Introduction: In today's world, no country can meet all the needs of its society without relying on the products and services of other countries. Even if such a capability exists in a country, it is not economically rational and cost-effective. On the other hand, agricultural products are one of the most important sources of meeting human nutritional needs. Meanwhile, globalization has led to the rapid growth of trade at the global level and the reduction of information and communication costs. In this context, the food market in developing countries has undergone fundamental changes due to rapid urbanization, increased food diversity, trade convergence, and liberalization of foreign direct investment in the food industry. One of the most important changes in the global trading system during this period is the increase in Regional Trade Agreements (RTAs). The domestic market needs are met through domestic production and imports. Several factors, including government policies, international conditions, and world prices, affect the process of supplying products. Given the frequent droughts and climate change, Iran needs to supply part of its agricultural products through imports, taking advantage of the capacities of preferential agreements such as the Iran-Eurasia Agreement (IEA). This study aimed at examining the use of economic opportunities arising from IEA in the field of grain and oilseed trade with the member countries of the Eurasian Economic Union (EEU). This agreement was signed between Iran and EEU on May 17, 2018, after two years of negotiations. The main question of this research was as follows: What was the effect of IEA’s Trade Creation (TC) and Trade Deviation (TD) on grain and oilseed imports after its implementation? A review of past studies indicated that these studies had analyzed various agreements and their effects on the development of trade in EEU member countries using various methods such as [1]. Software on Market Analysis and Restriction on Trade (SMART) and Gravity models. However, the significant difference of this study from other research is that it is the first to examine the effects of IEA after its implementation compared to before, using the SMART model for some basic products.
Materials and Methods: In this paper, using a partial equilibrium model called SMART Simulation Model, the effects of tariff reduction on Iran’s trade flow in agricultural trade with EEU member countries in the form of concepts of TC and TD were investigated. In the next step, the effects of tariffs on agricultural commodity groups at the classification level of Harmonized Commodity Description and Coding System (HS) were analyzed. The statistical population of this study included EEU and Iran. Data on the total value of bilateral trade (exports and imports) between Iran and the Union between 2016-2023 were based on information from Islamic Republic of Iran Customs Administration (IRICA) for 2017 to 2022 were extracted from the International Trade Center (ITC) website. Also, Iran’s tariff statistics were obtained from the book of export and import regulations for 2016-2023.
Results and Discussion: A statistical study showed that the value of Iran’s agricultural exports to the world had decreased by 11 percent between 2016 and 2023. In contrast, the average agricultural exports to EEU in the four years after the agreement was ratified increased by a significant 96 percent compared to the three years before. The value of agricultural imports from EEU also decreased by 7.6 percent during the period under study after the implementation of the agreement. This information indicated that since 2019 and after the implementation of the IEA, Iran’s trade with the union has had increased significantly and experienced significant growth. The TC and TD consequences on the import side of the aforementioned products from the Eurasian Union resulting from the tariff reduction were estimated to be $31 million in TC and $25.8 million in TD. Therefore, the total estimated increase in imports of the aforementioned products from the Union compared to their average imports during the four years following the implementation of the agreement (2019-2023) would be equal to $56.8 million, which would be a 13.4 percent increase in imports from the Union. In other words, the volume of trade has improved.
Conclusion and Suggestions: In line with the increasing trend of EEU share of world grain trade, the average share of wheat, barley and maize production in the studied period has varied from 1.5 percent for maize to 16.6 percent for barley. Therefore, the effects of the agreement on trade synergies between the Union and its partners and the world are very significant. In contrast, in the area of ​​oilseeds, this trend has been decreasing for the Union during the concerned period. The results of the SMART model indicated that the Trade Creation (TC) and Trade Deviation (TD) effects resulting from the implementation of the agreement were equal to $31 and $25.8 million, respectively, representing a total increase of $56.8 million in imports (13.4 percent) from this union compared to their average imports during the four years following the implementation of the agreement (2019-2023). Therefore, all numerical indicators in the goods covered by the agreement indicated its positive effects on the trade of Iran. According to the obtained results, the following points are recommended: 1) The government should put on its agenda the development of a medium-term strategy for taking advantage of international agreements; 2) It is necessary to take more serious measures to maximize the capacity of the Iran-Eurasia Memorandum of Understanding in supplying basic goods; 3) It is necessary to pay more attention to the issue of guiding businessmen and economic activists in utilizing the capacities of the Iran-Eurasia Agreement (IEA) in order to improve food security by using timely information and short-term and practical training; 4) Incentive and guiding approaches should be applied in implementing the ‘oilseed import policy subject to domestic purchase’ to further utilize the capacity of IEA; and 5) The diversity of import sources of agricultural products should be increased by utilizing various international agreements to supply basic products which seems necessary to be placed on the agenda of Ministry of Agriculture-Jahad (MAJ) of Iran.