More letters of credit (L/Cs) in national currencies are in prospect with the signing of an initial agreement for a free trade zone between Iran and the Eurasian Economic Union (EAEU).

Iran and Russia meanwhile are in bilateral talks to transact more business in their own national currencies.

Free trade zone

Russian Prime Minister Dmitry Medvedev has signed a draft agreement to establish the free trade zone that would include the EAEU countries - currently Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia - and Iran.

The agreement is for a four-year period during which the EAEU will grant Iran tariff concessions on 502 harmonised commodity codes.

Iran and EAEU members commenced negotiations for a free trade zone in 2015, although the signing has been postponed several times.

Bilateral negotiations

Iran and Russia are also exploring several options to boost bilateral trade and investment to mitigate the impacts of unilateral US sanctions imposed on both countries.

Tehran and Moscow are currently negotiating an agreement to use national currencies in trade instead of the US dollar and the euro.

Iran and Turkey issued their first L/C for business transactions in their national currencies as the two countries move to ditch the US dollar and the euro in bilateral trade (DC World News, 2 May 2018).

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.