Russia and Iran in the processes of regional and bilateral liberalization of trade

Regional and bilateral trade liberalization continues despite the Covid-۱۹ pandemic and the calmer attitude of the US to this issue since Donald Trump’s presidency. The number of regional trade agreements (RTA) grows, and the scope of sectors, covered by agreements, broadens. Russia and Iran take part in this process, though not very active. For both countries political side of bilateral cooperation with foreign partners matters no less, than purely economic side. Both countries are under international sanctions, which affects the geography of their trade and partnership. Russia is a member of the Eurasian Economic Union (EAEU), which is a customs union with a common trade policy. Thus, free trade agreements (FTA) with the third countries are concluded on behalf the EAEU. By ۲۰۲۲, the EAEU has concluded bilateral FTAs with Vietnam (۲۰۱۵), Iran (۲۰۱۸), Singapore and Serbia (۲۰۱۹). Negotiations or preliminary discussions are underway with some other countries. Iran is more cautious in its trade policy. Its FTA with the EAEU is not the full-scale FTA: it is an interim agreement, signed for a three-year period (in ۲۰۲۱, Russia agreed to prolongate it for three more years – till ۲۰۲۵). By the scale of tariff concessions, it looks rather a preferential trade agreement: Iran’s import tariff remain high even after their liberalization. Meanwhile, Iran seems to become more active in this sphere: in ۲۰۲۱ it announced the relaunch of FTA with Syria, FTA negotiations with Pakistan and discussed the possibility of trade liberalization with Turkey. Our purpose is to explore and compare the motives behind Russia’s and Iran’s policy in the RTAs sphere and to assess the probable results of trade liberalization with the help of partial equilibrium model. We find, that both countries pay attention to the political issues first in their RTA-related decisions.

Keywords:

Iran , partial equilibrium , Russia , trade liberalization