Iran and the Eurasian Economic Union have signed a memorandum on free trade at a ceremony held in Tehran on Jan. 19.
The document was signed by the head of Iran's Trade Promotion Organization, Alireza Peymanpak, and the head of Eurasian Economic Commission’s trade office, Andrey Slepnev, IRNA reported.
The Iranian official believes that with the operationalization of the Iran-EEU free trade deal, annual bilateral trade will exceed $10 billion in three years.
“The agreement will be put into effect after formal approval of by the governments of member states by mid-1402 (Iranian year From March 2023 March 2024),” Peymanpak said.
“Today we held final talks and came up with a list of traded goods, based on which 90% of the traded commodities have been put on the ‘green’ list, while 10% were designated ‘prohibited’.”
The “green” list refers to goods traded by the two sides at zero customs tariffs.
Peymanpak noted that the signed documents will be approved by the EEU states next month.
Slepnev said he expects the free trade agreement between Iran and the economic union to be signed soon.
"We held very important negotiations to settle a number of important issues. We are confident that the agreement will be signed in the near future," he told Sputnik.
The Russian official indicated that EEU and Iran are seeking to scrap most tariffs and launch joint projects in such spheres as transportation, industry, food production and finance, pointing out that this will potentially create jobs in both Iran and EEU, and advance technological innovation.
In the same context, the Iranian Foreign Ministry confirmed that Slepnev met with the Iranian Deputy Foreign Minister Mehdi Safari. It cited Slepnev as saying that the trade pact would hopefully be finalized during his trip to Iran.
According to the Iranian Foreign Ministry, Safari described the potential free trade zone of Iran, Russia, Armenia, Belarus, Kazakhstan and Kyrgyzstan as "a turning point in the expansion of ties" and proposed creating rail, road and maritime transportation corridors linking the six countries to streamline trade in industrial and agricultural goods.
Almost All Issues Cleared
EEU and Iran have agreed upon virtually all issues in their negotiations on a free trade zone, and only a few issues related to the agricultural sector have to be cleared, the Eurasian Economic Commission's trade unit said following Slepnev's visit to Tehran, Interfax reported.
"The main purpose of the visit was to consider key aspects of negotiations on concluding a free trade agreement between the Eurasian Economic Union and the Islamic Republic of Iran at the level of delegation heads. The parties reviewed modalities of the understandings needed for finalizing the negotiations and signing an agreement. All issues have been agreed upon, except for mutual access to the market of certain categories of agrarian produce, on which they agreed to continue discussions," it said.
"Prospects for the development of long-term and mutually beneficial cooperation in the transport, industry, agriculture, food security and other fields are impressive. A future agreement will help put a solid contractual foundation under these plans," the statement quoted Slepnev as saying.
From Preferential to Free Trade
Iran and EEU signed a three-year provisional agreement in Astana, Kazakhstan, on May 17, 2018, for the bloc to welcome Iran into EEU. The arrangement, which has lowered or abolished customs duties, is the first step toward implementing free trade between Iran and the five members of the union.
Noting that the two sides currently exchange goods based on a preferential trade agreement, Spokesman of the Ministry of Industries, Mining and Trade Omid Qalibaf recently said EEU has granted tariff concessions to 500 types of Iranian commodities as Iran has done to 400 types.
Asked about the impact of Iran’s import bans on EEU trade deal, he said the ban will not be applied to imports from the Eurasian bloc.
“The prohibition on import of certain types of goods like historical relics, pork, etc. continue to be enforced but restrictions on imports implemented to maintain foreign exchange reserves will not be applied,” he was quoted as saying by IRIB News.
There is a long list of products in Iran whose imports have been banned for many years.
According to Pour-Kazem Shayesteh, the deputy head of Iran’s Headquarters to Combat Smuggling of Goods and Foreign Exchange, the import of more than 2,000 types of goods is prohibited.
The Iranian government aims to economize on its foreign currency reserves by applying import restrictions.
Iran and EEU have finalized negotiations on free trade of more than 7,500 types of commodities, the head of Iranian delegation negotiating with the Eurasian bloc said earlier.
“Over the past two years, we have held around 30 rounds of negotiations with representatives of the Eurasian side — some face to face and others online. At the end, we agreed on a 150-page deal, which is the most comprehensive trade agreement [Iran has had],” Mirhadi Seyyedi was also quoted as saying by Tasnim News Agency.
According to Seyyedi, Iran’s trade with EEU is mostly focused on agricultural products.
“Our imports mostly constitute cereals and oilseeds. In return, Iran exports apple, vegetable and greenhouse crops at zero tariffs. EEU has agreed to include about 95% of its traded goods in the agreement,” he said.
“That is almost all types of goods exchanged between the two sides, except for those we are reluctant to import for some reasons such as agricultural machinery or dairy products.”
The official noted that since the signing of the preferential trade deal in 2018, bilateral trade has doubled between Iran and EEU from about $2.5 billion to $5 billion a year.
“Never before have we had an agreement as inclusive as this [the prospective free trade deal with EEU]. Clearly, when the provisional agreement is upgraded to a free trade treaty, out foreign trade will get a considerable boost,” he was quoted as saying by IRNA.
EEU is an economic union of some post-Soviet states located in Eurasia. The Treaty on the Eurasian Economic Union was signed on May 24, 2014, by the leaders of Belarus, Kazakhstan and Russia, and came into force on Jan. 1, 2015. Treaties aiming for Armenia's and Kyrgyzstan's accession to the Eurasian Economic Union were signed on Oct. 9 and Dec. 23, 2014, respectively. Armenia's accession treaty came into force on Jan. 2, 2015, and that of Kyrgyzstan came into effect on Aug. 6, 2015. Kyrgyzstan participated in EEU from the day of its establishment as an acceding state.
The union has an integrated single market of 184 million people and a gross domestic product of over $1.9 trillion. It encourages the free movement of goods and services, and provides for common policies in the macroeconomic sphere, transportation, industry and agriculture, energy, foreign trade and investment, customs, technical regulation, competition and antitrust regulation.
Q1-3 Trade at $2.2 Billion
Latest data released by the Islamic Republic of Iran Customs Administration show trade between Iran and the Eurasian Economic Union’s member states stood at 4.26 million tons worth $2.28 billion during the current Iranian year’s first nine months (March 21-Dec. 21), registering a 12.93% decline in weight, but a 3.86% growth in value compared with the corresponding period of last year.
Russia was Iran’s main trade partner among the countries under review with 2.86 million tons worth $1.63 billion. It was followed by Armenia with 706,007 tons worth $313.8 million and Kazakhstan with 619,077 tons worth $239.36 million.
Iran’s exports to EEU members reached 2.18 million tons worth $1.04 billion during the period, registering a 3.81% and a 19.35% increase in weight and value year-on-year, respectively.
Russia with 1.04 million tons worth $546.3 million, Armenia with 700,996 tons worth $304.07 million and Kazakhstan with 378,867 tons worth $132.38 million were the top export destinations.
Imports hit 2.08 million tons worth $1.23 billion during the period to register a 28.06% and a 4.83% decline in weight and value, respectively.
Russia was also the main exporter to Iran with 1.82 million tons worth $1.08 billion. It was followed by Armenia with 240,209 tons worth $106.97 million and Belarus with 12,340 tons worth $30.21 million.
Reports say trade between EEU and Iran in 2021 increased by 73% compared to 2020, exceeding $5 billion, while exports of EEU member states more than doubled (from $1.65 billion to $3.42 billion), and imports went up by 29% (from $1.25 billion to $1.6 billion).
Wide-Ranging Ties With Other Countries
In the past few years, Iran has been moving forward to expand cooperation and ties with regional and non-regional countries in the fields of trade, politics and security among other areas, Al Mayadeen reported on its website.
In June 2022, Iran announced that it had submitted its application for membership in the BRICS, which includes a group of five major emerging economies: Brazil, Russia, India, China and South Africa, which accounts for 30% of global GDP and 40% of the world's population.
During the 22nd Shanghai Cooperation Organization summit held in Uzbekistan last September, the organization announced Iran's full accession to the bloc after Tehran had previously signed a memorandum of arrangements and commitments with the organization.
