Iran-EEU Free Trade Zone Deal Could be Signed Before Yearend

Russia expects that an agreement for establishing a free trade zone between Iran and the Eurasian Economic Union will be signed before the end of the year, Russia’s Deputy Prime Minister Alexey Overchuk said in an interview with TASS on the sidelines of the St. Petersburg International Economic Forum.
"Now, indeed, the EEU has come very close to concluding such an agreement with Iran. This issue was touched upon, including at the Eurasian Intergovernmental Council and received the support of the heads of government. Therefore, we are making progress. The agreement can be signed," he added.
According to the Russian official, EEU is developing FTA agreements with several more states, with which negotiations are also underway.
"[We are in talks with] Egypt, India, Indonesia and the UAE. All these countries are friendly to us; they are growing markets, so respectively the economic center of the new multipolar world is moving in their direction," he said.
Overchuk drew attention to the fact that even in a bilateral format, negotiations on free trade zones are "very difficult, and they take years."
"Negotiators need to take into account a lot of different interests. In our case, the interests of all five EEU member states, their businesses and consumers are involved here. All this should be taken into account by our negotiators. This is a complex process," he said.
Russia, Armenia, Belarus, Kazakhstan and Kyrgyzstan are member-states of the Eurasian Economic Union.

Substantive Talks Finalized: Slepnev

The Eurasian Economic Commission has finalized its substantive discussion of all aspects of a free trade zone agreement with Iran, and this document may be signed as soon as this year, Eurasian Economic Commission Trade Minister Andrei Slepnev said earlier, as reported by Interfax.
"Delicate work is underway to fine-tune the document; we are putting the finishing touches on it. I hope that we will complete this process within a month. And we plan to report the results to the prime ministers in Sochi at the beginning of next month [during a summit of the prime ministers of countries of the Commonwealth of Independent States and the Eurasian Economic Union]. After that, some formal procedures will be performed. I think there is a very high degree of probability that we will sign the agreement with Iran this year," Slepnev was quoted as saying by the SB. Belarus Segodnya state-run media outlet.
The free trade zone agreement with Iran is able to dramatically increase mutual trade volumes, he added.
"We expect that after the agreement is signed, we will be able to raise our trade from $6 billion at present to $20 billion [per year] in the mid-term prospect, within five to seven years. These figures are quite realistic," he said.
"Iran is a very serious partner, a large country. It is possible to say that we are Iran's first major free trade partner. This country has quite high entry barriers. Iranian partners are offering us unprecedented conditions for accessing their market, which conditions we need to take advantage of," he said.

Timeline of Agreements, Discussions

On January 19, 2022, Iran and the Eurasian Economic Union signed an agreement to establish a free trade zone following the meeting of the delegations of the two sides.
Iran’s Deputy Minister of Industry, Mining and Trade Alireza Peymanpak said that, as part of the Free Trade Zone agreement, Iran and EEU approved zero tariffs on 90% of goods. 
The Free Trade Zone agreement will enter into force by the end of September 2023.
The two sides had signed a three-year provisional agreement in Astana, Kazakhstan, on May 17, 2018, for the bloc to welcome Iran into EEU. 
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 has said the EEU has granted tariff concessions to 500 types of Iranian commodities while Iran reciprocated with 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 the 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 the deputy head of Iran’s Headquarters to Combat Smuggling of Goods and Foreign Exchange, Mostafa Pour-Kazem Shayesteh, 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. In 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 the official, 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,” he said.
“EEU has agreed to include about 95% of its traded goods in the agreement. 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.”
Seyyedi 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 said.
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 January 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. Kyrgyzstan's accession treaty came into effect on Aug. 6 2015. Kyrgyzstan participated in EEU from the day of its establishment as an acceding state.

FY 2022-23 Trade in Review

Iran traded 6.37 million tons of goods (excluding crude oil exports) worth $3.25 billion with the Eurasian Economic Union’s member states in the fiscal 2022-23, registering a 51.44% and 42.27% drop in terms of weight and value respectively compared to the year before, latest data released by the Islamic Republic of Iran Customs Administration show.
Russia was the main trade partner among EEU members during the period with 4.04 million tons worth $2.32 billion of exchanged goods. It was followed by Armenia with 1.47 million tons worth $478,274 and Kazakhstan with 750,955 tons worth $320,145.
Iran’s exports to the EEU stood at 3.44 million tons worth $1.48 billion, registering a 24.32% and 27.2% rise in terms of weight and value respectively.
Russia with 1.41 million tons (up 24.52%) worth $743.88 million (up 27.45%), Armenia with 1.46 million tons (up 39.98%) worth $464.16 million (up 53.52%) and Kazakhstan with 475,615 tons (down 8.11%) worth $195.34 million (up 3.42%) were the top export destinations.
Imports hit 2.93 million tons worth $1.76 billion to register a 71.73% and 60.45% decline in weight and value respectively.
Russia was also the main exporter to Iran with 2.62 million tons (down 71.16%) worth $1.57 billion (down 61.07%). It was followed by Armenia with 275,340 tons (down 77.79%) worth $124.8 million (down 67.09%) and Belarus with 17,974 tons (up 93.68%) worth $43.66 million (up 52.61%).