TEHRAN – The proposed Free Trade Agreement (FTA) between Iran and the Eurasian Economic Union (EAEU) has reached a significant milestone, receiving unanimous approval from the Economic Commission of the Iranian Parliament. The agreement now awaits final ratification in Parliament's plenary session, marking a transformative step in strengthening Iran's economic integration with the region.

According to Mohammad Sadegh Ghanadzadeh, Deputy for International Business Development at the Trade Promotion Organization (TPO), Iran has already established 20 preferential and free trade agreements with various countries, but the Iran-EAEU FTA stands out as the first multilateral agreement of its kind involving the Eurasian bloc. The agreement was signed in December 2023 by the Industry Ministers of Iran and the five member states of the EAEU: Russia, Armenia, Kyrgyzstan, Belarus, and Kazakhstan.

A Milestone in Regional Trade

Under the agreement's implementation framework, enforcement will begin two months after ratification by the parliaments of all member states. So far, four EAEU countries—Russia, Armenia, Kyrgyzstan, and Belarus—have completed the ratification process. Kazakhstan, the final member, is in the process of securing legislative approval, paving the way for the FTA's activation.

"The Iran-EAEU trade agreement was the result of 60 rounds of negotiations spanning five years," Ghanadzadeh stated. "Once implemented, 87 percent of the trade tariffs between Iran and the EAEU will be reduced to zero, creating unprecedented opportunities for trade and economic collaboration."

Implications for Trade and Investment

The FTA promises to boost Iran's non-oil exports, expand market access, and attract foreign investment. Key sectors poised to benefit include agriculture, petrochemicals, machinery, and textiles. Iran's geographical position as a gateway to the Middle East and South Asia also provides EAEU members with a strategic corridor for trade expansion.

Trade between Iran and EAEU member states has shown steady growth since the establishment of a temporary trade agreement in 2019. In 2022, bilateral trade exceeded $5 billion, a 73 percent increase compared to 2021. Major Iranian exports to the EAEU include food products, construction materials, and petrochemicals, while imports primarily consist of machinery, steel, and agricultural goods.

Strategic Importance

The Iran-EAEU FTA aligns with Tehran's broader goal of pivoting toward regional partnerships in response to Western economic sanctions. Strengthening ties with the EAEU provides Iran with diversified trade routes and reduces dependency on traditional markets.

For the EAEU, the agreement enhances access to the Middle Eastern market and supports the bloc's vision of deeper economic integration among member states and their neighbors. Russia, a leading EAEU member, views this agreement as a crucial step in countering Western economic pressures while fostering closer ties with regional allies.

Future Outlook

Economic analysts suggest the FTA could significantly boost trade volume between Iran and the EAEU, potentially exceeding $10 billion annually within a few years. Beyond trade, the agreement could encourage joint ventures, knowledge exchange, and technology transfer in industries such as energy, transportation, and manufacturing.

The Iran-EAEU Free Trade Agreement represents a landmark achievement, underscoring the importance of regional economic cooperation in an increasingly interconnected global economy. As implementation draws closer, the agreement is set to redefine economic relations between Iran and the Eurasian region, offering substantial benefits for all parties involved.

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