[{"bbox": [72, 106, 1135, 159], "category": "Text", "text": "economic and business models. Further, the Action is in line with the Commission Communication on 'Achieving Prosperity through Trade and Investment'."}, {"bbox": [72, 171, 1135, 222], "category": "Text", "text": "The Action may be implemented through indirect management modality with World Trade Organisation's International Trade Centre."}, {"bbox": [72, 253, 301, 284], "category": "Section-header", "text": "## 2. RATIONALE"}, {"bbox": [87, 316, 220, 342], "category": "Section-header", "text": "### 2.1. Context"}, {"bbox": [72, 358, 1157, 439], "category": "Text", "text": "The Islamic Republic of Iran is a Lower Middle Income Country⁹ (LMIC) with a population of 85 million, educated workforce and massive fossil fuel reserves. Located at the intersection between the Middle East, Central Asia and South Asia, Iran is a key geopolitical power in the region."}, {"bbox": [72, 451, 1157, 637], "category": "Text", "text": "Relations with the EU are impacted by the implementation of the multilateral international agreement Joint Comprehensive Plan of Action (JCPoA) on the Iranian nuclear programme, which represents a key security priority for the EU. Signed in July 2015, this nuclear deal opened opportunities for dialogue and mutually beneficial cooperation in several areas. 2018 witnessed a withdrawal of the US from the agreement and re-imposition of related sanctions on Iran. This has worsened the economic situation in the country; it has contributed to annual inflation rates of 30.5%¹⁰. Iran GDP in 2018 fell by 6% and in 2019 by 6.8%¹¹. Further, Iran has been badly hit by the COVID-19 pandemic¹². However, its economy has proven to be resilient and in 2020 experienced a 1.5% GDP growth."}, {"bbox": [72, 649, 1157, 836], "category": "Text", "text": "In addition to the above, Iran faces structural economic challenges. Years of isolation from international markets have limited its economic competitiveness¹³. Improved economic governance and the fight against widespread corruption are among the country's key political priorities¹⁴. Iran is also trying to diversify from its heavy reliance on oil and gas revenues. World Bank's 2019 \"Ease of Doing Business\" report places Iran in 127th place out of 190 surveyed countries. Despite some initial progress on its Financial Action Task Force (FATF) Action Plan, Iran did not complete it and, as of early 2020, FATF described Iran as a high-risk jurisdiction with significant strategic deficiencies in its regime to counter money laundering, terrorist financing, and financing of proliferation."}, {"bbox": [72, 848, 1157, 980], "category": "Text", "text": "EU's trade with and investments in Iran are significantly below their potential considering the size of the two markets. Until 2019, the EU was one of Iran's largest trading partners after the U.A.E. and before China. However, in the context of the re-imposition of US sanctions related to JCPoA, the subsequent absence of payment and banking channels and the risk averse market choices by European economic operators, the volume of trade declined by more than 70% in 2019 and the situation did not change significantly in 2020."}, {"bbox": [72, 992, 1157, 1096], "category": "Text", "text": "Currently, there are ongoing diplomatic efforts to go back to the full implementation of the JCPoA including the US re-joining the nuclear deal and subsequent lifting of US related sanctions. If diplomatic efforts will be successful, a fully implemented JCPOA is likely to open significant opportunities for the EU and Iran to strengthen economic relations."}, {"bbox": [72, 1110, 1157, 1243], "category": "Text", "text": "The interest of the EU is to reverse the current trends in trade and investment relations including through targeted support to help aligning Iranian regulatory and business environment with EU/international best practices. Further, the EU has an interest of pursuing a commensurate EU-Iran trade relations, also through EU-Iran experts meetings on trade, investment, regulation and industry. The EU has a favourable view of Iran's efforts to accede to the World Trade Organisation."}, {"bbox": [72, 1256, 1157, 1337], "category": "Text", "text": "The main risks for EU-Iran cooperation and the Action described in this Action Document are: (i) further degradation of the implementation of the JCPoA; (ii) absence of an EU Delegation in Tehran, which limits monitoring, EU visibility and direct dialogue with Iranian counterparts."}, {"bbox": [72, 1349, 1157, 1400], "category": "Text", "text": "The Action is in line with: (i) President von der Leyen's vision of a geopolitical Commission through developing closer economic ties with Iran; (ii) the 2016 Joint Statement by HR/VP Mogherini and FM Zarif, which serves as a"}, {"bbox": [72, 1446, 1157, 1493], "category": "Footnote", "text": "⁹ The World Bank has reclassified Iran from an Upper Middle Income Country to a Lower Middle Income Country on 1 July 2021."}, {"bbox": [72, 1493, 1157, 1543], "category": "Footnote", "text": "¹⁰ IMF Datamapper: https://www.imf.org/external/datamapper; recent official reports from the Statistical Organisation of Iran have reported rates up to 48.7% comparing to March 2020"}, {"bbox": [72, 1543, 332, 1566], "category": "Footnote", "text": "¹¹ International Monetary Fund"}, {"bbox": [72, 1566, 1139, 1591], "category": "Footnote", "text": "¹² Since the onset of the COVID-19 pandemic Iran has officially experienced more than 3 million cases and 80 thousands deaths."}, {"bbox": [72, 1591, 1112, 1616], "category": "Footnote", "text": "¹³ According to World Economic Forum's 2019 Global Competitiveness Index, Iran ranks 88th out of 141 surveyed countries."}, {"bbox": [72, 1616, 1157, 1661], "category": "Footnote", "text": "¹⁴ According to Transparency International's 2020 Corruption Perception Index, Iran occupies the 149th place out of 179 countries."}, {"bbox": [1051, 1663, 1157, 1687], "category": "Page-footer", "text": "Page 4 of 20"}]