Iran’s trade with Eurasia on the rise
Strengthening ties with Eurasian countries to tap into global markets is a top priority for the Pezeshkian administration’s foreign policy, which has seen a 2.5-fold increase in exports through careful planning and trade facilitation. Iran entered into a free trade agreement with Eurasia four years ago, resulting in a significant reduction or elimination of tariffs. Consequently, trade with member states has increased by 2.5 times.
Iran has been a party to a free trade agreement with Eurasia for the past four years, which has resulted in a substantial reduction or elimination of tariffs. Consequently, trade with member states has surged by 2.5 times, according to Head of the Trade Promotion Organization Mohammad Ali Dehqan Dehnavi.
Speaking to manufacturers and traders at the Tehran Chamber of Commerce, the TPO chief has noted that Eurasia represents Iran’s first foray into free trade, with a significant 87% of tariffs being waived. This development is expected to intensify competition, as Iranian traders must adapt to new market realities, while member countries also seek to capitalize on the opportunity to expand their market share in the country.
The Free Trade Agreement between the Eurasian Economic Union and Iran was signed on December 25, 2023, in St. Petersburg, Russia, aiming to reduce or eliminate tariff and non-tariff barriers and promote economic and trade interactions. Upon signing the final agreement, 87% of tariff codes for trade between Iran and the Eurasian Economic Union will be zeroed out.
The ratification process for this agreement has been completed in the parliaments of Belarus, Russia, and Kyrgyzstan. Armenia and Kazakhstan, as the other two member states of the Eurasian Union must also go through the legal ratification process for the Free Trade Agreement to take effect.
The goal of forming this union is to develop the market and facilitate trade, create a unified economic space, establish a single market for member states, reduce prices by lowering transportation costs for raw materials, promote fair competition in the common market, and implement joint policies in agriculture, energy, technology, transportation, and other areas.
Participation in Eurasian Economic Union’s annual meeting
The annual meeting of the Eurasian Economic Union was held in Yerevan, Armenia, on September 30 and October 1, with a high-ranking delegation from Iran, comprising government and private sector representatives, in attendance. On the sidelines of the meeting, a trade dialogue between Iran and the Eurasian Economic Union was held, featuring roundtable discussions on topics such as developing trade and economic cooperation, strengthening industrial cooperation in the agricultural, industrial, transportation, and financial sectors, as well as reviewing various issues.
Iranian Vice-President Mohammad-Reza Aref emphasized at the Eurasian Economic Union’s prime ministers’ meeting that his country aims to bolster and broaden its ties with member states, particularly through bilateral and multilateral engagement. “We are convinced that sustainable economic growth can only be achieved by fostering robust cooperation among regional nations, and forums like the Eurasian Economic Union serve as a vital catalyst for realizing this objective.”
He added that Iran is ready to play a more active role in the union, given its internal capacities, including a potential trade capacity of over $80 billion with union members, rich oil and gas resources, significant transit advantages, and notable technical and engineering capabilities.
The vice-president emphasized the importance of the International North-South Transport Corridor as one of the key areas of cooperation between Iran and Eurasian Economic Union members, and the creation of a valuable logistical link between Eurasia and vast markets. He announced that the Islamic Republic of Iran is ready to provide special facilities to union member countries for establishing trade logistics centers in the northern and southern ports.
In addition to the vice-president’s remarks, Iranian Minister of Industry, Mine, and Trade Mohammad Atabak elaborated on the key issues, challenges, and solutions for strengthening economic and trade ties with Armenia, including the removal of banking guarantees for technical and engineering services, the elimination of currency commitments for exporters, and the vast potential for Iran’s presence in technical and engineering fields, infrastructure projects, and other economic sectors. He also highlighted the importance of removing trade barriers through the efforts of the Trade Development Organization.
According to a report by the Islamic Republic of Iran Customs Administration, Iran’s exports to Eurasian Economic Union member countries have seen a significant 16% increase in the first five months of this year, compared to the same period last year. The volume of exports to these countries has reached 2.2 million tons, representing a 35% growth compared to the same period last year.
The report also reveals that the value of exports to the five Eurasian Economic Union member countries during this period has totaled $748 million, marking a 16% increase compared to the same period last year. Notably, Kyrgyzstan has experienced the highest growth in exports.
Free trade for 87% of goods among member states
Deputy for International Business Promotion at the TPO, Mohammad Sadeq Qanadzadeh, shed light on the development of Iran’s trade relations with Eurasian Economic Union member states. He highlighted that the implementation of trade agreements will lead to 87% of goods traded among Eurasian Economic Union member states being exempt from tariffs, with 87% of traded goods benefiting from free trade.
In an interview with IRNA, Qanadzadeh revealed that the free trade agreement between Iran and the Eurasian Economic Union has been inked and is currently under review in the Iranian parliament, with a presentation to the open session expected soon. He noted that the approval process for this agreement has been finalized in the parliaments of Belarus, Russia, and Kyrgyzstan, and Iran is now awaiting its approval in the parliament.
Qanadzadeh underscored that developing Iran’s relations with Eurasian Economic Union member states hinges on the provision of infrastructure. “To boost trade, we need to establish a robust infrastructure in transportation and logistics, while also tackling the challenges faced by exporters and traders in the financial and monetary sectors, as well as other areas,” he emphasized.
The TPO official stressed that Iran must seize the Eurasian opportunity to expand its global market presence, thereby driving trade growth. The Islamic Republic of Iran’s top priority is to strengthen trade ties with its neighbors, particularly Armenia, as a stepping stone for enhancing the volume of trade and economic relations between the two countries.