Investigating the Potential Impacts of the Trade Agreement between Iran and the Eurasian Economic Union on the Export Sector of Agriculture and Industry; An Approach based on the Gravity Model

Consideration of regional systems as a way of managing national security barriers along with peaceful economic relations are achieved in the regionalization process. One of these agreements is the Eurasian Economic Union. The present study inspects the potential impact of the trade agreement between Iran and the Eurasian Economic Union on export sectors of industry and agriculture using the gravity model over 2001-2018.The results demonstrate the positive effect of the mean variables of GDP and FDI on exports from Iran to Eurasia in industry and agriculture and indicate the negative effect of the variables on product deriving from multiplication of population, tariff rate and real exchange rate with exports. The elimination of trade tariffs between Iran and Eurasia can benefit various sectors of Iran's economy, and this benefit is further enhanced when the industry sector tariff is removed.Economic policymakers should consider the economic implications of this agreement for success. If the agricultural sector is faced with import restrictions, it will most likely have negative effects and this option could be deemed as an inappropriate policy in agreement with the Eurasia. The creation of a joint financial mechanism for internal exchanges between Iran and the Eurasia, the formation of a database of Member States' traders for Iranian economic activists, the issuance of business visas among Member States and the establishment of a Eurasian Joint Chamber could enhance Iran's trade with Eurasia in the sector and it can be beneficial to exporting industry and agriculture.