Businesses, who are the ultimate beneficiaries of INSTEX, mostly say they have to wait for the mechanism to become operational before they can pass judgment. But what is known so far from statements released by the foreign ministers of Germany, France and the UK, is that the channel is meant to be used, at least in the early stages, only for humanitarian trade.
The US claims that it has exempted Iran from a wide-range of sanctions re-imposed last year when it unilaterally abandoned the international nuclear deal Iran signed with six world powers in 2015. But food merchants in Iran say due to the reluctance of many banks to handle payments to and from Iran, food trade has become too costly, riskier and time consuming.
"If the SPV is not launched, we will not have any other way to trade and import food," Mehdi Masoumi Esfahani, deputy president of Food Industries Commission at Tehran Chamber of Commerce, Industries, Mines and Agriculture told the Financial Tribune.
Masoumi Esfahani, in charge of Telavang – a major egg producer – says INSTEX becoming operational is crucial for Iran’s food industry, including his own company, which desperately need grains for poultry feed.
Masoumi Esfahani hopes that the Swiss humanitarian channel would also be launched soon to provide some respite for the local pharmaceutical and food industry.
Food merchants in Iran say due to the reluctance of foreign banks to handle payments from and to Iran, trade in foodstuff has also become costlier, riskier and time consuming
Bern is moving ahead with plans to unveil a humanitarian payment channel for Iran through complex negotiations with different parties in Iran, the US and Switzerland.
The channel, which is separate from EU's Special Purpose Vehicle (renamed INSTEX), intends to deal mainly in medical equipment, pharmaceuticals and food – goods the US says are not subject to its sanctions.
Majid Reza Hariri, deputy president of Iran-China Chamber of Commerce believes that Europe's move to launch INSTEX is a "step forward" but has not met expectations because it is only limited to food an medicine.
According to the E3 statement, the Instrument for Support in Trade Exchanges will function under the highest international standards with regard to anti-money laundering, combating the financing of terrorism (AML/CFT) and EU and UN sanctions compliance. In this respect, the E3 expect Iran to swiftly implement all elements of its FATF action plan.
The Paris-based FATF will decide later this month whether to remove Iran from the list of non-cooperative countries or not. Although Tehran has made tangible progress on its action plan, a main part of the related legislation has not been finalized.
Hariri also pointed to the fact that the channel's operations come with strings attached like upholding the FATF regulations.
"However there is the possibility for INSTEX to be linked to China's Bank of Kunlun or India," Hariri told the Tribune, adding that Iranian funds in China and India run a surplus and hence can be transferred to INSTEX to be used for Iranian imports from Europe.
Ferial Mostofi, president of Investment Commission at Iran Chamber of Commerce says so far there is not enough information about INSTEX except that it is headed by a German and hosted by France.
But Mostofi sees the possibility for INSTEX to include non-sanctioned goods other than food and medicine.
"There is the possibility for goods like those related to the sewage systems to be included in INSTEX," she told the Tribune.