IP- A free trade deal between the member states of the Eurasian Economic Union (EAEU) and Iran may be signed on Monday at a summit of the five countries' leaders, according to Eurasian Economic Commission Trade Minister Andrey Slepnev.

Iran PressIran news: Unlike the "temporary" free trade zone with the Islamic Republic, which has been in effect since 2019, the new pact envisions a reduction in duties affecting 90% of all commodities and more than 99% of deliveries from EAEU countries, which would be Iran's first such trade deal.

Increased deliveries of both foodstuffs and industrial products are expected, resulting in a threefold increase in trade turnover. Suppliers, on the other hand, are anxious about payment concerns and the nuances of doing business with Iran in the face of long-term Western sanctions.

The EAEU members and Iran have completed negotiations on the establishment of a free trade zone, Slepnev noted. The trade turnover between the EAEU and Iran has already more than doubled in the past three years, rising from $2.5 bln in 2019 to $6.2 bln at the end of 2022. According to the minister, the new arrangement will facilitate an expansion of deliveries to $18-20 bln per year within five to seven years.

Russia’s exports to Iran are significant, but import flows in the opposite direction are noticeably more modest. This imbalance impacts the ability to execute payments in the trade partners’ respective national currencies but the gap could be closed somewhat by utilizing equipment components deliveries and "generous quotas" for agricultural goods.

Experts interviewed by Kommersant do not anticipate competition from Chinese goods, the supply of which is fast increasing as such potential competition is limited by both the level of technology and production volumes.

At the same time, a source in EAEU business circles told the newspaper that, regarding Iran, the business community is largely concerned with settlement issues and the country’s complicated foreign exchange system that features three different rates of exchange for the Iranian rial in foreign trade settlements: the open market rate, the official rate, and the so-called NIMA rate. As well, doing business in Iran is hampered by the country’s closed economy.


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