On Monday (Dec. 25) Iran and the Eurasian Economic Union (EAEU) inked a major agreement to start free trade some six years after Tehran joined the bloc in the Russian city of Saint Petersburg. Tehran signed the accord in a bid to diversify its trade partners amid West crucial sanctions. Allying with a Russian-backed union is expected to bring a new regional trade order.

According to The Iran Project, Iranian Minister of Industry, Mine and Trade Abbas Aliabadi and Chairman of the Board of the Eurasian Economic Commission (EEC) Mikhail Myasnikovich have signed the pact. Also, deputy prime ministers of Russia, Armenia, Belarus, and Kazakhstan along with Kyrgyzstan’s deputy head of cabinet put their signatures on the Iran- EAEU Free Trade Agreement.

The treaty on the Eurasian Economic Union was signed on May 29, 2014, by the leaders of Belarus, Kazakhstan, and Russia and came into force on January 1, 2015. It consists of 183 million people and a gross domestic product of over $2.4 trillion. The Eurasian Economic Union comprises Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia.

The FTA will allow Iran and EAEU members to cut to zero the export and import tariffs for some 87% of the goods they trade, adding that trade for the remaining 13% of the commodities and goods will still be carried out under a tariff system.

It should be noted that Tehran the EAEU had inked a three-year preferential trade agreement (PTA) in 2019, some five years after Iran was invited to join the bloc.

Accordingly, Iran and the EAEU hope the FTA could enable them to increase their annual trade by nearly four times to some $20 billion within the next five to seven years.

Moreover, Iranian Minister of Industry, Mine, and Trade Abbas Aliabadi has praised the FTA between Iran and the Eurasian Economic Union as “a new chapter” for Iranian businesses.

Aliabadi described the signing of the permanent free trade agreement as an opportunity for Iranian industrialists and traders to access a large market in the region, where diplomatic and political relations are already robust.

Iran deputy head of the Trade Promotion Organization for International Affairs said a Free Trade Agreement between Iran and the Eurasian Economic Union’s member states will come into effect in the next Iranian year.

The matter of regional convergence is of great importance for Iran since it has been subjected to the crippling sanctions system of the US and the West for years. Tehran is seeking to thwart the sanctions by taking advantage of the capacity of regional links and developing ties with neighboring countries.

Besides, Iran has officially become a full-fledged member of the Shanghai Cooperation Organisation (SCO) and BRICS earlier.