Wednesday

29th Jun 2022

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.

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.

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.

Column

One rubicon after another

We realise that we are living in one of those key moments in history, with events unfolding exactly the way Swiss art historian Jacob Burckhardt describes them: a sudden crisis, rushing everything into overdrive.

News in Brief

  1. Hungary permits emergency supervision of energy firms
  2. Bulgaria expels 70 alleged Russian spies
  3. EU Commission told to improve CAP data analytics
  4. Scotland pushes for second independence vote in 2023
  5. Climate groups: G7 leaders 'backsliding' on climate
  6. Ukraine diplomat urges German MEPs to reject EU taxonomy
  7. EU asylum requests were climbing before Ukraine war
  8. Public sector journalists protest Macron tax plan

Stakeholders' Highlights

  1. Nordic Council of MinistersEmerging journalists from the Nordics and Canada report the facts of the climate crisis
  2. Council of the EUEU: new rules on corporate sustainability reporting
  3. Nordic Council of MinistersNordic ministers for culture: Protect Ukraine’s cultural heritage!
  4. Reuters InstituteDigital News Report 2022
  5. EFBWW – EFBH – FETBBHow price increases affect construction workers
  6. Nordic Council of MinistersNew Nordic think tank examines influence of tech giants

Latest News

  1. EU Commission says it cannot find messages with Pfizer CEO
  2. EU ministers sign off on climate laws amid German infighting
  3. EU presidency still looking for asylum relocation pledges
  4. Finland and Sweden to join Nato, as Erdoğan drops veto
  5. The euro — who's next?
  6. One rubicon after another
  7. Green crime-fighting boss urgently required, key MEP says
  8. G7 leaders want price cap on Russian oil

Join EUobserver

Support quality EU news

Join us