Iceland First European Country to Sign Free Trade Agreement with China
A Free Trade Agreement (FTA) between Iceland and China was signed today in Beijing by Mr. Össur Skarphéðinsson, Minister for Foreign Affairs and External Trade of Iceland, and Mr. Gao Hucheng, Minister of Commerce of the People's Republic of China, in the presence of the Prime Minister of Iceland and the Premier of China. The Iceland-China Free Trade Agreement is the first FTA signed between China and a European country.
The central aim of the Iceland-China Free Trade Agreement is to promote trade by abolishing tariffs on imports and to further enhance economic ties between the two countries. The Iceland-China Free Trade Agreement is in essence similar to other FTAs that Iceland, as a member of European Free Trade Association (EFTA), has already concluded. It covers trade in goods and services, rules of origin, trade facilitation, intellectual property rights, competition and investment.
Furthermore, the FTA entails that the two states should enhance their co-operation in a number of areas, including on labour matters and the environment. A Joint Free Trade Commission will supervise the functioning of the FTA and establishes a framework for resolving trade issues that may arise in the future. The Iceland-China Free Trade Agreement will enter into force when legal procedures of acceptance in both countries have been concluded.
Iceland and China already enjoy a solid business relationship. Although currently a modest share of Iceland´s total exports, annual growth of merchandise export value from Iceland to China more than doubled in 2010-2012. The most important Icelandic export product to China is fish and other marine products, amounting last year to 90% of the total. Trade in services between Iceland and China has also grown considerably, not the least in the tourism sector. Chinese imports to Iceland have grown five-fold in the last decade and amounted to 7.6%% of Iceland´s total merchandise imports according to 2012 figures.
With the abolition of tariffs, the Free Trade Agreement is expected to benefit businesses from both countries. For Iceland, this includes for instance exporters of most industrial and fish products. For a small number of products, Chinese tariffs will be dismantled after a transitional period of 5 or 10 years. Both countries exclude a limited number of products from tariff dismantling.
On the occasion of the signing of the Free Trade Agreement the Prime Ministers issued a joint statement on deepening bilateral cooperation between Iceland and China. The statement highlights the two countries´ friendly relations since the establishment of diplomatic relations in 1971 and formalizes a regular political dialogue that will inter alia address issues that are outlined in the statement, including human rights, gender equality, labour issues, Arctic affairs, as well as cooperation on geothermal development, culture, education and tourism.
The FTA with China is an important milestone in Iceland's long-term policy to establish a comprehensive network of free trade agreements. Iceland has concluded 26 FTAs with a total of 35 partner countries outside the European Union. Iceland is a member of the European Economic Area which brings together the 27 EU Member States and the three EFTA states - Iceland, Liechtenstein and Norway - in a single market.
For further information see Fact Sheet on Iceland – China Free Trade Agreement.
The Free Trade Agreement between Iceland and China.
The Joint Statement made the Prime Minister of Iceland and the Chinese Premier.