Iran Trades $430m With Eurasian Economic Union at Preferential Tariff Rates

EghtesadOnline: Iran has exported $180 million worth of commodities to Eurasian Economic Union member states under preferential tariffs since Oct. 27, when a trade agreement between the two sides came into effect, according to Energy Minister Reza Ardakanian.

News ID: ۷۴۹۳۲۱

30 December 2019

“EEU’s exports to Iran under the preferential trade agreement stood at $250 million during the same period. Imports mainly comprised essential goods,” the minister, who doubles as chairman of Iran-Russia Economic Commission, was quoted as saying by Mehr News Agency.

The above figures, according to Ardakanian, show less than 23% of Iran's exports to EEU and around 86% of imports from the bloc into Iran were carried out under the trade agreement.

“This is a very big gap. We need to reach a balance here with proper planning,” Financial Tribune quoted the minister as saying.

“Russia imports around $250 billion per year and given our favorable bilateral ties, we need to aim for this strong market."

Iran and the Eurasian Economic Union signed a three-year provisional agreement in Astana 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 EEU 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 862 types of commodities listed on their three-year provisional preferential trade agreement. As per the deal, Iran will enjoy much easier export terms and lower customs duties on 502 items and the same applies to 360 items from EEU member states.

Masoud Kamali Ardakani, the deputy head of Trade Promotion Organization of Iran for export market expansion, said Iran’s annual exports to EEU stand at $600 million whereas the country has the capacity to increase the figure to $20 billion per year.

“EEU member states import around $320 billion worth of commodities per annum,” Mizan Online quoted the official as saying.

“EEU’s total foreign trade amounts to close to $900 billion per annum. Iran’s share of this figure is nearly $2 billion.”

Ardakani noted that goods as varied as foodstuff, mineral products and construction material can be added to Iran’s export basket to EEU.

“Iran has received an average of 56% discount on export tariffs for the 502 commodities it trades under the PTA with the bloc,” he said.

Governor General of Mazandaran Province Ahmad Hosseinzadegan said on Saturday the EEU market’s main demand is for agricultural and food products.

“Mazandaran Province is a production hub for such products and therefore a headquarters for promoting economic relations with EEU will be formed in this northern Iranian province. The headquarters will provide local businesspeople and traders with information on the capacities of the market of EEU’s five member states,” he said.

Based on figures released by the Islamic Republic of Iran Customs Administration, Iran mainly exports pistachios, kiwis, apples, tomatoes, cucumbers, cabbages, grapes, dates, hydraulic cement, refined copper, methanol and pharmaceuticals to EEU countries.

In exchange, major commodities imported into Iran from EEU states include nuclear reactor parts, barley, sunflower oil, raw vegetable oils, field corn, radio navigation devices, cathodes, steel products, pine timber and sheep carcasses.

The agreement is important in view of the unilateral US economic sanctions imposed on Iran in 2018 after Washington walked out of the nuclear deal the world powers signed with Tehran in 2015.

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

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

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

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 in the last Iranian year (March 2018-19), according to Shahrokh Shajari, director general of the Agriculture Ministry's Export Promotion Bureau.

Agrifood trade accounted for 62.37% and 52.15% of the volume and value of Iran-EEU’s 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 year.

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.

An aggregate of 2.12 million tons worth $776.37 million of the total imports comprised agrifood products.

Agrifood products constituted 85.14% and 52.43% of the volume and value of Iran’s total non-oil trade with EEU respectively.

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 EEU member states, namely Russia, Kazakhstan, Armenia, Kyrgyzstan and Belarus, during the last Iranian year, 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 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% and 4.07% decline in tonnage and value respectively YOY.

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