Parliament adopts Iceland-China Free Trade Agreement
The Parliament of Iceland has adopted a Free Trade Agreement (FTA) between Iceland and China, the first FTA signed between China and a European country. Foreign Minister Gunnar Bragi Sveinsson put the FTA before Parliament last October, following the signature of the agreement in April 2013. The Free Trade Agreement will enter into force when legal procedures of acceptance in both countries have been concluded.
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 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.
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 in 2012 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.
For further information on the Iceland-China FTA: