EghtesadOnline: Iran and the Eurasian Economic Union held their first round of negotiations on upgrading their preferential trade agreement to a free trade deal in Tehran on July 19.
According to Hamid Zadboum, the head of Trade Promotion Organization of Iran, the two sides have agreed upon most terms related to the outlines of the free trade agreement, TPO’s news portal reported.
Noting that three more meetings have been scheduled by the end of 2021, the official said the next meeting will be held by Sept. 22, before which heads of negotiating teams will hold specialized meetings until an agreement is reached.
“As per the free trade agreement, the partner countries will gradually remove tariffs and duties on most imports and exports in the near future to expand business opportunities. One and a half years into the preferential trade agreement between EEU and Iran, economic exchanges have increased significantly despite the outbreak of Covid-19,” he added.
The Eurasian Economic Union member states include Russia, Kazakhstan, Armenia, Belarus and Kyrgyzstan.
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 PTA came into effect on Oct. 27, 2019.
The average tariff set by EEU on Iranian goods as part of the 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 the import of 11 Iranian agricultural and food products last year and conveyed the decision to the Trade Promotion Organization of Iran in an official letter.
“These goods that can be exported at a zero tariff include potato, onion, garlic, cabbage, carrot, chili, 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 in addition to 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.
Iran and the Eurasian Economic Union member states traded 8.68 million tons of commodities worth $3.4 billion in the last Iranian year (March 2020-21), according to the head of the Islamic Republic of Iran Customs Administration.
“Iran exported close to 2.68 million tons worth $1.05 billion to EEU states over the period, registering a 2% decline in value compared with the year before,” Mehdi Mirashrafi was also quoted as saying by IRNA.
Imports from the bloc stood at 6 million tons worth $2.36 billion during the same period, showing a year-on-year fall of 1% in value.
The IRICA chief said the decline in trade was due to restrictions related to the Covid-19 pandemic and economic sanctions imposed on the country.
Russia was Iran’s biggest trade partner among EEU member states.
Imports from Russia stood at 5.24 million tons worth $2.11 billion (89% of Iran’s total imports from EEU) as exports reached 1.06 million tons worth $509.91 million (48% of overall exports).
Following Russia was Kazakhstan with 741,510 tons worth $201.21 million of exports to Iran and 337,075 tons worth $167.99 million of imports.
Next was Armenia with $17.32 million and $304.55 million worth of exports to and imports from Iran respectively.
Belarus followed with $31.22 million and $21.11 million worth of exports to and imports from the country respectively.
Kyrgyzstan came last with $2.57 million and $45.85 million worth of exports and imports respectively.
Latest data show Iran and the Eurasian Economic Union traded $380 million worth of goods during the first two months of the current Iranian year (March 21-May 21).
Latest figures released by Tehran Chamber of Commerce, Industries, Mines and Agriculture show Iran’s exports to EEU stood at $180 million during the period, showing a 66% rise compared with the similar period of last year.
EEU member states exported $201 million worth of commodities to Iran during the same period, indicating a YOY decline of 46%, Mehr News Agency reported.
As a result, Iran’s trade deficit with the Eurasian bloc during the two-month period stood at $21.6 million, indicating a 91.9% improvement compared with the corresponding period of last year.
According to the TCCIM report, Iran’s exports to all five EEU members saw growth while imports from these countries, Belarus excluded, declined.