KOHTA to handle South Korea-Iran humanitarian trade: Envoy

Ambassador of the Republic of Korea to Tehran Ryu Jeong-hyun has explained the mechanisms established by Seoul for conducting humanitarian trade with Iran amid the United States’ sanctions. KOHTA which stands for the Korean Humanitarian Trade Arrangement is going to replace the pilot mechanism which is called the GL8.

9 August 2020
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Ambassador of the Republic of Korea to Tehran Ryu Jeong-hyun has explained the mechanisms established by Seoul for conducting humanitarian trade with Iran amid the United States’ sanctions.

The US reimposed sweeping sanctions on Tehran after it withdrew unilaterally from the 2015 nuclear deal two years ago. It initially granted temporary waivers to eight countries, including South Korea, to continue importing Iranian oil and exporting non-sanctionable goods to the Middle Eastern country, but refused to extend them despite their requests. 

This created many bilateral trade difficulties and Korean companies could no longer easily export to Iran and receive payments. 

The two countries had used the won currency-based accounts to continue their trade upon the US waiver. After its expiration in April 2019, a significant amount of won-based Iranian money, worth up to $7 billion, was frozen in two Korean bank accounts.

“Against the backdrop of such developments, the Korean government, therefore, proceeded to establish mechanisms for humanitarian trade with Iran, so that Iran could import medicine and food in the midst of the new situation,” Ambassador Ryu told Financial Tribune. 

The first mechanism for humanitarian trade is based on a general license announced by the US Treasury Department that enables humanitarian trade with Iran even if it involves the Central Bank of Iran, which is subject to American sanctions.

“Through close consultations with the relevant ministries, organizations and companies of Korea and Iran, the Korean government launched the GL8 mechanism and so far three pilot cases have been implemented,” the ambassador said. 

Gaucher Disease medicine, test kits for cancer tumor markers and test kits for cervical cancer were delivered to Iran using this mechanism.

The second mechanism, called KOHTA (the Korean Humanitarian Trade Arrangement), is similar to GL8, according to Ambassador Ryu, but relevant agencies are involved in a more systematic way to help companies abide by EDD (Enhanced Due Diligence) required by the US Treasury for humanitarian trade with Iran.

Through KOHTA, the companies of the two countries are expected to do trade in an even more secure, comprehensive and stable manner.

“Once consultations with the US on some technical aspects of KOHTA are completed, the GL8 is expected to be phased out and KOHTA will then be the main mechanism for humanitarian trade between Korea and Iran,” he said. 

The Korean ambassador explained that such mechanisms are essential to ensure companies are not exposed to the risk of being subjected to US secondary sanctions. 

“If a failure in EDD is identified, the companies and banks involved in such a transaction may be imposed with a penalty of a tremendous amount, and other companies will become alarmed and reluctant to engage in trade with Iran,” he said. 

In line with the efforts to strengthen bilateral humanitarian trade, the Korean deputy foreign minister for economic affairs also launched the Task Force for Promoting Humanitarian Trade with Iran on June 5.

It has held briefings for Korean export companies, consulted with Iranian diplomats and also met with Iranian importers through the Tehran office of KOTRA (Korea Trade-Investment Promotion Agency), according to the ambassador. Many Korean companies have participated in the briefings, demonstrating the interest among Korean business people in humanitarian trade with Iran.

“With this deep interest on both sides, the Korean government trusts that the humanitarian trade between Iran and Korea will expand,” the senior diplomat said, adding that the scope of items to be exported to Iran will also expand, from medicine and medical equipment to food and agricultural products.

Meanwhile, Korean news media, citing a source close to the matter, has reported that South Korea and Iran have agreed to launch a working group on expanding humanitarian trade.

Ongoing director general-level consultations aim 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.

Ambassador Ryu also stressed that Korea and Iran will never lose sight of the deep history of the friendship, in spite of the current difficulties. 

“We have the wisdom, looking to the future, to keep our bonds of cooperation strong,” he said. 

The Korean envoy pointed to the global coronavirus pandemic that started early 2020 as one of the challenges facing Korea and Iran.

“However, the Covid-19 pandemic can in fact give further impetus to deepening the bonds of friendship and cooperation between Korea and Iran,” he said. 

This year, the Korean government made donations worth $2 million to help Iran counter the coronavirus and sent PCR test kits and equipment related to testing for coronavirus. 

The ambassador said Korea will share with Iran information on some of the measures and policies implemented by Korea to counter the pandemic and will also continue to explore other potential areas of cooperation.

“Even in the midst of these challenging times, the two countries will further nurture and develop the ties as genuine friends, helping each other, truly demonstrating the truth of the words that have often been spoken: a friend in need is a friend indeed,” he said.