In a meeting between Iran’s representatives from the Iran-Kazakhstan Chamber of Commerce and the Trade Promotion Organization of Iran, it was announced that 80% of the Free Trade Agreement between Iran and the Eurasian Economic Union have been drafted and the rest will be finalized in the next meeting of the two sides.
According to the news portal of Iran Chamber of Commerce, Industries, Mines and Agriculture, after the draft is complete, negotiations will begin to determine the commodities each side wants to be included in the FTA.
It is estimated that the procedure leading to the signing of the agreement, including negotiations, reaching consensus and the ratification of the FTA draft in the parliaments of the countries involved, will take at least two years.
In the interim period, the current preferential trade agreement will be renewed and extended.
Chairman of Iran-Kazakhstan Chamber of Commerce Amir Abedi said during the meeting that to become a more active player in global trade, Iran has to overcome a series of barriers.
“Our cooperation with the Eurasian bloc and an FTA agreement could be a necessary move in this regard, giving us the opportunity to understand our strengths and weaknesses, capacities and capabilities,” he said.
He added that among EEU members, Kazakhstan is strategically more significant as it is located along important transportation corridors.
Representatives of Iran and the Eurasian Economic Union will meet soon in Armenia to discuss a new agreement. This is what Armenia’s Deputy Foreign Minister Armen Ghevondyan said during a recent discussion on the draft state budget for 2022 in parliament.
Ghevondyan recalled that the term of the temporary agreement, which was signed between Iran and the Eurasian Economic Union and entered into force in 2019, expires in 2022 since it was devised for three years, News.am reported.
“We’re currently working on making the interim agreement permanent and have planned discussions in Yerevan,” Ghevondyan added.
In addition, the Intergovernmental Council of the Eurasian Economic Union will hold a session in mid-November in Yerevan.
Provisional Agreement
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 Eurasian Economic Union member states include Russia, Kazakhstan, Armenia, Belarus and Kyrgyzstan.
“There are still problems with export to Iran,” said Armenia’s Minister of Economy Vahan Kerobyan said.
According to the minister, in spite of the temporary special trade agreement between Iran and the Eurasian Economic Union, according to which low customs duties apply for some goods, the Iranian side applies different types of non-tariff barriers, requiring this or that document or procedure.
“This obstructs export from not only Armenia, but also other countries of the Eurasian Economic Union,” he said.
First Round of Talks Concluded
Iran and the Eurasian Economic Union member states’ first round of negotiations for upgrading the current preferential deal between the two sides with a free trade agreement was held in Yerevan, the Armenian capital, from Nov. 1 to 3, according to the Trade Promotion Organization of Iran’s advisor for international affairs and trade agreements.
“Present at the negotiations were representatives from TPO, Iranian president’s Legal Advisory Office, the Foreign Ministry, Iran Chamber of Commerce, Industries, Mines and Agriculture, and Iran’s Embassy in Yerevan, as well as those from related bodies from the five EEU member countries,” Mirhadi Seyyedi was also quoted as saying by IRNA.
The official noted that the two sides are willing to reach an agreement as soon as possible.
“Before the meeting in Yerevan, we had seven videoconference meetings with our partners from EEU. These preliminary negotiations were led by TPO and initial talks were held on concluding the FTA agreement,” he added.
Mirhadi said on Tuesday that the next meeting will be held on Dec. 6 in Tehran, which will host a delegation of negotiators from the EEU bloc, adding that TPO expects talks on FTA to be finalized and agreed upon by then.
“The two sides will begin negotiations on the items and product categories that will go under FTA in Tehran and we expect to reach an agreement on the commodity lists after a few more rounds of talks. So far, we have agreed for 80% of the commodities entitled to lower tariffs in the PTA to come under the free trade agreement. Subsequently, tariffs on these good will gradually decline to reach zero percent.”
Boost in Exports Post-PTA
The TPO official said that with an FTA in place, trade between Iran and the EEU member states will experience significant growth.
“During the first year after the PTA first came into effect between the two sides, on Oct. 27, 2019, Iran’s exports of goods included in the PTA increased by 82%, which was higher than expectations. This shows opportunities for trade are ample between the two sides, so what we are after in the new round of negotiations is to prepare the ground and facilitate procedures as much as possible for both sides to use their trade capacity to the fullest.”
Iran exported a total of 860,420 tons of commodities worth more than $582.9 million to the Eurasian Economic Union member states under the preferential trade agreement over the one-year period. Both figures show 82% growth compared with the similar period of the fiscal 2018-19, when trade between the two sides used to be carried out under regular customs tariffs, TPO wrote on its website at the time.
The main exported commodities under PTA during the year were unshelled pistachio ($114.19 million), apple ($91.75 million), kiwi ($45.83 million) petrochemical and mineral tar oil ($30.51 million), raisin ($26.54 million), allspice ($19.11 million), greenhouse tomato ($16.07 million), pharmaceuticals ($15.95 million), Mazafati dates ($15.08 million), gherkin and cucumber ($14.23 million), orange (12.26 million), carpet ($11.7 million), other types of dates ($11.66 million) and fresh grape ($11.33 million).
Iran’s imports from the Eurasian bloc over the same period under the PTA stood at 4.93 million tons worth $1.65 billion, showing a 9% and 16% decline year-on-year.
Iran-EEU trade during the period under review stood at 9.56 million tons worth $3.42 billion, indicating a 16% and 8% rise in weight and value respectively YOY.
Seyyedi noted that at present, 50% of the global exports are shipped under the free trade agreements, but the figure for Iran stands at a meager 5%.
