You have to have a Port and a Trading Post or higher (Merchant, Merchant's Guild, etc.). Then you need to have at least one ship in every sea region between your "home" port and whichever port(s) you wish to trade with. Bamff's example
Quote Originally Posted by bamff
So for example, if you have a port in Leon, and ships in all sea sectors up to the English channel, your port will trade with each and every other faction port that is on one of these coastal seas.
is a good illustration of what we're talking about.

As for iron, it cannot be mined like silver and gold can. What iron does is allow you to build a Metalsmith (and its upgrades) in that particular province, which gives all units trained there an attack bonus. It's very handy for the Spanish in their wars against the Almohads, especially since it's ill-advised for any unit (Catholic or no) to wear heavy armour in the desert!