Why joining Eurasian Economic Union is an exceptional opportunity?

IRNA – The government of President Hassan Rouhani in 2016 proposed to its northern neighbors, who had formed the Eurasian Economic Union, to pave the way for Tehran to become a member as well; a proposal that was immediately welcomed due to Iran’s position in the region.

After two years of intense negotiation and evaluation of items and preferential tariffs between the two countries, it finally came to life in May last year.

With Iran joining the union, Russia, Armenia, Kazakhstan, Belarus, and Kyrgyzstan agreed to import hundreds of goods from Iran at preferential or sometimes zero tariffs and it has provided a new opportunity for experienced, young and even capable Iranian exporters with the opportunity to expand their market and grow non-oil exports.

Simply put, Iran’s membership at the Eurasian Economic Union has received a variety of specific customs privileges from the northern countries, and these countries have had an equal opportunity to enter the Iranian market.

Mehdi Sanaei, the ambassador of the Islamic Republic of Iran to the Russian Federation, which has been in charge of Iran’s diplomatic mission for almost six years in Moscow, told IRNA in this regard that soon after joining the Eurasian Economic Union, 502 items in the sectors of food, chemical consumables, construction products, export of technical and engineering services, industrial products and agricultural products from the Eurasian Economic Union, and the other 360 items in the same cases from Iran, which in total all items subjected to the agreement reaches to 862 cases and, based on agreement, between Zero to 100% tariff and customs reductions are met by both parties.

According to him, this means that Iranian state-owned companies, private companies, and businessmen can export these goods at much easier terms and with much lower customs duties to the Eurasian Union member states, which are often Iran’s neighbors and Eurasian Union businessmen can also trade with Iran with greater convenience.

What is certain is that the creation of facilities and the elimination of cumbersome rules for traders and investors is one of the goals of bilateral or multilateral agreements. Iranian officials hope the signing of the preferential tariff agreement and the creation of a free trade zone between Iran and the Eurasian Union will also promote the development of economic relations between Iran and the Eurasian Union and will help Iran’s regional hub and strengthen the north-south corridor.

According to the latest WTO report, trade with the Commonwealth of Independent States (CIS) by 2017 accounted for only two percent of Iran’s total trade. In other words, Iran was out of the CIS market and did not have a proper trade balance with these countries.

Iran’s ambassador to Russia believes that Iran, rich in oil and gas resources, due to its best transit position – between the Caspian Sea in the north and the Persian Gulf in the south and in its transit position between east and west it could be an appropriate route for transit of goods from EU member-states.

This is even more important when we remember that more than 180 million people live in the Eurasian Economic region, which covers more than 20 million square kilometers, with member-states’ GDP exceeding $4 trillion a year.

Most importantly, the people of these countries share a lot of cultural and social ties with Iran, so Iran’s access to markets in the region can create new job opportunities for the Iranian people, in addition to strengthening economic cooperation and, as a result, our country’s growing economy, trade and development even as Iran faces various sanctions by the United States, and the United States is trying every day to impose new restrictions on the Iranian nation to trade with other countries.

Consecutive US sanctions against Russia have also led the Kremlin to pay particular attention to the capacity of the Eurasian Economic Union.

Reza Ardakanian, Iran’s Minister of Energy and head of the Iranian side of the Joint Commission on Economic Cooperation of Iran and Russia, also told IRNA on his latest visit to Moscow that Iran’s pilot presence in Eurasia pact starts from the October 26 and many pervious opportunities have been lost due to the lack of organized, targeted presence in the markets of the region and this experience should not be repeated.

This may be the first treaty that Iran will actually have active presence in it, he said. We face a good market because it has a population of about 200 million people and we will be a part of it from the end of October and finally, after the pilot period, we can act as part of this free trade zone.

Ardakanian said that “we need a lot of work in the Iranian private sector” to organize and plan because we have lost many opportunities in the past due to the lack of organized and targeted presence in the regional markets, and “we should not repeat this experience anymore and I think Russia will have a well-planned presence in this regional market, with substantial capital in the sector.

The Russians have given their market of 140 million to several other countries in the region to sell their products in this market using preferential tariffs and sometimes zero tariffs on some commodities; a market that has trade exchanges worth $753 billion a year and is an opportunity that should not be overlooked while working with neighboring Iran is a priority and there is no doubt that the more investment we have in developing our relations with neighboring countries and the region, the greater our benefit in the national interest. In other words, investment to develop neighborly relations is within the national interest.

The Minister of Energy also stated that, given the considerable investments made in the Iranian power industry and the possibility of exchanging energy with all neighboring countries, we can start good cooperation with Russia in this field. This area is one of our comparative advantages and we can work well with the Russian Federation in the provision of technical engineering services as well as the use of a communications network for energy exchange.