EghtesadOnline: A total of 850 products will be entitled to preferential tariffs once the trade deal between Iran and the Eurasian Economic Union takes effect, according to Iranian Energy Minister Reza Ardakanian.
Following coordination made in this regard, the agreement will be enforced in late October, he was quoted as saying by Fars News Agency.
Iran and the Eurasian Economic Union are looking to substantially increase trade, as the two sides signed a three-year provisional agreement on May 17, 2018, for the bloc to welcome Iran into EEU.
The arrangement is the first step in implementing free trade between Iran and five members of the union. It lowers or abolishes customs duties, setting off a three-year process for a permanent trade agreement, according to Financial Tribune.
On June 27, after the approval of a parliamentary bill for setting up an economic union between Islamic Republic of Iran and five Eurasian countries, the Guardians Council verified the bill. The Guardian Council is a watchdog that ensures laws are in line with the Iranian Constitution and Islamic principles. It is the last chain in Iran's legislative body which vets the laws passed in the parliament.
Iranian President Hassan Rouhani signed into law the interim agreement on establishing a free trade zone between Iran and EEU in July. Subsequently, the president notified the law to the Ministry of Industries, Mining and Trade.
According to Armenia’s Minister of Economy Tigran Khachatryan, the agreement has been ratified by all five members of EEU.
"Iran’s free trade with EEU, which was put into effect at the approval of Iranian Parliament, is considered an important step in Iran’s foreign trade and expansion of trade exchanges with northern neighbors," Ardakanian said.
He noted that Iran’s exports to Russia, Kazakhstan, Belarus, Armenia and Kyrgyzstan would enjoy zero tariff within the framework of Iran’s free trade with EEU.
This is the first time Iran enters into a regional economic agreement actively since the Islamic Revolution in 1979.
Ardakanian put the total trade volume of EEU member states at about $753 billion per year, saying “using this high potential and capacity can create a giant development in our economic ties with this union”.
As sanctions imposed against Iran and Russia have created restrictions for bilateral economic activities, this agreement is of paramount importance for both sides and can help broaden economic relations.
“This agreement will be a substantial help to [Iran’s] economic development and to defeat sanctions using diplomacy and the potential of international and regional organizations,” Guardians Council Spokesman Abbasali Kadkhodaei has been quoted as saying.
According to the press service of the Eurasian Economic Commission, the agreement will come into effect on Oct. 27.
Russian Ministry of Industry and Trade has said a full-fledged agreement on a free trade zone between Iran and EEU will be concluded by early 2022.
According to the ministry, the interim agreement signed in May covers 50% of trade between the two sides.
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.
Iran traded 4.04 million tons of non-oil commodities worth $2.09 billion with the five EEU member states during the last Iranian year (ended March 20, 2019), registering a 22.96% and 34.08% increase in tonnage and value respectively compared with last year’s corresponding period.
Data released by the Islamic Republic of Iran Customs Administration show 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 and entered into force on Jan. 1, 2015.
The bloc was created in part in response to the economic and political influence of the European Union and other western countries. Key objectives of EEU include increasing cooperation and economic competitiveness for the member states, and promoting stable development to raise the standard of living in member states.
Iran mainly exported pistachios, kiwis, apples, tomatoes, grapes and dates to EEU countries.
In exchange, major commodities imported into Iran from EEU states included nuclear reactor parts, barley, sunflower oil, filed corn, radio navigation devices and sheep meat.