Free Trade Agreements
Icelandic companies compete on the global market and access to foreign markets is important to ensure a level and predictable playing field. The Ministry for Foreign Affairs promotes Iceland's interests in external trade and negotiates trade agreements with foreign countries in order to abolish barriers to trade and improve the competitive position of Icelandic companies. The Directorate For External Trade and Economic Affairs is tasked with carrying out Iceland‘s foreign trade policy, negotiating and administering agreements bilaterally or with its EFTA partners, and at the multilateral level within the WTO. Iceland is a strong proponent of a strong, rules-based multilateral trading system and actively supports efforts to advance the role of the WTO. Iceland is also party to numerous free trade agreements, plurilateral agreements and bilateral agreements. The Directorate works in concert with the Permanent Mission in Geneva to promote Iceland‘s interest within EFTA and WTO, as well as negotiating trade agreements with third countries.
1. EEA Agreement
The EEA Agreement is Iceland‘s most significant and far reaching agreement to date. The Agreement entered into force on 1 January 1994 and created a single market between the EU and three of the four EFTA States, Iceland, Norway and Liechtenstein. On trade, the Agreement provides for tariff elimination for all industrial products originating in a Party. Furthermore, Protocol 3 to the Agreement provides for tariff liberalisation for processed agricultural products and Protocol 9 provides for tariff liberalisation for fish products. Origin rules are found in Protocol 4 to the Agreement.
2. Iceland-EU bilateral agreements on tariff preferences for fish and agricultural products
a) Protocol 6 to the free trade agreement between Iceland and the EU (then EEC) from 1972:
Protocol 6 to 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. The preferences granted under Protocol 6 are still in force insofar as they provide for better market access than granted under Protocol 9 to the EEA Agreement.
b) An agreement on agricultural products:
In addition to Protocol 3 to the EEA Agreement, providing for tariff preferences for processed agricultural products, a bilateral agreement is in force between Iceland and the EU from 2018 on tariff preferences for unprocessed agricultural products. The agreement from 2018 replaced an agreement from 2007 on the same issue.
3. The EFTA convention
An agreement between the EFTA countries (Iceland, Liechtenstein, Norway and Switzerland). The Convention was originally signed in 1960. Iceland became a member of EFTA in 1970. The revised EFTA Convention entered into force on 1 June 2002.
4. Free Trade Agreement between Iceland and China
The free trade agreement between Iceland and China entered into force on 1 July 2014.
5. The Free Trade Agreement between Iceland and the Faroe Islands
The Hoyvík Agreement entered into force on 1 November 2006. It establishes a joint economic area within the territories of Iceland and the Faroe Islands. The Agreement provides for the abolition of tariffs on all originating goods.
6. An Agreement on Trade between Iceland and Greenland
An agreement with Denmark on trade between Iceland and Greenland provides for certain tariff preferences between the countries.
7. The EFTA Free Trade Agreements
The European Free Trade Association (EFTA) is an inter-governmental organisation that promotes free trade and economic integration amongst its four members; Iceland, Liechtenstein, Norway and Switzerland. The EFTA Convention regulates trade between the EEA-EFTA States and Switzerland. The EFTA States have also developed a worldwide network of free trade agreements with countries outside the European Union (EU), with a view to ensuring competitive and predictable conditions for its companies and trade partners.