Perspective on an Iran–Persian Gulf Cooperation Council (PGCC) Free Trade Agreement (FTA)

Document Type : Research Paper



In this paper attempts have been made to determine the merchandise trade impacts of a possible setting up of a Free Trade Area between Iran and the Persian Gulf Cooperation Council on Iran. For this purpose the SMART Simulation model which is a partial equilibrium model is employed. Results demonstrate that following the setting up of the FTA the volume of exports and imports and hence the volume of trade of Iran would increase. Although the results are to the effect that as a consequences of the FTA the trade balance deficit will deteriorate, but employing the rules of origin prevailing in preferential trade agreements would reduce such deterioration.