Iran was granted observer status in the Eurasian Economic Union (EEU) during the Supreme Eurasian Economic Council meeting held in St Petersburg, Russia, on December 26, Mehr News reported.

The Iran-Eurasian Economic Union Free Trade Agreement promises to eliminate tariffs for 87% of traded goods. Both parties will compile a negative list comprising items deemed sensitive by one party and exempt from tariff elimination. The remaining 13%, classified as the negative list, includes goods whose tariff reduction could adversely impact Iran's domestic industry or agriculture. Conversely, the EEU countries will also present their list of sensitive goods, ensuring equitable regulation.

The Russian Minister of Economic Development, Maxim Reshetnikov, confirmed the announcement, which comes a full year after the agreement was signed by Putin and the previous Iranian Raisi administration.

"During the meeting, the heads of the union countries decided to grant Iran the status of an observer state of the EEU to strengthen ties with the promising Iranian market,” he said in a statement.

The outgoing temporary trade agreement between the EEU and Iran, which was in effect from 2018 to 2023, led to a significant increase in trade turnover, from $2.7bn in 2018 to $5.2bn in 2023.

In the first ten months of 2024, mutual trade grew by 12.8% y/y, with exports to Iran increasing by 16% and imports by 8%, respectively.

Bakytzhan Sagintayev, Chairman of the Eurasian Economic Commission (EEC) 's board, met with Mohammad Atabak, Minister of Industry, Mines, and Trade, to mark the occasion in Moscow.

“We expect the agreement to enter into force soon, which will accelerate economic interaction and create more favourable conditions for business,” Bakytzhan Sagintayev said, Kyrgyz Akchabar reported.

With Iran's inclusion, the number of observer countries in the EEU has expanded to three. This joins Uzbekistan and Cuba, which previously received this status.

The EEU, comprising Russia, Kazakhstan, Belarus, Armenia, and Kyrgyzstan, seeks to foster economic collaboration and development among its members and observers.

The initial steps toward this landmark agreement were taken in 2017 when a draft agreement on preferential export tariffs was signed in Yerevan. Subsequently, in 2018, a temporary agreement was signed, reducing tariffs for a range of goods over three years.

With an 82% increase in Iran's exports of preferential items in the first year, negotiations were initiated in 2020 to elevate the temporary agreement to a comprehensive free-trade deal.

Iran also reportedly plans to sign a comprehensive cooperation agreement with Russia, which was drafted about three years ago, before President-elect Donald Trump returns to the White House and intensifies international sanctions. This is expected to happen on January 17, during President Masoud Pezeshkian's visit to Russia.

The Iranian government is also seeking to increase trade and economic cooperation with China. Foreign Minister Abbas Araghchi left for China on the morning of December 28.