According to a German weekly business news magazine, Wirtschaftswoche, citing diplomatic circles, Germany and France have agreed to host the EU’s promised trade mechanism aimed at facilitating trade with Iran in the face of US sanctions.

The report says the the company will be settled in France, and will be chaired by the German side.

Austria, Luxembourg and Belgium, the other potential candidates, had refused to host the SPV in fear of US reprisals.

Nine countries are interested in joining the Special Purpose Vehicle, including Italy, Spain, Austria and the Benelux (Belgium, the Netherlands, and Luxembourg), the report adds.

The report states that the mechanism will be limited to trade in humanitarian goods such as food and medicines; however,  Iranian Foreign Minister Zarif has stressed that the SPV will also cover oil sales.

For the Europeans, the SPV, which is initially intended to start as a small entity and could acquire a banking license over time, has a high political value, says the report.

"It is important for us to defend the interests of our companies and to underpin our economic independence from the US," the German weekly cites a diplomat as saying.

The trade mechanism is part of the EU’s efforts to encourage Iran to remain in the nuclear deal following the unilateral withdrawal of the US back in May, by offering an alternative payment channel to keep trade flowing with Iran in defiance of US sanctions. The SPV is intended to make cross-border payments superfluous, so that a European exporter to Iran would be paid by a European importer from Iran.