Iran's First PTA Transaction With Eurasian Economic Union

EghtesadOnline: Iran exported $28.2 million worth of commodities to the Eurasian Economic Union member states under preferential tariffs from Oct. 27 to Nov. 29.

News ID: ۷۴۹۲۱۳

18 December 2019

According to Director General of the Islamic Republic of Iran Customs Administration Mehdi Mir-Ashrafi, EEU’s exports to Iran under the preferential trade agreement stood at $166 million during the same period.

"Imports mostly included essential goods,” the customs chief was quoted as saying by Mehr News Agency.

The official noted that Iran’s total exports and imports to and from the five EEU member states during the period amounted to $137.9 million and $193 million respectively, according to Financial Tribune.

The above figures show 20% of Iran's export to EEU and 83% of imports from the bloc into Iran were carried out under a provisional trade deal.

Iran and the Eurasian Economic Union are looking to substantially increase trade, as the two sides signed a three-year provisional agreement in Astana, Kazakhstan, 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, before signing a permanent trade agreement after three years.

The average tariff set by the Eurasian Economic Union for Iranian goods as part of their provisional preferential trade agreement stands at 3.1%, while Iran’s average tariff for commodities from EEU amounts to 12.9%, according to the deputy for international affairs with Iran Chamber of Commerce, Industries, Mines and Agricultures.

Iran and EEU have a total of 862 types of commodities listed on their preferential trade agreement. As per the deal, Iran will enjoy much easier export terms and lower customs duties on 502 items and the same goes to 360 items from EEU member states.

The agreement is deemed especially important, considering unilateral US economic sanctions against Iran since US President Donald Trump last year walked out of the nuclear deal the world powers signed with Tehran in 2015.

The nuclear deal, officially known as the Joint Comprehensive Plan of Action, saw the removal of international sanctions against Iran upon its implementation in 2016.

Hossein Selahvarzi, the deputy head of Iran Chamber of Commerce, Industries, Mines and Agriculture, however, said the agreement is more of a practice in free trade for Iran rather than a short-lived escape from the US imposed economic sanctions.

The official says free trade is the “rescue route” for Iran’s economy.

“If at the end of the road to joining EEU, Iran can identify its points of weakness and strength in free trade, we can say it has made the most out of the agreement,” he was quoted as saying by Donya-e-Eqtesad.

“The level of trade exchanges between Iran and Eurasia could exceed $30 billion [per year],” said Deputy Minister of Industries, Mining and Trade for Commercial Affairs Hossein Modarres Khiyabani at the Iran-Eurasia Trade Forum hosted in Tehran earlier this month.

He put the current volume of Eurasia’s trade exchanges with other countries at $900 billion.

Last Year's Trade at Over $2b

The Islamic Republic of Iran Customs Administration's data for the last Iranian year (March 2018-19) show Iran traded 4.04 million tons of non-oil commodities worth $2.09 billion with the five member states of EEU, namely Russia, Kazakhstan, Armenia, Kyrgyzstan and Belarus, during the last Iranian year (ended March 20, 2019), registering a 22.96% and 34.08% increase in tonnage and value respectively compared with last year’s corresponding period.

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.

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 treaty that entered into force on Jan. 1, 2015.

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 total trade value, Russia topped the list among EEU countries with Iran 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 YOY.

Russia was Iran’s top export destination among the countries under review and 14th in the world.

In return, Russia 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.

Russia 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.

Agrifood Accounts for Over Half of Trade

Agrifood products accounted for over half of Iran-EEU trade last year.

Iran traded a total of 2.52 million tons of agrifood products worth 1.09 billion with EEU during in last Iranian year (March 2018-19), according to Shahrokh Shajari, director general of the Agriculture Ministry's Export Promotion Bureau.

As a result, agrifood trade accounted for 62.37% and 52.15% of the volume and value of Iran-EEU’s total non-oil trade respectively last year.

Iran’s agrifood exports to EEU member states stood at 405,010 tons worth $315.3 million during the 12-month period.

The above figures account for 26.12% and 51.9% of the weight and value of total non-oil exports to EEU respectively over the period.

Iran's exported agrifood products to EEU mainly include apples, vegetables, grapes, oranges, raisin, dates, kiwi and pistachio.

Meanwhile, 2.12 million tons worth more than $776.37 million of the total imports were agrifood products.

As such, 85.14% and 52.43% of the volume and value of Iran’s total non-oil trade with EEU respectively were agrifood products.