Preferential and free trade agreements today, have an important role in expanding trade in goods and services at the international level, and are commonly used as a policy tool in commercial planning, in promoting trade, and in particular in the context of accession to the World Trade Organization. Iran has concluded nine preferential trade agreements with Uzbekistan, Pakistan, Tunisia, Cuba, Bosnia-Herzegovina, Kyrgyzstan, Belarus, Turkey and Afghanistan, and one free trade agreement with Syria since 2005. This report, reviewed and analyzed the functioning of the above mentioned agreements. The main findings of the report are as follows:

1. The total trade of Iran with its contracting parties was about $ 5.7 billion (7.8% of Iran’s total trade value) in 2015, most of which related to Turkey (80%) and Pakistan (16%), and less than 4% to the other eight countries, due to apparent disregard for recognizing our natural trading partners in concluding such agreements. In addition, after the implementation of the agreements, the value of trade has been increasing with Iran’s major natural trading partners, i.e. Turkey and Pakistan, but decreasing with the other eight countries.
2. It was expected that the trade patterns would significantly change after the implementation of the agreements and application of corresponding tariff reductions. A survey of the trend of preferential trade between Iran and its contracting parties suggests, however, that in the period 2004-2015 there was no significant change in the value of, or the share in trade of items subject to preferential treatment. Consequently, in Iran’s total trade with its contracting parties, non-preferential imports have had the largest share (49%), followed by non-preferential exports (29%); while preferential imports and exports only have an 11% share each.
3. In confirmation of the positive effects of political relations on trade relations, it was observed that the trend of Iran's trade with Syria (before the outbreak of the Syrian Civil War) in the framework of Iran-Syria Free Trade Agreement was positive and in favor of Iran's exports.

Ultimately, in order to optimize the trade agreements as a policy tool for promoting trade and in particular increasing exports of the country, it was suggested that Iran’s preferential trade agreements with Turkey and Pakistan be reviewed in order to expand their coverage of goods. It was also proposed to increase the number of preferential trade agreements with Iran’s major trading partners, including Iraq, and to upgrade the existing agreements to levels beyond tariff reductions, to cover, for instance, trade in services, as well as trade facilitation measures.