Access to international markets is critical for Icelandic enterprises to compete on a level and predictable playing field in the global market. The Ministry of Foreign Affairs promotes Iceland’s interests in international commerce and negotiates trade agreements with other nations to remove trade obstacles and boost Icelandic enterprises’ competitiveness. The Directorate for External Trade and Economic Affairs is in charge of implementing Iceland’s foreign trade policy, as well as negotiating and administering bilateral and EFTA agreements, as well as multilateral accords within the WTO. Iceland is a strong supporter of a strong, rules-based global trading system and actively participates in efforts to expand the WTO’s function. Iceland is also a signatory to some free trade agreements, multilateral agreements, and bilateral agreements.
Iceland-Greenland Trade Agreement
A trade agreement with Denmark establishes specific tariff preferences between Iceland and Greenland.
EAA ( European Economic Area) Trade Agreement
Iceland’s most significant and far-reaching deal to date is the EEA Agreement. The agreement was signed on January 1, 1994, and it established a single market between the EU and three of the four EFTA countries: Iceland, Norway, and Liechtenstein. In terms of commerce, the Agreement eliminates tariffs on all industrial items originating in a Party. The agreement allows tariff liberalization of processed agricultural products.
The EFTA Free Trade Agreements
The European Free Trade Association (EFTA) is an intergovernmental organization that promotes economic integration and free trade among its four members: Iceland, Liechtenstein, Norway, and Switzerland. The Convention was signed for the first time in 1960. Iceland joined the European Free Trade Association in 1970, becoming the country’s first member. On June 1, 2002, the amended EFTA Convention went into effect. Additionally, the EFTA States have established a global network of free trade agreements with nations outside the European Union (EU) to ensure competitive and predictable trading conditions. for its companies and trade partners.
Iceland -EU
The free trade agreement between Iceland and the EU (then EEC) from 1972 provides for tariff preferences for imports of Icelandic fish products into EU markets, which is of great benefit to Iceland. Iceland was the sixth-largest supplier of fish and fishery products to the European Union in 2019, accounting for 4% of EU fish and aquaculture imports. Iceland’s biggest exports to the EU are basic metals and goods thereof (38%) and live animals and animal products (35%).
Iceland – China Free Trade Agreement
The Icelandic-Chinese free trade agreement went into effect on July 1, 2014. The Iceland-China Free Trade Agreement is China’s first with a European country. Iceland has abolished tariffs on all industrial and marine imports from China. Iceland’s rich aquatic products accounted for 99.77% of China’s total exports to Iceland.
Iceland and the Faroe Islands have signed a free trade agreement
The Hoyvk Agreement became effective on November 1, 2006. Within the territory of Iceland and the Faroe Islands, it establishes a combined economic zone. Tariffs on all originating commodities are eliminated under the agreement.
UK-Iceland
On July 8, 2021, the United Kingdom signed a free trade agreement (FTA) with Iceland, Liechtenstein, and Norway. Following the UK’s exit from the EU, the government has drafted new bilateral agreements that replicate, as far as feasible, the benefits of the UK’s existing trade arrangements with existing partners. The FTA hasn’t taken effect yet. Until then, goods trade between the United Kingdom and Iceland, and Norway is governed by the terms of the Agreement on Trade in Goods between the United Kingdom, Northern Ireland, Iceland, and Norway, which took effect on January 1, 2021.
