Abdollah Mohajer Darabi, Vice Chairman of the Iran-Russia Joint Chamber of Commerce, has cautioned about the potential risks of a Free Trade Agreement (FTA) between Iran and the Eurasian Economic Union (EAEU).
Speaking to Iran Chamber of Commerce newsroom on Saturday, Mohajer said that while the agreement presents significant opportunities, unresolved trade infrastructure issues and persistent foreign trade challenges could transform the deal into a threat to Iran’s economy.
He highlighted the immense potential of trade with Russia and the EAEU, which offers access to a market of over 300 million people. He also emphasized Iran's geographical advantage, noting its proximity to Russia and other EAEU nations, such as a one-hour transit time from Iran’s northern province of Mazandaran to Russia and Kazakhstan. Additionally, he believed that Iran’s political alignment with these countries, could foster stronger economic ties.
“Despite these advantages, we have failed to capitalize on them,” Mohajer said, pointing to the underperformance of Iran's exports, which have not exceeded $2 billion to Russia and $3 billion to the EAEU annually.
He argued that if trade infrastructures are adequately developed, Iran’s annual trade volume with these partners could surge to $10 billion. However, he underscored major obstacles, including banking and financial transfer issues exacerbated by Iran's ongoing difficulties with the Financial Action Task Force (FATF).
“We must urgently resolve FATF-related challenges if we aim to expand foreign trade and seize the opportunities presented by the free trade agreement with the EAEU,” Mohajer asserted.
He also cited uncompetitive production costs in Iran as a critical concern. Factors such as high transportation expenses, outdated machinery, low efficiency, and financial transaction challenges due to sanctions have increased production costs. "In the competitive landscape post-agreement with the EAEU, these issues will become even more problematic," he warned.