Concerning the conclusion of an FTA between the EAEU and the Islamic Republic of Iran

Concerning the conclusion of an FTA between the EAEU and the Islamic Republic of Iran

Trade and economic relations between the EAEU member states and the Islamic Republic of Iran are governed by the Interim Agreement leading to the formation of a free trade zone. The decision to start negotiations on such an agreement was made in 2016, signed on May 17, 2018 and on October 27, 2019 the Interim Agreement entered into force.

Thus, in accordance with the Interim Agreement, the Iranian side provided lowering import duties on 360 goods (97 agricultural and 263 industrial). The EAEU countries, reduced import duties on 502 goods (126 agricultural and 376 industrial).

Reference information: Iran has reduced duties on such goods as beef and lamb meat (duty reduction from 26% to 5-10%), legumes (from 55% to 5-10%), vegetable oils (from 20% to 10%), pasta and confectionery (from 55% to 14-20%), rolled steel (from 20% to 15%), rails (from 5% to 4%), batteries (from 32-55% to 10%), fittings, pipes (from 32% to 4%), etc. In general, on agricultural products, the import duties of Iran for the EAEU countries, including Kazakhstan, decreased from 32.2% to 13.2%, and for industrial goods the average level of rates on import duties redused from 22.4% to 15.4%.

The EAEU has reduced import duties on goods such as pistachios, dates, figs, raisins, shrimps, confectionery, dishes, detergents, carpets, and plastic products.

 

It is important to note that, within the framework of the Agreement, the Parties made the obligation to launch the negotiation process on a full- fledged free trade agreement within a year from the date of entry into force of the Interim Agreement. At the same time, it is worth noting that the Parties must complete such negotiations no later than three years after the date of entry into force of the Interim Agreement, or decide to extend the use of an Interim Agreement.

The relevant decision to start negotiations was made on December 11, 2020 by the heads of the EAEU states on a meeting of the Supreme Eurasian Economic Council.

Negotiations on the conclusion of a full-fledged free trade agreement are scheduled for the second half of 2021, and the first consultations were held on February 17th  of this year.

Regarding Iran's accession to the EAEU, we note that at the moment the issues of acceptance of membership in the EAEU and its suspension are regulated by a certain Procedure. So, to apply for accession to the EAEU, the country must go through certain procedural steps, including filing an application addressed to the Chairman of the Supreme Eurasian Economic Council, which is then sent for consideration to the member states.

By February 17th , 2021 the relevant application from the Islamic Republic of Iran has not been received. Thus, it is premature to talk about Iran's accession to the EAEU.

Reference information: In 2020, the trade between Kazakhstan and Iran amounted to USD 237.0 million, which is 37.2% less than in the previous year (USD 377.4 million). Export from Kazakhstan to Iran in 2020 amounted to USD 129.0 million, which is 56.4% less than in the previous year (USD 295.9 million). Import to Kazakhstan from Iran in 2020 increased on 32.5% compared to 2019 ($ 81.5 million) and amounted to $ 108.1 million.