A new round of free trade agreement talks between Iran and the Eurasian Economic Union will be held in Tehran this week, according to the head of Trade Promotion Organization.
“We have now come up with two lists of commodities, one containing 80% of the goods traded between Iran and EEU, and the other containing 20%. During the earlier rounds of negotiations, the two sides agreed on tariffs in the first list to gradually move toward zero over the years after the prospective FTA comes into effect. The second list includes sensitive and strategic goods, and therefore, both sides have agreed to keep their tariffs unchanged,” Alireza Peymanpak was also quoted as saying by Mehr News Agency.
The second list, the official added, contains close to 1,500 HS codes for different commodities, which the TPO has made accessible to state-owned bodies and private sector officials and businesses, adding that the list was prepared in collaboration with public and private sector officials.
Harmonized Commodity Description and Coding System (HS) is a list of numbers used by customs to classify a product. Harmonized System Codes are commonly used throughout the export process. It is a standardized numerical method of classifying traded products used by customs authorities around the world to identify products when assessing duties and taxes, and for gathering statistics.
“I invite all officials and businesses that have been given the list to go through the items, to make revisions if necessary and give us their expert opinions as soon as they can for us to include them in the upcoming negotiations.”
Peymanpak noted that the second list has been handed to officials from Iran Chamber of Commerce, Industries, Mines and Agriculture; Food and Drugs Administration; Agriculture Ministry’s Trade Promotion Organization; and Ministry of Industries, Mining and Trade’s Machinery and Transportation departments among others.
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 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 listed 862 types of commodities in their three-year provisional trade agreement. As per the deal, Iran was to enjoy easier export terms and lower customs duties on 502 items and the same went for 360 items from the EEU member states.
The Eurasian Economic Union member states include Russia, Kazakhstan, Armenia, Belarus and Kyrgyzstan. The bloc was created in part in response to the economic and political influence of the European Union and other western countries.
Exports to Be Exempt From Customs Duties as of Sept. 2022
Iranian exports to the EEU member states will be exempt from customs tariffs as of September 2022, the managing director of Iran-EEU Export Consortium Center has said.
“Our exports need to measure up to the standards of the EEU market. To arrive at this goal, we have established offices in Moscow and Yerevan to help with the export of Iranian goods and guide traders on the demands of destination markets,” Amir Abbas Afsharamin was quoted as saying by the Persian daily Ta’adol.
As per an agreement with EEU, he added, the raw materials of the end products destined for exports to the bloc will be procured meticulously so that Iranian products could compete with rivals in the Eurasian market.
“A lot of our processed foodstuff, including dried nuts, dates, pasta, different types of pastry, chocolates and canned food, already possess the required standards to be exported to EEU’s five member countries. We also have great potential in exports of faucet and textile.”
The official further said unfortunately, most of Iran’s raw agricultural products do not meet EEU’s required standards.
“Some of our dates, for example, are not disinfected on par with EEU standards. This is why the consortium has decided to step in and process such goods as demanded by these export destinations,” he added.
Afsharamin noted that the consortium has rented shelves in chain stores across the bloc as part of its measures to facilitate exports of Iranian products.
“Another field where Iranian businesses are capable of producing high quality products is the furniture and wooden artifacts industry. Yet, there are shortcomings in the production chain of furniture regarding raw materials. To overcome this problem, an export consortium has been founded that is mainly responsible to provide businesses active in the field with high quality raw materials, including fabric, sponge, particle boards and wood, at prices lower than those in our domestic market. This is the biggest agreement ever made with our furniture industry to procure specific raw materials and complete the production chain,” he said.
Interim Trade Deal Extended Until 2025
The interim free trade agreement between the EEU and Iran has been extended until 2025, an official representative of the Eurasian Economic Commission, Iya Malkina, told a briefing for the press after the Supreme Eurasian Economic Council meeting on Dec. 10, 2021, BelTA reported.
"During the summit, the parties signed a protocol to the interim agreement leading to the formation of a free trade zone between the Eurasian Economic Union and Iran," Iya Malkina said. "The interim agreement has been extended until October 27, 2025, or until the free trade agreement enters into force, whichever comes first."
She recalled that negotiations on the full-fledged free trade agreement are based on the regime in force between EEU and Iran in accordance with the interim agreement since October 2019.
In H1 2021, trade with Iran posted a great growth, such that exports of EEU member states surged by almost 47% to total $1.35 billion and imports by 34% to $825 million. Trade between the EEU countries and Iran increased by 27% over the same period in 2019, such that exports rose by 27% and imports by almost 70%.
The Supreme Eurasian Economic Council Summit, held via videoconference, was attended by Belarusian President Aleksandr Lukashenko.
Armenian Prime Minister Nikol Pashinyan endorsed the early conclusion of a full-fledged free trade agreement between Iran and EEU, speaking at the videoconference, ARKA news agency reported.
"A key component of the effective development of EEU, highlighted in its development strategy, is expansion of international cooperation and creation of a wide network of trade and economic relations. In this context, I think it is important once again to draw attention to the conclusion of a full-fledged free trade agreement between Iran and the EEU as soon as possible," he said.
Pashinyan stressed that the provisional (free trade) agreement with Tehran has clearly shown the potential and prospects for further deepening of cooperation.
"And despite reaching mutually beneficial agreements on a number of issues during the first round of talks held in Yerevan in early November, the extension of the provisional agreement for this period is justified," he said.
Pashinyan stressed that over the years, different formats of cooperation with third countries have been worked out. The solution to these problems, as the prime minister noted, is summed up in the main directions of EEU international activity for 2022, which fixes the key vectors and practical priorities of the union's international activity for the next year, emphasizing potentially promising areas.
"Within the framework of the Eurasian integration, a sufficiently stable institutional framework has been formulated, the common market is being established and there is certain success in the sphere of international cooperation," he said.
71% Growth in Bilateral Trade
Iran’s trade with member states of the Eurasian Economic Union stood at $4.63 billion during the first 10 months of the current Iranian year (March 21, 2021-Jan. 20), registering a 71% growth compared with the corresponding period of the year before, a customs official, Hossein Kakhaki, was quoted as saying by ILNA.
Iran’s exports hit $979.97 million, registering a 17% year-on-year rise.
Russia with $489,98 million topped the list of Iran’s export destinations in EEU, followed by Armenia with more than $256.11 million, Kazakhstan with $150.79 million, Kyrgyzstan with $67.91 million and Belarus with $15.16 million.
Among the main exported products, according to the official, were fresh pistachio, fruit and vegetable, plastic, iron and steel.
Kakhaki added that the EEU member states exported $3.66 billion worth of goods to Iran during the same period, registering a 67% YOY rise.
Russia with $3.3 billion was the biggest EEU exporter to Iran during the period under review. It was followed by Kazakhstan with $321.83 million, Belarus with $24.56 million, Armenia with $7.62 million and Kyrgyzstan with $1.25 million.
EEU member states exported vegetable oil, animal fat, grains, wood, vegetable, chemicals and mineral products to Iran.
Iran’s trade deficit during the period widened to $3.65 billion with the EEU bloc.
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 former head of the Islamic Republic of Iran Customs Administration.
“Iran exported 2.68 million tons worth $1.05 billion to EEU states over the period, showing a 2% decline in value compared with the year before. The figure accounts for 31% of the overall trade,” Mehdi Mirashrafi was quoted by IRNA as saying.
Iran’s imports from the bloc hit 6 million tons worth $2.36 billion, showing a fall of 1% in value with the figure accounting for 69% of the total trade.
“The decline in trade was due to restrictions related to Covid-19 pandemic as well as economic sanctions imposed on Iran,” Mirashrafi said.