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Contingency Trade Agreement between Iceland the United Kingdom

The Contingency Trade Agreement between Iceland the United Kingdom entered into force on 1 January 2021. The aim of the agreement is to maintain current tariff preference for trade in goods between the parties as previously applicable according the  Agreement on the European Economic Area (‘EEA Agreement‘) and other related trade agreements. The Contingency Agreement is intended to serve as a bridge arrangement until a new and comprehensive Free Trade Agreement can enter into force between the parties.

According to the agreement current tariff preferences according to agreements between Iceland and the European Union are maintained in trade between Iceland and the UK, including for seafood. If UK or Iceland have made use of the Tariff Rate import Quotas (TRQs) from Iceland-EU arrangements for trade between the countries, new TRQs are set based on the average utilisation of such quotas in the reference period 2014-2016, based on 2019 TRQ volumes.

On that bases, Iceland will grant the UK the following duty free TRQs:

  • 19 tons of cheese 
  • 11 tons of cheese, where name of product is a protected Geographical Indication
  • 18.3 tons of processed meat products

The Ministry of Industries and Innovation will administer the import quotas and advertise invitations for bid to the quotas.

In turn, the United Kingdom will grant duty free TRQs to Iceland: 

  • 692 tons of sheep meat 
  • 329 tons of skyr 
  • 145 tons (in total) for salmon; flat fish and other species; fresh fillets of redfish; herring; and, Norway Lobster.

The UK will administer quotas on ‘first come, first serve‘ basis.

The Continency Trade Agreement does only address technical barriers to trade in a limited way. However, the UK Government has informed that based on her unilateral measures the import conditions for most Icelandic goods will by enlarge remain the same, including for seafood. The import control of seafood and other animal products was implemented in stages until 1 July 2021. Importers of seafood and animal products in the UK and exporters of same products in Iceland are encouraged to be vigilant and make sure import requirements at any stage after 1 January are fulfilled.   The same applies to imports into Iceland, where with respect to EEA internal market rules, the UK will be treated as a third country. Further information in English on import and export of animal products can be found on the webpage of the Icelandic Food and Veterinary Authority.

The Agreement further provides for continued protection of Geographical Indications as under Iceland-EU Agreements, at least until a new and comprehensive Free Trade Agreement can enter into force.

The agreement is a part of the efforts of the Icelandic Government to secure key interests relating to UK‘s Departure from the EU and the EEA. The arrangement will guarantee continued exports of 55.000 tons of seafood to the UK on same duties as to day – worth 35-40 Billion ISK a year. The agreement furthermore secures same customs duties for UK goods on import to Iceland.

In recent months, the UK Government has sought to replicate EU trade agreements to provide for trade continuity with countries outside the EU beyond 1 January 2021. Due to the nature of the EEA Agreement and the EEA EFTA States‘ participation in the Internal Market based in the agreement it was not possible to replicate the effect of the EEA Agreement in the same way. The  Contingency Trade Agreement between Iceland, Norway and the United Kingdom was the result of this, whereas other issues will be dealt with in a new deep and comprehensive Free Trade Agreement, currently under negotiations.

The intention is for the Contingency Trade Agreement will remain in force until such new Free Trade Agreement can enter into force. Negotiations were concluded in 2021.

The text of the Contingency Trade Agreement can be found here. 

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