; Among them, the 20 major items imported from South Korea together account for more than 42% of the imports from the country, which are identified in this report; These goods are important in the portfolio of various Iranian goods imported from South Korea because the country meets an average of 40% of Iran's needs in those products and another 60% from countries such as China, Germany, Turkey, France and the United Arab Emirates. Supplied in Arabic, Chinese Taipei and other European countries. Almost all goods were imported from China at the same time as South Korea, so it seems possible to supply these goods from China.

It should also be noted that the replacement of goods imported from South Korea by other trading partners, due to possible differences in the quality of goods (in terms of brand and country due to differences in the technological structure of goods) and dissatisfaction of manufacturers for Supplying the parts required by the industries, it is necessary to examine the products under each of the six-digit HS codes with the opinion of domestic manufacturers.


Keyword: Iran-South Korea trade, sanctions, industrial production, technological structure

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