EghtesadOnline: The Eurasian Economic Commission Council approved the roadmap to implement the interim agreement on Iran’s entry into the Eurasian Economic Union Free Trade Zone.
The announcement was made by BelTA news agency based on a report of the EEC press service.
The agreement was signed at the Astana Economic Forum on May 17.
By the end of this year, the Supreme Eurasian Economic Council plans to make decisions on whether or not the roadmap will be mandatory for the EEU member states, Financial Tribune reported.
“Plans are in place to agree on a comprehensive agreement with Iran within the next three years. In the future, it will cover almost all commodity groups,” the EEC said.
During the Astana Economic Forum, the council also signed a roadmap on trade and economic cooperation between the EEU and China.
Iran and the Eurasian Economic Union are looking to substantially increase bilateral trade as the two sides signed a three-year provisional agreement on May 17 for the bloc to welcome Iran into the EEU.
The arrangement is the first step in implementing free trade between Iran and the five members of the union. It lowers or abolishes customs duties, setting off a three-year process for a permanent trade agreement.
Russian Ministry of Industry and Trade said last month that a full-fledged agreement on a free trade zone between Iran and the Eurasian Economic Union will be concluded by early 2022.
According to the ministry, the interim agreement signed in May covers 50% of the trade between the parties and will enter into force in early 2019.
As per the terms of the deal, Iran, which is not a member of World Trade Organization, will assume obligations stipulated by this organization, which will make its trade with EEU members more transparent and predictable.
“After the expiration of the three-year period, plans are in store to transition to a full-format agreement on a free trade zone, which will cover all commodities. Negotiations on the transition to the new agreement should be started no later than a year after the interim agreement enters into force,” the Russian ministry said.
The deal’s main advantages, the ministry noted, is a reduction in import duties and the formation of a “transparent and predictable trade environment”. This will be because all countries, including Belarus and Iran, which are not members of WTO, have agreed to adhere to the rules of this organization.
Experts recently interviewed by Russia’s Izvestia were upbeat on the prospects of the free trade zone deal between EEU and Iran. In their opinion, the zone will be beneficial for all parties, especially given the US sanctions against Moscow and Tehran, which are driving both to trade with each other and economic rapprochement.
“In the context of sanctions, the temporary agreement on the free trade area will partially compensate for Russia’s losses in the US market. The Iranian market is an alternative for deliveries of Russian metals, especially since the territorial proximity significantly reduces the cost of transportation,” Vyacheslav Kholodkov, the head of the Center for CIS Countries Studies, told Izvestia.
Iran’s free trade with EEU members is deemed important, as the US has reinstated sanctions against the Islamic Republic. By putting into effect the agreement, the two sides are hoping to give a major boost to mutual trade and make up for the loss of global markers as a result of economic restrictions imposed on Iran as well as Russia, the leading member of EEU, by the United States.
EEU was established in 2015 based on the Customs Union of Russia, Kazakhstan and Belarus, and was later joined by Armenia and Kyrgyzstan. In 2016, Vietnam officially became the first non-regional country to join the bloc’s free trade zone, which is designed to ensure the free movement of goods, services, capital and workers.
Since then, more than 40 countries and international organizations, including China, Indonesia, South Korea, Egypt and India, as well as some South American countries, have expressed interest in a free-trade deal with EEU.
Iran’s non-oil commercial exchanges with the five member states of the Eurasian Economic Union totaled $1.69 billion during the last Iranian year (March 2017-18) to register a decline of 35.38% compared with the year before, data released by the Islamic Republic of Iran Customs Administration showed.
Iran’s exports to EEU stood at $837.18 million during the period, indicating a 6.51% year-on-year increase.
Imports amounted to $858.02 million, down 53.3% YOY.
Iran’s total commercial exchanges with Russia were the highest in terms of value among the five member states of the bloc at $1.03 billion, down 42.14% YOY.