China, Iceland FTA In Effect From July 1

On May 20, it was announced that the free trade agreement (FTA) between China and Iceland, which was signed on April 15 this year, will come into effect on July 1, 2014.

The Iceland-China FTA is the first to be signed between China and a European country. Negotiations started in December 2006, but were aborted in 2009. In April 2012, the leaders of the two countries agreed to restart the talks, and, after a further two rounds, the final terms of the agreement were agreed in January this year.

In a joint statement after its signing, the FTA's purpose was said to be a deepening of mutually beneficial co-operation in the fields of trade (by abolishing tariffs) and investment. Seafood has been the biggest growth factor of Icelandic exports to China, but the exports of other products, such as electrical scales and ferrosilicon, are also increasing.

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 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.

The Chinese Government has welcomed the FTA as it appears to have a particular importance in showing how China can develop trade ties with the rest of Europe. However, it could also be of use during the upcoming exploration of natural resources in the Arctic region.

Source: Tax News