EghtesadOnline: There have been no requests for Iran's accession to the Eurasian Economic Union, Iya Malkina, an aide to the chairman of the board of Eurasian Economic Commission, said on Feb. 17 while commenting on media reports that Tehran had begun talks on accession to EEU (or EAEU).
“The Treaty on the Eurasian Economic Union and the procedure for admission of new members to the EAEU and termination of membership in the union stipulates that the interested state needs to send an application to the chairperson of the Supreme Eurasian Economic Council. No request from Iran has been received so far,” Malkina said.
She reminded that a temporary agreement between EEU and Iran is currently in force and it leads to a free trade zone. In 2020, the Eurasian bloc’s heads of state decided to start negotiations on the development of a full-fledged free trade zone.
“Thus, the agenda of our cooperation is related exclusively to trade,” she said.
Hamid Zadboum, the head of TPO, said in a meeting with Foreign Ministry officials on Jan. 11 that the Iranian Cabinet has approved the start of Iran-EEU free trade negotiations, Fars News Agency reported on Sunday.
“The Supreme Eurasian Economic Council also issued a permit on Dec. 11, 2020, which allows for the negotiations to take place. The EEU Secretariat has announced its readiness to begin the negotiations from February after the member states have made internal coordination and planning on the issue.”
The official noted that if negotiations come to fruition, bilateral free trade will begin from Oct. 2022.
Iran's Parliament Speaker Mohammad Baqer Qalibaf said on Wednesday upon his arrival in Tehran after a three-day trip to Moscow that preliminary works for Iran’s permanent membership in EEU would start in two weeks, as Tehran has started talks to do so, IRNA reported.
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 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.
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.
EEU conveyed the decision to the Trade Promotion Organization of Iran in an official letter.
Trade in Review
Iran and EEU member states traded more than $3.2 billion worth of goods during the one-year period since their bilateral preferential trade deal came into effect on Oct. 27, 2019 (until Oct. 26, 2020), of which over $2.2 billion were exchanged under the deal at discounted tariffs.
According to the latest report released by TPO, Iran exported 860,420 tons of commodities worth $582.9 million to EEU under the preferential trade deal.
The value and volume of exported goods under the agreement during the period show more than an 80% year-on-year rise, TPO wrote on its website.
The report added that 53.41% of Iran’s total exports to EEU over the period were under the trade agreement.
The main exported commodities under PTA during the year under review were unshelled pistachios ($114.19 million), apples ($91.75 million), kiwis ($45.83 million), petrochemical and mineral tar oils ($30.51 million), dates ($26.74 million), raisin ($26.54 million), allspice ($19.11 million), greenhouse tomatoes ($16.07 million), pharmaceuticals ($15.95 million), dates ($15.08 million), gherkins and cucumbers ($14.23 million), orange (12.26 million), carpet ($11.7 million) and fresh grapes ($11.33 million).
Iran’s top export destination among EEU members (for products listed under PTA) over the one-year period was Russia with $348.87 million (up 96.08% YOY), followed by Kazakhstan with $113.78 million (up 64.7% YOY), Armenia with $62.27 million (up 78.62% YOY), Kyrgyzstan with $42.88 million (up 26.34% YOY) and Belarus with $15.42 million (up 187.54% YOY).
Iran’s imports from the Eurasian bloc over the same period under PTA stood at 4.93 million tons worth $1.65 billion.
The tonnage and value of these imported goods show a 9% and 16% YOY decline respectively.
Barley ($541.21 million), field corn ($388.31 million), unrefined sunflower oil ($357.22 million), lumber ($104.42 million), fresh or frozen lamb meat ($55.88 million), polyamide thread ($23.55 million), genetically modified colza ($20.49 million), lentil ($19.56 million), chickpeas ($15.43 million), non-alloy sheets of iron and steel ($11.46 million), paper rolls or sheets ($10.04 million), dumpers ($8.42 million), plywood sheets ($7.01 million) and pharmaceuticals ($.4.94 million) were the main goods Iran imported from EEU member states at preferential tariff rates.
Russia was the biggest exporter to Iran with $1.22 billion worth of shipments under PTA (down 10.3% YOY), followed by Kazakhstan with $332.23 million (down 29.76% YOY), Belarus with $22.01 million (down 31.32% YOY), Kyrgyzstan with $2.49 million (down 73.56% YOY) and Armenia with $2.19 million (down 79.59% YOY).
Overall, Iran and EEU traded 9.56 million tons of goods worth $3.42 billion during the period, indicating a 16% and 8% YOY rise in weight and value respectively.
Iran’s total exports stood at 2.86 million tons worth $1.09 billion, showing a YOY increase of 8% and 30% in volume and value respectively.
In return, EEU member states exported 6.69 million tons of commodities worth $2.33 million to Iran, registering a 20% and 0.04% YOY growth in weight and value.
As such, Iran’s trade deficit with the EEU bloc stood at $1.23 billion over Oct. 2019-20 after the implementation of PTA, which shows a 16.27% improvement compared with the deficit of $1.47 billion in the period between Oct. 2018-19.