South Korea and Iran have agreed to launch a working group on expanding humanitarian trade as part of efforts to maintain bilateral partnership within the scope of a US-approved sanctions exemption, a source close to the matter said.
The consultation aims to discuss on a regular basis how to match Iran's demand for medicine and medical equipment with what South Korean exporters can offer, the source said.
The first working group talks will likely be held early next month, South Korea’s Yonhap news agency reported.
Both sides reached the agreement during their higher-level virtual talks held earlier this week.
In the talks, the Iranian side expressed intent to purchase several hundred millions of dollars worth of South Korean products, according to the source.
South Korea has been seeking to expand humanitarian exports to Iran, including coronavirus test kits, amid the worsening Covid-19 outbreak there, as well as other essential medicine, like flu vaccines and anti-diabetics.
Iran announced on 1 August that it is taking a legal action to force South Korean banks to give Iran access to its money frozen in the country since September 2019 when Washington's sanctions waiver for South Korea's imports of Iranian oil expired.
The two countries had used the won currency-based accounts to continue Korea's oil imports from Iran and exports of goods to Iran upon the US waiver of sanctions limiting dollar-based financial transactions with Tehran. But Washington refused to extend the sanctions waiver.
The Central Bank of Iran has won-denominated accounts at the Woori Bank and the Industrial Bank of Korea to receive payments for the import of the Iranian oil and pay for the export of goods to Iran that were not subject to sanctions. But after the lifting of the US sanctions exemption, these accounts were suspended and it has caused a split between Iran and South Korea.
Iran’s Foreign Ministry says South Korea is $7 billion in arrears for oil exported before the Trump administration reimposed penalties on Iran’s crude sales.
Iran announced in June that it had received medicines valued at $500,000 from South Korea after two years of negotiations.
Expanding humanitarian trade with Tehran is also expected to help the two countries settle the issue of Iran's assets frozen in South Korea.