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Nutty tariffs
U.S. sanctions and Iranian pistachios

By Mehrdad Valibeigi
August 25, 2000
The Iranian

When Madeleine Albright announced a partial lifting of U.S. sanctions on Iran in March, the State Department was not aware of the 300 percent tariff imposed on Iranian pistachios, according to official U.S. sources. Solving this has become a nagging problem, mainly because the removal of tariff barriers is a technical issue that requires due bureaucratic processes at the Commerce Department and the International Trade Commission, both independent from the State Department.

The issue of pistachio imports from Iran has significant economic consequences for the Iran, which is trying hard to promote non-oil exports. In the meantime, and besides the political dimensions, the current level of tariff barriers has practically kept the Iranian pistachios out of the reach of the American market. Consumers are paying much higher prices for lower quality pistachios grown in California or imported from other countries, such as Turkey.

In July, a shipment of Iranian pistachio arrived at U.S. customs in New York. An American trading company requested a review of the existing tariff. As an Iranian-American who would like to see improved economic and, eventually, normal relations between the two countries, I will try to give a brief account of the main issues involved in this apparently simple obstacle.

Back in 1986, more than a year before the imposition of U.S. sanctions by President Reagan, the Association of Californian Pistachio growers filed a complaint against the Rafsanjan Pistachio Producers Cooperative, the main producer and exporter of Iranian pistachio to the United States, for being engaged in "unfair competition" with California pistachio producers. They alleged that Iranian pistachio is sold at a lower cost because of direct and indirect subsidies from the Iranian government to the pistachio farmers.

The Reagan Administration agreed, in part because of intense lobbying by a number of Iranian pistachio growers in California. Since then the California pistachio growers have closely watched new developments, and methodically filed motions every year opposing the removal of the high tariffs. Privately, however, California growers have been more conciliatory. They would like to cooperate with Iranian growers to expand into international markets.

A good example of this gesture was a presentation by the chief attorney of the California Pistachio Commission, Bob Schramm, during the Iranian Trade Association's meeting in June. He did not mention the adversarial actions by California growers. He also avoided mentioning the formation of a political action committee by the Western Pistachio Association, to raise $150,000 for an intensive lobbying campaign to keep the Iranian pistachio out of the U.S. In sharp contrast, Iran's counter efforts have been rather limited.

The change in the political atmosphere between the two countries and removal of all sanctions would eventually help Iranian pistachio exporters. However, there are two other important factors that should be taken into consideration. First, there needs to be a major change in Iran's foreign exchange system and the way it affects exports. Second, the pistachio industry in the U.S. should let go of its monopoly which has driven prices unreasonably higher than international levels.

September 7 is the U.S. Commerce Department deadline for filing comments about the tariffs. Those interested in the resumption of Iranian pistachio sales in the U.S., including Iranian exporters and American importers as well as American consumer advocates, should join forces and launch a coordinated public relations and legal campaign to end the Californian pistachio monopoly.


Mehrdad Valibeigi is a professor of economics at the American University in Washington, DC.

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