Iceland Trade Agreements

Iceland Trade Agreements: An Overview

Iceland is a small island nation situated in the North Atlantic Ocean, with a population of just over 360,000 people. Despite its small size, Iceland has been able to forge a strong economic base through international trade agreements. This article provides an overview of Iceland`s trade agreements and how they have influenced the country`s economic growth.

European Economic Area (EEA) Agreement

Iceland`s most important and comprehensive trade agreement is the European Economic Area (EEA) Agreement. The EEA Agreement came into effect in 1994 and established a single market between Iceland, Norway, and the European Union (EU). The agreement allows the free movement of goods, services, capital, and persons between these countries.

Iceland`s participation in the EEA Agreement has been vital to its economic success. It has enabled the country to have access to the EU`s single market, which includes over 500 million consumers. This access has allowed Icelandic businesses to expand their customer base and increase their export potential. In 2019, Iceland`s export revenue was approximately $6.3 billion, with the majority of exports going to EU countries.

Free Trade Agreements (FTAs)

In addition to the EEA Agreement, Iceland has also signed several Free Trade Agreements (FTAs) with other countries. The most significant of these are the FTAs with China and the United States.

Iceland-China FTA

The Iceland-China FTA came into effect in 2014. This agreement has helped to increase trade between Iceland and China. In 2019, Iceland exported approximately $162 million worth of goods to China, mainly consisting of seafood, aluminum, and wool products. The FTA has also helped to improve political relations between the two countries.

Iceland-United States FTA

The Iceland-United States FTA was signed in 1984 and is the oldest FTA the U.S. has with any European country. This agreement has helped to increase trade between Iceland and the U.S. In 2019, Iceland exported approximately $115 million worth of goods to the U.S., mainly consisting of seafood and aluminum products.

Impact of Trade Agreements on Iceland`s Economy

Iceland`s trade agreements have been essential to the country`s economic success. In recent years, Iceland`s economy has been growing at a steady rate of around 4% per year, thanks in part to increased exports resulting from trade agreements.

The trade agreements have also increased foreign direct investment (FDI) into Iceland. In 2019, FDI into Iceland was approximately $4.5 billion, with the majority of the investment coming from EU countries.

Conclusion

Iceland`s trade agreements have been critical to the country`s economic growth. Through its participation in the EEA Agreement and FTAs with other countries, Iceland has been able to expand its export potential and increase its foreign direct investment. As Iceland continues to invest in its international trade relationships, the country`s economic future looks bright.