Iran’s trade with the Eurasian Economic Union in the first five months of the current fiscal year (March 21-Aug. 22) nearly doubled compared with the corresponding period of last year.
According to the director general of International Affairs Department of the Islamic Republic of Iran Customs Administration, bilateral trade stood at $1.96 billion during the period to register a 96% growth year-on-year.
Iran exported $420.82 million worth of goods to the bloc during the period, registering a 73% YOY growth.
“Russia with 222.74 million, Armenia with 99.68 million, Kazakhstan with 63.68 million, Kyrgyzstan with 26.98 million and Belarus with 7.74 million were Iran’s top five export destinations,” Hossein Kakhaki was also quoted as saying by IRNA.
Imports stood at $1.54 billion, registering a 59% growth in value compared with the corresponding period of last year.
Russia with $1.33 billion was the biggest exporter to Iran, followed by Kazakhstan with $195.58 million, Belarus with $9.62 million, Armenia with $3.54 million and Kyrgyzstan with $269,000.
The Eurasian Economic Union is an international organization targeting regional economic integration. The international legal entity was established by the Treaty on Eurasian Economic Union. The EEU provides for free movement of goods, services, capital and labor, and pursues a coordinated and harmonized policy in sectors determined by the treaty and international agreements within the union.
The EEU member states are Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia. The union has been created to comprehensively upgrade, raise the competitiveness of and cooperation between the national economies, and to promote stable development to raise the living standards of member states. The bloc has an integrated single market of 180 million people and a gross domestic product of over $5 trillion.
Trade in Review
Iran and the Eurasian Economic Union member states traded 8.68 million tons of commodities worth $3.4 billion during 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. The figure accounts for 31% of the overall trade,” Mehdi Mirashrafi, the head of IRICA, was quoted as saying by IRNA.
The official said imports from the bloc reached 6 million tons worth nearly $2.36 billion during the period, showing a YOY fall of 1% in value, adding that the figure accounted for 69% of the total trade.
“This decline in trade was due to restrictions concerning the Covid-19 pandemic and economic sanctions imposed on the country.
Iran Chamber of Commerce, Industries, Mines and Agriculture’s review of Iran’s trade with the Eurasia Economic Union from the fiscal 2016-17 to fiscal 2020-21 show the highest volume of trade between the two sides during the period was in the fiscal 2019-20 and the lowest was in the fiscal 2016-17.
“The highest trade balance was registered in the fiscal 2020-21 with a deficit of $93 million. Iran registered a non-oil trade surplus of $1 billion in the first five months of the current fiscal year (March 21-Aug. 22),” Mirashrafi said.
Iran’s total foreign trade hit 59.3 million tons worth $34 billion during the period, registering a 14% and 38% growth in weight and value respectively, year-on-year, the news portal of IRICA reported.
Non-oil exports stood at 45.5 million tons worth $17.66 billion, registering a 20% and 63% growth in weight and value respectively compared with the corresponding period of last year.
Imports stood at 13.8 million tons worth $16.63 billion from March 21 to Aug. 22, registering a 5% decline in terms of weight and a 21% growth in terms of value YOY.
Iran’s total non-oil foreign trade declined from $85 billion in the fiscal 2019-20 ($41.3 billion worth of exports and $43.7 billion of imports) to $73 billion in the fiscal 2020-21 ($34.52 billion of exports and $38.5 billion of imports).
From PTA to Free Trade Deal
Iran and the Eurasian Economic Union signed a three-year provisional agreement in Astana, Kazakhstan, 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 Oct. 27, 2019.
The average tariff set by the Eurasian Economic Union on Iranian goods as part of the 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 the EEU member states. EEU removed tariffs on imports of 11 Iranian agricultural and food products last year. It conveyed the decision to the Trade Promotion Organization of Iran in an official letter.
“Goods that can 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 EEU held their first round of negotiations on upgrading their preferential trade agreement to a free trade deal in Tehran on July 19.
According to Hamid Zadboum, the former head of Trade Promotion Organization, parties have agreed upon most terms considering the outlines of free trade agreement.
Noting that three more meetings have been scheduled by the end of 2021, the official said the next meeting will be held by Sept. 22 and the heads of negotiating teams will hold specialized meetings in between until an agreement is reached.
“As per the free trade agreement, the partner countries will gradually remove tariffs and duties on most imports and exports in the near future to expand business opportunities. One and a half years into the preferential trade agreement between EEU and Iran, economic exchanges have increased significantly despite the outbreak of Covid-19,” he was quoted as saying by TPO’s news portal.
