Kurdish Policy Analysis

Iran is losing ground in Iraq as Turkey, China, and Syria expand their market share

Iran is losing market share in Iraq to Turkey, China, and Syria as rising prices, weaker competitiveness, and logistical challenges undermine Tehran's exports.

Rising prices, declining competitiveness, and logistical shortcomings are weakening Iran's position in one of its most important export markets.

For years, Iraq has been one of Iran's most important export destinations and a critical source of non-oil revenue. However, new figures suggest Tehran is steadily losing its competitive advantage as regional rivals—including Turkey, China, and even war-torn Syria—expand their presence in the Iraqi market.

According to EghtesadOnline, Iranian exports to Iraq are losing momentum, with business leaders warning that structural weaknesses inside Iran are eroding its long-held position in one of the country's most strategic commercial markets.

Mostafa Mousavi, a member of the Iran Chamber of Commerce, Industries, Mines and Agriculture, attributed the decline primarily to the low quality, higher prices, and poor packaging of Iranian products, making them less attractive to Iraqi consumers and businesses.

Iran’s exports to Iraq are losing momentum. According to Mostafa Mousavi, a member of Iran Chamber of Commerce, Industries, Mines and Agriculture, the reason is to be sought in the low quality and high prices of Iranian products.

He also argued that Iran's competitors enjoy a significant advantage because governments such as Turkey, China, and Syria provide export subsidies, allowing their companies to offer lower prices and more competitive products.

"We can't compete with them under the current situation," Mousavi said.

He also referred to poor packaging as another reason behind Iran’s loss of Iraqi market, IRNA reported.

Mousavi said Iran’s rivals in the Iraqi market (mainly China, Turkey and Syria) pay subsidies to exporters, which have effectively diminished the competitiveness of Iranian exporters.

“We can’t compete with them, under the current situation,” Financial Tribune quoted him as saying.

Although it is embroiled in war, Syria exports agro products to Iraq, notably with refrigerated vehicles. This is while the Iranian transportation system lacks the infrastructure,” he said.

Referring to hot weather in Iran’s border provinces of Khuzestan and Ilam, Mousavi said the export of perishable products from these regions is a challenge.

Iran exported 4.13 million tons of non-oil commodities worth over $2 billion to Iraq during the four months to July 22, indicating a 13.7% decrease in volume and a 6.5% increase in value compared with the previous year’s corresponding period, according to the Islamic Republic of Iran Customs Administration.

According to Ebrahim Rezazadeh, secretary of Iraq’s Desk at Trade Promotion Organization of Iran, the country’s share of Iraqi market stood at 19.7% in March 2016-17.

“Iran exported a total of 14.2 million tons of commodities worth $6.1 billion to Iran last year, registering a 1.84% and 1.59% decline year-on-year,” he said.

Iran’s main exports to the neighboring country include agro products, foodstuff and fruits such as watermelon, tomato and cucumber, which account for 37% of the total exports.

Other Iranian exports to Iraq include canned food, tomato paste, chicken, egg, meat, construction materials (mainly rebar, tiles and ceramics), steel and evaporative cooler as other commodities Iran exports to Iraq.

Turkey’s share in the Iraqi market stood at 21% last year.

Joint Business Conference in October

A joint business conference between Iranian and Iraqi officials and businessmen is scheduled for October 15-16 at Iran’s International Conference Center in Tehran.

The event is being organized by the Entrepreneurship Faculty of the University of Tehran, Iran-Iraq Chamber of Commerce and Iran-Iraq Economic Development Headquarters, affiliated with the Presidential Office.

A high-ranking Iraqi delegation comprising top officials from neighboring Iraq and the Iraqi Kurdistan Region will also attend the conference. Representatives from Iraq’s ministries of trade, oil, electricity and transportation, the Central Bank of Iraq, Iraq’s commercial banks, Iraq’s National Insurance Company as well as Iraqi customs and health officials have been invited as well, the conference center’s site of Tehran University’s Entrepreneurship Faculty (conference-center.ir) reported.

Prominent merchants from the neighboring country active in the fields of food, construction material, energy, automotive, pharmaceutical, medical equipment, health tourism and technical and engineering services will accompany the visiting delegation.

Present in the conference from the Iranian side will be First Vice President Es’haq Jahangiri, the foreign exchange deputy of the Central Bank of Iran, Gholamali Kamyab, and the head of Trade Promotion Organization of Iran, Mojtaba Khosrotaj, among others.

The two sides are scheduled to hold B2B meetings on issues ranging from banking and insurance to food and techno-engineering services.

Iraq’s present political and security circumstances and their impacts on trade regulations will also be surveyed at the two-day event.

Iran’s export potential will be introduced to the Iraqi side and ways of eliminating money transfer and banking hurdles will be discussed, the conference center said.

Syria's Unexpected Commercial Advantage

Despite years of conflict, Syria has emerged as an increasingly competitive exporter to Iraq, particularly in agricultural products.

Mousavi noted that Syrian exporters benefit from refrigerated transport fleets capable of delivering fresh produce efficiently across the border—an infrastructure that Iran largely lacks.

"The Iranian transportation system lacks the necessary infrastructure," he said.

The challenge is particularly severe in Iran's southwestern border provinces of Khuzestan and Ilam, where extremely high summer temperatures complicate the export of fruits, vegetables, and other perishable products.

Iranian Exports Continue to Slow

Data released by the Islamic Republic of Iran Customs Administration illustrate the trend.

During the four months ending July 22, Iran exported 4.13 million tonnes of non-oil goods worth more than $2 billion to Iraq.

Compared with the same period a year earlier:

Export volume declined 13.7%

Export value increased 6.5%, largely reflecting higher prices rather than stronger demand.

The figures suggest that although exports generated more revenue, Iran sold significantly fewer goods into the Iraqi market.

Turkey Continues to Expand

According to Ebrahim Rezazadeh, secretary of Iraq's Desk at the Trade Promotion Organization of Iran, Iran's share of the Iraqi market stood at 19.7% during the 2016–17 period.

He added that Iran exported 14.2 million tonnes of goods worth $6.1 billion to Iraq during the previous year, representing declines of 1.84% in volume and 1.59% in value compared with the year before.

Iran's principal exports include:

Agricultural products

Foodstuffs

Watermelons

Tomatoes

Cucumbers

These products account for roughly 37% of Iran's exports to Iraq.

Other major exports include:

Canned foods

Tomato paste

Poultry

Eggs

Meat

Construction materials, including steel rebar, ceramic tiles, and ceramics

Steel products

Evaporative cooling systems

Meanwhile, Turkey's share of the Iraqi market has reached approximately 21%, placing Ankara ahead of Tehran in one of the Middle East's largest import markets.

Tehran Seeks to Reverse the Trend

Against this backdrop, Iranian officials are attempting to strengthen commercial ties through renewed economic diplomacy.

A joint Iran-Iraq business conference is scheduled for October 15–16 at Tehran's International Conference Center.

The event is jointly organized by the Entrepreneurship Faculty of the University of Tehran, the Iran-Iraq Chamber of Commerce, and the Iran-Iraq Economic Development Headquarters affiliated with Iran's Presidential Office.

A senior Iraqi delegation—including officials from both the Federal Government of Iraq and the Kurdistan Region—is expected to attend.

Representatives from Iraq's ministries of:

Trade

Oil

Electricity

Transportation

along with officials from the Central Bank of Iraq, commercial banks, customs authorities, health agencies, and the National Insurance Company are also expected to participate.

The Iraqi delegation will include business leaders active in:

Food industries

Construction materials

Energy

Automotive manufacturing

Pharmaceuticals

Medical equipment

Health tourism

Technical and engineering services

Iranian participants are expected to include senior government officials, among them First Vice President Es'haq Jahangiri, Central Bank foreign exchange deputy Gholamali Kamyab, and Trade Promotion Organization head Mojtaba Khosrotaj.

The conference will feature business-to-business meetings covering banking, insurance, food production, engineering services, and trade facilitation.

Officials will also discuss Iraq's political and security environment, its impact on commercial regulations, and potential measures to ease banking restrictions and cross-border money transfers that continue to hinder bilateral trade.

Analysis

The data point to a broader shift in Iraq's import market. While Iran remains one of Iraq's largest trading partners, its competitive advantages are increasingly being challenged by better logistics, stronger government export support, and more competitive pricing from rivals.

Turkey continues to strengthen its commercial footprint through diversified manufacturing and efficient supply chains. China maintains its dominance through low-cost industrial production, while Syria's recovery in agricultural exports demonstrates that targeted logistical improvements can overcome even severe wartime constraints.

For Tehran, maintaining its influence in Iraq may increasingly depend not only on political relationships but also on improving product quality, modernizing transport infrastructure, reducing export costs, and addressing structural inefficiencies that have weakened the competitiveness of Iranian goods.

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