The Strategist

US Companies Foretaste Lifting Sanctions Against Iran

12/24/2015 - 15:09

In the run-up to lifting the sanctions against Iran, several US corporate giants, including oil division of General Electric Inc., HP etc., are actively exploring possibility of entering the country’s market.

Sgt. Mallory S. VanderSchans, U.S. Marine Corps
Sgt. Mallory S. VanderSchans, U.S. Marine Corps
American companies, in addition to food manufacturers, aircraft parts and suppliers of medical goods, still cannot make direct transactions with Iran. However last week, one of the senators said that the restrictions can be relaxed in January, once the agreement with world powers is implemented.

Once that happens, the US Treasury Department of Foreign Assets Control will issue a general license, which will allow foreign subsidiaries of US corporations engage in transactions related to Iran.

None of the major players wants to lose in the race for Iran to Asian or European companies. Airlines are already rubbing hands – sales representatives clutching proposals will flood the country, populated by more than 77 million people.

Judging by the statements and actions of American companies, they do not doubt lifting the embargo. Previously, the business regarded probability of abolishing the ban rather as a political move, yet everything has changed now.

The reason why companies are so keen to capture the market of Iran is as clear as a day. For example, the market for computers, gaming devices and mobile phones will grow to $ 13 billion during four years, (estimated at $ 9.5 billion in 2014).

Foreign companies still have to act very carefully.

The US Treasury noted that non-US companies and individuals will not be subject to US sanctions if they take part in initial discussion of potential business opportunities in Iran or in the study of business relations after lifting the sanctions.

American companies are trying to negotiate with the State Department and the US Treasury about their foreign subsidiaries. In theory, they should also not be subject to US sanctions, but the position of the authorities on this issue is unclear.

According to the market representatives, now "people are exchanging drafts of contracts, but nothing has been signed yet."

In the meantime, companies are actively testing the waters, so that they could immediately leap to the market once the borders are open. However, they do it quite discreetly, without signing documents for official meetings, but only transferring them to their partners. According to some reports, these documents will be returned signed by mail.

The most high competition is expected in the technology sector. Earlier this year, Lenovo Group Ltd., the world's largest PC maker by sales, announced that it had been studying opportunities of the Iranian market and is working with dozens of companies in the retail sector.

In 2004, the company became Chinese, although keeps headquarters in North Carolina. This ease entering the Iranian market, in contrast to American companies.

Last year, Apple began working with Iranian distributors about possibility of entering the market once the sanctions are lifted. Negotiations were conducted with local distributors, though they were slowed down by such issues as weak protection of intellectual property.

In addition to the technology sector, Iran expects to attract about $ 30 billion of investment in oil and gas fields, offering new, more attractive contracts.