The Korea International Trade Association said Sunday that it started controlling local companies’ exports to Iran from June 12 following the European Union’s tightened sanctions on the Middle Eastern country.

The EU enacted rules in March to stop insurance coverage on all tankers carrying Iranian crude oil starting July 1 as part of sanctions on Iran to force it give up its nuclear program.

With the temporary measure taken by the quasi-state trade agency, Korean companies can face restrictions in exporting their products to Iran in the coming days.

The Seoul government recently succeeded in getting exempted from a U.S. law that bans economic entities dealing with the Iranian central bank from doing business with U.S.-based financial institutions.

Because the Iranian central bank collects the country’s oil export revenues, the law essentially forces other countries to stop importing oil from the country.

Government officials, however, belatedly found out about the EU measure and only recently began pushing for negotiations with the EU to extend the insurance coverage.

Crude oil tankers are required to have insurance on their cargo and hulls for protection and indemnity. Because of their potential danger, uninsured tankers are not allowed to pass through territorial waters.

But a possible halt of importing Iranian crude oil could result in the exhaustion of the remainder of the Woori Bank and Industrial Bank of Korea accounts set up by the Iranian central bank.

The bank accounts are filled with payments by local oil importers, with which local companies also get paid with Korean won for their exports to Iran.

The KITA will receive voluntary reports from exporting companies by June 22 and allocate the allowable payment limit on June 26.

“Considering that the trade with Iran could be abruptly affected following toughened sanctions in the international community, we have launched the voluntary measure to protect smaller firms,” said a KITA official.

The measure was based on the government’s trade and investment guidelines set up in September 2010, which allow the Korea Strategic Trade Institute to approve trade applications selectively.

The trade agency made it clear that the measure was taken temporarily and will be scraped depending on the result of the negotiations with the EU.

By Lee Ji-yoon (jylee@heraldcorp.com)