Iran has been granted observer status in the EEU, enhancing trade ties that rose from $2.7 billion in 2018 to $5.2 billion in 2023. A free trade agreement between Iran and the EEU will eliminate tariffs on 87% of goods, with both sides compiling sensitive lists. This development reflects Iran’s strategic goal to strengthen economic connections with regional powers amid international sanctions.
On December 26, 2023, Iran was awarded observer status in the Eurasian Economic Union (EEU) during a meeting of the Supreme Eurasian Economic Council held in St. Petersburg, Russia. This development is significant as it follows the signing of the Iran-Eurasian Economic Union Free Trade Agreement, which aims to eliminate tariffs on 87% of traded goods between the parties. Both Iran and the EEU countries will compile lists of sensitive items that will not be included in the tariff reductions to protect their respective domestic industries.
Maxim Reshetnikov, the Russian Minister of Economic Development, confirmed this announcement and noted that the decision to grant observer status is intended to strengthen economic ties with Iran, a market deemed promising. This new status comes after a temporary trade agreement boosted trade between Iran and EEU countries from $2.7 billion in 2018 to $5.2 billion in 2023. In the first ten months of 2024, mutual trade saw a year-on-year increase of 12.8%.
In conjunction with this decision, Bakytzhan Sagintayev, Chairman of the Eurasian Economic Commission (EEC), expressed optimism about the forthcoming agreement and its potential to enhance economic cooperation. Iran’s accession to the EEU unifies it with other observer states, namely Uzbekistan and Cuba, and signals a commitment to fostering collaboration within the regional trade bloc.
The groundwork for this agreement was laid in 2017 with an initial draft on preferential tariffs, leading to a temporary agreement in 2018 that significantly increased exports from Iran. Negotiations are ongoing to transition this temporary arrangement into a comprehensive free-trade agreement. Iran also plans to bolster its economic partnership with Russia amidst the backdrop of heightened international sanctions.
The Eurasian Economic Union (EEU) consists of several member states, including Russia, Kazakhstan, Belarus, Armenia, and Kyrgyzstan, and aims to promote economic collaboration among these countries and invited observers. Iran’s participation as an observer reflects its strategic interests in enhancing trade relations with the EEU. The development is set against Iran’s efforts to navigate international sanctions by seeking closer ties with both Eurasian nations and countries like China, reinforcing its commercial agenda. The initiative to establish trade agreements is indicative of Iran’s broader geopolitical strategy to expand its economic footprint despite challenges in the international landscape.
In summary, Iran’s recent attainment of observer status in the EEU marks a pivotal development in regional trade dynamics, enabling enhanced economic interactions with the union’s member states. The Iran-EEU Free Trade Agreement’s provisions aim to foster trade growth while addressing sensitive sectors essential to national interests. This step signifies a broader ambition of Iran to deepen economic ties within Eurasia, particularly amid ongoing sanctions that necessitate diversification of trade partnerships. Furthermore, the increase in trade turnover illustrates the potential benefits of this strategic alignment.
Original Source: www.intellinews.com
