Iran Joins Free Trade Zone with Eurasian Economic Union

Russia approved on Tuesday a draft agreement of four years to incorporate the Eurasian Economic Union (EAEU) and Iran into a free trade zone.

“By signing a decree, the Russian side approves the formation of a free trade zone between the Eurasian Economic Union and its states, on the one side, and the Islamic Republic of Iran, on the other side,” Prime Minister Dmitry Medvedev's report said.

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The deal covers a “limited range of goods” and is subject to ratification as its regulations differ from Russian legislation.

The agreement will boost oil trade between Moscow and Tehran, and make it easier for Iranian oil to reach international markets. The Iranian economy is still weighed down by ongoing U.S.-sanctions and a U.S. administration that is threatening to scrap the nuclear deal.

The EAEU includes Russia, Armenia, Belarus, Kazakhstan, and Kyrgyzstan. The bloc has negotiated free trade deals with non-regional countries as well, including Vietnam, China, Egypt, South Korea and India.

The trade bloc was first proposed by the then President of Kazakhstan, Nursultan Nazarbayev in 1994 as a way of promoting regional integration as the former Soviet Union dissolved. The Eurasian Economic Community was founded in 2000, but a full economic union wasn't realized until 2014, after then-Prime Minister of Russia Vladimir Putin announced his support for the original idea.