Monday

19th Oct 2020

Iceland signs first European free trade pact with China

  • Iceland's main export is fish. (Photo: European Commission)

Iceland on Monday (15 April) became the first European country to sign a free trade agreement with China after six years of negotiations.

A joint-statement notes the two sides want “to enhance their exchange and practical co-operation on the Arctic” and “further deepen their mutually beneficial co-operation in the fields of trade and investment.”

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

The agreement will remove tariffs on most goods.

Experts say China is interested in gaining a foothold in the northern territory and hopes to become a permanent observer at the eight-nation Arctic Council next month.

The giant has labelled itself a “near Arctic nation” though its closest geographical point to the ice-capped region is some 1,600 kilometres away.

Receding ice caps are opening up trade routes that could reportedly cut a third of the shipping time between Shangai and Hambourg. Iceland's foreign minister told The Wall Street Journal that the two nations are also in talks on exploring the vast reserves of oil buried beneath the north-eastern coastal waters.

At €10.7 billion, the tiny Nordic country’s GDP is dwarfed when compared to China’s €5.3 trillion.

Trade between the two is relatively small.

Iceland shipped mostly fish last year worth some €47,6 million to the Chinese mainland and imported some €264 million in goods and services.

China is now Iceland’s fourth biggest importing country and the biggest trading partner in Asia. The deal could see an additional boost to the trade figures as Iceland continues to recover from a banking sector that collapsed in 2008 and saw its economy in ruins.

The European commission says Iceland’s “economy following the long and severe post-crisis recession and grew more rapidly than expected.”

The country paid back over half the loans received from the IMF and Nordic countries ahead of time.

In 2010, it became a candidate country to join the European Union but suspended talks in January following domestic opposition.

The island-nation currently enjoys bilateral free trade agreements with the bloc through its membership in the European Free Trade Association and the European Economic Area. Though the trade deal will not enable China to gain access to the EU market, reports the New York Times.

Meanwhile, the Union remains Iceland’s largest trading partner.

In 2011, Iceland exports to the Union totalled more than €933m which is equivalent to 5 percent of all EU fish imports. Manufactured exports such as aluminium and medical and pharmaceutical products are also on the rise.

Agenda

Kerry in Brussels this WEEK

US Secretary of State John Kerry will be in Brussels at the beginning of the week while the end of the week will see EU-ambivalent Icelanders go to the polls.

Merkel backs China in EU trade row

Merkel has pledged her support to China in a trade row with the European Commission over solar panels and wireless equipment.

News in Brief

  1. Italy takes extra measures as Covid-19 infections rise
  2. Coronavirus: Brussels worst in Europe, health minister says
  3. Vandalism sparks call for EU action on 5G disinformation
  4. Belgium installs curfew, closes restaurants and bars
  5. Ireland to probe Instagram's use of EU children's data
  6. Belarus: 10th weekend rally in a row against Lukashenko
  7. Warfare continues to rage in South Caucasus
  8. Turkish Cypriots elect nationalist president

EU tells China to prove investment deal is worthwhile

"China has to convince us that it is worth having an agreement," EU Commission president Ursula von der Leyen said, telling China to move on key reciprocity issues on the planned bilateral investment agreement.

Supported by

Stakeholders' Highlights

  1. UNESDAMaking healthier diets the easy choice
  2. Nordic Council of MinistersUN Secretary General to meet with Nordic Council on COVID-19
  3. UNESDAWell-designed Deposit Return Schemes can help reach Single-Use Plastics Directive targets
  4. Nordic Council of MinistersNordic Council meets Belarusian opposition leader Svetlana Tichanovskaja
  5. Nordic Council of MinistersNordic Region to invest DKK 250 million in green digitalised business sector
  6. UNESDAReducing packaging waste – a huge opportunity for circularity

Latest News

  1. France marks trauma of history teacher's murder
  2. Spain's Sanchez in storm over judicial appointments bill
  3. Violating promises and law, von der Leyen tests patience
  4. Brexit and EU budget in spotlight This WEEK
  5. A ghost town haunts the future of Cyprus
  6. EU leaders unsure how to talk to Turkey
  7. EU leaders discuss Turkey's air and sea 'provocations'
  8. EU's 2030 climate target left for December summit

Join EUobserver

Support quality EU news

Join us