Speech at Reykjavík meeting with EU ambassadors

Speech by H.E. Guðlaugur Þór Þórðarsson,
Minister for Foreign Affairs
at a meeting with EU ambassadors
Reykjavík, Iceland, 19 June 2019

Distinguished guests, ladies and gentlemen!

First of all, let me thank you very much for participating in our celebration on the 75th anniversary of Iceland’s independence.

Last year we celebrated a century of full sovereignty. As a free, sovereign and an independent nation, we have made the most of our journey so far. One hundred years ago Iceland was one of the poorest nations in western Europe. Now we are one of wealthiest with one of the highest living standards in the world.

Yes, we are blessed with natural resources. But they have always been there. So, the explanation for this turnaround lies elsewhere.
When we took matters into our own hands just over a century ago and fully 75 years ago, we not only gained the freedom of ruling our own matters, we gained to freedom to trade and interact with other nations based on our interests.
Iceland is in fact a text-book example of the benefits of free trade and international cooperation. If we didn’t have access to other markets and if our markets were not open to others, we would still be poor. We would not be hungry, and we would not be cold, but we would be poor.

We have used our independence to cooperate with other nations. We have not isolated our selves from the world, quite the contrary. 

In 1949 we became founding members of NATO and in 1970 we joined the European Free Trade Association, EFTA. And a quarter of century ago, in 1994, we joined the European Economic Area when the EEA Agreement came into force.

It was indeed very appropriate, on a year that marked the 50th anniversary of our independence, when we had been a sovereign nation for 75 years, that we were able to use our status as a state among states to enter into such an agreement and to establish such a beneficial partnership with other nations.

The EEA Agreement is Iceland´s most far-reaching and important economic agreement. It creates a firm basis for our participation in the internal market of the EU.

It provides access to a market of more than 500 million people. It ensures a level playing field for our businesses on the internal market and provides more choices and protection for our consumers. Furthermore, it ensures mobility for individuals; students, workers and pensioners, and creates a framework for cooperation in the fields of science, research and education.

Iceland has benefitted enormously from the EEA Agreement. It has been a key element in ensuring a substantial gradual increase in foreign trade and GDP over the last 25 years, resulting in higher living standards for Icelanders.

But still, the EEA Agreement has powerful enemies here in Iceland.

In recent years political powers in Iceland have systematically talked down the importance and the benefits of the EEA Agreement. It has been asserted repeatedly that we have to adopt 80-90% of all the EU legislation without having any influence on the content. This is far from the truth. The fact is that we have adopted less then 15% of EU legislation in the past 25 years. And, although math was never my strongest skill in school, I think we can agree that 15% is considerably less than 90%, and some might say on the other end of the scale.
It has also been argued that we might as well join the EU since we are a part of almost every chapter. This is also false. Most importantly we are not subject to the common fisheries policy, which even in this crowd doesn’t have many supporters. 

Apart from that we are not subject to policy on agriculture, tax issues, currency cooperation, custom union and foreign policy, to name a few important areas. The fact of the matter is that out of 34 chapter of the EU legislation, 10 chapters are fully integrated in the EEA Agreement and 13 chapters are 100% outside.

But why all the wrong assertions and why is the EEA Agreement wrongly accused?
Yes, because it is a hindrance. It is a hindrance to those in Iceland who seek full membership of the EU. They know that while we can rely on the EEA Agreement the question of joining the EU is far of the horizon.

And in recent months these powers have gained support from a surprising source. Association that used to fight for non-EU membership has now shifted its focus to EEA Agreement and is fighting for the termination of the agreement. So, the very anti-EU powers and the very pro-EU powers have joined forces against the EEA Agreement.
Politics really are art of the possible, aren’t they?

In this context I would like to point out that the coalition parties in the government are the only political parties that are pure EEA supporters. None of the coalition parties wants to join the EU and all of the support the EEA Agreement. All other parties in Iceland either seek full EEA membership or are against the EEA Agreement.

It is therefore not surprising that this government has given the good functioning of the EEA Agreement high priority. We have invested more resources and streamlined processes; improved parliamentary procedures and involvement from stakeholders; increased presence in Brussels from line Ministries to better shape and influence EEA law.

And we have made some important achievements; 1) big improvements in the EFTA Scoreboard, 2) backlog reduction and 3) more pro-active engagement on key issues at an earlier stage in the process.

We have also defined four key challenges ahead:

1) Importance of respecting the two-pillar system.While there is no doubt that the EEA Agreement has served us well, there is no denying that it poses constitutional challenges for us.

Powers are increasingly being delegated from the EU Member States to EU’s regulatory agencies and bodies to issue decisions which are binding for the EU States and their agencies and economic operators. 

This is putting strain on a basic feature of the EEA Agreement, the two-pillar structure, which embodies the idea of an independent EU pillar and an independent EFTA pillar, the EU bodies being mirrored in the EFTA pillar. 

Fortunately, we have, up to this point, been successful in finding solutions that work, although not all of them have been in conformity with the two-pillar system. However, I don't think I exaggerate when I say that it has become more and more difficult in some cases to find acceptable solutions when national powers are being delegated to supranational entities.

2) The second challenge is to address the wide discrepancy in the quality and consistency of implementation of EEA legislation. 

Iceland is sometimes criticized for being late to agree to incorporate EU legislation into the EEA agreement or for late implementation of EEA legislation. In this respect it should be noted that Iceland´s implementation deficit has decreased dramatically over the past year. It´s currently below 1% which is close to the EU average. 

Unlike in the EU Member States where the EU´s regulations are directly applicable, Iceland with its small administration, needs to make EU regulations part of its internal legal order by way of national implementing measures.

Moreover, Icelandic authorities put great emphasis on the quality of implementation and not only the speed of transposition.

This is not always the case for all Member States of the Internal Market. When the EU Member States has been assessed, certain EU Member States have sometimes been described as ”A world of dead letters”. 

The quality of implementation and enforcement is no less important than speed. I believe it is important to keep this in mind when comparisons are made between our countries regarding the implementation of EEA legislation.

3) The third challenge is to improve market access

We cannot talk about the EEA Agreement as a gold standard of deep economic integration while market access for one of our key industries – fisheries - remains far below what the EU offers to third countries. 

This type of discrimination risks undermining support for our broader cooperation and my government has engaged actively with the EU to find a solution.  

I have taken the matter up in meetings with the EU and requested discussions on an improved market access for fisheries products, in line with what the EU now offers in its more recent FTAs with third countries.

4) The last but certainly not least of the four challenges we have defined is to safeguard the EEA Agreement, both domestically and by an outreach.

We need to guard against complacency and make sure that the EEA is not taken for granted.

We need to prioritize key issues and defend our interests in Brussels to ensure the Agreement continues to work for the benefit of our people.  

We need to ensure full and fact-based debates on key sensitive EEA issues, including 3rd energy package, DGSIII, meat issue, etc. 

As regards the Deposit Guarantee Scheme III in particular, we must be absolutely certain that DGSIII does not impose any state liability on the treasury and, until we are, the Directive cannot be incorporated into the EEA Agreement.

Dear friends.

Iceland and the EU enjoy a good relationship. The cornerstone of our close and dynamic relationship is of course the EEA – along with our Schengen cooperation – but we also cooperate on a host of other areas. This includes trade and economic development; security and defence cooperation; climate change; the arctic and human rights.

The government wants to engage closely with the new Commission and Parliament on the political priorities in the next five years – including on key issues like the digital economy and climate change.

We would also want to follow-through on Iceland’s Chairmanship priorities, already described.

And of course, we offer and expect full cooperation with the EU on the incredibly important issue of Brexit, how it is resolved to benefit of all.

Finally, dear friends, ladies and gentlemen.

The EEA-Agreement has served us well and will continue to do so – if we are able to defend it. When things have been going well for a long time, complacency is inevitable. And you are never closer to loosing something than from the moment you take it for granted.

Third of the Icelandic population are born after we joined the EEA and thousands more do not have any recollection of the society before the agreement.

False news and populist propaganda are the main threats to our continued partnership. We must all step up to the task of defending this important and mutually beneficial cooperation.