While international appetites grow for business opportunities in Iran following the lifting of economic sanctions, Turkey, owing to its foreign policy, has failed to make use of a special trade arrangement it already had with Iran. A preferential agreement, the product of negotiations that took about a decade, had taken effect between the two neighbors Jan. 1, 2015. With a target of $35 billion in bilateral trade by the end of the year, the deal introduced tariff cuts on 140 products from Turkey and 125 products from Iran. The day it took effect, Turkey’s then-Economy Minister Nihat Zeybekci hailed a “very important beginning for Turkish-Iranian business, friendship, and political and economic cooperation.”

What began with high optimism, however, has resulted in a huge disappointment. The bilateral trade volume at the end of 2015 stood at $9.7 billion, not only far off the target but also below 2014's $13.7 billion. Turkey’s imports from Iran dropped 38% to $6.1 billion in 2015, while its exports decreased 5.7% to $3.66 billion. Given Turkey’s purchase of 10 billion cubic meters of natural gas from Iran, the drop in exports indicates that Turkey has decreased the purchase of Iranian goods other than gas. Similarly, Turkish exports of food, iron and steel, chemicals and automotive sub-industry products had been expected to increase under the deal, but this seems to have not materialized either.

The shrinking trade volume — a trend since 2012 — suggests that Turkish-Iranian trade links are moving toward a point where the two neighbors buy only essential goods from each other. In 2012, the trade volume stood at $21.89 billion despite the sanctions, before dropping to $14.5 billion in 2013 and even further in the next two years to reach $9.7 billion in 2015, the lowest level in the past four years.

So why are the trade links regressing?