The UK, France and Germany have made a special trade deal with Iran, while trying to preserve the sanctity of 2015 nuclear deal which prevents Iran from creating weapons in a trade-off for economic incentives. The nuclear agreement was signed between UK, France, Germany, Britain, China, Russia, and US. Last year US President Donald Trump moved out of the deal, saying Tehran was “not living up to the spirit” of the treaty, and reimposed sanctions.
As a consequence of that, many European companies shut down all trade activities with Iran, only to relax and re-establish trade relations once Iran threatened to increase its nuclear activities.
France, Germany and Britain would set up an “Instrument in Support of Trade Exchanges” or INSTEX, which would allow businesses to go around direct financial transactions and protect the companies involved.
INSTEX is to be headquartered in Paris and overseen by a German banker.
European powers have signed the deal with the Islamic republic in order to counter the impact of US sanctions on Iran and save remaining pieces of the nuclear deal.
The three foreign ministers said a parallel structure would have to be established in Iran and along with “addressing all the technical and legal aspects required to make the special purpose vehicle (SPV) operational.”
The US State Department issued a statement notifying the European nations involved with trade with Iran that US is closely observing their actions. The part of the statement which sounded more like a warning read, “As the president has made clear, entities that continue to engage in sanctionable activity involving Iran risk severe consequences that could include losing access to the U.S. financial system and the ability to do business with the United States or U.S. companies,” the State Department said in a statement.
To begin with the trade deal will focus on the products that don’t come in the way of U.S. sanctions, such as medicine, medical supplies, and agricultural goods.
It is said that SVP would start in a month or two and other European Union nations would also follow suit.