Iran has gained observer status in the Eurasian Economic Union, allowing for improved trade relations through a Free Trade Agreement that eliminates tariffs on 87% of goods. This decision follows a prior successful temporary trade agreement and represents a broader effort to strengthen Iran’s economic ties with EEU member states, particularly Russia. Additional plans to enhance cooperation with China are also underway as Iran seeks to diversify its economic partnerships.
On December 26, during the Supreme Eurasian Economic Council meeting in St. Petersburg, Russia, Iran was officially granted observer status in the Eurasian Economic Union (EEU). This strategic development allows Iran to enhance its economic ties within the EEU framework, which includes member states such as Russia, Kazakhstan, Belarus, Armenia, and Kyrgyzstan. The Iran-EEU Free Trade Agreement aims to eliminate tariffs on 87% of traded goods, promoting efficient economic interaction between the parties involved. A negative list will be curated by both sides to protect sensitive domestic industries, ensuring a balanced approach to trade benefits.
Economic Development Minister Maxim Reshetnikov confirmed this pivotal decision, highlighting that it follows a year after the initial agreement was signed between Russian President Vladimir Putin and the former Iranian administration. The previous temporary trade agreement — in effect from 2018 to 2023 — resulted in a considerable increase in trade volumes, growing from $2.7 billion to $5.2 billion. In the initial ten months of 2024 alone, mutual trade with Iran surged by 12.8%, driven by a 16% increase in exports to Iran.
Bakytzhan Sagintayev, Chairman of the Eurasian Economic Commission, expressed optimism during a meeting with Iranian officials, stating, “We expect the agreement to enter into force soon, which will accelerate economic interaction and create more favorable conditions for business.” With Iran’s entry as an observer, the number of such countries in the EEU has now risen to three, joining Uzbekistan and Cuba.
The journey toward this significant agreement began in 2017 with discussions to refine preferential export tariffs, culminating in the signing of the temporary agreement in 2018. Notably, Iran’s exports of preferential items spiked by 82% in the first year of this arrangement. Negotiations to establish a comprehensive free-trade deal initiated in 2020 underscore the commitment to strengthening economic relations further.
Furthermore, Iran’s government is actively pursuing expanded trading relationships with nations beyond the EEU, particularly focusing on a comprehensive cooperation agreement with Russia, expected to be signed during President Masoud Pezeshkian’s upcoming visit on January 17. Additionally, Iranian Foreign Minister Abbas Araghchi is on a trip to China aimed at enhancing bilateral trade and investment opportunities, showcasing Iran’s broader strategy to diversify its economic partnerships.
The decision to grant Iran observer status in the EEU signifies a strategic effort to enhance economic collaboration amid shifting geopolitical dynamics. The EEU, established to foster economic ties among its member states, enables participating countries to benefit from reduced tariffs and increased trade efficiency. Iran’s inclusion reflects its commitment to strengthening relations with regional powers following previous sanctions, and its aim to forge stronger economic partnerships, particularly with Russia and China. The context of this development is rooted in previous trade agreements that have shown promising growth in trade volumes, thereby encouraging further integration within the EEU framework.
Iran’s recent attainment of observer status in the Eurasian Economic Union marks a strategic milestone in enhancing economic ties within the region. The establishment of a free trade agreement, alongside the framework for protecting sensitive industries, is indicative of a mutual desire to expand trade relationships. Furthermore, this development aligns with Iran’s broader initiatives to diversify its economic partners, particularly with Russia and China, in light of evolving international circumstances. Overall, this transition emphasizes the EEU’s expanding influence and Iran’s proactive economic strategy.
Original Source: www.intellinews.com
