Iran, Armenia to Enhance Transactions via EEU Deal

EghtesadOnline: Iran and Armenia discussed the possibility of establishing a special-purpose vehicle for conducting trade between the two neighboring countries.

News ID: ۷۸۵۰۷۲

27 November 2019

The issues were discussed at a meeting that surveyed ways of expanding bilateral ties held at Tehran Chamber of Commerce, Industries, Mines and Agriculture on Monday.

The Iranian side suggested that the vehicle could turn out to be something like the Instrument in Support of Trade Exchanges (INSTEX), the brainchild of the European Union after the US unilaterally pulled out of Iran nuclear deal last year and unleashed tough sanctions.

The system, though not yet launched by Europe, is similar to a barter deal, mainly in the form of Iran selling oil to Europe in exchange for importing other commodities, Financial Tribune reported.

Present at the Monday event were Armenian Ambassador to Iran Artashes Tumanyan, Secretary-General of TCCIM Bahman Eshqi, TCCIM’s Deputy for International Affairs Hesameddin Hallaj, Chairman of Iran-Armenia Chamber of Commerce Hervik Yarijanian, the head of Caucasian Affairs Bureau with the Iranian Foreign Ministry, Mohsen Faghani, and representatives of Iranian and Armenian businesspeople and traders.

“Armenia exported close to $94 million worth of commodities to Iran in 2018, which accounts for only 4% of all its exports and imported goods worth $269 million, which make up 6% of all its imports. The trade agreement between Iran and the Eurasian Economic Union can prepare the grounds for increasing trade ties between the two countries,” Hallaj was quoted as saying by the news portal of TCCIM.

The preferential trade agreement signed between Iran and EEU came into effect on Oct. 27. Iran has three years to negotiate a free trade agreement with the Eurasian bloc.

Iran and the 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 the EEU member states.

The average tariff set by EEU on Iranian goods as part of a preferential trade agreement set to come into effect between the two sides on Oct. 27 stands at 3.1%, while the figure is 12.9% for EEU goods exported to Iran.

Tumanyan said Iran enjoys abundant natural resources and a young expert workforce, adding that Armenia is willing to expand its relations with Iran in all fields.

“We want TCCIM to come up with a list of handicaps in the way of trade with EEU so that the Armenian Embassy in Tehran can work out and solve them,” he said.

The official said it is possible to establish a special-purpose vehicle similar to INSTEX between the two sides, albeit in a smaller scale.

Before this meeting, Tumanyan met with TCCIM Chairman Masoud Khansari and stressed the importance of eliminating banking and financial transaction barriers that have negatively affected bilateral trade ties.

“We are planning for a barter trade system to be established between Iran and a few countries, including China. As such, financial transactions could be reduced to a minimum. The same could happen for Iran and Armenia,” said Khansari.

“Iran’s private sector is in negotiations with the Chinese for creating a barter trade system,” Khansari said upon returning from a recent visit to China.

“Negotiations are in their final stages and when implemented, barter trade will be carried out in cooperation with China and Hong Kong. This will facilitate and speed up our commercial ties,” he was quoted as saying by the news portal of Iran Chamber of Commerce.

“We had meetings with officials of China, Beijing and Shanghai chambers of commerce as well as Iranians residing in China … The Chinese sides expressed their willingness to invest in Iranian mineral, power plant and agricultural projects that promise early profit returns, but said their investments will be indirect due to the sanctions against Iran.”

EEU Chairman in Tehran on Dec. 1

Tehran will host Chairman of the Board of the Eurasian Economic Commission, Tigran Sargsyan, as well as other top officials from the union on Dec. 1.

Hamid Zadboum, the head of Trade Promotion Organization of Iran, believes the presence of Sargsyan in Tehran is an important step in facilitating the implementation of the trade agreement.

Several Iranian traders have been complaining about hurdles in the way of implementation of the deal ever since it took effect, saying they have not been able to enjoy the preferential rates set in the agreement.

It is hoped that the upcoming conference will address these problems.