Document Type : Original Article
Authors
1
Department of Economics, Faculty of Administrative Sciences and Economics, University of Isfahan, Isfahan, Iran.
2
Department of Economics, Faculty of Administrative Sciences and Economics, University of Isfahan, Isfahan, Iran
Abstract
1. INTRODUCTION
According to economic theories, trade liberalization increases efficiency, economies of scale, improves competition, enhances factor productivity, and increases trade flows, ultimately leading to economic growth. In this regard, most countries prefer to establish bilateral or regional trade agreements to expand trade and strengthen international economic relations. In this regard, the Shanghai Cooperation Organization is a regional intergovernmental organization that was formed in 1996. This organization is also the largest producer and consumer of gas and currently has 12 members, including 9 permanent members Russia, China, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, India, Pakistan and Iran, and 3 observer members. In addition, the Shanghai Cooperation Organization has great capacities in the energy sector, because by covering about a quarter of the world's population, it controls 23% of oil, 55% of natural gas and 35% of coal in the world. Undoubtedly, Iran's accession to the aforementioned organization will increase the potential and capacities of this organization. For this reason, the issue of energy is one of the focal points of Shanghai Cooperation Organization. Therefore, the present study seeks to answer the question of what impact Iran's membership in Shanghai Cooperation Organization and the elimination of trade tariffs between Iran and its members has on major energy sector indicators in Iran?
2- THEORETICAL FRAMEWORK
Operationally, the relationship between trade and energy consumption is a complex and multidimensional issue in energy economics and policy. In summary, it can be examined from the following aspects:
a) The impact of trade on energy consumption
• Increased consumption through trade: International trade often requires extensive transportation (ships, planes, trucks), which increases the consumption of fossil fuels. For example, the export and import of goods can increase global demand for energy, especially in oil and gas exporting countries, whose production and export are directly dependent on energy consumption.
• Reduced consumption through trade: Free trade can help transfer energy-efficient technologies (such as solar panels or optimization equipment). Developing countries can optimize their energy consumption through imports and reduce dependence on domestic resources.
b) Impact of energy consumption on trade
• Energy subsidies and pricing: In countries such as Iran, heavy subsidies on energy (such as cheap fuel) can encourage smuggling and disrupt formal trade. These subsidies increase domestic consumption and divert resources from exports (foreign trade).
• Energy and trade constraints: Energy shortages (such as power or gas outages) can disrupt industrial production and reduce exports. For example, in heavy industries such as steel, high energy consumption directly affects competitiveness in global markets.
• Energy trade as a specific area: Trade in gas, oil and electricity (such as regional gas hubs) is itself a type of trade that affects global energy consumption patterns. Competition for energy hubs can shape trade relations and supply consumption through new routes.
c) Global and policy aspects
According to reports from organizations such as the International Energy Agency (IEA), free trade can reduce energy intensity, but climate change and sanctions complicate this relationship. For example, sanctions have affected Iran’s energy trade and pressured domestic consumption. At the national level, policies such as energy price liberalization can reduce smuggling and facilitate foreign trade, while trade restrictions (such as sanctions) can lead to inefficient energy consumption.
3- METHODOLOGY
Between the computable general equilibrium models, the multi-regional general equilibrium model is specifically designed for the analysis of world trade and can conduct research and studies on the international flow of goods and services and factors of production in a dynamic and static manner. Using the multi-regional general equilibrium model instead of the single-regional general equilibrium model has several advantages. One of the strengths of these models is their ability to help understand the relationship between sectors, countries and factors of production on a global scale. Among the multi-regional general equilibrium models, the Global Trade Analysis Project for Energy-based models provides a variety of possibilities for world trade and energy-related research. Also, the required data are extracted from the Global Trade Analysis Project for Energy-based (GTAP-E) version 10 database and analyzed with the regional computable general equilibrium model and MATLAB software.
4- RESULTS & DISCUSSION
Results showed that reducing trade tariffs between Iran and other SCO member countries, on the one hand, due to the ease of replacing domestically produced goods with imported goods and on the other hand, due to the increased use of fossil energy exploration, production, and distribution technologies, leads to a decrease in fossil energy consumption, a decrease in total energy consumption, and an increase in energy consumption efficiency (a decrease in energy intensity and a decrease in energy consumption coefficient) in Iran. However, after a few periods, due to feedback effects, this decrease in total energy consumption, energy intensity, and energy consumption coefficient is neutralized. In other words, saving energy consumption and increasing energy consumption efficiency lead to an implicit decrease in energy prices and subsequently lead to a re-increase in total energy consumption, energy intensity, and energy consumption coefficient. In addition, reducing trade tariffs between Iran and other SCO member countries leads to an increase in renewable energy consumption in Iran due to increased cooperation in the development of renewable energy technologies.
5- CONCLUSIONS & SUGGESTIONS
According to the results of the research, Iran's most important trade advantages in the Shanghai Cooperation Organization should be sought in the energy sector, because on the one hand, the largest producers (such as Russia) and the largest consumers (such as China) of energy in the world are in this organization, and on the other hand, membership in this organization leads to a reduction in fossil energy consumption, an increase in the efficiency (intensity) of energy consumption, and an increase in the consumption of renewable energies. Therefore, it is suggested to the country's foreign policy and macroeconomic officials to take the necessary measures to reduce trade tariffs between Iran and other countries of the Shanghai Cooperation Organization.
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