Iran's Non-Oil Trade With EEU Increases 34 Percent

EghtesadOnline: Iran traded 4.04 million tons of non-oil commodities worth $2.09 billion with the five member states of the Eurasian Economic Union, namely Russia, Kazakhstan, Armenia, Kyrgyzstan and Belarus, in the last Iranian year (ended March 20, 2019).

News ID: ۷۴۷۱۹۹

30 April 2019

The statistics indicate a 22.96% and 34.08% increase in tonnage and value respectively compared with last year’s corresponding period.

Latest data released by the Islamic Republic of Iran Customs Administration show Iran’s exports totaled 1.55 million tons worth $607.43 million during the year, indicating a 0.07% and 0.14% decrease in tonnage and value respectively year-on-year.

Imports stood at 2.49 million tons worth $1.48 billion, up 0.53% and 0.73% in tonnage and value respectively YOY, according to Financial Tribune.

EEU is an international economic union comprising countries located in central and northern Asia and Eastern Europe. The founding member states, Belarus, Kazakhstan and Russia, established the union by signing a treaty that entered into force on Jan. 1, 2015.

The bloc was created in response to the economic and political influence of European Union and other western countries. Key objectives of EEU include increasing cooperation and economic competitiveness for the member states, and promoting stable development to raise the standard of living in member states.

Main Commodities, Trading Partners

Iran mainly exported pistachios, kiwis, apples, tomatoes, grapes and dates to EEU countries.

In exchange, major commodities imported into Iran from EEU nations included nuclear reactor parts, barley, sunflower oil, field corn, radio navigation devices and sheep carcasses.

In terms of trade value, Russia topped the list among EEU countries with bilateral trade standing at 2.67 million tons worth $1.62 billion, up by 41.48% and 59.13% in tonnage and value respectively YOY.

Exports to Russia amounted to 499,802 tons worth $280.53 million to register a 4.07% decline in both tonnage and value respectively YOY.

Russia was Iran’s top export destination among EEU countries and 14th in the world. In return, it exported 2.17 million tons of commodities worth $1.34 billion to Iran, up by 59.39% and 84.52% in tonnage and value respectively YOY.

The country was the top exporter of goods to Iran among EEU members and eighth in the world.

Major Iranian commodities exported to Russia were kiwi, tomatoes, apples and pistachios.

For its part, Russia mainly exported nuclear reactor parts, sunflower oil, field corn and barley to Iran.

Kazakhstan was Iran’s second biggest trading partner among EEU nations during the 12 months, as two-way commercial exchanges stood at 758,674 tons worth $218.47 million to register a 37.7% rise in tonnage and 7.28% decrease in value YOY.

Iran exported 461,599 tons of goods worth $131.4 million to Kazakhstan, up 39.86% in tonnage and down 22.19% in value YOY.

Kazakhstan was Iran’s third export destination among EEU and 29th in the world during the period.

Iran’s exports to Kazakhstan mainly included pistachios, dates and Portland cement. In return, it imported 297,075 tons of commodities worth $878.06 million from Kazakhstan, up by 34.46% and 30.46% in tonnage and value respectively YOY, a majority of which were barley, sheep carcasses and colza seeds.

Kazakhstan was the second exporter of goods to Iran among the nations under review and 36th exporter to Iran in the world.

Armenia was Iran’s third major trading partner among EEU states.

Mutual trade between Iran and Armenia amounted to 572,373 tons worth $181.67 million, indicating a 28.61% and 20.47% decline in tonnage and value respectively YOY.

Iran’s exports reached 567,397 tons worth $158.99 million, down 27.92% and 21.51% in tonnage and value respectively YOY, while Armenia’s exports to Iran were at 4,975 tons worth $22.67 million, down by 65.91% and 12.37% in tonnage and value respectively YOY.

Armenia was Iran’s second export destination as well as the fourth exporter of goods to Iran among EEU members. The country was Iran’s 26th export destination and 58th exporter to Iran in the world.

Bitumen, liquefied natural gas, non-alloy semi-finished iron/steel products and pistachios were Iran’s main goods exported to Armenia, while Armenia exported mainly sheep carcasses, pharmaceuticals, vehicles, X-ray panels and sensors to Iran.

Belarus was the third biggest exporter to Iran, after Russia and Kazakhstan, among EEU countries and 57th in the world, as Iran imported 11,789 tons worth $23.94 million from Belarus during the 12-month period, down by 45.72% and 25.16% in tonnage and value respectively YOY.

Iran mainly imported fiber, monocular and rubber from Belarus.

Highest Growths, Declines in Trade

Trade with Russia (at $1.62 billion) and Kazakhstan ($45.11 million) saw the highest YOY growths of 59.13% and 0.84% respectively, while trade with Belarus (at $26.7 million) and Armenia ($181.67 million) witnessed the lowest declines of 20.89% and 20.47% respectively.

Iran’s exports to Belarus (at $2.76 million) saw the highest growth of 56.29% while exports to Kazakhstan ($131.4 million) and Armenia ($158.99 million) witnessed the highest declines of 22.19% and 21.51% respectively.

Imports from Kyrgyzstan (at $11.37 million), Russia ($1.34 billion) and Kazakhstan ($87.06 million) saw the highest growths of 87.83%, 84.52% and 30.46% respectively while imports from Belarus (at $23.94 million) and Armenia ($22.67 million) witnessed the highest declines of 25.16% and 12.37% respectively.

New Level of Regional Economic Cooperation

Iran and the Eurasian Economic Union are looking to substantially increase trade, as the two sides signed a three-year provisional agreement on May 17, 2018, for the bloc to welcome Iran into EEU.

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.

“The agreement has taken Tehran to a new level of regional economic cooperation and links Iranian economy with those of other states,” Davood Mirzakhani, an aide to Iran’s energy minister, was recently quoted as saying by IRNA at the Iran-Russia Cooperation Commission.

“The interim agreement indicates that the Iranian economy has entered a new level of regional economic cooperation.”

Russia’s Ministry of Industry and Trade has said 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 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.

“The deal has paved the way for a connection between Iran’s economy and the region,” he said.

“Iran enjoys rich oil, gas and mineral resources, and is a capable country in terms of technical and construction expertise. All these elements, which bring about stability and help form a regional economic hub, will turn the country into a major partner of Eurasia.”

The Iranian official stressed that when Iran finally joins the union, it will be a positive step and can play an effective role in protecting Iran’s economy, especially under the new US sanctions.

The senior Iranian energy authority noted that joining the Eurasian Economic Union “can be a small-scale and pilot model of joining World Trade Organization”.

Mirzakhani noted that Iran's membership can help domestic products become more competitive in bigger markets.

"The Eurasian Economic Union Free Trade Zone is Iran’s first serious step in joining larger trade organizations,” he said, calling it “the most important and practical step against the US policy of isolating the country”.