A bilateral free trade agreement between Iceland and China was signed on April 15 in Beijing by Ossur Skarpheoinsson, Minister for Foreign Affairs and External Trade of Iceland, and Gao Hucheng, China’s Minister of Commerce, and witnessed by the Chinese Premier Li Keqiang and Iceland’s Prime Minister Johanna Sigurdardottir.
The Iceland-China FTA is the first to be signed between China and a European country. In a joint statement, its purpose was said to be a further deepening of their mutually beneficial co-operation in the fields of trade (by abolishing tariffs) and investment.
With the entry into force of the FTA, tariffs on most goods between the two countries will be removed. For a small number of products, Chinese tariffs will be dismantled during a transition period of 5 or 10 years, but Chinese exports into Iceland will be duty-free as from the entry into force. Both China and Iceland exclude a limited number of products from tariff preferences – Iceland excludes, for example, dairy and meat products, while China will exclude certain paper products.
In 2010 the Norwegian Minister of Trade, Trond Giske made it his mission to make Norway thye first European country with an agreement of free trade. Among other things he took an 11 day tour in China, stating that such an agreement between the two countries was important to Norwegian opportunities.
Then the Chinese dissident Liu Xiaobo was awarded with the Nobel Peace Prize, diplomatic relations between Norway and China soured, and today there is still no trade agreement between the two countries.
While the China-Norway relations have been poor the past few years, China has had close ties with Iceland. When several European countries wanted to withhold emergency loans for Iceland after the financial crisis, China was one the countries pushing for the loans to be delivered.
Some suggest that that the Icelandic agreement may have a particular importance to China to show how trade ties could be developed with the rest of Europe, but it could also be of use during the upcoming exploration of natural resources in the Arctic region.