Iran is set to establish a new bazaar in Russia to boost its economic and trade relations with the Eurasian Economic Union (EEU) member countries, according to the head of Iran's Trade Promotion Organisation (TPO).

The move aligns with the free trade agreement (FTA) signed between Iran and the EEU, which aims to expand Iran's regional footprint. It also follows the Iranian parliament's ratification of the agreement with the EEU to create a free trade zone on February 28. The deal is expected to come into force by March or April 2025, and will connect Iran with the markets of five EEU member states (former Soviet countries), with a combined trade volume estimated to be between $850bn and $900bn.

Mohammad-Ali Dehghan Dehnavi said that the proposed bazaar will act as a key platform, enabling Iranian exporters to deliver their goods directly to consumers in Russia, bypassing local middlemen and follows previous Iranian operations on the northern end of the Caspian Sea port in the Lotus free trade zone, IRNA reported.

The TPO head described the agreement as a "significant milestone" for Iran, offering a practical means of mitigating some of the adverse effects of international sanctions and builds on exports to the northern neighbour in recent years, including exports of Iranian-made Coca Cola.

"The signing of the agreement is a fitting step towards easing the negative impacts of sanctions imposed on Iran," he said, noting that the deal could help lift certain restrictions that have hindered trade due to ongoing international sanctions.

The official pointed out that the TPO is negotiating similar preferential or free trade agreements with more than ten other nations.

He focused on Iran's growing focus on regional trade pacts as opposed to relying on traditional global trade mechanisms such as the World Trade Organization (WTO).

Dehghan Dehnavi urged stakeholders to view the FTA with the EEU as an opportunity rather than a challenge, adding, "We must seize these agreements as a valuable chance to strengthen our position in the global market, particularly in the face of expanding global trade alliances."

The Free Trade Agreement (FTA) between Iran and the Eurasian Economic Union (EEU), signed on December 25, 2023, aims to eliminate customs duties on nearly 90% of goods traded between the parties, encompassing over 95% of their mutual trade volume. This extensive tariff reduction covers a broad spectrum of products, including agricultural goods such as cereals and grains (wheat, corn, barley), meat products (cattle, lamb, poultry), vegetable oils (sunflower and soybean), dairy products (milk, cheese, butter), and confectionery items (chocolates and sweets). The agreement also extends to industrial goods including metals and metal products (steel and aluminum), chemical products (fertilizers and industrial chemicals), woodworking products (lumber and furniture), machinery and equipment (industrial machinery and tools), and transportation equipment (aircraft, ships, and railway machinery).

Earlier, Vladislav Kondratiev, editor of the Russian analytical portal "Caspian Bulletin" on February 28, told Vestnik Kavkaza about the benefits Iran and the EEU will derive from creating a free trade zone.

"Since a strict sanctions regime continues to apply to Iran from the West, the Islamic Republic is interested in increasing trade volumes with regional states. The EEU, by providing a free trade zone with reduced customs duties, creates economic advantages for Iran. Now Iranian enterprises will be able to trade their goods on more favourable terms in the Eurasian Union markets," he said.