Iran's Trade With Eurasian Economic Union Hit $2.8 Billion

EghtesadOnline: Iran and the Eurasian Economic Union traded a total of about $2.8 billion worth of goods between October 27, 2019, when a preferential trade agreement came into effect between the two sides, and Aug. 21, 2020, according to Elham Hajikarimi, secretary of Trade Promotion Organization of Iran's Eurasia Affairs Bureau.

News ID: ۷۵۱۲۹۷

19 October 2020

The traded volume shows a 6% year-on-year rise, the official was quoted as saying by ILNA.

“Iran’s exports to the bloc reached $823.9 million, while imports from the EEU amounted to $1.97 billion, registering a 21% and 1% respective rise year-on-year,” she said.

Spokesperson of the Islamic Republic of Iran Customs Administration Rouhollah Latifi has been quoted as saying by Mehr News Agency that Iran’s main imports from the Eurasian block are essential goods and animal feed raw material.

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

Trade Under PTA

Iran exported more than $435.14 million worth of commodities to EEU member states under the preferential trade agreement during the same period under review, according to the latest report released by the Trade Promotion Organization of Iran.

The report shows 53% of Iran’s total exports to EEU over the period were under PTA.

Iran’s main export destination in the Eurasian Union was Russia. Belarus was last on the country’s export list.

Exports under PTA to Russia stood at $263.7 million, showing a 77% year-on-year rise.

Iran exported more than $96.41 million worth of goods to Kazakhstan, $37.71 million to Kyrgyzstan, $25.85 million to Armenia and $11.47 million to Belarus under PTA, indicating a 57%, 42%, 11% and 210% YOY rise respectively.

The main exported commodities under PTA during the period were apple, shelled and unshelled pistachio, Kiwi, allspice, cucumber and gherkin, dates, orange, lettuce, tomato paste, grapes, cauliflower, broccoli and other types of vegetables, ILNA reported.

Iran’s imports from the Eurasian bloc over the same period under PTA stood at $1.32 billion.

Russia with more than $1.17 billion was the biggest exporter to Iran (under PTA) from among the EEU member states to register a 13% YOY decline. It was followed by Kazakhstan with $277.44 million, Belarus with $21.21 million, Armenia with $1.92 million and Kyrgyzstan with $1.32 million, indicating a 36%, 29%, 67% and 84% fall respectively YOY.

Barley, field corn, unrefined sunflower oil, lumber, fresh or frozen lamb, lentils, polyamide thread, chickpeas, paper rolls or sheets, soybeans, iron and steel alloys and genetically modified colza were the main imports under the deal.

All in all, Iran-EEU trade under their trade agreement over the period stood at $1.75 billion.

Three-Year Provisional Treaty

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 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.

Iran and EEU 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 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.

“These goods that can, from now on, be exported at a zero tariff include potato, onion, garlic, cabbage, carrot, chilies, 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 and 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.

The Iran-EEU agreement is deemed especially important, in view of unilateral US economic sanctions reimposed on Iran since US President Donald Trump last year walked out of the Iran nuclear deal it had signed with world powers 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 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 daily.

“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 Khyabani at 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.

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

Tehran to Host Int'l Exhibition on Trade With EEU

Tehran is planning to host an international exhibition in early 2021 aimed at introducing trade potentials to the Eurasia Economic Union.

According to Managing Director of Iran International Exhibitions Company Bahman Hosseinzadeh, the first international exhibition of EEU trade opportunities is planned to be held during the 11th Iranian month (Jan. 20-Feb. 18, 2021).

“All the EEU member countries are going to have active participation in this exhibition,” the official was quoted as saying by Mehr News Agency.

“This exhibition is a good opportunity to introduce the capabilities of Iranian producers and upgrade their industrial and commercial competitiveness, while introducing Iranian products to Eurasian member countries.”

Hosseinzadeh noted that the Eurasia International Exhibition will act as a link for the expansion of relations between Iran and EEU members by promoting economic convergence and strengthening mutual relations.

“The exhibition will strengthen Iran's economic diplomacy with members of this union and provide new capacities for the country’s traders to develop non-oil exports,” he added.