Taiwan-Iran Economic Relations Under the International Sanctions Regime

Taiwan-Iran Economic Relations Under the International Sanctions Regime

Taiwan-Iran Economic Relations Under the International Sanctions Regime

On November 29, Iran and world powers converged in Vienna in talks on reviving the 2015 Iran nuclear deal, formally called the Joint Comprehensive Plan of Action (JCPOA). Amid mounting US-China tensions, the resumption of the Iran talks presents a potential venue for Washington and Beijing to collaborate on a global issue of concern. After then-President Donald Trump pulled the United States out of the JCPOA in 2018 and reimposed sanctions on Iran that had been lifted following Tehran’s compliance with the nuclear deal, Iran began to enrich uranium to a level closer to weapons-grade. President Joseph Biden has made renewing the Iran nuclear deal a foreign-policy priority—and China is seeking to leverage its role in the Iran talks to gain concessions from the United States on the Taiwan issue. Besides the linkages between China’s posturing on Iran and US Taiwan policy, Taiwan’s own economic and trade relations with Iran have been adversely affected by the international sanctions regime on Iran. Under pressure from US and European Union sanctions, Taiwan has reduced both its oil imports and overall trade relations with Iran, and has had to find alternative foreign energy sources.

Linkages between the Iran Nuclear Issue and Taiwan

During their November 15 virtual meeting, President Biden and Chinese President Xi Jinping (習近平) discussed the Iran nuclear talks ahead of the Vienna meeting, among a list of other issues that included tensions over Taiwan. “The two presidents had the chance to talk about how we can align our perspectives heading into that meeting so that the P5+1 is united in dealing with Iran and trying to pave the way for a return to the [deal],” said White House National Security Advisor Jake Sullivan, referring to the five permanent members of the United Nations Security Council (UNSC) plus Germany, who are all engaged in the talks on the Iran nuclear deal, though the US and Iran are not in direct talks with each other. Although China favors resumption of the JCPOA, which it had helped to negotiate in 2015, the current tensions in US-China relations, including over Taiwan, make it unlikely that Beijing will readily offer Washington full support on the Iran nuclear issue in the short run. Beijing has made statements suggesting that it cannot compartmentalize cooperation with the United States on issues of mutual interest—for example, climate change—without first making progress on other issues that spark bilateral tensions such as Taiwan. 

In the past, Beijing has sought to obstruct progress on the UNSC resolutions that would impose sanctions on Iran due to tensions with Washington over Taiwan. In 2007 and 2008, China withheld support for UN Security Council efforts to penalize Iran in order to protest US support of Taiwan, including American arms sales to the island. [1] An Iranian op-ed published in February 2010 argued that China’s behavior in a recent UN meeting on Iran “was not an indication of a ‘strategy’ in support of Iran or a ‘policy’ to delay consensus in favor of Iran, rather it was purely a ‘reaction’ to the sale of US weapons to Taiwan.” [2] Such Chinese actions on Iran-related meetings and resolutions in the UNSC suggest that Beijing has used its role in these forums to pressure Washington on Chinese “core interests” (核心利益) such as Taiwan; progress on the Iran nuclear talks is of secondary concern to Beijing. Indeed, Chinese policy has tended to frame Beijing’s cooperation on the Iran issue as dependent on US accommodation to China’s position regarding Taiwan. Chinese officials have argued that if the United States can sell arms to Taiwan, then China can also continue its arms sales to Iran. However, US policymakers tend not to link the Iran nuclear issue and US policy towards Taiwan.

Ahead of the Vienna meeting, Beijing has taken steps to shore up its support of Iran—thereby buttressing Tehran’s position vis-à-vis the other negotiating powers, and also complicating Chinese collaboration with the rest of the P5+1. In a phone conversation in May between Xi and then-President Hassan Rouhani of Iran, the Chinese leader said that “China supports Iran’s reasonable demands” on the JCPOA and “is willing to strengthen coordination with Iran to safeguard the common interests of both sides.” 

At the same time, China’s economic relations with Iran have helped to shield Tehran from US and European sanctions and pressure. After the Trump Administration pulled out of the JCPOA and urged all countries to stop importing Iranian oil, China continued to purchase oil from Iran despite US sanctions, and has emerged as Iran’s largest trade partner and top oil client. In 2020, China imported a monthly average of 2.4 million barrels of oil from Iran. In March 2021, China and Iran signed a “Comprehensive Strategic Partnership” that promises at least USD $400 billion of Chinese investment in Iran in return for guaranteed supplies of Iranian oil for 25 years. From the Western perspective, the Chinese have given the Iranians an economic lifeline, which not only undercuts the international sanctions regime but also could fund Tehran’s growing nuclear program. At the same time, China wields the most leverage over Iran, due to their economic partnership. If Western countries request that Beijing use its influence over Tehran to help revive the Iran deal, then the Chinese government may also demand some concessions from Western countries on other issues of interest, including Taiwan.

Taiwan-Iran Economic Relations and the Oil Trade

As a net oil importer, Taiwan is almost entirely dependent on foreign energy sources, in particular crude oil. In the early 2000s, Iran constituted Taiwan’s third-largest oil trade partner, following Saudi Arabia and Kuwait. Iran shipped 59,746,000 barrels of oil to Taiwan at the height of their oil trade in 2003, but rounds of international sanctions on Iran’s nuclear program that also penalized foreign buyers of Iranian oil have dealt significant blows to Taiwan’s trade relations with Iran. Two-way trade reached USD $5.6 billion in 2008 owing to large Taiwanese imports of Iranian oil. 

Today, economic and trade ties between the two sides could not be more lackluster: bilateral trade reached USD $146 million in 2020 with low levels of two-way foreign direct investment (FDI) over the past several decades. According to Taiwan’s Ministry of Economic Affairs (MOEA, 經濟部), 78 Iranian FDI cases in Taiwan totaling USD $7.72 million were approved from 1952 to 2019, compared to only one Taiwanese FDI case in Iran (amounting to USD $183,000) that was approved during the same time period. The main Iranian products imported by Taiwan have been petroleum, aluminum, and steel. Taiwanese exports to Iran are mostly steel, storage devices and storage units, and polyvinyl chloride. 

Taiwan-Iran trade has been largely influenced by the imposition and lifting of Western sanctions on Iran. Bilateral trade climbed to USD $1.3 billion in 2016, coinciding with the lifting of US and European sanctions imposed on oil exports from Iran that same year. Indeed, Taiwan’s imports of Iranian oil jumped from 3,925,000 barrels of oil in 2015 to 11,774,000 barrels of oil in 2016, according to statistics from MOEA’s Bureau of Energy (經濟部能源局). However, two-way trade fell from USD $1.6 billion in 2018 to USD $179 million in 2019, representing an 88-percent drop. This was largely due to Taiwan’s precipitous cuts in Iranian oil imports starting in 2019. 

In April 2019, then-President Trump indicated that the United States would not be renewing special waivers that had allowed five countries—China, India, Japan, South Korea, and Turkey – that import oil from Iran to be exempt from US sanctions. The Trump Administration declined to renew the waivers set to expire on May 2, in an effort to bring Iran’s global oil exports to “zero” and as part of the US “maximum pressure” campaign against Tehran. Secretary of State Mike Pompeo commented following the White House announcement: “The goal remains simply: to deprive the outlaw regime of the funds it has used to destabilize the Middle East for decades and incentivize Iran to behave like a normal country.”

Prior to Trump’s announcement, Taiwan, which had also received a special sanctions exemption from Washington, was already cutting its oil purchases from Iran. Taiwan stopped purchasing Iranian oil in late 2018. Indeed, the last available figure for Taiwan’s oil trade with Iran was in 2018, which showed that the island imported 5,986,000 barrels of oil from the Islamic Republic; however, no data is available for Iranian oil imports into Taiwan from 2019 to the present. This suggests that Taiwan’s oil imports from Iran have approached zero since 2019, coinciding with the Trump Administration’s drive to cut off Iran’s foreign oil revenues.

Indeed, Iran has dropped off the list of Taiwan’s main oil trade partners. Meanwhile, Taiwan has increased its oil imports from other Middle Eastern producers, including Saudi Arabia and the United Arab Emirates (UAE), as well as the United States. Starting in 2017, Taiwan began importing 2,583,000 barrels of US oil. In 2018, US oil exports to Taiwan grew to 43,900,000 barrels of oil, a staggering jump of nearly 1,600 percent from the previous year. The next year, US oil imports to Taiwan reached 59,743,000 barrels of oil, and then dropped slightly to 53,064,000 barrels of oil in 2020. Taiwan imported 46,575,000 barrels of oil from the United States between January and October 2021. Furthermore, in 2020, Taiwan also increased its oil imports from other foreign suppliers, including Angola and Qatar. From January to October 2021, Saudi Arabia (30 percent of Taiwan’s total oil imports), Kuwait (20 percent), the United States (19 percent), and the UAE (10 percent) constituted Taiwan’s top four oil exporters.


Taiwan’s ability to develop stronger economic and trade ties with Iran has been severely hampered by the international sanctions regime that was erected to punish Iran’s nuclear program. As one of Taipei’s former top oil trade partners in the Middle East, Iran could potentially reprise its position if international negotiations to resurrect the Iran nuclear deal ultimately prove successful. Taiwan’s past trade relations with Iran under the sanctions regime have indicated how the lifting of US and European sanctions on Iran has also economically benefited Taiwan’s trade with Iran. Therefore, the talks to revive the JCPOA could affect Taiwan’s trade relations with Middle Eastern oil producers. Arguably, renewing the 2015 Iran deal is in the interest of the United States and its European allies; a revived deal not only could reduce tensions with Iran, but also enable Western democratic nations to focus more on the security challenges posed by China in the Indo-Pacific region. Moreover, Taipei will also find itself less restricted when it comes to purchasing Iranian oil and engaging in commercial opportunities with Iran.

The main point: The recent attempt to revive the 2015 Iran deal has shed light on the linkages between China’s posturing on Iran and US Taiwan policy, as well as the ways in which Taiwan’s own economic and trade relations with Iran have been adversely affected by the international sanctions regime on Iran. 

Special thanks to GTI Intern Adrienne Wu for her research assistance. 

[1] “Hu Offered Gates No Help on Iran, Criticized US on Taiwan,” East-Asia-Intel Reports, November 14, 2007. “China Blocked UN Pressure on Iran After US Arms Sales to Taiwan,” Geo-Strategy Direct, November 5, 2008.

[2] “Iran’s Nuclear Case: China’s ‘Trump Card’ Against US – Daily,” BBC Monitoring Middle East-Political, February 8, 2010, retrieved in Nexis Uni.