Iran is Set to Join EAEU in a Free Trade Zone Agreement

Supreme Eurasian Economic Council

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In a further sign of Iran’s re-emergence on the world stage we note with interest that Iran and the Eurasian Economic Union (EAEU) are expected to sign a temporary agreement on establishing a free trade zone in 2017. Both sides are expected to continue talks on liberalising mutual market access and coordinating tariff obligations. The negotiations are scheduled to be finished by October 11, after which a decision will be made to speed up the process of signing the agreement with Iran.

This interim agreement is seen as the first step in the development of a reduction of duties on export goods which will allow the EAEU to benefit from trade with Iran. We expect Iran to eventually become a fully-fledged member of the EAEU and see this merely as a bridging agreement to achieve those aims.

This agreement is also seen as providing Iran with significant opportunities to trade in food, chemical and construction materials, as well as exports of engineering services and associated spheres. Interestingly, Armenia was the nation who took the first step towards integrating Iran into the EAEU initiative.

It would certainly prove to be very beneficial for Iran to cooperate with the EAEU and it could also provide a stepping stone for more cooperation with the BRICS members.

Furthermore, and of key interest, is the fact that cooperation between the EAEU and Iran would strengthen cooperation on the North-South corridor project. It should also be noted that Iran will play an instrumental role in the creation of a joint economic bridge stretching from Lisbon in Portugal to the Persian Gulf and onto the Far East as part of the One Belt One Road (OBOR) initiative.

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In a further indication that Iran is also likely to join the Shanghai Cooperation Organization (SCO), they have expressed an interest in prospective economic projects of the SCO. We anticipate that Iran will join the SCO as a full member within the next 12 months.

In further developments in 2016, Russia and Iran agreed to pay for bilateral supplies of products in national currencies, stepping up economic cooperation and hence de-dollarisation.

 

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