Iran's Trade With Eurasian Economic Union Hits $2.4b

EghtesadOnline: Iran and the Eurasian Economic Union traded 6.86 million tons of commodities worth $2.4 billion from Oct. 27, 2019, when a preferential trade agreement between the two sides came into effect, to June 20, 2020, according to the spokesman of the Islamic Republic of Iran Customs Administration.

News ID: ۷۵۰۳۶۹

04 July 2020

“The figure pertains to seven months and 26 days. Though the region was struggling with the Covid-19 pandemic for more than half this period, trade kept flowing. Iran and EEU accounted for 28% and 72% of the total trade volume respectively over the period,” Rouhollah Latifi was also quoted as saying by Mehr News Agency.

Iran’s total exports to the bloc, said the official, stood at 1.65 million tons valued at $681 million, he added.

“Imports from the five EEU member states hit 5.2 million tons worth $1.73 billion, $1.17 billion of which (67.3%) were carried out under the trade agreement,” he said.

“Iran exported a total of $367 million worth of goods to Russia during the period, making it our main export destination among the five EEU member states. The export volume accounted for 54% of Iran’s total exports to EEU during the period. Russia was followed by Armenia with $164 million (24%) and Kazakhstan with $104 million (15%), Kyrgyzstan with $38 million (5.6%) and Belarus with $9 million (1.3%).”

Russia was also the Eurasian Union’s biggest exporter to Iran with more than $1.34 billion to account for 80% of Iran’s total imports from the bloc. Following Russia were Kazakhstan with $287.19 million (16.5%), Belarus with $33.73 million (1.9%), Armenia with $10 million (0.5%) and Kyrgyzstan with $5.6 million (0.32%).

According to Latifi, Iran’s main exported commodities over the period under review included apples, fresh and dried pistachios, liquefied natural gas, kiwis, cucumbers, pickles, raisins, cabbage, cauliflower and broccoli.

Imports, he said, were mainly essential goods and animal feed raw material that included barley, seeds and wheat, field corn, sunflower oil, meat and paper.

Also known as necessity goods, essential goods are products consumers will buy, regardless of changes in income levels.

Provisional Three-Year Trade Deal

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.

The two sides have listed 862 types of commodities in their three-year provisional trade agreement. As per the deal, Iran will enjoy easier export terms and lower customs duties on 502 items and the same goes for 360 items from the EEU member states.

EEU removed tariffs on imports of 11 Iranian agricultural and food products in April. It conveyed the decision to the Trade Promotion Organization of Iran in an official letter.

“Goods that can, from now on, be exported at zero tariff include potato, onion, garlic, cabbage, carrot, chili, wheat, grains, rice and ready-to-eat meals for kids. The measure taken by EEU in these difficult times when the country is battling the Covid-19 crisis in addition to economic sanctions can help boost our production and exports,” Reza Nourani, the head of Iran’s National Association for Agricultural Products, was quoted as saying by Fars News Agency.

To be able to use this opportunity fully, the official said, there is the need to provide the required infrastructure, including refrigerated containers.

The Eurasian Economic Union member states include Russia, Kazakhstan, Armenia, Belarus and Kyrgyzstan.

The Iran-EEU agreement is deemed especially important, considering unilateral 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 sanctions have been aimed at restricting Iran's trade with other countries in a bid to cripple the Iranian economy, in what Iranian officials have termed as "economic war".

Hossein Selahvarzi, the deputy head of Iran Chamber of Commerce, Industries, Mines and Agriculture, says the trade deal 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 Iran-Eurasia Trade Forum hosted in Tehran earlier this month.

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