WORLD TRADE  
ORGANIZATION   
WT/TPR/M/273 
25 February 2013 
 (13-0994) 
Trade Policy Review Body 
13 and 15 November 2012  
 
 
 
TRADE POLICY REVIEW 
 
ICELAND 
 
Record of the Meeting 
 
Chairperson:  H.E. Mr. Eduardo Muñoz Gómez (Colombia) 
 
 
  Page 
 
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 3 
II. OPENING STATEMENT BY THE REPRESENTATIVE OF ICELAND  5 
III. STATEMENT BY THE DISCUSSANT 8 
IV. STATEMENTS BY MEMBERS 11 
V. REPLIES BY THE REPRESENTATI VE OF ICELAND AND ADDITIONAL 
 COMMENTS  26 
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 31 
 
 
Note:   Advance written questions by WTO Me mbers and the replies provided by Iceland are 
reproduced in document WT/TPR/M/273/Add.1 and will be available online at:  
http://www.wto.org/english/tr atop_e/tpr_e/tp_rep_e.htm.    WT/TPR/M/273 
 Page 3 
 
 
  I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 
1. The fourth Trade Policy Review of Iceland was held on 13 and 15 November 2012.  
The Chairperson H.E. Mr. Eduardo Muñoz Gómez (C olombia) welcomed the delegation of Iceland 
headed by H.E. Mr. Högni Kristjánsson, Director General of the Directorate for Trade and Economic 
Affairs, Ministry for Foreign Affairs, and th e discussant, H.E. Mr. Selim Kuneralp (Turkey). 
2. The Chairperson recalled the purpose of the Trad e Policy Reviews and the main elements of 
the procedures for the meeting.  The report by Iceland was contained in document WT/TPR/G/273 
and that of the WTO Secretariat in WT/TPR/S/273. 
3. Questions by the following delegations had been  submitted in writing at least two weeks in 
advance and had been transmitted to  the delegation of Iceland:  the United States; Colombia; Canada; 
the EU; Korea; Mexico; Japan;  and Argentina.  The following delegation submitted written questions 
after the two-weeks deadline:  Thailand. 
4. The Chairperson observed that he had consider ed the reports prepared for the meeting by 
Iceland and the Secretariat.  Both reports noted th at Iceland was severely impacted by the financial 
crisis, with nearly the entire banking system colla psing resulting in an average annual contraction in 
GDP of 5.4% in 2009-10.  Since then the economy had recovered and both reports noted that the 
recovery had been export led.  However, risks rema ined mainly in the form of non-performing loans, 
which threatened growth and also hampered the banking sector's ability to lend.  He noted that 
Members would like to know what steps Icel and intended to take to resolve this.  
5. Capital controls were imposed in 2008 in th e aftermath of the banking sectors collapse and 
these still remained in place.  He noted that Members would like Icel and to provide details on the how 
it intended to gradually phase these out. 
6. He also noted that the authorities had identifie d energy intensive industries, along with land 
intensive industries, knowledge based industries and tourism as sectors where Iceland had a 
competitive advantage as future avenues for grow th.  However, the current restriction whereby 
investment and/or ownership of energy exploita tion rights and the production and distribution of 
energy were limited to EEA and EFTA residents, which would hinder investment in the sector.  
Foreign ownership of fishing operati ons and primary fish processing was also limited.  He noted that 
Members would be interested in knowing if Iceland planned to remove these restrictions in the near 
future.  Furthermore, investor confidence needed to  be restored in order to attract investment, what 
measures had the authorities taken or planned to take in this regard? 
7. Overall, this Review provided Members an opportunity to exchange on certain systemic 
issues of interest to all policy makers.  These included: 
 Notifications:   Iceland is not up to date with its  notification obligations, for example  
no notifications have been made to  the TBT or SPS Committees since 2006. 
 
 Financial sector:   addressing on-going problems in  the banking sector, including 
non-performing loans so that, amongst other things, banks can improve their services, 
including provision of credit.  
 
 SPS:  Iceland has restrictive import policies on fresh meat, raw eggs, and animal 
products not for human consumption.  Imports  of fresh meat require the permission of 
the Minister of Industries and Innovation.  Additionally, imports of live animals are 
prohibited. WT/TPR/M/273 
Page 4  
 
   Fiscal plan:   recapitalization of the banks after the collapse resulted in a significant 
fiscal outlay on the part of government. It is  important that Iceland reduce public debt 
and put public finances on a sustainable track.  
 Agriculture :  agriculture remains a small a part  of the economy despite relatively 
high levels of support.  
  WT/TPR/M/273 
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  II. OPENING STATEMENT BY THE RE PRESENTATIVE OF ICELAND 
8. Let me state at the outset that international tr ade remains at the core  of Iceland's economic 
and foreign policy. Iceland is highly reliant on inte rnational trade and one of the primary policy goals 
is to promote and strengthen the competitiveness of  domestic businesses in world markets and abolish 
barriers to trade by extending Iceland´s multilateral a nd bilateral trade relations.  I think it is even an 
understatement to say that much has happened in Iceland since the last TPR took place.  
9. During the enduring global crisis Iceland was pa rticularly hard hit.  In October 2008 we 
suffered a dramatic banking crisis with 85% of the banking system collapsing within a span of less 
than a week. This created significant turmoil in financial markets and in effect closed down the 
foreign exchange market, which in turn caused a dramatic depreciation of the krona, and wiped out 
the Icelandic stock market. Public debt rose from less than 30% of the GDP up to 100%.  
Furthermore, policy rates rose to 18% and infla tion to approximately 20%. On top of this, 
unemployment rate went from 1% to almost 10% in less than a year.  In reaction we successfully implemented an economic policy programme, develope d in cooperation with the IMF with additional 
financing from the other Nordic countries, Poland and the Faroe Islands, and stayed the course.  
10. The Icelandic economy is regaining strength af ter the collapse. We have enjoyed economic 
growth of approximately 3%, both in 2011 and 2012.  Real wages have increased significantly and so 
has private consumption.  Tough fiscal consolida tion measures have been taken and a budget surplus 
is forecasted in 2014.  The policies have succeeded  in containing povert y problems and softening 
financial hardship amongst the most vulnerable.  As a result of these measures Iceland graduated from 
the IMF programme last year and re-entered capital markets less than three years after the crisis.  
11. Growth has been driven by private consumpti on and investment, though from very low levels, 
as well as rising exports of both goods and services.  Increased exports can be attributed to an 
improved competitive position following the sharp declin e in the real exchange rate following the 
crisis as well as an increase in to tal catch by the fishing sector due to stronger stocks.  Despite this 
continued growth, real gross dom estic product and purchasing power is forecasted to only reach by 
the end of 2013 the levels they were at in 2005.  
12. The labour market has started to show real si gns of improvement, even  though unemployment 
at 7.2% in the second quarter of 2012 is high by histor ical standards.  Labour market participation has 
remained relatively strong throughout the crisis and stood at 82.2% in the same period. 
13. Iceland's exports are largely concentrated in primary products and commodities despite 
significant diversification in the past decade.  Ma rine products and aluminium – which relies heavily 
on hydroelectric power – each account for around 40%  of goods export and 25% of total exports.  The 
share of services in total export revenue has risen to  35% from 26% in 1990.  This means that the ratio 
of services trade to total trade has become one of the highest among OECD countries.  The rapid 
expansion of the tourism sector has played an important  role in this respect.  In the past decade alone, 
the number of tourists has risen by 100%.  The on-going challenges in the international economy and 
financial markets, particularly in Europe, are of grave concern to Iceland.  The internal European 
market accounts for more than 80% of Iceland' s merchandise exports a nd 60% of merchandise 
imports.  
14. Despite good progress to date in rebuilding the economy and strengthening the financial 
sector framework, further important steps need to be  taken.  Among the most important is the removal 
of the capital controls imposed during the crisis  in 2008, but without endangering economic and 
financial stability.  The main challenge regarding th e lifting of capital controls relates to the large 
foreign assets that entered the economy prior to the cr isis and pressures for exit.  In March 2011, the 
Government approved a strategy to lift the cap ital controls which the Central Bank continues WT/TPR/M/273 
Page 6  
 
  to implement. Importantly, the Icelandic aut horities have recently established a working group 
with participation from the European Commission, the European Central Bank and the IMF tasked 
inter alia  with assessing the state of play and prospects for lifting the capital controls. 
15. Now I would like to give a brief overview of Iceland's trade policy.  Iceland is a founding 
WTO Member and a strong supporter of the multilateral trading system, including the full 
implementation of existing disciplines and commitments.   Such a system is of particular importance 
for smaller members, like Iceland, and provides for a more level playing field in international trade.  
Iceland is disappointed that the D oha Development Agenda has not b een concluded.  However, it is 
reassuring that talks continue, for example on trade facilitation, which Iceland believes is beneficial 
for smaller Member states and bigger alike, regardless of the level of development.  
16. Iceland has continued through its membership  of the European Free Trade Association 
(EFTA) to establish an extensive network of free trade agreements.  Since our last TPR in 2006, 
Iceland with its EFTA partners has signed 12 free trade agreements.  At present, the EFTA network 
consists of 23 free trade agreements in for ce and several declarations on co-operation.  
17. With the 1994 EEA-Agreement, Iceland became a pa rty to the single market of the EU.  The 
Agreement guarantees equal rights and obligations for citizens and economic operators in the EEA.  It 
however does not cover EU common policies fo r fisheries and agriculture, or the common 
commercial policy, to take some examples.  The EEA  has served us well, but Iceland is now taking a 
step closer in the European integration by its memb ership application to the EU.  The negotiations are 
well on track, 21 of 33 negotiating chapters have b een opened and 10 of them have already been 
provisionally closed.  A further seven negotiating positions have been submitted by Iceland.  
18. Last, but certainly not least, I would like to mention development policy.  In 2008, the 
Icelandic Parliament passed a comprehensive lega l framework on all aspects of Iceland's official 
development cooperation.  The Development Strategy for 2011-14 emphasises international 
agreements and development effectiveness and outlin es Iceland's target for official development 
assistance, with the aim of reaching 0.5% in 2017 and the UN target of 0.7% in 2019.  Aid for Trade 
related activities represents approximately 28% of  Iceland's development assistance.  These activities 
are mainly within the priority sector s of fisheries and renewable energy. 
19. Lastly I would like to touch upon Iceland's vision for the near future.  The financial crisis 
forced us to re-evaluate our economic and political  priorities and implement wide ranging – and in 
many cases painful – reforms.  It revalidated the im portance of traditional sectors such as fisheries and 
agriculture, and exposed the notion of speculative finance as the engine of economic prosperity.  A 
key factor in ensuring successful developm ent is the emphasis on knowledge, welfare and 
sustainability.  
20. The result is a comprehensive strategy for th e future called Iceland 2020.  This policy 
statement, which was rolled out in 2011, incorporat es a balanced mix of policy priorities that should 
sustain responsible growth and provide 21st century opportunities for our citizens.  It emphasises 
social knowledge, welfare and sustainability as the pillars of development.  The strategy includes 
plans for investments in human resources and physical infrastructure, as well as policies to strengthen 
education and culture, innovation a nd development, the environment and social infrastructure.  This 
vision, however, is based on open trade relations w ith partners, including foreign direct investments, 
as well as the sustainability and success of Iceland' s key economic sectors, starting with fisheries.  
21. Although Iceland has been broadening its long-term export base in goods and services, 
fisheries remain a significantly important sector of our economy, accounting for 10.5% of GDP and 
41% of the total export value of goods in 2011.  Iceland is the 13th largest fishing nation in terms of  WT/TPR/M/273 
 Page 7 
 
 
  volume caught in the world in 2011. The cornerstone  of our fisheries policy is the sustainable 
utilisation of our marine resources.  
22. Agriculture is central to Iceland´s food security , sustainability and rural viability.  Conditions 
for agriculture in Iceland are however constrai ned by many external and internal factors, inter alia  the 
country's remote location just below the Arctic circle, challenging climate, difficult topography, low 
population density, long distances and the small home  market.  These challenges adversely affect the 
international price and cost competitiveness of th e agricultural sector, which is dependent on both 
direct support schemes and market support measures. 
23. Due to the specific circumstances, it is importa nt that the agricultural sector in Iceland be 
given a reasonable amount of time to adjust to a ch anging global environment for trade in agricultural 
goods. Concerns like food security and rural devel opment have to be taken into account in all 
negotiations regarding agriculture. 
24. After fish, aluminium is Iceland's second most important merchandise export. It accounted for 
around 4.5% of GDP and around 38% of the total expor t value of goods in 2011.  Iceland is now one 
of the ten largest aluminium producers in th e world following the completion of large-scale 
investment projects in the aluminium and power sectors. 
25. Iceland has in the last decade increased its pr oduction of electricity by continuing to harness 
its hydro and geothermal energy resources. This has increased the diversification of Iceland's 
economy, and provided power-intensive industries with a viable option to fossil fuels.  A comprehensive Energy Strategy has recently been formulated to better manage this important sector. 
26. Tourism has experienced rapid growth and currently provides around 14% of Iceland's 
foreign currency earnings.  In 2011 more than 565,0 00 tourists visited our island, a 16% increase in 
the number of visitors from the previous year.  So  far this year, the increase has been 17% from 2011.  
A new public strategy for tourism has been establis hed, with the aim to maintain Iceland´s unique 
nature, extend the tourist season, decrease seasonal fluctuations and promote a better distribution of 
tourists around the country.  FDI has been an importa nt part of the government's policy for the last 
few years. Iceland has made 12 investment agreements  with other states.  We are currently negotiating 
an investment agreement with Turkey and negotiati ons with Ukraine are expected to take place next 
year.  
27. Iceland has been through a roller coaster ride in th e past six years.  Hence, the speech today is 
very different from the one delivered six years ago.   In hindsight we know the ascent was too sudden 
and the descent much too steep.  Today Iceland is a different country than it was six years ago.  Four 
years after the crash we find ourselves back on the track, ascending at a much more gradual and 
manageable speed; hopefully wiser and better equippe d to meet the challenges ahead.  We are not 
alone in this, and we know many WTO Members face hurdles much more systemic and challenging than our own.  One universal constant, however, is the notion of openness.  For our part, Iceland never 
reverted to protectionist or trade distorting measures.  Through these difficult times, we upheld our 
WTO commitments.  These were never in question, any more than other international commitments.  
Iceland does best in close economic and trade co operation with its partne rs, and is committed to 
advancing the work of the WTO.   WT/TPR/M/273 
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  III. STATEMENT BY THE DISCUSSANT (H.E. MR. SELIM KUNERALP (TURKEY)) 
28. Iceland is a candidate negotiating its accession to the EU.  If these negotiations for which we 
wish Iceland well are concluded in the next few years, the present TPR may well become Iceland's last.  However, we should all resist the temptation to push the Icelandic delegation into a corner on the 
grounds that this may be the last opportunity for us to do so.  As we all know, that is not the purpose 
of today's meeting at all. 
29. Let me first acknowledge Iceland's strong comm itment to the multilateral trading system.  
Iceland has consistently contributed to the regul ar work conducted in all WTO bodies.  A former 
Permanent Representative of Iceland, Ambassador Stefan Johannesson who has chaired the NAMA negotiations and the Working Party on the Accession of Russia to the WTO, has made a personal and 
important contribution to this organization.  The role  that he has played is a clear demonstration that 
even representatives of small economies may assume important responsibilities in the WTO. 
30. According to the Global Peace Index, Iceland is the most peaceful country in the world.  
Iceland has undergone a dramatic and unprecedented cr isis in 2008-09 that has led to the collapse of 
its banking sector.  However, this crisis has not changed Iceland's ranking in that Index.  That 
probably demonstrates the resilience of the Icelandic people.  
31. Before the crisis, Iceland had an enormous  and vibrant banking sector whose liabilities 
amounted to more than ten times the size of the Icelandic GDP.  Despite the fact that Iceland's 
banking sector is subject to European banking  legislation, lending was allowed to increase 
exponentially as a result of a deregulation policy that was adopted for the banking sector.  Once the 
global financial crisis erupted and became a global confidence crisis, the vulnerability of the Icelandic 
banking sector made a run on it inevitable and the th ree largest banks collapsed in the autumn of 
2008.  Icelandic households were hit hard by this  shock, GDP fell by 5.4% in 2009-10, inflation 
reached double figures, a sizeable share of domestic savings were lost, unemployment swiftly rose to 
9.2% and the Icelandic krona depreciated appreciab ly.  GDP in 2011 was still below the level of 2006, 
at fixed Icelandic Krona prices.  In fixed U.S. do llar terms, the situation appears to be much more 
dramatic.  The IMF has estimated that before the cr isis Iceland had the third largest per capita income 
in the world.  After the crisis, Iceland fell to 20
th place.  Nevertheless, per capita income on a PPP 
basis remains above the EU average. 
32. Such a large scale decrease in economic activ ity has had an inevitable impact on human 
development. Following the crisis, Iceland has fa llen sixteen places from the rank it had in the 2007 
UN Human Development Index.  Similarly, it has also lost ground in the Wall Street Journal's 
economic freedom index because of factors such as increased capital controls and state involvement 
in the economy. 
33. After the onset of the crisis and with the he lp of a US$2.1 billion loan from the IMF, the 
Icelandic government was able to alleviate the situation, restructure the banking system, restore confidence in the economy and stabilize the currency  which incidentally is one of the smallest 
independent currencies in the world.  Austerity was introduced and banks were allowed to fail but 
welfare payments were maintained.  Restricti ons on capital movements were introduced and an 
obligation to repatriate holdings of foreign curre ncy held abroad was imposed.  According to the 
OECD, "the removal of capital controls would be an important factor in rebuilding trust with 
international investors and enabling Icelandic compan ies to access global capital markets."  I should 
therefore like to ask the Icelandic delegation how long they expect such capital controls to be 
maintained, particularly at a time when Icela nd is conducting accession negotiations with the EU.  
34. Another important issue is private debt restru cturing.  While Iceland has forgiven some 
household debts as part of the reaction to the bank ing crisis, private debts have soared and state  WT/TPR/M/273 
 Page 9 
 
 
  controlled banks have become major stake-holders in some private companies.  Increased state 
involvement in the economy must be addressed if economic growth is to be sustainable.   
35. The economy responded quickly to the measures ta ken in 2008-2009.  Thanks to the rapid 
depreciation of the currency, Iceland's trade deficit turned into a surplus. Inflation has fallen sharply 
after having peaked in 2008.  However, as the econom y began to pick up, the trade surplus which had 
reached 10.1% of GDP in 2010, fell to 8.5% in 2011 and 6.6% by June 2012, because of stronger 
merchandise imports that followed the economy's re covery.  Meanwhile, the current account deficit 
remains high at 8% of GDP, owing to the conti nued fall out of the banking crisis and payment of 
interest on the liabilities of Icelandic institutions.  Nevertheless, in August 20 12, Iceland completed its 
three-year restructuring programme with the IMF and has started to borrow on international global 
markets again, having regained investment grade.  The economy has grown by 3.1% in 2011 and is 
expected to grow in 2012, albeit at a slower rate than anticipated.  Unemployment has fallen to 4.7% 
and is decreasing further.  Public finances have be en restored and Iceland aims at a budget surplus for 
2014.  Inflation is now under control and expected to be around 5.4% in 2012.  The improved climate 
in the economy should make it easier for some of the r estrictions imposed at the time of the crisis to 
be relaxed. 
36. The composition of Iceland's trade and its princi pal partners has not ch anged.  Fish products 
and aluminium account for 80% of Iceland's exports.  More than 80% of Iceland's exports go to the 
EU and EFTA countries.  The aluminium sector which employs 20% of the population and represents 9% of output appears to be particularly vulnerabl e in such an environment.  Could the Icelandic 
delegation tell us whether they are concerned with  this dependence on a limited number of markets 
and export products, particularly at a time when many European countries are suffering from low or 
negative growth which inevitably must have has an unfavorable impact on demand for Icelandic 
products.  Is Iceland taking action to diversify both its trading pa rtners and the composition of its 
export products, considering that this is one of the main objectives of the Iceland 2020 Policy 
Statement?   
37. As a member of the EEA and a candidate c ountry which has starte d accession negotiations 
with the EU during the period under review, Icela nd has adopted much of EU legislation and is 
continuing to do so at a steady pace.  The first chapte rs were opened to negotiati ons in June 2011.  As 
of October 2012, 18 chapters have been opened a nd 10 closed.  However, while alignment on the EU 
acquis  seems to be high in some areas such as competition policy, intellectual property law, 
government procurement or financial services, this do es not seem to be the case in other areas such as 
agriculture and fisheries.  An update on the stat e of play as well as an assessment as to when the 
accession process might be completed would be useful for the Members.  
38. As a member of EFTA, Iceland is also party to  24 free trade agreements with a total of 
33 countries.  It would be interesting to find out how a small economy such as Iceland copes with the 
spaghetti bowl of rules arising from such a large number of agreements and arrangements and how it 
assesses their impact on the multilateral trading system.  It is important to point out that despite the 
acute economic crisis it has undergone, Icela nd has commendably refrained from resorting to 
protectionist measures to address its domestic probl ems.  Iceland maintains a limited number of 
import restrictions, based on environmental and health concerns.  
39. Nevertheless, looking at the questions put by Members, it seems that the area of SPS and TBT 
notifications needs improvement as a number of no tification requirements remain unfulfilled.  As a 
small economy highly dependent on foreign trade, I have no doubt that Iceland appreciates the 
importance of transparency and may want to look at  ways of improving its performance in that area. 
40. Another area where Iceland may want to improve its trade regime is government 
procurement.  While members welcomed Iceland's decision to accede to the GPA that was announced WT/TPR/M/273 
Page 10  
 
  at the last TPR, it still has not provided the inform ation required under Article  25 of the Agreement.  
Any update that Iceland may want to provide with respect to its process of ratifying the revised GPA 
would probably be appreciated by Members.  I ha ve no doubt that Members were pleased to read 
about the continuing improvements that Iceland is making to its intellectual property regime.  Iceland has introduced several changes to its patent and tradem ark legislations and there probably is interest in 
the ongoing progress in that area. 
41. The level of agricultural protection in Iceland is do uble that of the EU and higher than in most 
OECD countries.  Farmers apparently derive slightly more revenue from agricultural support 
measures than from the sale of their output.  Th e implicit tax on consumers from agricultural price 
policies is estimated at 33%, compared with 8% in the EU.  The total cost of support to the 
agricultural sector is estimated at 1.2% of GDP, ev en though farmers constitute  a very small part of 
the working population of the country and productivity remains low.  The presently implemented market price support policy is considered to be ine fficient and expensive in that it results in large 
transfers from consumers to farmers.  As in ma ny other developed countries, one of the major 
objectives of agricultural support policies seems to be to maintain a minimum degree of viable 
production and keep a certain if limited part of the population on the land. 
42. The tariff structure for imported agricultural produc ts is quite complicated.  The tariff is of a 
compound nature, composed of ad valorem  and specific duty components.  The meat and dairy 
sectors enjoy the highest levels of protection.  Howe ver, no notification seems to have been made by 
the Icelandic authorities on domestic support policies, in the recent past.  In fact, the latest such 
notification covers the period 2001-03.  Can I ask the Icelandic delegation why regular notifications 
have not been made and whether they in tend to make one in the near future. 
43. On the other hand, the fisheries sector is highly competitive and receives very little state 
support.  It accounts for 40% of merchandise exports and 9.9% of GDP in 2011.  The catch volume is 
falling but value has increased because  of rising prices.  Despite not enjoying outright state support, 
the Icelandic fisheries industry benefits from restrictions to access to the sector, including from 
potential foreign investors.  Iceland manages its  fishing stocks through setting Total Allowable 
Catches (TACs) and a system of Individual Transferable Quotas (ITQs).  The OECD considers that these two instruments which constitute the building blocks of Iceland's fisheries policy allows a 
sustainable and profitable exploitation of Iceland's scarce fish resources. 
44. Last but not least, I feel the need to emphasi ze that Iceland has continued to provide ODA 
throughout the crisis, albeit at a reduced level.  It hopes to reach the UN target of 0.7% of GDP 
by 2017 which is extremely commendable.  Before concluding, I should like to stress once again that 
Iceland has very strong economic fundamentals which will enable it to overcome fully the economic 
difficulties it has faced in recent years, and put it b ack on the path of sustainable economic growth.   
45. Iceland's case reminds us of how globali zed the world economy has become.  Policies 
adopted by a small economy can affect large number s of people in other and much bigger countries.  
Iceland's experience has underlined the need for glob al vigilance in international regulatory bodies as 
well as stronger and more effective policy coordi nation among our countries.  Nevertheless, and 
despite unfavourable odds, Iceland has been contin uously improving its trade policy environment.  
My research into Iceland's trade policy and practice has indicated that it has maintained an open trade 
regime whilst struggling with the fall out of the econom ic crisis.  I have no doubt that Iceland will 
maintain that course, addressing the challenges it faces along the way within the framework of its 
WTO commitments.  WT/TPR/M/273 
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  IV. STATEMENTS BY MEMBERS 
UNITED STATES 
 
46. We begin our comments today by recognizing the positive relationship between the United 
States and Iceland – a relationship that is founde d on cooperation and mutual respect.  We each 
appreciate the powerful role that international tr ade plays in global economic and political stability. 
47. The economic relationship between the United St ates and Iceland is positive and growing.  
Total two-way goods trade between the United Stat es and Iceland totalled $843 million in 2011, with 
U.S. goods exports to Iceland up 93.2% from 2010, en compassing a wide range of products including 
inorganic chemicals, mineral fuel, aircraft, machin ery, and many other products.  During the period 
since its last review, the United States and Icel and signed the U.S.-Iceland Trade and Investment 
Cooperation Forum Agreement, which provides a forum for further expanding and strengthening 
bilateral trade and investment relations between the United States and Iceland.   
48. We are encouraged by the indications that economi c recovery is under way in Iceland.  As the 
Secretariat Report noted, exports recovered quickly following the crisis and significantly contributed 
to Iceland's recovery.  The key role that interna tional trade plays in the Icelandic economy is clearly 
demonstrated by the increase in total merchandise trade as a proportion of GDP, rising from 47% in 2005 to 70% in 2011.   
49. We commend Iceland for its clear and unwavering commitment to the multilateral trading 
system during the period under review, which remained  steadfast in the face of the global economic 
crisis.  The United States and Iceland share a comm on fundamental desire to ensure the health and 
vitality of an open global trading system, which we  view as critical to promoting economic growth 
and development for all Members.  The United Stat es supports Iceland's view that a strong, rules-
based system is the best guarantee against prot ectionism, and provides important transparency and 
predictability for traders around the world.  Icela nd has been an active pa rticipant in the WTO, 
including in all rounds of multilateral trade negotiati ons and most of the plurilateral negotiations and 
arrangements conducted within the framework of th e WTO, with the exception of the Agreement on 
Trade in Civil Aircraft. 
50. While we note that Iceland maintains a relativel y liberal trade and investment regime, there 
are areas where Iceland could make further improvements.  We point first to agriculture, where production is directly protected from competition thr ough trade measures, chiefly high tariffs that lack 
transparency.  Not only are tariffs relatively high for imports that compete directly with production in 
Iceland, but also quite complicated as a result of compound tariffs with both an ad valorem  
component and a specific duty component.  The Secretariat Report notes that since the average ad valorem  equivalent of these compound tariffs varies c onsiderably, it is not possible to calculate 
ad valorem  equivalents, which further creates difficult c onditions for traders of agricultural products.   
51. This lack of competition for agriculture products is also reflected in Iceland's approach, along 
with its EFTA partners, to the negotiation of FT As, which eliminate tariffs on markedly fewer 
agricultural tariff lines than non-agricultural tariff lin es, raising questions about  whether "substantially 
all trade" with an FTA partner is covered.  We continue to encourage Iceland to increase the market 
orientation of its agricultural production and trade policies. 
52. In addition to very high levels  of protection for agricultural and food products, traders also 
encounter problematic SPS barriers in Iceland.  I celand prohibits the import of beef from animals 
treated with hormones, despite decades of scientific  evidence demonstrating that this practice poses 
no risks to health and relevant international food saf ety standards for its use.  We are also concerned 
that Iceland's new measures related to labelling re quirements for genetically engineered products will WT/TPR/M/273 
Page 12  
 
  create barriers to trade.  In light of more than  20 years of experience with products of modern 
biotechnology, and not a single indication of a safety  problem, we urge Iceland to reexamine its 
measure. 
53. We would also highlight the references in the Secretariat Report to a number of outstanding 
notifications, such as those to the import licensi ng, SPS and TBT Committees.  In some cases, Iceland 
has not notified measures taken since 2004.  We welc ome more information about Iceland's plans for 
submitting these notifications.  We encourage Icela nd to promptly notify proposed measures to the 
appropriate WTO Committees in advance of their a doption, irrespective of how the measures were 
developed or whether they are notified to other part icular trading partners, so that all Members may 
provide comment, as outlined in the WTO Agreements. 
54. Finally, we would like to take this opportuni ty to note our deep concern with respect to 
Iceland's continued practice of commercial whali ng and its whale products export practices, which 
undermine the International Whaling Commission' s moratorium on commercial whaling and also 
remains an obstacle to our otherwise fruitful relations hip.  We urge Iceland to listen to international 
public opinion and cease these practices. 
55. In closing, the United States and Iceland have  important common interests, including our 
long-standing, shared support for the multilateral trad ing system.  I would like reiterate that we value 
our continued work with the Icelandic government  and our other WTO partners to strengthen and 
build upon the WTO's critical role. 
COLOMBIA 
56. I would like to begin by quoting a few words written in 2009 by the Prime Minister of 
Iceland, which provide an apt introduction to this trade policy review:  "Nowhere was hit as hard by 
the credit crisis as Iceland, but as the country rebuilds its economy and banking sector, it is determined to learn from this harshest of lessons". 
57. Indeed, Iceland saw its positive economic perfo rmance severely affected during the period 
under review, having posted growth rates of nearly 6% during the years preceding the 2008 crisis.  
High levels of indebtedness, compounded by infl ation and high interest rates, brought about the 
collapse of the banking sector in that year.  GDP c ontracted by more than 5% between 2009 and 2010.  
Iceland's foreign trade declined by ove r 30% between 2008 and 2009, from US$11.4 billion 
to US$7.6 billion. 
58. In spite of the major problems caused by the cr isis, however, the Secr etariat Report highlights 
the fact that Iceland did not introduce any protectio nist measures to cushion its  impact.  This enabled 
Iceland's trade flows to recover fairly quickly to pr e-crisis levels, and its dynamic exports contributed 
to the country's recovery. 
59. The Government has undertaken a number of st ructural reforms to help re-stabilize the 
economy, which is producing positive results.  We  would especially underscore the emphasis placed 
during this process on preserving Iceland's welfare stat e, which has helped the country achieve one of 
the highest rankings in the human development index. 
60. There are sectors in which Iceland has cl ear competitive advantages, such as energy 
generation, which can contribute to diversif ying the economy and boosting economic growth.  
The overriding challenge today is to ensure econo mic conditions such as to maintain the necessary 
trust among investors.  WT/TPR/M/273 
 Page 13 
 
 
  61. As regards foreign trade, although exports unde rwent a sharp decline in 2009, they recovered 
rapidly and by 2011 had already reached levels very similar to those preceding the crisis.  Exports are 
still heavily concentrated in a few products a nd markets.  Fishing products and aluminium 
manufactures accounted for almost 80% of exports in 2011.  C onsideration should be given to the role 
of the fisheries sector, which represents 42% of Iceland's exports.  Although the figures show a 
significant increase in value, catches have been declining significantly in volume terms during 
recent years. 
62. Europe's share as a destination of Iceland's e xports has risen from 80% to 85% over the past 
six years.  Except for Russia and Nigeria, exports to the rest of the world have dropped as a proportion of the total.  This is a matter that deserves car eful consideration, because maintaining the active 
growth of Iceland's exports will be linked in the years to come to good performance of the 
European economies. 
63. Although the Secretariat Report shows overall that  Iceland is an open economy, with fairly 
straightforward and speedy import procedures, we fi nd that, generally speaking, agricultural products 
are subject to higher tariffs as well as a vast number of specific and mixed duties whose 
ad valorem  calculation is not clear.  Iceland might consider simplifying its tariff structure in the 
future.  Lastly, we note that Iceland still has many periodic notifications pending, and we therefore 
urge it to catch up on those outstanding as soon as possible. 
64. In his New Year's address for 2012, the President  of Iceland stated the following:  "Of course 
we face obstacles of various types, but these ca n be overcome through solidarity and careful 
deliberation, and by applying a broa d-minded approach and mutual trust.   All those who are elected to 
positions of responsibility must have this as their guiding principle and strive to combine their 
strengths to produce good results instead of fostering dissension". 
65. We ourselves will have to address a variety of challenges in the coming months, and an 
approach based on mutual trust, broad-mindedness,  and the endeavour to combine our capacities, 
without becoming entrenched in individual positi ons, will undoubtedly help us achieve good results. 
CANADA 
66. Although Iceland's economy has suffered the af ter-effects of the collapse of the banking 
sector, GDP rose slightly in 2010 and the IMF fore casts progressive growth until 2017.  Canada 
congratulates Iceland for its resilience and its end eavours to maintain open access to its markets.  
We are particularly gratified to witness Icelan d's renewed activity on the international financial 
markets, and to note the decline in household debt and the revival of the property market. 
67. Canada recognizes Iceland's commitment to prog ressive trade liberalization, and to the 
multilateral trading system.  Iceland, as has been not ed, has consistently dem onstrated its willingness 
to support commercially meaningful outcomes, includi ng through its participa tion in the Information 
Technology Agreement.  Generally speaking, Icel and maintains a substantive engagement and a 
collaborative approach.  Canada understands that, in challenging economic times, the pressure to 
resort to protectionist measures can increase.  We ap plaud Iceland for resisting such pressures to date, 
and welcome Ambassador Kristjánsson's assurance that  this support for open markets will continue.   
68. While all would prefer that trade liberaliza tion be advanced on a multilateral basis, we 
recognize that regional and bilatera l initiatives can complement and c ontribute to multilateral efforts.  
In this regard, Canada notes that our collec tive difficulty in moving the DDA forward has not 
diminished Iceland's aggressive trade agenda.  We take note of Iceland's success in bilateral 
negotiations, having concluded, as part of EFTA, 24 FTAs covering trade with 33 countries, as well WT/TPR/M/273 
Page 14  
 
  as four bilateral agreements in its own right.  This includes 13 agreements signed since 2005, 
including Canada's own FTA with the EFTA States. 
69. Canada has maintained bilateral relations with  Iceland for many years now, and from one of 
the country's oceans to the other.  On the trade front, the volume of Canadian exports has still not 
recovered to pre-2008 banking crisis  levels.  The year 2011 ended with a total of $52.5 million worth 
of goods exported to Iceland, mainly fish and seaf ood.  Canadian imports from Iceland did, however, 
increase by 28.0% between 2010 and 2011,  from $32.8 million to $42.0 million. 
70. Bilateral investment also suffered from the crisis .  However, Canadians remain interested in 
business opportunities with Iceland; the energy an d natural resources sectors have emerged as the 
major focus of activities.  Noting, however, the invest ment restrictions in this sector highlighted by 
the Chair in his introductory remarks.  On the ot her hand, Canadians are contributing in a major way 
to Iceland's production, exports and thus the econom ic recovery.  Montreal headquartered Rio-Tinto 
Alcan, which has been operating in Iceland since the late sixties, has recently upgraded its aluminum 
smelting plant in Straumsvík, Iceland.  
71. Indeed, the importance to Canada of its bila teral commercial relationship with Iceland is 
highlighted by the entry into force of the Cana da - European Free Trade Association Free Trade 
Agreement in 2009.  Canada continues to discuss with  Iceland and its EFTA partners the possibility of 
extending the Agreement to areas beyond trade in g oods, such as trade in services, investment, and 
government procurement. 
72. Finally, Canada notes the growing importance of science and technology in Iceland's 
economy, and acknowledges a number of parallels between our nations in  this regard.  Bolstered by a 
well-educated population, high levels of investme nts into higher educati on and a relative abundance 
of natural resources, Canada and Iceland share many of the same strengths with respect to the growth 
and development of high-tech industries.  Further complementarity can be found in our shared experience of harnessing alternative forms of energy,  and in the areas of Arctic and oceans research.  
Thus, we would welcome increased bilateral scientific and technological collaboration moving 
forward. 
EUROPEAN UNION 
73. The EU is pleased to participate to the fourth  Trade Policy Review of Iceland and discuss 
developments in its trade policies and practices sinc e the previous review in 2006.  As you are all 
aware, Iceland in the meantime has started its accession negotiations with the EU.  
74. The EU acknowledges the huge efforts done by  Iceland for recovering from its severe 
financial crisis. Iceland was particularly hard hit by the financial and economic crisis with a near 
complete breakdown of its banking system; despite th is situation, the economy is recovering, it grew 
by 2.6% in 2011 and recent forecasts point to 2.7% growth in 2012 and 2.5% in 2013.  Post-crisis 
growth has been driven by exports, notably in the fishing and tourist sectors, but also by private 
consumption.  Investment, however, remains fairly low. 
75. Overall, Iceland's structure of trade in goods has not changed significantly over the past few 
years and the EU and other EFTA countries remain the main destination for exports and the main 
source of imports.  The EU is by far the main tr ading partner for Iceland, accounting for 52% of its 
imports and 78% of its exports, with fish and fish products, and aluminum products accounting for 
nearly all exports.  The establishment of energy in tensive industries such as aluminum smelters has 
been facilitated since Iceland has large resources of competitively priced hydroelectric power and 
geothermal energy. Imports are more broadly based, although ores for processing, fuels, and 
machinery and transport equipment made up nearly 60% of total imports in 2011.   WT/TPR/M/273 
 Page 15 
 
 
  76. Our preferential trade agreement dates back to 1972;  a second important step towards a 
higher integration was achieved in 1994, with th e creation of the European Economic Area (EEA).  
The EEA Agreement is the key framework for the EU -Iceland relations and, as it was stressed during 
the recent TPR of Norway, one of the peculiariti es of the EEA Agreement is its dynamic character 
allowing to continuously update its common rules by adding new relevant EU le gislation.  Thanks to 
its membership to EEA and to EFTA, Iceland has legisl ation similar and often identical to the EU's, in 
areas covered by the EEA Agreement.  
77. Nowadays, the EU and Iceland share common inte rests in several areas, including in the 
fields of renewable energy and climate change or  cooperation in the Arctic.  Following Iceland's 
application for membership of the European Un ion, in July 2009, accession negotiations started 
officially in July 2010, and are progressing well.  The EU also appreciates Iceland's valuable 
contribution to the economic and social cohesion in  the EU through the EEA Financial mechanism. 
78. Looking at the stated objectives of Iceland's trade policy, the EU recognizes the important 
role played by Iceland in the multilateral trad ing system, strongly supporting open and rules-based 
multilateral trading system anchored in the WTO;  like Iceland, we also see the WTO as our main 
instrument to further develop our trading relati ons.  The EU furthermore recognizes Iceland's positive 
role in the Doha Round negotiations.  
79. As the EU stressed in its advanced questions to Iceland, in certain areas there is nevertheless 
still room for improvement. This is particularly tr ue for SPS matters as Iceland continues restrictive 
import policies on certain products, among others, on fresh meat, raw eggs and animal products not 
for human consumption.  
KOREA, REPUBLIC OF 
80. We are very pleased to note that Iceland and Korea have traditionally maintained a close 
cooperative economic relationship.  This relationship has been further enhanced since the entry into 
force of the FTA between Korea and the EFTA countries in September 2006.  This year our two countries celebrate the 50
th anniversary of the establishment of diplomatic ties.  In the coming decades 
as well, we very much hope and expect that our c ooperative bilateral relations , particularly in the 
areas of trade and investment, will continue to be  strengthened. 
81. Turning to Iceland's overall economic performance, we are also pleased to note that primarily 
as a result of its increase of exports, the Icelandic economy is recovering from the severe effects of the 
global economic crisis of 2008.  This has been possible due to, among other factors, the overall strength of its key industrial sectors such as fishi ng and energy.  We would like to encourage the 
government of Iceland to continue to make effort s to reform its economy, including areas such as the 
banking sector, and to take further steps towards re ducing public debt and put the economy on a more 
sustainable track. 
82. As far as Iceland's trade policies and practices ar e concerned, we would first like to recognize 
and praise its overall strong commitment to an open  and multilateral trading system.  Iceland's MFN 
tariffs are quite low and over 70% of all tariff lines are duty free.  As the Secretariat Report highlights, 
it is particularly noteworthy and commendable that  Iceland did not introduce any protectionist 
measures in the midst of the recent economic crisis.  Iceland has also continued to make efforts to 
improve its IPR regime and port control system. 
83. At the same time, we would also like to encour age Iceland to continue to address the concerns 
of other Members in such matters as those re garding complex tariff regimes for some products, 
outstanding notifications in some areas, and restrictive measures on foreign investment in the energy sector.  In particular, we would like to know whethe r the government of Iceland has a plan to open the WT/TPR/M/273 
Page 16  
 
  energy sector to non-EEA countries in order to attr act further foreign investment.  Korea shares 
similar views and interests with Iceland in such ar eas as agriculture and looks forward to continued 
cooperation in these and other areas in the future. 
MEXICO 
84. As has already been mentioned, Iceland is one  of the least populated countries in the world, 
but far from seeing this as a problem, it has taken advantage of the opportunities offered by its very 
specific circumstances, especially fi shing.  Iceland has successfully ri sen to the challenges before it, 
which do not only involve protecting itself from the cold and volcanic eruptions. 
85. Iceland has made considerable progress in emerging from the deep financial crisis, as has 
already been pointed out several times.  In 2008,  2009 and 2011 it achieved the fiscal consolidation 
targets agreed with the IMF, enabling it to regain much of the economic ground lost during the crisis.  
However, now is not yet the time for it to relax its  vigilance.  The OECD recommends that Iceland 
continue to run an annual  budget surplus of at least 3% of GDP , beyond 2013, so as to maintain a 
moderate level of public debt.  Iceland should also be attentive to the issue of its ageing economically 
active population and introduce a stricter and more transparent fiscal accountability system. 
86. Mexico congratulates Iceland on resisting prot ectionist pressures despite the depth of the 
crisis it is facing.  The OECD points out that agri cultural protection, measured in terms of estimated 
support for producers, is double that of the European Union, which is not inconsiderable, and higher 
than in most OECD member countries.  The implic it tax from agricultural price policies is estimated 
at 33%, compared with 8% in the European Union.   Such high levels of support place an additional 
burden on consumers and taxpayers.  In this connec tion, the Icelandic Government needs to reduce 
agricultural support by eliminating tariffs and special duties on agricultural products.  We also wish to 
express our concern about the extensive use of sanitary and phytosanitary measures. 
87. Iceland could improve some aspects of its trade policy.  In particular, its bound import tariffs 
on agricultural products average 113.8%, with average a pplied rates of 27.2%, i.e. one of the highest.  
This is in sharp contrast to the tariffs on no n-agricultural products, with an average bound tariff 
of 9.6% and an applied rate of 2.3%. 
88. Although Iceland has reduced its 26 customs distri cts to one, which is also a step forward in 
facilitating imports, the Secretariat Report indicates that the average time for exporting or importing 
goods is 19 days, that is, almost twice as long as  the average in high-income OECD countries.  
We therefore urge Iceland to conti nue streamlining its procedures.  As regards trade restrictions, it is a 
good sign that Iceland generally does not impose rest rictions on imports other than on health and 
safety grounds, in accordance with the interna tional treaties to which Iceland is party. 
89. As to technical barriers to trade, Iceland has implemented an electronic system whereby 
anyone may submit comments on an official website  concerning any draft European standard.  
This fosters transparency in international trad e and should be implemented by other countries.  
Mexico has a similar facility.  However, the el ectronic system concerns only draft European 
standards.  We would prompt Iceland to contin ue signing mutual recognition agreements, especially 
with non-European countries.  We also encourage I celand to update its notifications to the WTO. 
90. According to the Secretariat Report, there has been a sharp decline in imports of automotive 
products.  Meanwhile, a fiscal policy has been impl emented in this sector, subjecting vehicles to 
higher taxes depending on their pollution emission leve ls.  Mexico being a leading exporter of motor 
vehicles, trucks and other means of transport, it would welcome further details concerning these taxes 
and the reasons for the decline in imports.  WT/TPR/M/273 
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  JAPAN 
91. I would like to start with Iceland's macroeconom ic environment and policies.  Iceland is an 
important trading partner for Japan, and Iceland expor ts mainly fishery products to Japan with the 
volume of ¥14.1 billion in 2011. We also have some si milar characteristics. Firstly, Iceland and Japan, 
surrounded by the ocean, samely have a flourishing  fishery sector.  Next, we both have a volcanic 
geography and little natural fossil resource.  Japan and Iceland have develope d a close relation in a 
variety of areas other than trade.  
92. Japan bears in mind that according to the Secr etariat Report, Iceland had experienced the 
harmful influence led by the grave global economic crisis in 2008, and it has still been tackling the 
challenges to recover from the crisis's aftermath. In particular, that crisis caused the banking system in 
Iceland to collapse, and the real GDP shrank by 6.8% in 2009 and by 4% in 2010.  Although the Iceland government's prompt monetary measures su cceeded in stabilizing th e exchange rate and 
alleviating the inflation, Japan believes that above all to entirely restructure the banking system should 
be firstly prioritized to ensure the certainty of the economy of the Iceland.  Japan, therefore, would 
like to invite Iceland to additionally resort to m easures to address the issues such as a number of 
unperforming loans. 
93. In addition to the challenges in the financial se ctor, of course, trade and investment will be a 
key for the Iceland's recovery.  Japan would like to applaud that facing the global economic crisis 
Iceland never resorted to the protectionist measures.  In fact, a recent economic recovery of Iceland so 
far has mainly resulted from export.  In other word s, it's a benefit from the multilateral trade system. 
Considering this important role that trade has played  in the ongoing recovery of Iceland, Japan would 
like to welcome the Iceland's continuous efforts for th e international trade libera lization.  On the other 
hand, with respect to the investment, the decline of investor confidence due to the global economic 
crisis has not been fully remedied, and Japan again points out the importance of the dealing with the 
financial difficulties. 
94. Now let me move on to specific trade and trade -related policies.  Here, we have two specific 
points. According to both reports, Iceland declared  a new strategy for tourism.  Japan welcomes this 
policy that the Icelandic Government has regarded the tourism as one of the principal sector for its 
economic recovery, and will practically implement the related policies such as preservation of the 
nature in Iceland.  It is likely that tourism in Iceland can be competitive, making use of its uniqueness 
in the climate, the rich natural environment a nd the geography, and can steadily create employment 
there.  
95. Next, with respect to the fishery policy, Japan  notes that a fishery sector continues to be 
significant in Iceland's economy and it has valued the sustainable fishery in accordance with the 
resource management based on scientific data as desc ribed in a Statement on Responsible Fisheries in 
Iceland.  Thirdly, Japan is interested in Iceland's energy policy that is trying to decline the dependence 
on the fossil fuels, and to utilize the natural rene wable resource.  As grounded on the these elements, 
in conclusion, Japan strongly hopes that Icela nd overcome various difficulties caused by the global 
economic crisis. 
ARGENTINA 
96. First of all, I wish to congratulate Icela nd on its recovery from the 2008 financial crisis, 
when the main commercial banks (highly rated by  the credit rating agencies) collapsed, compelling 
the Government to intervene with emergency measures,  such as the creation by the State of three new 
banking establishments to prevent a complete meltdown of the system
.  Today, exports are on the rise, 
leading to a surplus in the trade and services ba lance, a lower rate of unemployment, and policies 
aimed at increasing the population's real disposable income. WT/TPR/M/273 
Page 18  
 
  97. I would like to emphasize that the country's economic recovery was fuelled by small and 
medium-sized enterprises, as stated in the Gove rnment Report.  The importance of the fishing 
industry as one of the pillars of the economy is also worthy of note, as are Iceland's low energy prices, 
which have led to the establishment of industries such as aluminium smelters. 
98. Agriculture is one of the cornerstones of deve lopment for medium- and low-income countries.  
We are therefore concerned that agricultural produc ts are subject to tariffs which are often compound 
duties with an ad valorem  component of 30% and a variable specific duty component.  Agricultural 
products are, moreover, subject to stri ct sanitary and phytosanitary policies. 
99. I would now like to dwell briefly on our bilate ral trade, which, on av erage, has experienced 
sustained growth, with some ups and downs.  In 2011, total trade between our two countries amounted 
to US$3.7 million.  The main exports included fruit, articles of leather, wood and beverages, while the 
key imports were nuclear reactors, mechanical appliances, and optical, photographic or cinematographic instruments and apparatus. 
100. We believe we can go much further in devel oping trade between our two countries, and we 
therefore encourage Iceland to continue working jo intly with Argentina, both bilaterally and in the 
context of relations between EFTA  and MERCOSUR, to which Iceland and Argentina respectively 
belong, in order to strengthen trade relations so that  they reflect our countries' true potential.  Lastly, 
as regards joint action within this Organization, it should be mentioned that Iceland and Argentina, 
together with other Members present here, form the Friends of Fish Group, whose objective is to 
bring about a sizeable decrease in fisheries subsidies.  
SEPARATE CUSTOMS TERRITORY OF TAIWAN, PENGHU, KINMEN AND MATSU 
101. As noted in both reports, after a period of contraction over the past few years, Iceland's 
economy recently has shown signs of gradual rec overy.  There has been positive GDP and economic 
growth, private consumption and investment are in creasing, unemployment is declining, real wages 
are rising and the property market has stabilized.  
102. We are also pleased to note that, with the exception of the Agreement on Trade in Civil 
Aircraft, Iceland is party to all current WTO Agreements, including the GPA since 2001.  
Furthermore, it is committed to the conclusion of  the DDA in accordance with the current mandate, 
and the majority of its trade legislation mirrors WTO obligations.  
103. It is also mentioned in the Reports, however , that while Iceland has submitted a number of 
notifications on agriculture and RTAs to the WTO, a considerable number of regular notifications still 
remained outstanding at the end of July 2012.  We would urge Iceland to fulfil its notification 
obligations in this respect.  
104. What is encouraging, though, is Iceland's stated main policy objective of providing a 
favourable climate for investment through its access to the EEA market, low tax rates, liberal 
investment policies, and a stable business environmen t with few restrictions on foreign ownership.  
But again we are somewhat concerned to learn that  various restrictions on foreign ownership have 
remained unchanged since its last TPR.  Iceland will hopefully be able to reassure Members that it has 
plans for further reform of its investme nt policy in the not-too-distant future. 
105. For us, Iceland is not a big trading partner, but it is becoming increasingly important.  Our 
main imports are fisheries products  and ferro-silicon.  As the Icelandic economy recovers from the 
various crises and starts to st rengthen, we would encourage the Government to undertake further 
reforms aimed at reducing public debt, putting pub lic finances back on a sustainable track, and  WT/TPR/M/273 
 Page 19 
 
 
  resuming the core lending activities of its banks.  We  shall continue to work towards strengthening 
and deepening our trade and investment relationship with Iceland.  
INDIA 
106. Though Iceland's economy suffered a major recessi on due to collapse of its banking system 
resulting from the global financial crisis, we are encour aged to note that Iceland did not resort to any 
protectionist measures.  Instead, the Government adopted a prudent policy of capital controls and 
fiscal consolidation that has helped in Iceland's economic recovery.  In addition, funding from the 
IMF and other Nordic countries also helped in th e recovery.  The growth of the economy by 3% 
in 2011 was driven primarily by exports, priv ate sector consumption and gross fixed capital 
formation. 
107. Trade is an important contributor to Icel and's economy, with total merchandise trade 
comprising 70% of its GDP.  However, 80% of its exports are made up to fish products and aluminium, while the EU and EFTA countries remain  its main trading partners.  This has made 
Iceland dependent on a limited trade basket and export markets, highlighting the need for greater 
export diversification. 
108. The Government has identified some sectors like energy intensive, land intensive and 
knowledge based industries, and tourism, where Ic eland has a competitive advantage and which could 
be future avenues for growth.  For instance, a bundance of hydro and thermal power has resulted in 
establishment of energy intensive industries, like aluminium smelters.  However, there are some 
restrictions on investment and ownership of energy exploitation rights, and production and 
distribution of energy that hinder investments in the sector. 
109. As pointed out in the Secretariat Report, a lthough Iceland is recovering from the crisis, the 
recovery remains fragile.  In the longer term, the challenge would be to sustain the growth 
momentum.  For this, it is important that Icel and reduces public debt and put public finances on a 
sustainable track and continue with debt restructur ing so that non-performing loans can be reduced.  
Investor confidence also needs to be restored in or der to attract investments.  We wish Iceland success 
in addressing these challenges. 
110. On the bilateral level, India and Iceland sh are cordial and friendly relations.  We have 
therefore strived, through various means, to promot e bilateral trade and investment with a view to 
benefitting from the comparative strengths of our economies.  Bilateral trad e during 2011-12 stood at 
US$38.64 million, which is much below the potenti al.  Agreements on Investment Protection and 
Promotion and on Double Taxation Avoidance were signed in 2007.  There are several companies 
from Iceland that have operations in  India.  We look forward to a productive engagement with Iceland 
to take our bilateral cooperation to a higher plane. 
BRAZIL 
111. Brazil notes with satisfaction the data in the TPR  Reports that indicate the fact that Iceland 
has been able to deal with th e major challenges posed to its people and its economy by the 2008 
financial crisis.  Iceland was hit particularly hard by the crisis.  That is why the economic recovery 
and the graduation from the IMF program demonstrate Iceland's resilience and great capacity to adapt 
in adverse circumstances, relying in its dynami c domestic industry and the benefits accruing from 
international trade. 
112. Indeed, Iceland's continued reliance on trade a nd investment as promoters of growth in the 
midst of the financial crisis is an inspiri ng sign to the WTO Membership, in the sense that 
commitment to the multilateral trading system is a major tool to tackle the economic uncertainties of WT/TPR/M/273 
Page 20  
 
  our time.  In this context, trade flows between Brazil and Iceland have been increasing at impressive 
rates.  In 2003, bilateral exchange amounted to ap proximately US$6 million.  This number has soared 
to around US$270 million in 2011, without disruption of an y kind during the financial crisis.  Brazil is 
confident that this pattern will be maintained in  the future and hopes bilateral trade flows will be 
diversified.  Most of Brazilian exports to Icela nd have been concentrated on calcined aluminium. 
113. In this regard, Brazil would like to recall th at it has no record of exporting agricultural 
products to Iceland.  Brazil is one of the most  competitive producers of agricultural goods, thus 
offering great opportunities to consumers in Icel and to access prime quality products at very 
competitive prices.  According to the Secretariat Report, the average MFN ad valorem  applied tariffs 
to agricultural products were around 9%.  Iceland applies, however, non- ad valorem  tariffs to 
agricultural products, and their ad valorem  equivalent could not be calculated by the Secretariat, 
which nonetheless states that agriculture products "are much more heavily protected than other 
sectors".  Additionally, Iceland provides domestic  support to products in which Brazil is highly 
competitive, such as beef, pork and poultry.  Con sequently, there seems to be a great potential for 
increase and diversification in bilateral trade flows. 
114. In order to improve commercial relations, Braz il attaches great importance to the negotiation 
of the Agreement between MERCOSUR and the Eu ropean Free Trade Association, which Brazil 
hopes will advance in an exped itious and balanced manner. 
MOROCCO 
115. Morocco welcomes Iceland's efforts to implemen t reforms since the previous review of the 
country's trade policy in 2006.  The delivery of a gl obal and ambitious strategy to rebuild the financial 
sector, especially through the creation and capita lization of new banks which emerged from the 
three main banks that collapsed in October 2008,  has enabled financial intermediation services to 
return to normal - a key requirement for sustaine d growth, following the almost complete meltdown 
of the financial system at the end of 2008 and in early 2009. 
116. However, debt restructuring needs to conti nue and the large overhang of non-performing 
loans reduced so that banks can resume their core lending activity.  The Icelandic Government has 
also introduced tax and customs reforms, including both cutbacks and tax increases, as a reaction to 
the financial crisis. 
117. Morocco welcomes the fact that  despite the crisis, Iceland has recorded a trade surplus 
since 2009.  In 2011, total exports  of goods amounted to ISK 620 billion and total imports of goods 
to ISK 562 billion.  Fisheries and aluminium ma nufacturing accounted for over 80% of merchandise 
exports;  fisheries have once again become the leading export sector in value terms and have 
constituted a sound basis for the national economy.  The share of aluminium products more than 
doubled as a new aluminium plant came online in 2008. 
118. However, FDI has declined drastically and was approximately ISK 30 billion in 2010 (2% of 
GDP).  The decline in FDI flows is due mainly  to the loss of confidence among investors after 
the 2008 financial crisis.  We therefore encourage I celand to rebuild investor trust so as to attract 
more investment. 
119. My delegation wishes to underscore Iceland' s active engagement in its bilateral trade 
agreements with several countries, including Morocc o, as well as at regional level in the context of 
the European Free Trade Associa tion (EFTA), the European Economic Area (EEA), and other free 
trade agreements.  Iceland is strongly committed to the multilateral trad ing system and trade 
liberalization within the WTO framework.  The strengt hening of its trade relations and diversification 
of its partners reflect Iceland's commitment to promoting the multilateral trading system.  WT/TPR/M/273 
 Page 21 
 
 
  120. However far apart in geographical terms, Mo rocco and Iceland maintain excellent trade 
relations governed by the Morocco/EFTA Agreement,  which entered into force in March 2000 and 
helps to promote trade between the two countries.  Moreover, Morocco and Iceland have signed an 
agricultural protocol to strengthen scientific and tech nical cooperation in agriculture, ranging from the 
exchange of information and documentation to the exchange of experts and the joint organization of 
seminars and conferences on agriculture. 
121. Trade between the two countries is admittedly limited because of geogr aphical distance.  
That being said, there are a number of interesti ng opportunities, especially in fisheries, fisheries 
research, seafood preservation, cold-storage trans port, and vocational training.  I would like to 
congratulate the Government of Iceland on its successf ul and impressive performance in recent years, 
and on its remarkable dynamism within multilateral trade. 
TURKEY 
122. Following the severe economic crisis in 2008 a nd 2009, Iceland economy is on the way to a 
full recovery.  It has restored c onfidence in the economy and growth  has been on the rise to its pre-
crisis level.  However, certain problems like privat e debts, public finances still exist as a result of the 
crisis and the measures taken since then.   S till, Icelandic economy has proved to have strong 
foundations and ongoing reforms will fu rther facilitate the full employment levels of pre crises period.  
123. Turkey and Iceland have very good political a nd economic relations.  Both countries benefit 
from the framework Turkey-EFTA Free Trade Agre ement provides and we enjoy a modest trade 
volume of around US$40 million. We have not faced w ith any specific problem in our bilateral trade 
for a long time.  For most sectors, Iceland's trade regime is stable, open and mostly liberal with over 
70% of tariff lines being duty free.  However, pictur e is different in agriculture sector which benefits 
from a number of various defensive measures.  
124. Furthermore, Iceland, as an EFTA member, has been concluding a number of bilateral and 
regional arrangements in a rapid ma nner and we are very much interested in hearing how they cope 
with the increased number of various  and probably diversifie d rules arising out of such arrangements.  
In such an environment, transparency through the notifications may become critical to understand the 
ongoing changes in trade and investment regime.  
125. We would like to commend Iceland for its fi sheries management.  Iceland seems to 
successfully maintain a delicate balance between economic benefit and environmental concerns on 
such a sensitive issue.  Since its last review, there has been no major problem in operation of the 
fisheries quota system.  While the businesses are aff ected by the crisis, we noted with appreciation 
that business environment has not changed much since the last review.  Further, Iceland has been 
strengthening its efforts to further open its market to  foreign investment.  This could also support their 
efforts to improve green energy  technologies in the country.  
126. Lastly, before concluding, we would like to express our appreciation to Iceland for their 
contribution to the work of the WTO.  They ha ve provided leadership in a few critical areas like 
NAMA negotiations and the Russian Accession.  We hope that they will continue playing such a role 
in the future.  
CHINA 
127. China and Iceland always enjoy a friendly relationship and growi ng economic cooperation 
since we established diplomatic relations in 1971.  Th is year Premier Wen Jiabao of China paid a visit 
to Iceland, which demonstrates our strong will to d eepen our cooperation with Iceland.  On trade, 
during the review period, we are glad to witness the sound performance of our bilateral trade, on both WT/TPR/M/273 
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  exports and imports, despite the global recession, reflecting the complementary and inter-dependent 
nature of our bilateral trade.  According to Ch inese Customs, in 2011 bilateral trade between China 
and Iceland amounted to US$150 million, growing 35%  over the previous year.  From January to 
August 2012, our bilateral trade recorded US$119 million, representing a growth of 22.5% over the 
same period last year.  It is also noted that in these eight months the export of Iceland to China 
increased by 52%. 
128. On investment, Iceland's direct investment  in China is US$12 million by August 2012, 
covering 26 projects in total.  However, for th e moment there is no FDI from China in Iceland 
although many Chinese investors have shown their great interest.  We would like to work together with Iceland to tap the potentiality on two-way invest ment.  For that, recently we have received some 
good news that some Chinese investors and their Iceland partners are exploring the possibility to 
cooperate for some projects on energy and fishery.   
129. As the Secretariat Report indicated, Iceland w as one of the countries worst affected by the 
financial crisis.  However, despite the crisis, Icel and has not introduced any protectionist measures.  
The overall tariffs are quite low and over 70% of  tariff lines are duty free.  We commend Iceland's 
proper response to the crisis by maintaining an open trade regime, which has contributed to the 
recovery of its economy.  We note with pleasure th at the GDP of Iceland stopped contracting in 2011 
and was back to the growing track.  We do believe Iceland can step off the crisis and resume its 
growth in the near future, although the rec overy now is still fragile and risks remain. 
NORWAY 
130. We congratulate the Government of Iceland fo r the economic performance during the period 
under review.  The reports before us reveal that th ere have been some ups and downs and that there 
are still some challenges ahead but we feel assured that this is both underst ood and will be tackled by 
Iceland in due course.  
131. Since the last review of Iceland here in th is framework, the country has gone through a most 
severe economic crisis.  I would like to start my remarks here today by congratulating the Icelandic 
government on a most impressive reconstruction process that has been undertaken since those 
dramatic events in 2008.  Obviously, there will alwa ys be different views on elements of the policies 
that have been adopted and of the choices that ha ve been made, as may be seen in Icelandic public 
and political debate every day.  
132. It remains a fact that four years after the co llapse of the Icelandic financial sector, Iceland's 
economy has turned from recession to growth.  Public  finances are in the process of being balanced. 
Unemployment, which rose dramatically, has been  reduced and shows a downward trend.  Weak 
groups have been protected from the most dramatic consequences of the cris is, and the fundamentals 
of the welfare system have been upheld.  
133. My government - together with the other Nord ic countries and Poland and linked to Iceland's 
cooperation program with the Intern ational Monetary Fund - was pleased  to be able to support and 
assist Iceland in the aftermath of th e crisis through currency loans.  
134. When we mention this today, it is because we now are in a situation where Iceland has 
already re-paid an important portion of these loans,  well ahead of schedule.  This is a significant 
expression of the very positive development that has taken place in Icelandic economy and bears 
witness to the recovery which is well under way.  The very positive evaluation by the IMF of the 
implementation of the cooperation program, complete d a year ago, is another important testimony to 
this.  WT/TPR/M/273 
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  135. Of course, challenges still exist.  One of them is - as pointed out in the Reports before us - the 
capital controls that were necessary to  impose and that still are in effect.  It would be of great interest 
to hear your views on the perspectives for the lif ting of this regime, which is, as we know, an 
objective of the government.  
136. Norway and Iceland share a common history and culture, and there are also quite a few 
similarities in the make-up of our economies. The ab undance of natural resources, the relative weight 
of a few sectors in the economy, the interest in en ergy and the development of green energy, the harsh 
climate that makes agricultural production difficult to name a few.  
137. In trade, Norway is Iceland's single largest source of imports (15,9%).  About half is oil and 
gas, and another approx. 25% is different kinds of  machinery.  Seafood and fish is another large 
commodity (3%) exported from Norway to Iceland.  More  than half of this is shrimp that feeds into 
the Icelandic processing industry and is then exporte d to the EU.  There is, however, still potential for 
considerable increase in Norwegian-Icela ndic business development and investments.  
138. We know that agricultural production in Iceland is hampered by a harsh climate and difficult 
topography and that such production is therefore dependent upon direct and indirect government 
support.  We are sympathetic to the fact that I celand has certain non-trade concerns, and that the 
maintenance of a viable agricultural sector plays a ke y role in this regard.  The application of some 
high tariffs in order to protect a few basic comm odities within Iceland's ve ry narrow production scope 
is in our view a legitimate policy for a ne t food importing country which cannot possibly be 
internationally competitive in agriculture.  
139. Geographical, historical and cultural proximity are the cornerstones of the good and close 
cooperation between Iceland and Norway in a multit ude of areas.  Not least through our common 
membership of EFTA.  Not only is this a very co mprehensive agreement among ourselves - it is also 
our common platform for conducting for negotiating free trade agreements with other partners.  All of 
these agreements are based on the WTO disciplines and aim to further our trade arrangements with 
partners and build on and develop the existing disciplines within the WTO. 
140. Iceland is a small country which neverthel ess makes a big contribution to the multilateral 
trading system.  Iceland is a true friend of the system!  
141. The tireless efforts of former Geneva-Ambassa dor Stefan Jóhannesson in leading the NAMA-
negotiations for a number of years, and his impressi ve and untiring efforts in leading the longest and 
final lap of the accession negotiations with the Russi an Federation to a successful conclusion at last 
year's Ministerial meeting bear witness to this.  We thank Iceland for their contributions to the system 
and look forward to continue working with th em here in the WTO and in all other fora.  
HONDURAS 
142. According to the Secretariat report, and in line with the global economy, Iceland's economy 
grew steadily until 2008, when it suffered a major set back as a result of the sev ere recession caused by 
the collapse of the banking sector.  Following this economic downturn, recovery has been driven by 
exports, and total merchandise trade increased dramat ically in 2011, thanks to the competitiveness and 
vitality of the fisheries, energy and aluminium sect ors.  Consumption and private investment are also 
on the rise, and unemployment is declining. 
143. The fishing industry is the backbone of Icela nd's economy, accounting for 40% of exports and 
almost 10% of GDP.  Nonetheless, the national ec onomy has diversified over the past ten years, 
turning towards the services industry and the production of software, biotechnology, and tourism. WT/TPR/M/273 
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  144. Although Iceland's key challenge is to mainta in growth, longer-term prospects are very 
encouraging given Iceland's abundant energy resour ces, rich fishing grounds, popularity as a tourist 
destination, favourable demographics a nd relatively well-funded pension system. 
145. We welcome the structural reforms aimed at adjusting to a new economic environment.  
The banking system has been rest ructured, household and corporate debt have been adjusted and 
reforms have been made concerning tax and cu stoms policies, as well as competition and state 
ownership rules. 
146. Iceland's trade policy is focused on its app lication to join the European Union and its 
membership of EFTA and the EEA.  Last October, Honduras, together with Guatemala, Costa Rica 
and Panama held the fourth round of negotiations on the trade agreement with EFTA, composed of 
Norway, Switzerland, Iceland and Liechtenstein.  For Honduras and the other Central American 
countries, this agreement would be would be the ideal complement to the Association Agreement 
between Central America and the European Union.  We hope to conclude this agreement within the 
next few months. 
PANAMA 
147. Our country acknowledges the major efforts that  Iceland has been making since the crisis 
in 2008, and we encourage it to continue improving its trade policies.  Along with other Central American countries, Panama is currently in  the process of negotiating with the European Free 
Trade Association, to which Iceland belongs.  Panama  thus hopes to expand and establish closer trade 
relations in the very near future.  We will remain  attentive to the development of the discussion during 
this Review. 
NIGERIA 
148. Nigeria, like Iceland, believes that open mark ets, non-discrimination and global competition 
in international trade are conducive to global and na tional welfare.  My delegation therefore wishes to 
acknowledge the active and constructive role that Ic eland has been playing in the DDA negotiations. 
We are also happy to note the significant contributi ons being made by Iceland to the integration of 
developing countries, transition ec onomies, and least deve loped countries into the multilateral trading 
system, especially its support for the Doha Development Global Trust Fund.  
149. Nigeria wishes to commend Iceland for its low and simple tariff regime.  We also note that 
over 70% of all its tariff lines are duty free.  However, my delegation also wishes to encourage 
Iceland to continue its trade liberalization effo rts, by narrowing the gap between the bound and 
applied rates so as to enhance the predictability of  its trade regime. It would be interesting to know 
how Iceland intends to achieve this objective.  Anot her area is Iceland customs clearance procedures, 
which were largely computerized to facilitate trad e.  According to the Secretariat Report Electronic 
Data Interchange (EDI) covered 98% of the declarat ions of import and export firms and any clearance 
using EDI took only a matter of few minutes while the manual requires few hours.  Noting that 90% of Icelandic standards and regulations were European standards and few percentages were 
international standards. Nigeria encouraged Icela nd to harmonize the remaining national standards so 
as to facilitate the flow of international trade. 
150. Nigeria is pleased to note Iceland's continuing strong economic performance in the period 
since the last review in 2003.  Despite a brief ec onomic setback in 2008, I celand economic recovery 
has been underway since 2010 averaging 3.1% in 2011 and economic expenditure increased by 4.7%, private sector consumption grew by 4% and investment by 13.4% while public consumption 
decreased by 0.6%.  At the same time, exports grew by 3.2% and imports by 6.4%.  This resulted in 
surplus of ISK 154 billion in the balance on goods and services in 2010 (10% of GDP) and a surplus  WT/TPR/M/273 
 Page 25 
 
 
  of ISK 133 billion in 2011 (8% GDP).  The terms of trade deteriorated by 1% of GDP in 2011 
compared to the previous year.  Despite this de velopment the favourable current account balance in 
2011 contributed to a 5.4% increase in GNI compared to 1.7% increase in 2010. 
151. As highlighted in the Secretariat Report, Ni geria however, notes the continued efforts by 
Iceland government towards its significant structural changes following the financial crisis in 2008.  
In particular, banking system reforms that were ca rried out in recent years which include household 
and corporate debt restructuring, tax and customs policy reforms, others were competition and state 
ownership rules review. It would be interesting to  hear any information Iceland might share with 
Members about its structural reforms, in particul ar the increase in tax following the 2008 financial 
crisis.  
152. It is also note that the structural reform s by Icelandic government the services sector had 
grown to account for some high percentage of GDP in 2011.  The seafood sector account for 10.8% in 
2011 from 9.7% in 2010, aluminium smelting industr y account for 4.6% in 2011 from 4.1% in 2010 
while tourism peaked up from 5.6% in 2009 to 16% increase in 2011, with the above progress, 
Nigeria is convinced that this would further ensure that Iceland prepared for trade liberalization at the 
global level.   
153. Finally, as acknowledged in the Secretariat Report, in spite of its intensive trade liberalization 
effort that includes services sector among others e limination of tariff and non-tariff barriers to trade, 
simplification of exports and imports procedures and the increased in trade flows and diversification, 
Iceland still faces challenges among them financial sector .  It is hoped that Iceland will continue with 
its reforms in order to bring about a more comp etitive trade and macro-ec onomic environment that 
will put the economy on a trajectory of sustainable growth.    WT/TPR/M/273 
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  V. REPLIES BY THE REPRESENTATIVE OF ICELAND AND ADDITIONAL 
COMMENTS 
154. My intervention will focus on themes we have iden tified from your interventions.  First, a few 
words on our economic recovery.  Th e financial crisis was a wake-up call for us.  Iceland is slowly 
emerging from a financial crisis and we appreciate your words of support.  However, the recovery 
remains vulnerable to both internal and external fa ctors.  The economic situation in Iceland was the 
subject of numerous interventions.  Many countries raised the question of how Iceland intends to lift 
capital controls.  The controls will be lifted as c onditions permit in accordance with our international 
obligations.  
155. The main challenge facing Iceland in lifting the controls relates to an overhang of Icelandic 
krona that entered the economy prior to the cris is.  A sudden outflow of these funds could cause a 
sharp depreciation of the currency.  The funds have  since been reduced and are currently just above 
20% of GDP, and a strategy to further reduce it by transferring volatile assets to longer-term 
investments is currently being implemented.  The st rategy is condition-based rather than time specific, 
even though a sun-set clause for year-end 2013 is foreseen in the current legislation.   
156. A number of delegations raised the issue of inv estment restrictions in certain sectors.  The 
fact is that Iceland maintains a very open and liberal  investment regime for investors.  However, we 
do maintain sector-specific restrictions in a handful of sensitive sectors, namely  fisheries, energy, real 
estate and air transport.  There are no plans to further liberalise investments in these sectors beyond 
the measures currently in place.   
157. The government took over a large share of the ba nking sector following the financial crisis.  It 
now holds a majority stake in one of three large banks, a minority stake in the other two as well as 
stakes in smaller savings banks.  State ownership re mains limited in other sectors, with the exception 
of the energy sector. A parliament ary bill has been put forward which authorises the government to 
divest part of its holdings in the financial sector.  However, the government intends to hold on to a 
controlling stake in one of the banks.  
158. Regaining investor confidence is of utmost importance for the economy.  The successful 
conclusion of the IMF programme in 2011 and fiscal c onsolidation was important in this regard.  The 
market reaction to these successes was reflected in Icel and's return to international capital markets.  
Iceland is currently applying measures that facilitate  FDI according to legislation passed in 2010.  For 
such a small economy, however, large-scale foreign di rect investments will to a large extent depend 
on developments in inte rnational markets.  
159. The Icelandic authorities and financial instituti ons have implemented a range of programs to 
assist highly indebted households.  As a result, hou sehold debt has decreased from 132% of GDP in 
early 2009 to 109% of GDP in mid-2012.  Househ old debt will decrease further as illegal foreign 
exchange linked loans are recalculated.  The interest  rate rebate has also b een increased sharply to 
alleviate household interest rate costs.  It shoul d be noted that the high indebtedness of Icelandic 
households is reflected in widespread home-owners hip. Household net asset positions have increased 
steadily since 2010 and this development is expected  to continue as housing prices raise.  Levels of 
non-performing loans have also decreased and are now below 10%.  
160. As regards notifications, we recognize the impor tance of timely notifications and are taking 
active steps in that direction.  To mention few exampl es, in the field of agriculture we aim to make all 
outstanding notifications, in particular on domestic  support, by end-February  2013.  We will submit 
notifications on procurement statistics and the a nnual questionnaire for import licencing procedures 
by end-March 2013.  In addition, we have been reviewing our pro cedures in order to better provide 
for appropriate and timely TBT a nd SPS notifications.  To this extent we have already notified two  WT/TPR/M/273 
 Page 27 
 
 
  important SPS regulations and made a TBT notifica tion regarding our labelling and traceability rules 
on products containing GMOs.   
161. Due to the geographic isolation and restricted imports of live animals and their genetic 
material, animals in Iceland are fre e from many infectious agents known to be endemic throughout the 
world. Only a small number of known infectious agen ts found in other parts of the world can be found 
in Iceland.  Therefore, animals in Iceland are highly sensitive to various transmissible agents.  
Previous disease outbreaks in Iceland show that the vulnerability of Icelandic stocks to novel 
pathogens is extremely high.  This situati on makes Icelandic livestock highly vulnerable.  
162. For these reasons the importation of live animals, raw meat and eggs are restricted.  Not by 
choice but by necessity, in accordance with what we cons ider to be an appropriate level of protection.  
The fact remains that the Minister of Industries and Innovation can permit importation according to specific requirements.  The importation of pets and fu r animals, to mention a few, occurs regularly.   
163. Another theme that emerged in the discussions was agriculture. Icelandic agriculture operates 
under difficult circumstances.  As our colleague from Norway pointed out in his intervention last Tuesday, non-trade concerns are an important cons ideration in our agricultural policy.  For these 
reasons Icelandic agriculture cons ists of a rather narrow range of  products, mainly meat and dairy 
production. These sectors enjoy both market support and/ or direct payments.  The current support is 
considered necessary to maintain ag ricultural activity in Iceland and at the same time supporting rural 
viability. 
164. We understand the criticism from some Members that our system of customs duties is 
complicated, specifically the application of compound duties in certain cases.  From 1995 Iceland has applied both ad valorem  and specific duty rates well within Iceland‘s WTO commitments.  However, 
from 1995, the MFN duty rates applied have remained at the same level, despite a significant increase 
in world market prices and relatively high inflatio n in Iceland.  Thus, the specific component of 
compound duties has been more beneficial for importers then if only ad valorem  duties had been 
applied.  This essentially means that the tariff si mplification would not necessarily favour importers or 
consumers. The fact remains that around 70% of I celand‘s tariffs lines for agricultural products are 
duty free, making Iceland a fairly liberal market for agricultural products.  
165. Finally, there were a number of questions raised on other issues.  On the EU accession 
process, without reiterating my previous comments,  I can tell you that the process is moving ahead 
efficiently. Two-thirds of the negotiating chapters have been opened and we are beginning to address 
the challenging ones, like monetary policy, the environment and the common trade policy.  I do not have a crystal ball regarding the timeline but I can tell you that the accession process will not be dictated by artificial dates, but by the quality of the overall process.  In the end the Icelandic people 
will decide their own fate on this issu e in a referendum on an Accession Treaty. 
166. We were also reminded of the inherent risks of relying too heavily on a limited number of 
economic sectors and markets.  We agree, and of course we understand the danger of putting all your 
eggs in one basket. It is true that Iceland's merc handise exports are fairly concentrated both in type 
and markets. Yet, keep in mind that Iceland has traditionally been a one crop economy, fisheries.  
That is no longer the case and we have made importa nt strides to diversify the economy.  Today, the 
fisheries sector remains a critical pillar of economic vitality and foreign currency earnings.  Yet, other 
sectors such as aluminum and tourism, not to mention the services and high tech sectors, are developing further and will ensure a much more diverse economic base. Much of the jobs of the 
future will be created in these sectors.   
167. Even though further diversification would be we lcome, it is important to note that Iceland's 
small population may hamper extensive diversifica tion of production given a lack of economies of WT/TPR/M/273 
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  scale. The Government has, however, taken active steps to support the tourism sector.  This is 
supported by growing funding for research and deve lopment with an aim towards strengthening the 
knowledge based sector, an important avenue for future exports.   
168. With respect to market diversification, the EU is obviously our most important market and 
will remain so in the foreseeable futu re.  Icelandic exporters have been able to react efficiently to the 
ongoing crisis in Europe.  The simple fact is that  we sell our goods and services on the international 
market for the best price we can get.  Of course our job is to create better market conditions for our 
economic operators wherever we ca n, and we have been doing exactly that by concluding a relatively 
high number of free trade and bilateral investment ag reements with partners throughout the world.  
169. And to answer the Discussant's question on our  ability to manage the growing "spaghetti 
bowl" of FTAs, I can tell you that this has not been a significant hurdle in large part because all our 
free trade agreements complement the multilateral system.  Our administration has also gained 
valuable experience in managing the EEA Agreement.   The best scenario, I believe for all of us, 
would be significant progress in the Doha Development Round.  
170. Now that we approach the conclusion of this re view, I want to recall that the point of this 
exercise is to listen - with open ears and an open mi nd - to constructive criticism and peer review.  To 
understand better the areas where we are doing well; to explain policies others find wanting or 
unclear; and to consider trade related policies where we  can do better.  This we have certainly done.    
DISCUSSANT 
171. My overall assessment is that participants in  the discussion appreciate the commitment to 
maintain an open economy and in particular to respect its WTO obligations that has been 
demonstrated by Iceland throughout the unprecedente d crisis it has undergone.  There has also been 
recognition that Iceland's trade and investment re gime is on the whole ope n and predictable albeit 
with some exceptions.  
172. During our discussion held on the first day of the review with the aim of analyzing the impact 
of the crisis over the Icelandic economy and its im plications for policy making, we noticed some 
echoes from the previous review held in 2006.  We probably all realize that as a result of the 
economic crisis and compared to the previous review in 2006 Iceland is today a very different country 
not only in terms of economic developments but al so in terms of the policy making environment.  
173. Against this background, much praise was offered to Iceland on Tuesday for not resorting to 
any protectionist measure and maintaining a largely open market during and after the crisis.  In this 
sense, Iceland sets an outstanding example for other WTO Members.  I think we must commend 
Iceland for staying the course of its liberal trade polic y.  It is important to note that Iceland has also 
expressed its determination to mainta in this course in the future.  
174. The previous review concluded that Iceland need ed to continue structural reforms and pursue 
diversification.  It is significant that even in the challenging environment arising out of the crisis 
Iceland appears to see it as an opportunity to conso lidate structural reforms and strive for a more 
diversified economy as clearly aimed at in the "2020 Iceland policy statement".  
175. Nevertheless, concerns have been expressed to the effect that the recovery which has been 
under way in Iceland is fragile and that there is a clear need to address rema ining challenges in areas 
like public finances in an effective manner.  In its  statement on Tuesday, Iceland has reinforced our 
understanding that it will maintain its commitment towards more reforms.   WT/TPR/M/273 
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  176. One point which has been raised frequently in the discussion is the agricultural policies 
followed by Iceland.  Before drawing any conclusions, it would be fair to state that we must take into 
account the peculiar features of Iceland's geographic lo cation and climatic conditions.  I think that we 
all are aware that these facts impose some constrai nts on the Icelandic government in terms of the 
agricultural policies that it follows.  However, in  the light of the discussion that has taken place and 
the questions that have been put to it, Iceland may want to reconsider the mix of these policies.  In 
particular, the question can be asked of whether the presently imposed outright prohibition on imports 
of raw meat and eggs is really justifiable on the basis of scientific evidence. 
177. I think the accession talks with the EU provide an opportunity for Iceland to have a closer 
look at some of the policies it pursues.  Accession to the EU and the long-term goal of membership of 
the Eurozone can be expected to consolidate Icela nd's integration with the single market and thereby 
support its efforts at diversification of its output.  It was therefore interesting to hear the Icelandic 
delegation's expectations in this regard. 
178. In the same vein, capital controls which are deemed  to be redundant by the OECD are an area 
which has attracted attention during our discussion and I have taken note of the intentions of the 
Icelandic government to eliminate those restrictions  by the end of 2013 also in the light of their 
incompatibility with EU membership.  
179. Of a more systemic nature, the notifications issue seems to be a source of concern for 
members and rightly so.  Notifications are the only way to ensure that the WTO's essential function of 
monitoring the relevant policies of its members is co nducted in an efficient and transparent manner.  I 
believe that transparency and predictability are cruc ial particularly for countries like Iceland that rely 
on international trade for their c ontinued development.  We are pleased to hear that Iceland has 
submitted some of these notifications albeit just before  the present review and that it intends to make a 
whole series of fresh notifications in the next few months. 
180. Before concluding, let me reiterate once again th at I have been very pleased to participate in 
this meeting as a discussant as this participation and the preparations it has required have enabled me 
to study if only in a superficial manner the cha llenging environment of polic y making during and after 
a severe crisis.  
181. If I may be permitted one last comment, this time as a representative of Turkey, a country 
which has had some considerable experience with such crises in the past, I must say that I was 
particularly impressed by the effective way with which Iceland has been coping with its crisis and 
refrained from taking any actions that would be incons istent with its international obligations.  I am 
sure it will continue to do so in future as the effects of the crisis fade away. 
UNITED STATES 
182. The U.S wishes to thank Iceland for the hard work in preparing for this TPR and for the 
replies to our advance question.  We have two br ief follow-up comments to share.  We thank Iceland 
for its response regarding the Article 7.3 notifi cation requirement of the WTO Agreement on Import 
Licensing Procedures.  We take do note of Iceland' s promise to submit its annual reply for 2013 this 
coming March.   
183. We also thank Iceland for the update on its SPS and TBT notification, especially those related 
to recent changes to import requirements for dairy and livestock import requirements, and for changes 
to labeling requirements for imports in certain agricu ltural products made with genetically engineered 
crops as ingredients, such as grains and cereal produc ts.  Iceland indicated th at it has already notified 
the measures we noted in our questi ons, and the notification should be circulated in the course of the 
week.  We therefore look forward to reviewing these notifications.  WT/TPR/M/273 
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  EUROPEAN UNION 
184. The EU would like to thank Iceland for the rep lies provided and the information that we heard 
today, we have gone through out the replies and we do not have follow-up questions at this stage.  So 
we would just like to thank Iceland for the effo rts that they have put into this exercise. 
  WT/TPR/M/273 
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  VI. CONCLUDING REMARKS BY THE CHAIRPERSON 
185. The fourth Trade Policy Review of Iceland has given us a better understanding of trade and 
economic developments in the country  over the past six years and help ed us to measure the challenges 
it faces in achieving full economic recovery.  Our candid discussion has been greatly helped by the 
full and open participation of the I celandic delegation, led by H.E. Mr. Högni Kristjánsson, Director 
General for Trade and Economic Affairs, Ministry of Foreign Affairs, and by the insightful remarks of 
the discussant, H.E. Ambassador Selim Kuneralp of Turkey, as well as the questions and statements from delegations and the replies from Iceland. 
186. Members appreciated the constructive role played  by Iceland in the WTO and its commitment 
to the multilateral trading system.  They also noted that the size of the country was not a barrier to 
meaningful participation in the WTO, noting in particular the efforts of Ambassador Johannesson 
with respect to NAMA negotiations and the success ful accession of the Russian Federation.  Certain 
Members noted that through EFTA, Iceland has been  actively expanding its network of FTAs and 
wanted to know how these would complement Iceland's WTO commitments.   
187. In this Trade Policy Review, Members commended Iceland on its policy response to the 
collapse of its banking system due to the global economic crisis.  Measures taken by the authorities 
enabled the economy to recover without resorting to  protectionist measures.  At the same time 
however, Members stressed that in order to sustai n growth, Iceland still needed to resolve several 
issues relating to the banking sector, such as non-perfor ming loans so that banks could return to their 
core lending activities as well as conti nuing with fiscal consolidation. 
188. Members also noted that Iceland had a narrow export base and that the majority of exports 
were destined for the EU and EFTA markets.  Thus, they expressed the need for diversification, which 
would leave Iceland less vulnerable to exogenous s hocks.  While welcoming Iceland's strategy of 
identifying energy intensive industries, along with land intensive industries, knowledge based 
industries, and tourism as sectors where Iceland h as a competitive advantage and growth potential;  
they raised concerns regarding restrictio ns for investments from outside the EEA.   
189. The statements, questions and replies voiced in th e course of this Review have highlighted the 
fact that Iceland is an open economy and trade is  essential to its development.  However, certain 
concerns of a systemic nature were raised, where Members felt that reforms could be implemented.  The following are some areas noted by Members and we have taken careful note of the explanations 
and comments provided by Iceland's Head of Delegati on, Mr. Kristjansson, in his intervention, this 
morning: 
 Notifications:  Many Members noted that Iceland had not kept up with its 
notification obligations particularly in the areas of import licensing, SPS and TBT measures where no notifications had been made since 2006.  We appreciate very much the commitments made by the Head of  Delegation this morning regarding more 
timely and complete notifications in the near future;  
 Tariffs:   While members stated that Iceland's overall tariffs were quite low, with over 
70% of tariff lines duty free, they expr essed concern about the difference between 
applied and bound rates and the complexity of the tariff;   
 SPS measures :  Many delegations noted with concern Iceland's very strict SPS 
regime particularly with regards to fresh meat, raw eggs and animal products not for 
human consumption; 
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   Agriculture:   Several delegations noted the rela tively high and increasing levels of 
support and protection for Agriculture in spite  of the sector's small and declining role 
in the economy.  They also noted that tariffs on agricultural goods were high and complex with a large number of compound duties with both ad valorem  and specific 
duties applied. 
 
190. Iceland was severely affected by the global financial crisis.  Policy choices following the 
crisis, which included capital controls and fiscal  consolidation, and limiting the cost of bank 
restructuring on public finances, helped the economic recovery.  The recovery from the crisis has been 
export led and the country did not introduce any trad e restrictive measures.  Furthermore, Iceland 
successfully completed the IMF programme and also  repaid considerable amounts of the bilateral 
loans that it took.  Consequently growth h as rebounded and inflation and unemployment have 
declined.  We also noted that Iceland's negotia tions to join the European Union are advanced. 
191. Despite the recovery, growth remains fragile. Go ing forward, several outstanding issues in the 
banking sector still need to be resolved, capital controls gradually phased out, and investment 
restrictions lifted.  These in turn would help restore investor confidence and encourage foreign 
investment.  Additionally, diversification both with regards to the mix of goods and destinations needs 
to be encouraged so as to provide a buffe r against shocks in specific markets.  
192. In conclusion, this Review ha s confirmed the important role played by Iceland in the 
multilateral trading system and the benefits it has derived from maintaining  an open economy.  Once 
again, I thank the delegation of Iceland, the discussant and Members for contributing to an 
informative and interesting review.  I also wish  to express my appreciation to the delegation of 
Iceland for its oral and written responses during the meeting.  We look forward to receiving any 
outstanding responses within the coming month.  Icel and has travelled a difficult road in the last few 
years;  hopefully, the inputs from these deliberations w ill help to shape its trade policies so that, in the 
future, the way to full recove ry and stability becomes easier. 
 
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