Lists of the developing and least-developed states that are beneficiaries of the Eurasian Economic Union’s Generalized System of Preferences (GSP) finalized by the Eurasian Economic Council on March 5 have recently been released and Iran is one of the countries named in the list, according to the director of EEU Affairs Desk in the Trade Promotion Organization of Iran.
“Many countries have been removed from the list, among them some of Iran’s potential rivals in EEU’s lucrative market, namely Turkey, China, India, South Korea, the littoral states of Persian Gulf, Iraq, Brazil, Vietnam, Hong Kong, Indonesia, Lebanon, Singapore, Thailand and Malaysia,” Elham Haji-Karimi was quoted as saying by ILNA.
“The GPS provides developing counties a 25% tariff discount for numerous commodities, most of which are agricultural products and the combination of the two factors gives Iran a high chance of securing a foothold in the bloc.”
Based on the data on the EEC website, the official said, the number of developing countries in the revised list has shrunk from 103 to 29 and that of least-developed ones from 50 to 48.
The Generalized System of Preferences, instituted in 1971 under the aegis of the United Nations Conference on Trade and Development, has contributed over the years to creating an enabling trading environment for developing countries, UNCTAD writes on its website.
The following 13 countries grant GSP preferences: Australia, Belarus, Canada, the European Union, Iceland, Japan, Kazakhstan, New Zealand, Norway, the Russian Federation, Switzerland, Turkey and USA.
Haji-Karimi said traders need to abide by certain regulations to benefit from GPS.
“Tariff preferences shall be granted to goods originating in developing countries, and therefore, exporters need to obtain certificates of origin from provincial chambers of commerce. They have to keep their trade documents for at least three years for accountability reasons in case further inquiry is required,” she added.
Trade With EEU at $3.4b in Fiscal 2020-21
Iran and the Eurasian Economic Union member states traded a total of 8.68 million tons of commodities worth $3.4 billion in the last Iranian year (March 2020-21), according to the head of the Islamic Republic of Iran Customs Administration.
“Iran exported close to 2.68 million tons worth $1.05 billion to EEU states over the period, registering a 2% decline in value compared with the year before,” Mehdi Mirashrafi was also quoted as saying by IRNA.
Imports from the bloc stood at 6 million tons worth $2.36 billion during the same period, showing a year-on-year fall of 1% in value.
“The decline in trade was due to restrictions concerning the Covid-19 pandemic as well as economic sanctions imposed on the country,” he added
Russia was Iran’s biggest trade partner among EEU member states.
Imports from Russia stood at 5.24 million tons worth $2.11 billion (89% of Iran’s total imports from EEU) as exports reached 1.06 million tons worth $509.91 million (48% of overall exports).
Following Russia was Kazakhstan with 741,510 tons worth $201.21 million of exports to Iran and 337,075 tons worth $167.99 million of imports.
Next was Armenia with $17.32 million and $304.55 million worth of exports to and imports from Iran respectively.
Belarus came next with $31.22 million and $21.11 million worth of exports to and imports from the country respectively.
Kyrgyzstan came last with $2.57 million and $45.85 million worth of exports and imports respectively.
Based on figures released by Tehran Chamber of Commerce, Industries, Mine and Agriculture Iran and the Eurasian Economic Union member states traded a total of $2.1 billion worth of non-oil commodities during the last Iranian year which shows an 11% decline compared with the year before.
Based on the report Iran’s non-oil exports to EEU amounted to around $1.1 billion registering a 4% fall compared with the previous year. Imports from the Eurasian bloc stood at around $1 billion, showing a 16.5% decrease YOY.
Iran’s exports at preferential tariffs stood at $256 million, accounting for close to 25% of the country’s exports over the period under review.
TCCIM report also attributed the decline in non-oil commodity trade to the consequences followed by the outbreak of the COVID 19 pandemic.
The Eurasian Economic Union member states include Russia, Kazakhstan, Armenia, Belarus and Kyrgyzstan.
Iran and the Eurasian Economic Union signed a three-year provisional agreement in Astana on May 17, 2018, for the bloc to welcome Iran into EEU. The arrangement, which lowers or abolishes customs duties, is the first step toward implementing free trade between Iran and the five members of the union. The PTA came into effect on October 27, 2019.
Iran Chamber of Commerce, Industries, Mines and Agriculture recently reviewed Iran’s trade with the Eurasia Economic Union from fiscal 2016-17 to fiscal 2020-21.
The study shows the highest volume of trade between the two sides during the period was in fiscal 2019-20, and the lowest was in fiscal 2016-17.
Moreover, the highest trade balance was registered in fiscal 2020-21 with $93 million in deficit.
Iran and EEU signed a three-year provisional agreement in Astana, Kazakhstan, on May 17, 2018, for the bloc to welcome Iran.
The arrangement is the first step in implementing free trade between Iran and the five members of the union. It lowers or abolishes customs duties, setting off a three-year process for a permanent free trade agreement.
The average tariff set by the Eurasian Economic Union on Iranian goods as part of a preferential trade agreement stands at 3.1%, while the figure is 12.9% for EEU goods exported to Iran.
Iran and EEU have listed 862 types of commodities in their three-year provisional trade agreement. As per the deal, Iran will enjoy easier export terms and lower customs duties on 502 items and the same goes for 360 items from EEU member states. EEU removed tariffs on imports of 11 Iranian agricultural and foodstuff products in April. It conveyed the decision to the Trade Promotion Organization of Iran in an official letter.
“These goods that can, from now on, be exported at a zero tariff include potato, onion, garlic, cabbage, carrot, chili, wheat, grains, rice and ready-to-eat meals for kids. The measure taken by EEU in these difficult times when the country is battling the Covid-19 crisis in addition to economic sanctions can help boost our production and exports,” Reza Nourani, the head of Iran’s National Association for Agricultural Products, was quoted as saying by Fars News Agency.
Iran and the Eurasian Economic Union are holding talks on abolishing customs duties to reach free trade with zero tariffs.
“Negotiations on free trade with zero tariffs have been going on between Iran and EEU since last week … If this goal is achieved, we will get access to an unrivaled market because EEU only has preferential agreements with Vietnam, Singapore and Serbia,” the advisor for international affairs and trade agreements of Trade Promotion Organization, Mirhadi Seyyedi, said recently.
“Such an achievement will bring positive results in our economic interactions in the region. The enhancement of trade with EEU will facilitate our trade and financial interactions,” he said.
