Tehran Hosts Forum to Survey EEU Prospects

The one day event has been organized with the aim of surveying avenues through which Iranian economic players can enter the Eurasian market and gain a foothold, make investments and find trustable business partners there, the news portal of Iran Chamber of Commerce, Industries, Mines and Agriculture reported. 

Iran and the Eurasian Economic Union are looking to substantially increase bilateral trade, as the two sides signed a three-year provisional agreement on May 17 for the bloc to welcome Iran into EEU's free trade zone.

The arrangement is the first step in implementing free trade between Iran and five members of the union. It lowers or abolishes customs duties, setting off a three-year process for a permanent trade agreement, according to Financial Tribune.

Russia's Ministry of Industry and Trade said last month that a full-fledged agreement on a free trade zone between Iran and the Eurasian Economic Union will be concluded by early 2022.

According to the ministry, the interim agreement signed in May covers 50% of the trade between the parties and will enter into force in early 2019.

As per the terms of the deal, Iran, which is not a member of World Trade Organization, will assume obligations stipulated by this organization, which will make its trade with EEU members more transparent and predictable.

“After the expiration of the three-year period, plans are in store to transition to a full-format agreement on a free trade zone, which will cover all commodities. Negotiations on the transition to the new agreement should be started no later than a year after the interim agreement enters into force,” the Russian ministry said.

The deal’s main advantages, the ministry noted, is a reduction in import duties and the formation of a “transparent and predictable trade environment”. This will be because all countries, including Belarus and Iran, which are not members of WTO, have agreed to adhere to the rules of this organization.

Experts recently interviewed by Russia's Izvestia were upbeat on the prospects of the free trade zone deal between EEU and Iran. In their opinion, the zone will be beneficial for all parties, especially given the US sanctions against Moscow and Tehran, which are driving both to trade with each other and promote closer economic ties.

“In the context of sanctions, the temporary agreement on the free trade zone will partially compensate for Russia’s losses in the US market. The Iranian market is an alternative for deliveries of Russian metals, especially since the territorial proximity significantly reduces the cost of transportation,” Vyacheslav Kholodkov, the head of the Center for CIS Countries Studies, said.

Iran's free trade with EEU members is deemed specially important, as the US has reinstated sanctions against the Islamic Republic. By putting into effect the agreement, the two sides are hoping to give a major boost to mutual trade and make up for the loss of global markers as a result of economic restrictions imposed on Iran as well as Russia, the leading member of the EEU, by the United States.

EEU was established in 2015 based on the Customs Union of Russia, Kazakhstan and Belarus, and was later joined by Armenia and Kyrgyzstan. In 2016, Vietnam officially became the first non-regional country to join the bloc’s free trade zone, which is designed to ensure the free movement of goods, services, capital and workers.

Since then, more than 40 countries and international organizations, including China, Indonesia, South Korea, Egypt and India, as well as some South American countries, have expressed interest in a free-trade deal with EEU.

Iran’s non-oil commercial exchanges with the five member states of the Eurasian Economic Union totaled $1.69 billion during the last Iranian fiscal year (March 2017-18), to register a decline of 35.38% compared to the year before, according to data released by the Islamic Republic of Iran Customs Administration. 

Iran’s exports to EEU stood at $837.18 million during the period, indicating a 6.51% year-on-year increase.

Imports amounted to $858.02 million, down 53.3% YOY.

Iran’s total commercial exchanges with Russia were the highest in terms of dollar value among the five member states of the bloc at $1.03 billion, down 42.14% YOY.