WT/REG355/1  
7 July 2016  
(16-3654)  Page: 1/41  
Committee on Regional Trade Agreements   
 
FACTUAL PRESENTATION 
FREE TRADE AGREEMENT BETW EEN ICELAND AND CHINA 
(GOODS AND SERVICES) 
Report by the Secretariat 
This report, prepared for the considerat ion of the Free Trade Agreement between 
Iceland and China, has been drawn up by the WTO Secretariat on its own 
responsibility and in full consultation with the Parties. The factual presentation 
reproduces as closely as possible the terminology used in the Agreement and in the comments provided and does not imply offi cial endorsement or acceptance by the 
Secretariat of such terminology. The report has been drawn up in accordance with the 
rules and procedures contained in the Decision for a Transparency Mechanism for 
Regional Trade Agreements (WT/L/671) and thus does not imply any value judgement by the Secretariat regarding the contents of the Agreement. 
Any technical questions arising from this report may be addressed to Rohini Acharya 
(tel: +41 22 739 5874). Any statistical questions arising from this report may be addressed to Rowena Cabos (tel: +41 22 739 5185). 
 
 WT/REG355/1 
 
- 2 - 
 
   
TABLE OF CONTENTS 
Page 
1   TRADE ENVIRONMENT ................................................................................................. 4  
1.1   Merchand ise trade ..................................................................................................... 4  
1.2   Trade in servic es and inve stment ................................................................................. 6  
2   CHARACTERISTIC ELEMEN TS OF THE AG REEMENT .................................................... 10  
2.1   Background  Information ............................................................................................ 10 
3   PROVISIONS ON TRADE IN GOODS ........................................................................... 11  
3.1   Import duties and charges,  and quantitative  restrict ions ................................................ 11 
3.1.1   Genera l provisions ................................................................................................. 11 
3.1.2   Liberalization of  trade and ta riff lines ........................................................................ 11 
3.1.3   Liberali zation schedule............................................................................................ 12 
3.1.4   Tariff rate quotas ................................................................................................... 15 
3.2   Rules of origin .......................................................................................................... 15 
3.3   Export duties and charges,  and quantitative  restrictions ................................................. 15 
3.4   Regulatory provisions on trade in goods ....................................................................... 16 
3.4.1   Standards ............................................................................................................. 16 
3.4.1.1   Sanitary and phytosanitary measures .................................................................... 16 
3.4.1.2   Technical barriers to trade .................................................................................... 16 
3.4.2   Safeguard mechanisms ........................................................................................... 18 
3.4.2.1   Global safeguards ............................................................................................... 18 
3.4.2.2   Bilateral safeguards ............................................................................................. 18 
3.4.2.3   Balance of payments safeguards ........................................................................... 19 
3.4.3   Anti-dumping and countervailing measures ............................................................... 19 
3.4.4   Subsidie s and State-aid .......................................................................................... 19 
3.4.5   Customs-re lated procedures .................................................................................... 19 
3.4.6   Other regulations ................................................................................................... 21 
3.5   Sector-specific provis ions on trad e in goods ................................................................. 21 
4   PROVISIONS ON TRADE IN SERVICES ....................................................................... 21  
4.1   Scope and definitions ................................................................................................ 21 
4.2   Denial of benefits ..................................................................................................... 21 
4.3   General provisions on trade in services ........................................................................ 21 
4.3.1   Mark et acce ss ....................................................................................................... 21 
4.3.2   National and MFN tr eatment .................................................................................... 21 
4.3.3   Commercial presence ............................................................................................. 21 
4.3.4   Performanc e requirements ...................................................................................... 22 
4.3.5   Senior Managers and Boards of  Direct ors .................................................................. 22 
4.3.6   Movement of  natural persons .................................................................................. 22 
4.4   Liberalization commitments ........................................................................................ 22 WT/REG355/1 
 
- 3 - 
 
  4.4.1   Iceland ................................................................................................................. 23 
4.4.1.1   Horizont al commit ments ...................................................................................... 23 
4.4.1.2   Sector-spe cific commitments ................................................................................ 23 
4.4.2   China ................................................................................................................. .. 26 
4.4.2.1   Horizont al commit ments ...................................................................................... 26 
4.4.2.2   Sector sp ecific commitments ................................................................................ 26 
4.4.3   In vestme nt ........................................................................................................... 29 
4.5   Regulatory provisions ................................................................................................ 29 
4.5.1   Domestic regulation ............................................................................................... 29 
4.5.2   Recognition ........................................................................................................... 29 
4.5.3   Subsidies .............................................................................................................. 29 
4.5.4   Safeguards ........................................................................................................... 29 
4.5.5   Other ................................................................................................................. .. 30 
4.5.5.1   Tr ansparen cy ..................................................................................................... 30 
4.6   Sector specific provis ions on trade in services ............................................................... 30 
4.6.1   Financial services ................................................................................................... 30 
5   GENERAL PROVISIONS  OF THE AGREEMENT ............................................................. 30  
5.1   Tran sparency ........................................................................................................... 30 
5.2   Current payments and capital movements .................................................................... 30 
5.3   Exceptions ............................................................................................................... 30 
5.4   Accession and Withdrawal .......................................................................................... 31 
5.5   Institutio nal framework ............................................................................................. 31 
5.6   Disput e settlement ................................................................................................... 31 
5.7   Relationship with other agr eements concluded by the Parties .......................................... 32 
5.8   Government  procurement .......................................................................................... 34 
5.9   Intellectual property rights ......................................................................................... 34 
5.10   Other .................................................................................................................. .. 35 
5.10.1   Competition ........................................................................................................ 35 
5.10.2   C ooperat ion ........................................................................................................ 35 
ANNEX 1 ....................................................................................................................... . 37 
 WT/REG355/1 
 
- 4 - 
 
  Key Facts 
 
Parties to the Agreement:  Iceland and China 
 
Date of Signature:  15 April 2013 
 
Date of Entry into Force:  1 July 2014 
 
Date of Notification:   10 October 2014 
 
Full implementation:  Goods :  2024  
Services :  2014  
 
1  TRADE ENVIRONMENT1 
1.1.  The Free Trade Agreement between Icelan d and China (hereinafter "the Agreement") is 
Iceland's third RTA (following its accession to the European Free Trade Association (EFTA) and its RTAs with the EU and the Faeroe Islands) notified to the WTO; in addition, Iceland as a member 
State of the EFTA has notified 25 agreements to the WTO. The Agreement is China's 12
th 
notification of an RTA to the WTO.2 
1.2.  The two economies are considerably  different. In 2014 Iceland had a GDP of 
US$17,071 million, compared to US $10,360 billion for China. In the same year Iceland ranked 
86 and 100 in terms of global exports and impo rts of merchandise and 52 and 65 for services 
exports and imports. China on the other hand was ranked 1st and 2nd in merchandise exports and 
imports and 3rd for commercial services exports and imports in 2014. These rankings exclude 
intra-EU trade. In terms of composition of trade, Iceland mainly exports agriculture (fish and other 
marine products) and fuels and mining products (base metals) and imports mainly manufactures, while China's exports and imports are dominated by manufactured products. 
1.1  Merchandise trade 
1.3.  Chart 1.1 shows the parties' global and bilateral merchandise trade for the period 2002-2014. 
While Iceland maintained a global trade deficit until 2008, its trade balance moved into surplus 
between 2009 and 2012. China has maintained a surplus in its overall merchandise trade during 
the entire period and also a trade surplus in its trade with Iceland.  
                                               
1 Unless otherwise indicated, the figures in this section are based on the WTO's Trade Profiles and the 
UNSD Comtrade Database. 
2 WTO RTA Database ( http://rtais.wto.org ).  WT/REG355/1 
 
- 5 - 
 
  Chart 1.1 Iceland and China: Merchandise bilateral trade and with world, 2002-2014 
0.00.20.40.60.81.0
05001,0001,5002,0002,500
2002 2004 2006 2008 2010 2012 2014B. China 2002-2014
(US$ billions)
Imports from Iceland (Right Axis)
Exports to Iceland (Right Axis)
Total Imports
Total Exports
0.00.20.40.60.81.0
0123456789
2002 2004 2006 2008 2010 2012 2014A. Iceland 2002-2014 
(US$ billions)
Imports from China (Right Axis)
Exports to China (Right Axis)
Total Imports
Total Exports
 
Source: UNSD Comtrade database. 
1.4.  Chart 1.2 below shows the product composit ion of both parties' average merchandise trade 
during 2011-2013 by HS Section. While Iceland's global exports are dominated by base metals and fish and other marine products which accounted fo r 78% of total exports during this period, China 
mainly imports fish products from Iceland (75% of China's imports from Iceland). The composition 
of Iceland's imports from China reflect closely that of China's overall exports: machinery and textiles which accounted for 54% of China's global exports were also Iceland's two largest imports 
from China accounting for 61% of its imports from China during the period. WT/REG355/1 
 
- 6 - 
 
  Chart 1.2 Iceland and China: product composi tion of merchandise trade, annual average 
(2011-2013) 
47
1497644226Iceland imports from China (%)
22
19
1796543332224Iceland's Global Imports (%)
42
1276554432226China's Global Exports (%)
7598422China's imports from Iceland (%)
31
25766553211China's Global Imports(%)
42
3663322222Iceland's Global Exports(%)Total: US$ 346 million Total: US$ 4.9 billion
Total: US$ 1,837 billionTotal: US$ 5.1 billionTotal:  US$ 2,052 billion
Total: US$ 80 million
 
Source: UNSD, Comtrade database. 
1.2  Trade in services and investment 
1.5.  Chart 1.3 shows Iceland's global trade in commercial services during the period 2001-2013, 
while Chart 1.4 shows China's global trade in commercial services during this period as well as bilateral trade in services with Iceland for 2011- 13. Iceland maintained a rising deficit in its 
services balance until 2006. The deficit has since declined and since 2009 the services balance has 
been in surplus. Iceland's services exports and imports are dominated by transportation services, 
followed by travel and other business services. WT/REG355/1 
 
- 7 - 
 
  Chart 1.3 Iceland: Trade in commercial services with world, 2001-2013 
0.01.02.03.04.0
2001 2003 2005 2007 2009 2011 2013A. Iceland imports from world
2001-2013
(US$ Billion)
0.01.02.03.04.0
2001 2003 2005 2007 2009 2011 2013B. Iceland exports to world
2001-2013
(US$ Billion)
 
Note: In 2013, trade figures are only available for Transport and Travel; no available exports for Construction 
(2006-2008) and Royalties and licence fees (2001, 2003 and 2005). 
Source: WTO Statistics Database. 
 
1.6.  China has maintained a global trade deficit in services during 2001-2013 but a surplus in its 
bilateral trade in services with Iceland for the period 2011-2013. Like Iceland, its main exports and 
imports of services are transportation and travel services. Other key exports are other business services that have grown rapidly and construction services. In bilateral trade with Iceland China's 
main exports are computer and information services, other business services and travel, while it 
mainly imports travel and other business services. WT/REG355/1 
 
- 8 - 
 
  Chart 1.4 China: Trade in commercial services with Iceland and world 
051015202530
2011 2012 2013A. China imports from Iceland
2011-2013
(US$ Million)
051015202530
2011 2012 2013B. China exports to Iceland
2011-2013
(US$ Million)
050100150200250300350
2001 2003 2005 2007 2009 2011 2013C. China imports from world
2001-2013
(US$ Billion)
050100150200250300350
2001 2003 2005 2007 2009 2011 2013D. China exports to world
2001-2013
(US$ Billion)
 
Note: no trade data with world on Consulting and Advertising, media for 2001-2010. 
Source: WTO Statistics Database and Chinese authorities (2011-2013). 
 
1.7.  Charts 1.5 and 1.6 show the parties' foreign direct investment stocks and flows both globally 
and bilaterally. Iceland has been a net outward in vestor for much of the period although both 
stocks and flows fell sharply in 2008 as a consequence of the financial and economic crisis. With 
regard to China. Iceland's investment in China has fluctuated sharply but stocks invested in China have been positive since 2006. China has remain ed a net recipient of FDI during the period 
2001-2013 with a steady increase in both inward and outward FDI stocks and flows. WT/REG355/1 
 
- 9 - 
 
  Chart 1.5 Iceland: FDI stock and flow with China and world 
020406080100120140160180200
2002 2004 2006 2008 2010 2012FDI stock with China
2002-2012
(US$ Million) 
Outward
-10-505101520253035
2002 2004 2006 2008 2010 2012FDI flow with China
2002-2012
(US$ Million) 
Outward
051015202530
2001 2003 2005 2007 2009 2011 2013FDI stock with world
2001-2013
(US$ Billion) 
Outward Inward
-10-5051015
2001 2003 2005 2007 2009 2011 2013FDI flow with world
2001-2013
(US$ Billion) 
Outward Inward
 
Note: No data for Iceland's inward  FDI stock and flow with China. 
Source: OECD (2002-2012), UNCTAD (2001 and 2013). 
Chart 1.6 China: FDI stock and flow with Iceland and world 
02004006008001,0001,2001,4001,600
2001 2003 2005 2007 2009 2011 2013FDI stock with world
2001-2013
(US$ Billion) 
Outward Inward
020406080100120140
2001 2003 2005 2007 2009 2011 2013FDI flow with world
2001-2013
(US$ Billion) 
Outward Inward
 
Source: UNCTAD and Chinese authorities (2011-2013). 
 WT/REG355/1 
 
- 10 - 
 
  2  CHARACTERISTIC ELEMENTS OF THE AGREEMENT 
2.1  Background Information 2.1.  The Free Trade Agreement between Iceland and China (hereinafter "the Agreement") was 
signed on 15 April 2013 and entered into force on 1 July 2014. It was notified to the WTO under 
Article XXIV:7(a) and its Understanding and V:7(a) of the GATS on 10 October 2014.
3 The text of 
the Agreement, together with its annexes, is available on the Parties' official websites: 
Iceland:  http://www.mfa.is/foreign-policy/trade/fr ee-trade-agreement-be tween-icelandand- 
  china/  
China:  http://fta.mofcom.gov.cn/topic/eniceland.shtml . 
2.2.  The Agreement aims to establish a free trade area between the Parties consistent with 
Article XXIV of the GATT and Article V of the GATS. It applies to th e customs territory of China and 
to the territory of Iceland and the Parties also agree to take measures to ensure application of the 
Agreement by local governments and authorities in their territories. 
2.3.  The objectives of the Agreement include expand expansion and diversification of trade; 
eliminate barriers to trade and encourage and facilitate cross border movement of goods and 
services; promote conditions of fair competition; achieve further understanding of the government procurement of the Parties; ensure adequate and effe ctive protection of intellectual property rights 
in accordance with respective international ob ligations; create effective procedures for the 
implementation and application of the Agreement, for its joint administration and dispute resolution; and establish a framework for further bilateral, regional and multilateral cooperation to expand and enhance the benefits of the Agreement (Article 2). The Agreement has 12 Chapters 
and nine annexes. The structure is as described in Box 2.1 below: 
Box 2.1 - Structure of the Agreement 
 Preamble 
Chapter 1 General provisions 
Chapter 2 Trade in goods 
Chapter 3 Rules of Origin 
Chapter 4 Customs procedures and trade facilitation 
Chapter 5 Competition 
Chapter 6 Intellectual property rights 
Chapter 7 Trade in services 
Chapter 8 Investment 
Chapter 9 Cooperation 
Chapter 10 Institutional provisions 
Chapter 11 Dispute Settlement 
Chapter 12 Final Provisions 
Annexes  
Annex 1 Tariff concessions 
Annex 2 Competent authorities and contact points on SPS 
Annex 3 Competent authorities and contact points on TBT 
Annex 4 Product specific rules of origin 
Annex 5 Certificate of origin 
                                               
3 WTO documents WT/REG355/N/1 and S/C/N/771, 13 October 2014. WT/REG355/1 
 
- 11 - 
 
   Preamble 
Annex 6 Declaration of origin 
Annex 7 Schedules of specific commitments in services 
Annex 8 Movement of natural pers ons supplying services 
Annex 9 Rules of procedure of the Arbitration Panel 
Source: Free Trade Agreement between Iceland and China. 
 
3  PROVISIONS ON TRADE IN GOODS 
3.1.  Chapter 2 of the Agreement deals with trade in goods. The Parties agree to provide each 
other national treatment in accordance with Article III of the GATT 1994, including its 
interpretative notes, which are incorporated into  and made part of the Agreement (Article 6). 
3.1  Import duties and charges,  and quantitative restrictions 
3.1.1  General provisions 
3.2.  Except as otherwise provided in the Agr eement, the Parties may not increase existing or 
adopt new customs duties for each others' imports.4 Tariffs shall be progressively eliminated to 
imports of originating goods of the other Party in  accordance with Annex 1 of the Agreement and 
except as otherwise provided by the Agreement. The successive tariff reductions are to be 
implemented from a base rate of duty which is the MFN applied duty on 1 January 2012. 
Furthermore, if a Party reduces its applied MFN ra te after the entry into force of the Agreement 
and before the end of the tariff elimination period, tariff elimination shall be applied to the reduced 
MFN rate of duty. 
3.3.  Either Party may request the other to consider accelerating elimination of customs duties as 
set out in their Schedules. Any agreement to accelerate tariff elimination shall supersede any duty 
rate or staging category determined in their Sche dules for that good when approved by each Party 
in accordance with its respective applicable legal procedures. Entry into force shall be determined by the procedures in Article 126 of the Agreement (see Section 5.4 below). 
3.4.  Administrative fees and charges (other than  customs duties and other charges in Article 7, 
paragraph 5), imposed on or in connection with impo rts or exports are to be limited in amount to 
the approximately cost of services rendered and must not represent an indirect protection to domestic goods or a taxation of imports or exports for fiscal purposes. To ensure transparency 
each Party shall make available through the Internet or a comparable computer based 
telecommunications network a list of the fees and charges and changes thereto levied by the Central Government on imports or exports (Article 9). 
3.5.  The rights and obligations of the Parties on import (and export) restrictions are governed by 
Article XI of the GATT 1994, which is incorporated into and made part of the Agreement (Article 8). 
3.1.2  Liberalization of trade and tariff lines 
3.6.  Tables 3.1 and 3.2 below show the schedul ed liberalization of tariff lines and trade, 
respectively by Iceland and China with further details provided in Annex 1 below. In 2014, around 70.2% of Iceland's tariff (6,041 lines) were already duty free on an MFN basis, corresponding on 
average to 64.6% of its imports from China during 2011-2013.
5 Following the entry into force of 
                                               
4 Import duties do not include charges equivalent to an internal tax, consistent with Article III:2 of the 
GATT 1994, for like, directly competitive or substitutable goods of the Party, or for goods from which the imported good has been manufactured or produced, in whole or part; anti-dumping or countervailing duty; and fees or other charges in connection with imports, commen surate with the cost of services rendered (Article 7, 
paragraph 5). 
5 In 2014, Iceland's MFN applied tariff contained 8,601 lines at the HS eight digit level. Of these 94.74% 
carried ad valorem rates of duty. Of the remainder, 395 lines were subject to compound rates of duty while 57 
had specific rates of duty. The Secretariat has used th e ad valorem part of the tariff duty where compounds 
rate of duty are charged. WT/REG355/1 
 
- 12 - 
 
  the Agreement a further 2,163 lines or 25.1% of tariff, were liberalized for imports from China. 
This corresponded to 35.3% of Iceland's impo rts from China during 2011-13. Some 397 lines 
(4.6% of the tariff) are to remain subject to duties for imports from China, corresponding to around 2.9% of Iceland's imports from China in 2011-2013.
6 
Table 3.1: Iceland 
Tariff elimination commitments under the Ag reement and corresponding average trade 
Duty phase-out 
period Number of 
lines % of total lines 
in Iceland's tariff 
schedule Value of Iceland's 
imports from China 
(2011-2013) 
in million US$ % of 
Iceland's 
total imports 
from  
China 
2011-2013 
MFN duty free (2014)  6,041 70.2 10,447.2 64.6 
2014 2,163 25.1 5,711.3 35.3 
Remain dutiable  397 4.6 2.9 0.0 
Total  8,601 100.0 16,161.4 100.0 
Note: Based on the HS 2012 nomenclature. 
Source:  WTO estimates based on data from Iceland authorities and WTO-IDB. 
 
3.7.  Table 3.2 shows China's tariff elimination schedule under the Agreement. In 2014 around 
8.4% of China's MFN applied tariff, or 699 lines, were duty free on an MFN basis, corresponding to 1.1% of its imports from Iceland during 2011-2013.
7 As a result of the entry into force of the 
Agreement, China liberalized a further 7,214 lines (87.2% of the tariff) for imports from Iceland, 
corresponding to 84.5% of its imports from Iceland during 2011-13. A further 25 and 2 lines are to be liberalized respectively in 2019 and 2024, which accounted for 7.5% and 1.3% respectively of 
imports during 2011-13 from Iceland. Following th e end of implementation, 337 lines or 4.1% of 
China's tariff is expected to remain subject to du ties for imports from Iceland; these accounted for 
around 5.7% of its imports from Iceland in 2011-13. 
Table 3.2: China 
Tariff elimination commitments under the Ag reement and corresponding average trade 
Duty phase-out period Number of 
lines % of total lines 
in China's tariff 
schedule Value of China's 
imports from Iceland 
(2011-2013) 
in million US$ % of China's 
total imports 
from  
Iceland 
2011-2013 
MFN duty free (2014) 699 8.4 0.9 1.1 
2014 7,214 87.2 67.7 84.5 
2019 25 0.3 6.0 7.5 
2024 2 0.0 1.0 1.3 
Remain dutiable 337 4.1 4.5 5.7 
Total 8,277 100.0 80.1 100.0 
Note: Based on the HS 2012 nomenclature. 
Source:  WTO estimates based on data from Chinese authorities. 
 
3.1.3  Liberalization schedule 
3.8.  Table 3.3 and Chart 3.1 below provide further details of Iceland's tariff liberalization under 
the Agreement by HS Section and HS Chapter. At the end of liberalization, all of Iceland's tariff 
lines remaining dutiable for imports from China are found in HS Sections I-IV, especially I (live 
animals and animal products), and IV (prepare d foodstuff and beverages). The Chart shows MFN 
                                               
6 In addition to commitments to eliminate tariffs, Iceland has also made commitments to reduce or 
eliminate part of the tariff for certain agricultural prod ucts: these include certain ve getables such as cabbage, 
broccoli, carrots and turnips, celery , mushrooms for which the ad valorem component is eliminated while the 
specific duty component remains for imports from China;  flowers, for wh ich the ad valorem component of the 
tariff is eliminated while the specific duty component is reduced if the product is imported during a certain period of the year; and certain prepared foods. 
7 In 2014 China's MFN applied tariff consisted of 8,277 lin es at the eight digit level. Of these 8,237 lines 
were subject to ad valorem rates of duty. Of the remaining lines, 35 had specific rates of duty, while 5 lines had other duties. WT/REG355/1 
 
- 13 - 
 
  and preferential rates of duty for products rema ining dutiable once the Agreement is implemented 
by HS Chapter. In general the preferential and MFN average tariff for these lines is the same suggesting no further preferences for lines that remain dutiable for imports from China, except for HS Chapters 20 and 19. Average MFN and preferential applied tariffs range from 14.2% in 
Chapter 18 (cocoa and cocoa preparations) to 54.6% for Chapter 20 (preparations of vegetables, 
fruit, nuts or other parts of plants).  
Table 3.3 Iceland: Tariff elimination under the Agreement, by HS Section 
 
HS Section MFN average%  No. of lines MFN 2014  Number of  
duty-free lines under  
the Agreement (2014) Remain 
dutiable Avg. Final 
Tariff 
(Dutiable) 
I 7.2 920 679 29 212 29.8 
II 12.6 467 294 152 21 30.0 
III 0.0 109 105 2 2 - 
IV 9.5 1,103 570 371 162 25.8 
V 0.1 192 190 2   
VI 1.2 978 825 153   
VII 2.3 367 240 127   
VIII 5.4 123 25 98   
IX 1.9 218 158 60   
X 2.1 186 137 49   
XI 5.1 898 549 349   
XII 12.7 71 6 65   
XIII 3.6 192 108 84   
XIV 3.0 61 43 18   
XV 1.3 690 584 106   
XVI 2.1 1,112 837 275   
XVII 0.6 464 431 33   
XVIII 0.1 227 224 3   
XIX 5.7 25 7 18   
XX 8.7 187 19 168   
XXI 0.9 11 10 1   
Total 4.4 8,601 6,041 2,163 397 28.5 
Note: - specific duties only. 
 For the calculation of averages, sp ecific rates are excluded and the ad valorem  component of 
compound rates are included. 
 Based on the HS 2012 nomenclature. 
Source:  WTO estimates based on data  provided by Iceland authorities. 
Chart 3.1 Iceland: Average of du tiable rates, by HS Chapter  
0102030405060
2467 * 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2Rate of duty (%)
HS ChapterMFN Preferential
 
Note: * contains specific duties only. 
 Based on the HS 2012 nomenclature. 
Source: WTO estimates based on data provided by Iceland authorities. WT/REG355/1 
 
- 14 - 
 
  3.9.  Table 3.4 and Chart 3.2 show China's tariff elimination under the Agreement, respectively by 
HS Section and HS Chapter. At the end of implementation China will maintain tariffs on imports from Iceland across most HS Sections (except Sectio ns I, XII, XIII, XVII, XIX and XXI). The largest 
number of lines remaining dutiable are found in HS Sections X, IX and IV. The preferential and 
MFN average tariff for lines remaining subject to  duty once the Agreement is implemented, as 
shown in Chart 3.2 by HS Chapter, is the same suggesting no further preferences for these lines. Average MFN and preferential applied tariffs for lines remaining dutiable range from 3% in 
Chapter 25 (salt, sulphur, earth and stones) to 40% in HS 52 (cotton) and 62%% in HS 10 
(cereals).  
Table 3.4 China: Tariff elimination under the Agreement, by HS Section 
 
HS Section MFN average% No. of lines MFN 2014  Number of  
duty-free lines under 
the Agreement Remain dutiable Avg. Final 
Tariff 
(Dutiable) 
2014 2019  2024 
I 11.6 488 63 414 9 2   
II 14.3 511 54 426   31 50.8 
III 13.0 56  36   20 10.3 
IV 17.7 306 1 263   42 29.6 
V 3.8 201 37 162 1  1 3.0 
VI 6.8 1,286 9 1,257 7  13 18.1 
VII 9.4 272 1 268 1  2 7.3 
VIII 12.3 106  92 1  13 18.7 
IX 4.4 208 76 79   53 7.3 
X 5.3 161 35 10   116 6.7 
XI 11.4 1,141  1,126   15 30.1 
XII 17.9 71  71     
XIII 13.5 197 1 196     
XIV 10.5 90 32 56   2 35.0 
XV 7.3 770 4 760 1  5 7.0 
XVI 8.3 1,511 284 1,213   14 21.4 
XVII 13.1 351 1 350     
XVIII 9.9 334 34 293 5  2 15.0 
XIX 13.0 21  21     
XX 11.5 186 65 113   8 16.6 
XXI 9.8 10 2 8     
Total 9.8 8,277 699 7,214  25 2 337 16.9 
Note: For the calculation of averages, specific rates are excluded and the ad valorem  equivalent of specific 
rates are included. 
 Based on the HS 2012 nomenclature. 
Source:  WTO estimates based on data  provided by Chinese authorities. 
Chart 3.2 China: Average of du tiable rates, by HS Chapter  
010203040506070
7
1011
15
171920
21
22242528
29
303133
35
38394041
42
434448
49
51525559
71
737476
84
85909495
96Rate of duty (%)
HS ChapterMFN Preferential
 
Note: Based on the HS 2012 nomenclature.  
Source: WTO estimates based on data  provided by Chinese authorities.  WT/REG355/1 
 
- 15 - 
 
  3.1.4  Tariff rate quotas 
3.10.  There are no tariff rate quotas under the Agreement.  3.2  Rules of origin 3.11.  Section 1 of Chapter 3 of the Agreement describes rules of origin, while Section 2 describes 
operational procedures relating to documents and documentary evidence of origin; Annex IV to the 
Agreement contains a list of product specific rules of origin. In addition, Chapter 4 deals with customs procedures and trade facilitation (see Section 3.5.5 below). 
3.12.  Under Chapter 3, a good is considered as originating in a Party when it is wholly obtained or 
produced entirely in the territory of a Party
8; it is produced entirely in the territory of one or both 
Parties exclusively from materials whose origin conforms to the provisions of Chapter 3; or if it is produced in the territory of one or both Parties using non-originating materials that conform to a 
change in tariff classification (CTC), a region al value content (RVC), a process requirement or 
other requirements indicated in Annex IV on product specific rules of origin and the good meets the other applicable provisions of the Chapter. De minimis  provisions nevertheless, ensure that 
products that do not meet the CTC requirements of  Annex IV, shall be considered to be originating 
if (i) the value of all non-originating materials, including those of undetermined origin, that do not meet the CTC requirement does not exceed 10% of  the FOB value of the given good; and (ii) the 
good meets all the other applicable criteria of Chapter 3 (Article 28). 
3.13.  Operations that do not confer origin are defined in Article 27 and include simple operations 
such as operations to preserve the good condition of goods during transport and storage, breaking up and assembly of packages, washing, cleaning, ir oning of textiles, simple painting and polishing. 
Articles 29-32 describe provisions on accessories, spare parts and tools, packing and containers for 
transportation, packing materials and containers for retail sale and neutral elements which shall not be taken into account when calculating origin, except in certain cases. Preferential tariff 
treatment is provided for goods which satisfy the rules of origin requirements and are directly 
transported between the Parties. The following shal l be considered as direct transport: (i) goods 
transported without passing through a non-party; and (ii) goods whose transport involves transit 
through one or more non-parties with or without trans-shipment or temporary storage in such 
non-parties provided that the transit is justified geographically or related exclusively to transport requirements, the goods are not traded or consumed in the third-party and they do not undergo subsequent production or operation there other than unloading, reloading, splitting up of 
consignments or any other operation necessary to pr eserve them in good condition, provided that 
they remain under customs control during transit (Article 33). 
3.14.  The Agreement permits accumulation und er Article 26 where if originating goods or 
materials of a Party are incorporated into a good in the other Party, the goods or materials so 
incorporated shall be regarded to be originating in the latter Party. 
3.15.  Section 2 (Articles 34-45) contain operational procedures including procedures for issuing a 
certificate of origin, the declaration of origin, approved exporters, waiver of certificates or 
declaration of origin, refund of import duties or deposits as well as verification procedures and denial of preferential treatment. Finally, the Part ies agree to designate contact points to ensure the 
effective and efficient implementation of the Chapter.
9  
3.3  Export duties and charges,  and quantitative restrictions 
3.16.  Administrative fees and charges (other than  customs duties and other charges in Article 7, 
paragraph 5), imposed on or in connection with impo rts or exports are to be limited in amount to 
the approximately cost of services rendered and must not represent an indirect protection to 
domestic goods or a taxation of imports or exports for fiscal purposes. To ensure transparency each Party shall make available through the Internet or a comparable computer based 
telecommunications network a list of the fees and charges and changes thereto levied by the 
Central Government on imports or exports (Article 9). 
                                               
8 Wholly obtained goods are defined in Article 23 of the Agreement. 
9 The contact points are: ROO Division, Department of Customs Collection, General Administration of 
Customs of the Peoples Republic of China an d the Directorate of Cu stoms for Iceland.  WT/REG355/1 
 
- 16 - 
 
  3.17.  The rights and obligations of the Parties on export (and import) restrictions are governed by 
Article XI of the GATT 1994, which is incorporated into and made part of the Agreement (Article 8). 
3.4  Regulatory provisions on trade in goods 
3.4.1  Standards 
3.4.1.1  Sanitary and phytosanitary measures 3.18.  Sanitary and phytosanitary (SPS) measures are covered by Article 19 and apply to all SPS 
measures of the Parties which may, directly or indirectly, affect trade between them. Its objectives 
are: to avoid unfair distortion in trade of animals, products of animal origin, plants and products of plant origin between the Parties, while protecting human, animal or plant life or health; ensure that the Parties' SPS measures do not arbitrarily or unjustifiably discriminate between the Parties; 
resolve any trade issues related to SPS in a prompt and efficient manner; and provide trade 
expansion opportunities to the Parties. 
3.19.  The Parties' rights and obligations on SPS measures are governed by the WTO Agreement 
on the Application of SPS Measures (SPS Agreemen t) and they agree to follow the principles of 
scientific justification, harmonization, equivalence and regionalization of the SPS Agreement when establishing their relevant SPS measures. The Partie s also agree to the full implementation of the 
transparency provisions (Article 7) of the SPS Agreement, in accordance with its Annex B. 
3.20.  Implementation is to be carried out by the competent authorities and contact points as 
identified in Annex II of the Agreement.
10 The Parties shall exchange information on SPS issues 
arising from bilateral trade and their SPS measures that may affect their bilateral trade through 
their contact points. 
3.21.  The mutual benefits of the principle of equi valence as in Article 4 of the SPS Agreement, for 
both exporting and importing countries is recogniz ed and the importing Party shall give favourable 
consideration to accepting the SPS measures of the exporting Party as equivalent to its own, if the 
exporting Party objectively demonstrates that its measures achieve the appropriate levels of SPS protection of the importing Party. The Parties indicate that they have not taken any such actions.  
3.22.  Cooperation on SPS measures is to be strengthened with a view to increasing mutual 
understanding of the Parties' respective regu latory systems and facilitating access to their 
respective markets. 
3.23.  Expert consultations are provided for at the written request of a Party, if that Party 
considers that the other Party has taken measures which are likely to affect, or have affected, 
access to its market. The consultations are to be convened as soon as possible and shall aim at an appropriate resolution of the issue in conformity with the SPS Agreement. To permit the efficient 
use of resources, the Parties shall, to the extent  possible, endeavour to use modern technologies 
in communications, such as electronic communication or video or telephone conference. If necessary, the results of expert consultations shall be reported to the FTA Joint Commission 
established by the Agreement. 
3.4.1.2  Technical barriers to trade 3.24.  Article 20 on technical barriers to trade (TBT ) applies to all technical regulations, standards 
and conformity assessment procedures that may directly or indirectly affect trade in goods 
between the Parties, except for SPS measures. It aims to facilitate the establishment of a more 
comprehensive mechanism of information exchange and cooperation between the Parties, and enhance mutual understanding of each Party's administrative system; strengthen cooperation 
between the Parties on technical regulations, standards and conformity assessment procedures, 
                                               
10 For Iceland: the Icelandic Food and Veterinary Authority (MAST); and for China: Department of 
International Cooperation, General Administration of Quality Supervision, and Inspection and Quarantine (AQSIQ). WT/REG355/1 
 
- 17 - 
 
  reduce the costs of trade, promote and facilitate bilateral trade between the Parties; and 
effectively solve any problem in their bilateral trade. 
3.25.  The Parties' rights and obligations on technical regulations, standards and conformity 
assessment procedures are governed by the WTO Agreement on Technical Barriers to Trade (TBT 
Agreement) and nothing shall prevent a Party from adopting or maintaining technical regulations, 
standards or conformity assessment procedures in accordance with these rights and obligations. In this regard, upon written request by a Party, the Parties shall hold expert consultations as soon as 
possible to address any matter arising from the application of specific technical regulations, 
standards and conformity assessment procedures that according to a Party have created or are likely to create an obstacle to trade between the Parties, with view to finding an appropriate solution in conformity with the TBT Agreement.  
3.26.  Implementation of the obligations under Article 20, as well as any communication and 
exchange of information, is to be carried out by the competent authorities and contact points identified in Annex III to the Agreement.
11 The Parties are to inform each other of any significant 
changes to the structure, organization and division of responsibility of the competent authorities. A 
mechanism to exchange information between the TBT National Enquiry Points is to be established. According to the Parties such a mechanism has not yet been established.  
3.27.  Where relevant international standards exist or their completion is imminent, the Parties 
agree to use them, or their relevant parts, as a basis for their technical regulations and related conformity assessment procedures except when such international standards or their relevant parts are ineffective or inappropriate to fulfil legitimate regulatory objectives. 
3.28.  The mutual benefits to the exporting and im porting parties of the principle of equivalence as 
in Article 2 of the TBT Agreement is recognized. A Party shall give positive consideration to accepting technical regulations of the other Party as equivalent to its own, if they can achieve the 
same results in fulfilling legitimate objectives an d the same level of protection as in the other 
Party. 
3.29.  On conformity assessment procedures, the Parties recognize the differences between their 
legal systems and agree to explore the possibilities  of mutual recognition of conformity assessment 
procedures in accordance with the TBT Agreemen t; exchange information on their conformity 
assessment systems with a view to promoting the recognition of conformity assessment procedures between themselves; and give favourable consideration to a request by the other Party 
to recognize the conformity assessment procedur es conducted by bodies in the other Party's 
territory through a mutual recognition agreement or arrangement. The Parties indicate that no 
such requests have been made to date.  
3.30.  The Parties also resolve to strengthen cooperation in order to increase mutual 
understanding of their respective systems and facili tating access to their respective markets. The 
areas identified include strengthening cooperation, communication and coordination in 
international standardization bodies and in the WTO TBT Committee; intensifying communication 
between the Parties' administrative organization s and promptly exchanging information on their 
technical regulations, standards, conformity asse ssment procedures and good regulatory practices; 
and expeditiously broadening exchange of inform ation on technical regulations, standards and 
conformity assessment procedures and give favourable consideration to any written requests for 
consultations.  
3.31.  To permit the efficient use of resources, the Parties shall endeavour, to the extent possible, 
to use modern communication technologies such as electronic communication, and video and 
telephone conference. If necessary, the findings of expert consultations shall be reported to the FTA Joint Commission established by the Agreement. 
                                               
11 The contact points are: the Ministry of Foreign A ffairs for Iceland and the Department of International 
Cooperation, General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) or its successor for China. WT/REG355/1 
 
- 18 - 
 
  3.4.2  Safeguard mechanisms 
3.4.2.1  Global safeguards 3.32.  Under Article 17 the Parties maintain their rights and obligations under Article XIX of the 
GATT 1994 and the WTO Agreement on Safeguards. Global safeguards taken under these 
provisions shall not be subject to the Disp ute Settlement Mechanism of the Agreement. 
3.4.2.2  Bilateral safeguards 3.33.  Bilateral safeguards are permitted by the Agreement during the transition period only and 
are to be maintained to the extent and for such time as may be necessary to remedy serious 
injury and facilitate adjustment. They are to be applied for an initial period of one year, with extension not exceeding one year. They may be used if as a result of the reduction or elimination of a customs duty under the Agreement, an originating good of a Party is being imported into the 
other Party's territory in such increased quantities in absolute terms or relative to domestic 
production, and under such conditions as to constitute a substantial cause of serious injury or threat thereof, to domestic industry producing a like or directly competitive product. In such cases, 
the importing Party may: suspend the further reduct ion of any rate of customs duty on the good 
provided for under the Agreement; or increase the rate of customs duty on the good to a level not 
to exceed the lesser of the MFN applied rate of duty on the good in effect at the time the measure 
is taken, or on the date of entry into force of the Agreement (Article 18). 
3.34.  Notification requirements relating to safeguard investigations or applications including 
written notice provided to the other Party on initiating an investigation on or finding serious injury or threat thereof; taking provisional measures or applying or extending measures or modifying 
measures previously taken are covered by Article 18:2. Pertinent information such as evidence of 
serious injury or threat thereof caused by the su rge in imports, details of the goods concerned as 
well as the proposed measure, date of introduction  and expected duration, shall be provided in the 
notification. The Party proposing the measure shall provide adequate consultations and as much in 
advance as possible, with the other Party. The Parties shall, inter alia, use this information to determine compliance with other provisions of Ar ticle 18, whether any proposed measure should 
be taken and its appropriateness as well as consideration of alternative measures. In taking 
measures, furthermore, paragraph 5 requires the Parties to ensure the consistent, impartial and reasonable administration of their laws, regulati ons, decisions and rulings governing all safeguard 
investigations; entrust determinations of serious injury or threat thereof in safeguard investigation 
proceedings to a competent investigating authorit y; and adopt or maintain equitable, timely, 
transparent and effective procedures for safeguard investigations. 
3.35.  The measure shall only be applied following an investigation by the competent authorities of 
the Party in accordance with Articles 3 and 4.2(c) of the WTO Agreement on Safeguards. 
Investigations shall comply with the requirements of sub-paragraphs 2(a) and (b) of Article 4 of 
the WTO Agreement on Safeguards and all these Arti cles are incorporated into and made part of 
the Agreement. 
3.36.  Bilateral safeguards may not be applied to the import of a product, which has previously 
been subject to a safeguard for at least two year s from the expiry of the measure and may not be 
taken on a product to which a global safeguard is applied. If a global safeguard is taken on a 
product subject to a bilateral safeguard, the latte r shall be terminated. Upon termination of the 
bilateral safeguard, the rate of duty applied to the product shall be that in the Party's schedule 
under Annex 1 of the Agreement. 
3.37.  For cases where delay would cause damage that would be difficult to repair, a Party may 
take provisional safeguard measures pursuant to a preliminary determination of clear evidence of imports having caused or threatening to cause serious injury. Such provisional measures may only 
be applied for up to 200 days and shall take the form of a tariff increase which will be promptly 
refunded if the investigation does not determine serious injury to a domestic industry from the increase in imports. The duration of the provisional measure shall be counted as part of the initial period and any extension of a definitive measure. WT/REG355/1 
 
- 19 - 
 
  3.38.  A Party proposing a bilateral safeguard shall provide to the other Party a mutually agreed 
adequate means of trade liberalizing compensation in the form of concessions having substantially equivalent trade effects or equivalent to the value of the additional duties expected to result from the measure. Should the Parties not agree on compensation within 30 days of consultations, the 
Party against whose originating goods the measure is applied may take action having trade effects 
substantially equivalent to the bilateral measure. Such action will be applied only for the minimum 
period necessary to achieve the substantially equivalent effects and in any case be terminated no 
later than the date of termination of the safeguard. 
3.4.2.3  Balance of payments safeguards 3.39.  A Party faced with serious balance of payments and external financial difficulties or threat 
thereof, may, in accordance with the WTO Agreement and consistent with the Articles of 
agreement of the International Monetary Fund, adopt measures deemed necessary (Article 14). 
3.4.3  Anti-dumping and countervailing measures 3.40.  The Parties maintain their rights and obligations under Article VI of the GATT 1994 and the 
WTO Agreement on Implementation of Article VI of the GATT 1994 (Article 16). 
3.41.  For countervailing measures the Parties al so maintain their rights and obligations under 
Article VI of the GATT 1994 and the WTO Agreement on Subsidies and Countervailing Measures. 
Before initiating an investigation to determine the existence, degree and effect of any alleged 
subsidy, as provided for under Article 11 of the WTO Agreement on Subsidies and Countervailing Measures, the Party considering initiating the investigation shall notify the other Party in writing as soon as possible and allow for consultations under the framework of the FTA Joint Commission 
(see Section 5.5 below), within 10 days of receipt of the notification, with a view to finding a 
mutually acceptable solution. 
3.42.  Anti-dumping and countervailing actions taken pursuant to these provisions will not be 
subject to the Dispute Settlement provisions of the Agreement (Articles 16 and 15 respectively). 
3.4.4  Subsidies and State-aid 3.43.  The objective of the Parties is the multilateral elimination of export subsidies for agricultural 
goods and they agree to work together towards an agreement in the WTO to eliminate such 
subsidies and prevent their reintroduction in any form. Neither Party shall introduce or maintain any export subsidy as defined in the WTO Agreem ent on Agriculture, on any agricultural good 
destined for the territory of the other Party (Article 10). No other references to subsidies are made 
in the Agreement. 
3.4.5  Customs-related procedures 3.44.  Chapter 4 on customs procedures and trade fa cilitation is based on general principles for the 
development and administration by the Parties'  competent authorities of trade facilitation 
measures such as transparency, efficiency, simplification, harmonization and consistency of trade procedures; promotion of international standards; consistency with multilateral instruments; the 
best possible use of information technology; high standard of public service in the interest of their 
respective business communities; government controls based on risk management principles; cooperation within each Party among customs and other border authorities; consultations with their respective business communities; and assurance of trade security and facilitation.  
3.45.  The Parties affirm their commitment to the use of efficient trade procedures aiming to 
reduce costs and unnecessary delays in their bilateral trade and agree to promptly publish on the Internet in English all laws, regulations and rules of general application relevant to their bilateral 
trade in goods. They shall also establish inquiry points for customs and other matters covered by 
the Chapter that may be contacted, as far as practicable in English, on the Internet. The Parties indicate that such inquiry points have been established. They shall consult with their business 
communities on their needs with regard to the development and implementation of trade 
facilitation measures, with particular attention given to small and medium sized enterprises. They shall publish in advance and in particular on th e Internet, draft laws and regulations of general WT/REG355/1 
 
- 20 - 
 
  application relevant to international trade, giving the public an opportunity to comment on them 
and assure a reasonable interval before their entry into force. Finally, they also agree to administer in a uniform, impartial and reasonable manner all their laws, regulations, rules and administrative decisions on international trade in goods. 
3.46.  Provisions are made for advance rulings which shall be issued in a reasonable, time bound 
manner, upon written request, providing all the in formation needed by the importer, exporter or 
producer that has registered with the customs administration as required by domestic laws, before 
the date of import of the product. The rulings shou ld include information on the tariff classification 
of the product; the rules of origin that the Party will apply to the product; and any other matters agreed to by the Parties. In addition each Party shall endeavour to make information on advance rulings which it considers to be of significant interest to other traders publicly available, taking into 
account the need to protect confidential information (Article 49). 
3.47.  With regard to customs valuation, the Parties will apply Article VII and the Agreement on 
Implementation of Article VII of the GATT 1994 to goods traded between them (Article 50). 
3.48.  Customs procedures must be simple, reasonable, objective and impartial. Controls, 
formalities and the number of documents required in trade in goods between the Parties will be limited to those necessary and appropriate to ensure compliance with legal requirements. In 
addition, the Parties will maintain procedures that provide for advance electronic submission and 
processing of information before goods arrive, subject to certain conditions or requirements being satisfied, to expedite clearance. The release of goods prior to meeting all import requirements of 
the Party may be permitted if sufficient and effect ive guarantees are provided by the importer and 
where the customs authorities decide that further examination, physical inspection or other 
submission is not required. Procedures must also  ensure that any guarantee is discharged without 
delay once no longer needed. Customs procedures are to be based as much as possible on 
internationally agreed standards applied by the Parties and must aim to reduce costs and 
unnecessary delays in trade between them (Article 52).
12 
3.49.  Customs controls must be based on risk management with each Party determining the 
person and goods, including means of transport, to be examined and the extent of examination 
based on current risk assessment. Measures of control should be focused on high risk goods while clearance of low risk goods should be facilitated,  with customs procedures not being more onerous 
than necessary to limit exposure to high risk impo rts. Where it is cost effective and efficient, the 
Parties shall use information technology for customs operations, taking into account developments 
in the WCO. 
3.50.  Article 55 requires that a Party applying an Authorized Economic Operator System or 
security measures affecting international trade afford the other Party the possibility to negotiate 
mutual recognition of authorization and security  measures to facilitate trade while ensuring 
effective customs control, and draw on relevant international standard, particularly the WCO 
Framework of Standards. Each Party shall also  facilitate temporary admission of goods in 
accordance with its domestic laws and regulations and international standards applied by each Party respectively (Article 56).
13 
3.51.  Importers, exporters and producers are to be assured the right to at least one level of 
independent administrative review and judicial appeal in accordance with each Party's domestic 
legislation (Article 57). The Parties will also ensure cooperation and coordination in the procedures of its border enforcement and import and export co ntrol authorities and agencies to facilitate trade 
(Article 58). All information provided in relation to import, export or other related matters shall be 
treated with confidentiality and be covered by the obligation of professional secrecy in accordance with each Party's respective laws and will not be disclosed without the express permission of the 
person or authority providing the information (Article 59). 
                                               
12 In particular they agree to follow the standard s and recommended practice s of the World Customs 
Organization (WCO), including the prin ciples of the revised International Convention on the Simplification and 
Harmonization of Customs Procedures (revised Kyoto Convention). 
13 Where temporary admission is defined as custom s procedures under which certain goods may be 
brought into the customs territory conditionally, withou t paying customs duty. Such goods shall be imported 
for a specific purpose, and intended for re-export wi thin a specified period without having undergone any 
change except normal depreciation due to the use made of them. WT/REG355/1 
 
- 21 - 
 
  3.52.  Article 60 of the Agreement provides for th e possibility to request consultations on matters 
arising from the operation or implementation of the Chapter through the relevant contact points designated by the Parties.
14 Further steps to facilitate trade taken by the Parties are to be notified 
as appropriate and submitted for the consideration of the FTA Joint Commission established by the 
Agreement.15 The Commission will review relevant international trade facilitation initiatives to 
identify areas where further joint action would promote the Parties' common objectives. 
3.4.6  Other regulations 
3.5  Sector-specific provisions on trade in goods 
3.53.  There are no sector-specific provisions on trade in goods.  4  PROVISIONS ON TRADE IN SERVICES 4.1  Scope and definitions 
4.1.  The Agreement applies to measures by the Parties affecting trade in services, where 
"measures" by the Parties follows the definitions given in Article I of the GATS. Its scope also 
reflects the GATS in that it does not include services supplied in the exercise of governmental 
authority in the territory of each Party; and re gulations or requirements for the procurement by 
governmental agencies or services purchased for governmental purposes and not with a view to commercial resale or with a view to use in the supply of services for commercial sale. In addition, 
the Chapter does not apply to measures affecting air traffic rights or measures affecting services 
directly related to the exercise of air traffic righ ts, except as provided for in paragraph 3 of the 
GATS Annex on Air Transport Services (Article 67). 
4.2  Denial of benefits 
4.2.  Article XXVII of the GATS is incorporated into and forms an integral part of the Agreement 
(Article 89). 
4.3  General provisions on trade in services 
4.3.1  Market access 
4.3.  The Parties agree to provide each other se rvices and services suppliers market access as 
governed by Article XVI of the GATS, which is inco rporated into and made part of the Agreement. 
The Parties' specific commitments are provided in Annex VII which forms an integral part of the 
Agreement. 
4.3.2  National and MFN treatment 4.4.  National treatment is governed by the Pa rties commitments under Article XVII of the GATS, 
which is incorporated into and made part of the Agreement (Article 71). 
4.5.  MFN treatment is provided by the Parties unless as indicated in their Schedules of specific 
commitments (Annex 7 to the Agreement).  
4.3.3  Commercial presence 
4.6.  Commitments on commercial presence are indicated by the Parties in their schedules of 
specific commitments (Annex 7). 
                                               
14 The contact points are: Department of International Cooperation, General Administration of Customs 
of the Peoples Republic of China and the Rules of Origin and Free Trade Agreements, Directorate of Customs 
for Iceland. 
15 An indicative list of such measures is provided in Article 60 and includes: general measures to 
facilitate trade, official controls, transpor t, standards, use of computers and EDI etc. WT/REG355/1 
 
- 22 - 
 
  4.3.4  Performance requirements 
4.7.  There are no commitments with regard to  performance requirements in the Agreement. 
4.3.5  Senior Managers and Boards of Directors 4.8.  Other than those stated in the Parties' schedules of specific commitments, there are no 
commitments on senior managers and boards of directors in the Agreement. 
4.3.6  Movement of natural persons 4.9.  Provisions on the movement of natural pe rsons are covered by Annex VIII of the Agreement 
(Article 75). The scope of Annex VIII extends to natural persons who are services suppliers of a 
Party and natural persons of a Party who are employed by a services supplier of a Party for the supply of a service. A natural person of a Party is defined by the Agreement as "a national or a permanent resident of a Party under its respective legislation"; until such time as China enacts its 
domestic law on the treatment of permanent residents of foreign countries, the Parties' obligations 
to each others' permanent residents shall be limited to the extent of their GATS obligations. 
4.10.  Article 2 of the Annex requires the Parties to make publicly available, or ensure that its 
competent authorities make publicly available, information necessary for an effective application 
for the grant of entry, temporary stay and work in their respective territories. The information shall be kept updated and will include description s of all categories of visas and work permits 
relevant to the entry, temporary stay and work of natural persons; requirements and procedures 
for application for, and issuance of first-time entry, temporary stay, and where applicable, work 
permits, including information on documents required, conditions to be met and methods of filing; as well as requirement and procedures for application for, and issuance of renewals for temporary 
stay and, where applicable, work permits. The Parties are to provide each other with details of 
relevant publications or websites where this information is available. Any information that cannot be made available publicly for practical reasons must be exchanged (including subsequent 
changes) between the Parties. The Parties must also indicate to each other the contact details of 
an authority from who service suppliers of th e other Party can, upon request, obtain the 
information. 
4.11.  Procedures for granting entry, temporary stay, or work permits for service providers of the 
other Party are to be expeditious, in accordance with the Party's relevant laws and regulations.
16 
Requests for additional information on the application, as well as information on the status of and decision regarding the application are to be made without delay (Article 3). The Annex establishes 
a Working Group under the FTA Joint Commission  established by the Agreement to exchange 
information, review developments, prepare and coordinate positions and prepare technical amendments to issues covered by the Annex. Th e Group will also expl ore the possibility of 
streamlining procedures, including for certified Chinese natural persons to work in Iceland in areas 
such as Traditional Chinese Medicine, as Chinese chefs, mandarin teaching aides, Chinese Wushu martial arts coaches and Chinese tour guides in cooperation with relevant agencies and pursuant 
to the law of Iceland and its international obligations. The Group shall be convened in connection 
with the meetings of the Joint Commission upon the request of either Party and shall report to the Joint Commission (Article 5). Although the Wo rking Group has not yet met, according to the 
Parties discussions on a number of issues took place during the first China-Iceland Joint 
Commission meeting.  
4.4  Liberalization commitments 4.12.  Liberalization commitments in the Agreement are based on a GATS type positive list. These 
are set out in the Parties' schedules of specific commitments annexed to the Agreement 
(Annex VII) which form an integral part of the Agreement. The Parties may modify or withdraw their commitments at any time after three years following the commitments entering into force, 
provided that it notifies the other Party of its intention to modify or withdraw a commitment no 
later than three months before the intended date of implementation of the modification or 
                                               
16 The relevant contact points are the Ministry of  Commerce for China and th e Ministry For Foreign 
Affairs and External Trade for Iceland (Article 4). WT/REG355/1 
 
- 23 - 
 
  withdrawal; and it enters into negotiations with the other Party to agree to the necessary 
compensatory adjustment. The compensatory adjustment shall ensure that the general level of mutually advantageous commitments are not less favourable to trade than provided for in the Schedules prior to such negotiations. If the modifying Party implements the proposed modification 
or withdrawal and does not comply with the findings of the arbitration under Chapter 11 of the 
Agreement, the other Party may modify or withdraw substantially equivalent benefits in conformity with the findings.  
4.13.  The Parties commit to review their Schedules of specific commitments every two years with 
the objective of further liberalizing trade in services between them. If a Party enters into an agreement with a non-party under Article V or Article V bis of the GATS, it shall, upon request from 
the other Party, afford an opportunity to discuss the possibility to accord treatment to the other 
Party no less favourable than it accords to like services and service suppliers of the non-party. 
4.4.1   Iceland 4.4.1.1  Horizontal commitments 
4.14.  Iceland's horizontal commitments in the Agreement largely reflect those in its GATS 
Schedule. With regard to limitations on market access, the main changes are that Iceland lifts the requirement that investment by non-residents in a number of industries and services not exceed 
25% of the total investment of the relevant sector without special permission. It also lifts the 
restriction of a total of 250 million Islandic Krona invested within a year in these sectors by a non-
resident or a group of financially related non-re sidents unless special permission is given. In 
addition, the requirement of a trade permit for natural and legal non-residents involved in trade in 
goods or rental of videos (which is also required for Icelandic and non-resident providers) is lifted 
under the Agreement as is the requirement that th e provision of services by non-resident natural 
persons, either self-employed or as part of a business enterprise with unlimited liability have a 
concession granted by the Ministry of Commerce. 
4.15.  With regard to national treatment, the treatment accorded to subsidiaries of third-country 
companies is extended to EFTA as well as EEA partners. Exemption from the requirement that 
managers and the majority of members of the boar d of directors in all domestic enterprises be 
domiciled in Iceland unless exempted from this re quirement by the Ministry of Commerce is also 
extended to all EFTA member States. In addition a new limitation on national treatment requires that the majority of founders of limited liability companies be resident in Iceland unless exempted 
from this requirement by the Ministry of Commerce;  the citizens of EEA and EFTA States are also 
exempt from this requirement. 
4.4.1.2  Sector-specific commitments 
4.16.  In its GATS Schedule Iceland made commitments in 113 out of 155 services sectors and 
sub-sectors. Its commitments in the Agreement la rgely follow its GATS commitments with some 
exceptions. 
4.17.  In business services, Iceland's commitmen ts are essentially the same as in its GATS 
schedule with the exception of conditions of national ity, or previous residency of at least one year 
for legal advice on home country law, when practising legal services as a member of the General Bar association in Iceland which has been removed in the Agreement.  In addition, for accounting, 
auditing and book-keeping services the residency requirement has been removed for market 
access through mode 4 under the Agreement.  
4.18.  Under computer and related services, "other" services have been specified to include 
maintenance and repair services of office machinery and equipment including computers 
(CPC 845) and other computer services (CPC 849). The commitments taken are unchanged from in the GATS.  
4.19.  With respect to R&D services, the restriction on foreigners from undertaking scientific 
research in natural sciences without having first obtained a research permit issued by the Icelandic Council of Science has been lifted under the Agr eement. Finally, under other business services, the WT/REG355/1 
 
- 24 - 
 
  nationality requirement for publishing of newspapers or magazines within the national territory as 
well as for editors has been lifted. 
4.20.  Commitments in communication services are unchanged. Under distribution services, other 
distribution services, for which Iceland has no limitations in the GATS are missing from its 
commitments under the Agreement.  
4.21.  Under distribution services, full commitments are taken in the GATS, but these are missing 
from Iceland's Schedule in the Agreement. Under environmental services, other services are 
defined more narrowly under the Agreement as 9409 but the same commitments are made under 
the Agreement as in the GATS.  
4.22.  In financial services, the supply of dire ct insurance and insurance broker services is 
reserved for Icelandic or authorized insurance undertakings from another EEA or EFTA Member 
State, whereas in the GATS this reservation does not extend to undertakings from an EFTA 
Member State. Similarly market access under mode 3 requires authorization for insurance 
undertakings not established in an EEA or EFTA Memb er State to establish branch offices in Iceland 
which is broader than just EEA Member States in  the GATS. For national treatment, there are no 
limitations for modes 1 and 2 as in the GATS. For mode 3 the Agreement requires the majority of founders of an insurance undertaking be Icelandic residents or legal entities registered in Iceland, 
citizens of another EEA or EFTA Members State residing in an EEA or EFTA Member State. In the 
GATS this is a requirement for all founders and no t extended to citizens or residents of EFTA 
Member States. The Agreement also adds residency requirements for managers and board members of insurance undertakings (unless exempt ed by the Minister of Commerce) except for 
citizens of other EEA and EFTA Member States. Similarly residency requirements for insurance 
brokers are exempted for citizens or legal entities of another EFTA Member State residing in an EFTA Member State in addition to what is pr ovided under the GATS. The Minister of Commerce 
may however grant an exemption from this requir ement, which would be an improvement over its 
GATS Schedule. 
4.23.  For banking and other non-insurance fina ncial services market access under mode 3 is 
subject to authorization by the Financial Supervisory Authority (instead of the Ministry of 
Commerce under the GATS) for all credit institut ions and undertakings engaged in securities 
services established in a non-EEA or EFTA Member State, the latter not being included in the GATS Schedule. For national treatment, there are no changes for modes 1 and 2, while mode 3 adds 
citizens and legal persons of EFTA Member States to the exemption from residency requirements 
for the founders of credit institutions. In addition, residency requirements are relaxed for board members of credit institutions and undertakings en gaged in securities services and UCITS and the 
exemption from the residency requirement is extended to citizens of EFTA Member States. 
4.24.  Under tourism and travel related services the only changes for hotels and restaurants and 
travel agencies and tour operator services is that the condition for a licence for national treatment 
under modes 3 and 4 is residence in Iceland compared to one year previous residency in the 
GATS.  
4.25.  For recreational, cultural and sporting services, no changes are made by the Agreement 
except for a qualification under mode 3 for sporting and other recreational services, that 
professional boxing is illegal in Iceland but amateur boxing is permitted. 
4.26.  In air transport services Iceland has commitments in the GATS for maintenance and repair 
of aircraft and parts thereof, sales and market ing and computer reservation systems. The only 
change it makes in the Agreement is that for sales and marketing and computer reservations 
systems the national treatment limitation on modes 1 and 3 are lifted by the Agreement. Its commitments in road transport services are unchanged. Iceland does not make commitments in 
other transport services in the Agreement althou gh such commitments are included in its GATS 
commitments. WT/REG355/1 
 
- 25 - 
 
  Table 4.1 Iceland: Sector-specific liberalizat ion under the Agreement at national level, 
excluding mode 4 
Sectors (CPC Classification) GATS FTA 
Sectoral GATS 
Commitments (except 
horizontal 
commitments) Sectoral commitments 
(except as in the horizontal 
reservations) in the FTA 
1. Business services    
A. Professional Services  Partial Lessa 
B. Computer and Related Services        Partial Same 
C. Research and Development Services        Partial New 
D. Real Estate Services           Partial Same 
E. Rental/Leasing Services without Operators      Partial Same 
F. Other Business Serv ices  Partial New 
2. Communication services    
A. Postal services            -- Same 
B. Courier services            -- Same 
C. Telecommunication services  Partial Same 
D. Audiovisual services -- Same 
E. Other  -- Same 
3. Construction & related engineering 
services    
A. General construction work for buildings      Full Same 
B. General construction wo rk for civil engineering    Full Same 
C. Installation and assembly work        Full Same 
D. Building completion and finishing work      Full Same 
E. Other              -- Same 
4. Distribution services    
A. Commission agents' services          Full Same 
B. Wholesale trade services  Full Same 
C. Retailing services                     Full Same 
D. Franchising                         Full Same 
E. Other Full Lessa 
5. Educational services    
A. Primary education services         -- Same 
B. Secondary education services         -- Same 
C. Higher education services          -- Same 
D. Adult education            -- Same 
E. Other education services          -- Same 
6. Environmental services    
A. Sewage services            Partial Same 
B. Refuse disposal serv ices          Partial Same 
C. Sanitation and similar services        Full Same 
D. Other Partial Same 
7. Financial services   
A. All insurance and insura nce-related services     Partial Same 
B. Banking and other financ ial services Partial Same 
C. Other -- Same 
8. Health related and social services   
A. Hospital services -- Same 
B. Other Human Health Servic es         -- Same 
C. Social Services            -- Same 
D. Other -- Same 
9. Tourism and travel related services    
A. Hotels and restaurants (including catering)      Partial Improved 
B. Travel agencies and tour operators services     Partial Same 
C. Tourist guides services          Partial Same 
D. Other -- Same 
10. Recreational, cultural and sporting 
services   
A. Entertainment services  Partial Same 
B. News agency services           Partial Same 
C. Libraries, archives, museums and other 
cultural services  Partial Same 
D. Sporting and other recreational services      Partial Same 
E. Other  Partial Lessa 
11. Transport services    
A. Maritime Transport Services  Partial Same WT/REG355/1 
 
- 26 - 
 
  Sectors (CPC Classification) GATS FTA 
Sectoral GATS 
Commitments (except 
horizontal 
commitments) Sectoral commitments 
(except as in the horizontal 
reservations) in the FTA 
B. Internal Waterways Transport  -- Same 
C. Air Transport Services  Partial Improved 
D. Space Transport            -- Same 
E. Rail Transport Services  -- Same 
F. Road Transport Services Partial Same 
G. Pipeline Transport  -- Same 
H. Services auxiliary to all mo des of transport  Full Same 
I. Other Transp ort Services  Full Lessa 
12. Other services not included elsewhere  -- Same 
Note: MFN and Horizontal limitations, as well as Mode 4 commitments/limitations not included. 
--: No commitments. Partial:  Commitments subject to some limitation(s) und er market access or national treatment, under any of 
the three modes. 
Full: Commitments not subject to limitation(s) under market access or national treatment, under any of 
the three modes. 
New: New commitments made under the Agreement (Full or partial, with or without limitations). "New" 
can, in most cases, be seen as "improved". 
Improved: Overall improved commitments made under th e Agreement as compared to those under the GATS. 
a "other" services subsector not included in the Agreement. Source:  Draft Consol idated GATS Schedule of Specific Comm itments (S/DCS/W/ISL), prepared by the 
Secretariat (in 2003 and 2005) and Iceland's Schedule annexed to the Agreement.  
 
4.4.2   China 
4.4.2.1  Horizontal commitments 4.27.  Under the Agreement, China lists a number of horizontal restrictions, most of which appear 
in its GATS Schedule. The additional horizontal restrictions in the Agreement are that subsidies to 
domestic services suppliers in any new sector and subsector scheduled in future services negotiations after China's accession to the WTO are unbound; and the commitment that conditions 
on ownership, operation and scope of activities as set out in contractual or shareholder 
agreements or licence establishing or authorizing th e operation or supply of services by an existing 
foreign service supplier will not be made more restrictive as of the date of China's accession to the WTO, will not apply to any new sector or subsecto r scheduled after China's accession to the WTO.  
4.4.2.2  Sector specific commitments 
4.28.  China made extensive commitments in the GATS, covering 93 out of 155 services sectors 
and sub-sectors, when it acceded to the WTO. Its commitments under the Agreement are very 
similar to those in the GATS. Additional commit ments are made in business services (computer 
and related services, real estate services, and ot her business services), and transport services 
(road transport). China also maintains MFN exemptions under the GATS related to maritime and 
international transport and freight and passenger-related services. 
4.29.  With regard to business services, in computer and related services, China has lifted its 
market access limitation on commercial presence, permitting wholly foreign-owned enterprises, in comparison with the GATS which permits commercial presence only in the form of joint ventures 
although majority foreign ownership is permitted. Similarly, in real estate services involving owned 
or leased property, while under the GATS China permits market access under mode 3 except for whole foreign owned enterprises for high standard real estate projects such as apartments and 
office buildings (but not luxury hotels), in the Agreement, wholly foreign owned enterprises are 
permitted with no restrictions. For real-estate services on a fee or contract basis wholly foreign owned enterprises will be allowed, while under the Agreement market access through commercial 
presence is permitted only in the form of joint ventures, albeit with foreign majority ownership.  WT/REG355/1 
 
- 27 - 
 
  4.30.  Under other business services China has added market research services and services 
related to management consulting (project manage ment services other than for construction) to 
its commitments under the Agreement. For both these sectors, it requires commercial presence and permits market access under mode 3 only in th e form of joint ventures, with foreign majority 
ownership permitted. An economic needs test is  also required. While for the former, both for 
market access and national treatment the other modes are unbound, for the latter it has no limitations on modes 1 and 2 for market access wh ile modes 1, 2 and 4 for national treatment are 
unbound. It has no GATS commitments in these two subsectors. Building cleaning services for 
which it has no GATS commitments, as well as printing of packaging materials on a fee or contract basis have been added to the Agreement. For building cleaning services, while mode 1 is unbound under both market access and national treatment du e to lack of technical feasibility, there are no 
limitations under market access in mode 2 and modes 2 and 3 under national treatment. Wholly 
foreign owned enterprises will be permitted. Mode 4 is unbound except as under China's horizontal 
commitments. For printing of packaging materials modes 1 and 2 are unbound under market 
access, while modes 1-3 are unbound under national treatment. Wholly foreign owned enterprises 
are permitted for mode 3 under market access and an  economic needs test is required. Mode 4 as 
in other sectors is unbound except as indicated in the horizontal commitments. 
4.31.  Under financial services, while all Chin a's commitments under the Agreement mirror those 
in the GATS, other financial services (provision and transfer of financial information and financial data processing and related software by supplier of other financial services, and advisory, intermediation and other auxiliary financial serv ices) are missing from China's schedule under the 
Agreement. China has clarified that its obligations under the GATS Annex on Financial Services are 
incorporated into the Agreement and therefor e its GATS commitments apply also under the 
Agreement for these sub-sectors. 
4.32.  Under recreational, cultural and sporting services, for which China has no GATS 
commitments, it makes commitments in sporting and other recreational services (for CPC 96411, 96412 and 96413, excluding golf). It agrees to provide market access under mode 3 for wholly 
foreign owned enterprises, subject to economic ne eds tests. All the other modes for both market 
access and national treatment are unbound. 
4.33.  Finally, under transport services, China has added passenger transportation under road 
transport services. It agrees to provide market access under mode 3 in the form of joint ventures, 
with foreign investment not to exceed 49% of total equity and an economic needs test is required. 
Modes 1, 2 and 4 are unbound for both market access and national treatment, while there are no limits on mode 3 under national treatment.  
Table 4.2 China: Sector-specific liberalizatio n under the Agreement at national level, 
excluding mode 4 
Sectors (CPC Classification) GATS FTA 
Sectoral GATS 
Commitments (except 
horizontal 
commitments) Sectoral commitments 
(except as in the horizontal 
reservations) in the FTA 
1. Business services    
A. Professional Services  partial Same 
B. Computer and Related Services        partial Improved 
C. Research and Development Services        -- Same 
D. Real Estate Services           partial Improved 
E. Rental/Leasing Services without Operators      -- Same 
F. Other Business Servic es  partial Improved 
2. Communication services    
A. Postal services            -- Same 
B. Courier services            partial Same 
C. Telecommunication services  partial Same 
D. Audiovisual services partial Same 
E. Other  -- Same 
3. Construction & related engineering 
services    
A. General construction work for buildings      partial Same 
B. General construction wo rk for civil engineering    partial Same 
C. Installation and assembly wo rk        partial Same WT/REG355/1 
 
- 28 - 
 
  Sectors (CPC Classification) GATS FTA 
Sectoral GATS 
Commitments (except 
horizontal 
commitments) Sectoral commitments 
(except as in the horizontal 
reservations) in the FTA 
D. Building completion and finishing work      partial Same 
E. Other              partial Same 
4. Distribution services    
A. Commission agents' services          partial Same 
B. Wholesale trade services  partial Same 
C. Retailing services                     partial Same 
D. Franchising                         partial Same 
E. Other partial Same 
5. Educational services    
A. Primary education services         partial Same 
B. Secondary education services         partial Same 
C. Higher education services          partial Same 
D. Adult education            partial Same 
E. Other education services          partial Same 
6. Environmental services    
A. Sewage services            partial Same 
B. Refuse disposal serv ices          partial Same 
C. Sanitation and similar services        partial Same 
D. Other partial Same 
7. Financial services   
A. All insurance and insura nce-related services     partial Same 
B. Banking and other financ ial services partial Same  
C. Other -- Same 
8. Health related and social services   
A. Hospital services -- Same 
B. Other Human Health Servic es         -- Same 
C. Social Services            -- Same 
D. Other -- Same 
9. Tourism and travel related services    
A. Hotels and restaurants (including  catering)      partial Same 
B. Travel agencies and tour operators services     partial Same 
C. Tourist guides services          -- Same 
D. Other -- Same 
10. Recreational, cultural and sporting 
services   
A. Entertainment services  -- Same 
B. News agency services           -- Same 
C. Libraries, archives, museums and other 
cultural services  -- Same 
D. Sporting and other recreational services      -- New 
E. Other  -- Same 
11. Transport services    
A. Maritime Transport Services  Partial Same 
B. Internal Waterways Transport  Partial Same 
C. Air Transport Services  Partial Same 
D. Space Transport            -- Same 
E. Rail Transport Services  Partial Same 
F. Road Transport Services Partial Improved 
G. Pipeline Transport  -- Same 
H. Services auxiliary to all mo des of transport  partial Same 
I. Other Transp ort Services  -- Same 
12. Other services not included elsewhere  -- Same 
Note: MFN and Horizontal limitations, as well as Mode 4 commitments/limitations not included. 
--: No commitments. Partial:  Commitments subject to some limitation(s) und er market access or national treatment, under any of 
the three modes. 
Full: Commitments not subject to limitation(s) under market access or national treatment, under any of 
the three modes. 
New: New commitments made under the Agreement (Full or partial, with or without limitations). "New" 
can, in most cases, be seen as "improved". WT/REG355/1 
 
- 29 - 
 
  Improved: Overall improved commitments made under th e Agreement as compared to those under the GATS. 
Source:  Draft Consolidated GATS Schedule of Spec ific Commitments (S/DCS/W/C HN and Corr.1), prepared 
by the Secretariat (in 2003 and 2005) and China's Schedule annexed to the Agreement.  
 
4.4.3  Investment 
4.34.  The objective of Chapter 8 which deals with  investment is to help the Parties promote, 
within the bounds of their competence, an attractive and stable reciprocal investment climate. To 
this end, they agree to promote the establishment of information exchange channels and facilitate 
communication on investment policy, laws, and economic, trade and commercial information; explore the possibility of establishing investme nt promotion mechanisms; and provide national 
information for potential investors and on parties that wish to cooperate on investment. Article 92 
refers to the Parties' Agreement concerning the Promotion and Reciprocal Protection of Investments of 31 March 1994 and recognizes its importance in creating favourable conditions for 
investment between the Parties and thus contributing to the creation of the free trade area 
established by the Agreement. 
4.5  Regulatory provisions  
4.5.1  Domestic regulation 
4.35.  The rights and obligations of the Parties wi th respect to domestic regulation are governed 
by Article VI of the GATS, which is incorporated into and made part of the Agreement (Article 73). 
4.5.2  Recognition 
4.36.  Where a Party recognises, by agreement or arrangement, education or experience obtained, 
requirements met or licences or certifications granted in the territory of a non-party, that Party shall accord the other Party adequate opportunity to negotiate its accession to the agreement or 
arrangement, whether existing or future, or to negotiate a comparable agreement or arrangement 
with it. In the case of automatic recognition granted by a Party, it shall afford adequate opportunity for the other Party to demonstrate that the education or experience obtained, 
requirements met or licences or certifications granted in the territory of the other Party should also 
be recognized. Any such agreement or arrangement or autonomous recognition shall be in conformity with the relevant provisions of the WT O Agreement, and in particular, Article VII of the 
GATS (Article 74). 
4.5.3  Subsidies 
4.37.  There are no provisions on subsidies in th e Chapter on Services. However, the Parties agree 
to review disciplines on subsidies related to trade in services in light of any disciplines agreed 
under Article XV of the GATS with a view to inco rporating them in the Agreement. At the request 
of a Party which considers that it is adversely affected by a subsidy of the other Party, the Parties shall consult to reach an amicable solution on the matter (Article 83). 
4.5.4  Safeguards 
4.38.  There are no provisions on safeguards in the Chapter on Services. However, under 
Article 78 the Parties note the multilateral negotiations under way pursuant to Article X of the GATS on non-discriminatory emergency safeguard measures and agree that once the negotiations 
are complete, to conduct a review to discuss appropriate amendments to the Agreement, so as to 
incorporate the results of the negotiations. 
4.39.  The Parties' rights and obligations to sa feguard the balance of payments are governed by 
paragraphs 1-3 of Article XII of the GATS, which in incorporated into and made part of the Chapter 
on Trade in Services (Article 81). WT/REG355/1 
 
- 30 - 
 
  4.5.5  Other 
4.5.5.1  Transparency 4.40.  Article III and III bis of the GATS on transparency and di sclosure of confidential information 
are made an integral part of the Agreement. 
4.6  Sector specific provisions on trade in services 
4.6.1   Financial services 4.41.  In addition to the schedule of specific commitments, the GATS Annex on Financial Services 
is incorporated into and made part of the Agreement. 
5  GENERAL PROVISIONS OF THE AGREEMENT 5.1  Transparency 5.1.  In addition to transparency requirements under various provisions, Article 123 calls for each 
Party to ensure that its laws, regulations and administrative rulings of general application on any 
matter covered by the Agreement or that may affect its operation, are promptly published or otherwise made available. Upon request by a Party, the other Party, to the extent possible, shall 
promptly provide information and respond to specific questions on these matters. The information 
shall be considered to have been provided when notified to the WTO or when it has been made 
available free of charge on the official , public website of the Party concerned. 
5.2  Current payments and capital movements 
5.2.  Except to safeguard the balance of payments, the Parties may not apply restrictions on 
international transfers and payments for current transactions relating to their specific commitments. Nothing in the Agreement shall affect the rights and obligations of a Party who is a 
member of the International Monetary Fund under the Articles of its agreement, including the use 
of exchange actions which are in conformity with the Articles of Agreement of the IMF, provided 
that a Party shall not impose restrictions on any capital transactions inconsistently with its specific 
commitments regarding such transactions except to safeguard the balance of payments as 
permitted by Article 81 of the Agreement (Article 80). 
5.3  Exceptions 
5.3.  General exceptions under the Agreement mirror Article XX of the GATT 1994, which along 
with its interpretative notes, are incorporated in to and made part of the Agreement (Article 11). 
Nothing in the Agreement shall be construed to require a Party to furnish or allow access to any information if it determines that this is contrary to it essential security interests; to prevent a Party 
from taking any action which it considers necessary for the protection of its national security 
interests (relating to: fissionable materials or the materials from which they are derived; traffic in arms, ammunition and implements of war and to such traffic in other goods and materials for the 
purposes, directly or indirectly, of supplying a military establishment; or taken in time of war or 
other emergency in international relations); or to preclude a Party from applying measures that it considers necessary for the fulfilment of its objectives under the United Nations Charter to 
maintain or restore international peace or security (Article 12). 
5.4.  Article 13 of the Agreement grants rights and imposes obligations for taxation measures 
where corresponding rights and obligations exist under Article III of the GATT 1994. Nothing in the 
Agreement shall affect the rights and obligations of the Parties under any tax agreement in force 
between the Parties. In the event of any inconsistency related to taxation measures between the 
Agreement and such tax agreement, the latter shal l prevail to the extent of the inconsistency. 
Moreover, in the case of a tax agreement between the Parties, the competent authorities under 
that agreement shall have sole responsibility for determining whether there is an inconsistency 
between that agreement and the Agreement. Except  as provided by Article 13, nothing in the 
Agreement shall apply to taxation measures. WT/REG355/1 
 
- 31 - 
 
  5.5.  With regard to trade in services, Article 82 of the Agreement maintains the rights and 
obligations of the Parties on general and security exceptions under Articles XIV and paragraph 1 of 
Article XIV bis of the GATS, which are incorporated into and made part of the Trade in Services 
Chapter of the Agreement (Chapter 7). 
5.6.  Nothing in the Agreement shall require a Party to disclose confidential information, which 
would impede law enforcement, otherwise be cont rary to the public interest, or prejudice the 
legitimate commercial interests of public or private enterprises (Article 124). 
5.4  Accession and Withdrawal 
5.7.  The Agreement has no provisions for acce ssion by third parties. Under Article 128 either 
Party may terminate the Agreement by written notifi cation to the other Party. The Agreement shall 
expire 180 days following the receipt of the notification. 
5.8.  The Agreement may be amended by agreement between the Parties. Any agreed 
amendments will enter into force 60 days after the Parties have notified each other in writing of the procedures required by their laws to bring such amendments into force, or any other period 
agreed by the Parties. Once in force, any amen dment shall constitute an integral part of the 
Agreement. If there are any amendments to the WTO Agreements that have been incorporated 
into the Agreement, the Parties shall, upon reques t by either Party, consult on whether to amend 
the Agreement accordingly (Article 127).  
5.5  Institutional framework 5.9.  The Agreement establishes the China-Iceland Free Trade Agreement Joint Commission (FTA 
Joint Commission) under Chapter 10. The Partie s are represented through the Ministry of 
Commerce (MOFCOM) for China and the Ministry fo r Foreign Affairs and External Trade (MFA) for 
Iceland. Its functions will be to supervise and review implementation, an d where appropriate, to 
interpret the Agreement; facilitate avoidance and settlement of any disputes that may arise on the 
interpretation or application of the Agreement; supervise the work of all working groups 
established under the Agreement and establish additional working groups as necessary, upon agreement between the Parties; and consider any other matter that may affect operation of the 
Agreement. The Parties indicate that no additional  working groups have been established to date. 
All decisions by the FTA Joint Commission are taken by consensus, following its established rules of procedure. According to the Parties such rule s of procedures have not yet been established. 
5.10.  Modifications to the Agreement and its Annexes may also be negotiated by the Joint 
Commission. Any such modifications are subject to  the completion of necessary domestic legal 
procedures of the Parties. 
5.11.  The first session of the Joint Commission is  to be convened within one year from the entry 
into force of the Agreement, followed by sessions at  least every two years on a regular basis, or as 
mutually determined by the Parties. The Parties may also meet at any time when special circumstances arise, at the request of either Part y. The sessions of the Joint Commission are to be 
co-chaired by the Parties. 
5.6  Dispute settlement 5.12.  Chapter 11 of the Agreement outlines conditions and procedures for the Parties to bring 
disputes against each other where a Party considers that the other Party has failed to carry out its 
obligations under the Agreement, except for issues that are explicitly carved out.  
5.13.  The Parties shall endeavour at all times to  agree on the application of the Agreement and 
shall make every attempt through cooperation and consultations to arrive at a mutually 
satisfactory resolution of any matter affecting th e operation of the Agreement (Article 105). Should 
a dispute arise under the Agreement or any other agreement to which the Parties are party or the WTO Agreement, the complaining Party may select the forum in which to settle the dispute. Once 
selected and the Party has requested establishment of a Panel, the selected forum shall be used to 
the exclusion of another forum (Article 107). WT/REG355/1 
 
- 32 - 
 
  5.14.  A request for consultations to the other Part y shall be submitted in writing, explaining the 
reasons for the request, identification of the meas ure at issue and an indication of the legal basis 
for the complaint. The Party complained against must respond to the request within 10 days from the date of its receipt and enter into consultations in good faith within not more than 30 days from 
the date of receipt of the request with a view to reaching a mutually satisfactory solution. The 
consultations are to be confidential and without prejudice to the rights of either Party in any further proceedings. Failure to respond to the request or hold consultations within these time 
periods allows the complaining Party to request the establishment of an arbitral panel 
(Article 109). 
5.15.  If consultations fail to resolve the issue within 60 days from receipt of the request for 
consultations, the complaining Party may request the establishment of an arbitral panel in writing 
to the other Party, stating the measure concerned,  and indicating the provisions of the Agreement 
it considers to be relevant. The panel shall be established upon receipt of the request (Article 109). The panel, the details of whose composition is provided in Article 110, shall comprise three 
members, one each appointed by the Parties and a third, the Chair, appointed through agreement 
between the Parties. 
5.16.  The Panel is expected to make an objective assessment of the dispute, including the facts of 
the case and the applicability and conformity with the Agreement. Where it finds that a measure is 
inconsistent with the Agreement, it shall recommend that the responding Party bring the measure into conformity with the Agreement. In making its recommendations, the panel cannot add to or diminish from the rights provided under the Ag reement and must make its award based on the 
provisions of the Agreement, interpreted in accordance with customary rules of public international 
law (Article 111). 
5.17.  Unless otherwise agreed by the Parties, the panel is expected to conduct its proceedings in 
accordance with Chapter 11 and its Rules of Procedure in Annex IX to the Agreement. The panel 
takes its decisions by consensus, or if unable to agree by consensus, a majority vote. 
5.18.  A complaining party may withdraw its complaint at any time before the initial report is 
issued. Such a withdrawal would be without prejudice to its right to introduce a new complaint 
regarding the same issue at a later point in time. The Parties may also agree to suspend (up to 12 months) or terminate the work of an arbitral pa nel under Article 114. The panel will present its 
initial report within 90 days from the date of establishment of the arbitration panel. Written 
comments on the initial report may be presented by either party within 14 days of the 
presentation of the report. The final report must be presented within 45 days of the initial report 
and unless there are objections, published within 15 days of presentation to the parties. 
5.19.  The parties shall implement the recommendati ons of the panel within a reasonable period of 
time, which Article 118 defines as mutually determined by the parties. If the parties fail to agree on the reasonable period within 45 days from the release of the panel report, either party may, to 
the extent possible, refer the matter back to the original panel, which will provide its 
determination within 60 days of the matter being referred to it. If the panel's recommendations are not implemented within the reasonable period of time, the complaining party may suspend the application of concessions and obligations of equiva lent effect to the responding party. The party 
must first seek to suspend concessions and obligati ons in the same sector(s) as that affected by 
the measure that the panel found to be inconsistent; and if the complaining party considers that it is not practicable to do so, it may suspend concessions and obligations in other sectors. It must 
explain its grounds for doing so and inform the other party of its intention to suspend benefits at 
least 30 days before doing so. Upon written request, the original panel may determine whether the level of concessions and obligations to be suspended is excessive and shall present its 
determination within 60 days from the request. The suspension of benefits shall be temporary and 
only be applied by the complaining party until the measure found to be in violation of the Agreement has been brought into conformity with the Agreement. 
5.7  Relationship with other agreements concluded by the Parties 
5.20.  Under Article 4 of the Agreement the Parties affirm their existing rights and obligations with 
respect to each other under the WTO Agreement and other agreements to which they are party. In case of any inconsistency with the provisions of the Agreement and these other agreements, the WT/REG355/1 
 
- 33 - 
 
  Parties shall consult to arrive at a mutually satisfactory resolution in accordance with customary 
rules of interpretation of public international law, unless otherwise provided by the Agreement. 
5.21.  Table 5.1 shows the Parties' notified and non-notified regional trade agreements in force 
(other than the Agreement). 
Table 5.1 Iceland and China: Participation in  other RTAs (notified and non-notified in 
force), as of 1 March 2016  
RTA Name Date of 
entry into 
force Coverage GATT/WTO Notification 
Year WTO Legal Cover 
ICELAND 
EFTA - Bosnia and Herzegovina 01-Jan-15 Goods 2015 GATT Art. XXIV 
EFTA - Central America  
(Costa Rica and Panama) 19-Aug-14 Goods & Services 2014 GATT Art. XXIV & GATS Art. V 
EFTA - Hong Kong, China 01-Oct-12 Goods & Services 2012 GATT Art. XXIV & GATS Art. V 
EFTA - Montenegro 01-Sep-12 Goods 2012 GATT Art. XXIV 
EFTA - Ukraine 01-Jun-12 Goods & Services 2012 GATT Art. XXIV & GATS Art. V 
EFTA - Colombia 01-Jul-11 Goods & Services 2011 GATT Art. XXIV & GATS Art. V 
EFTA - Peru 01-Jul-11 Goods 2011 GATT Art. XXIV 
EFTA - Albania 01-Nov-10 Goods 2011 GATT Art. XXIV 
EFTA - Serbia 01-Oct-10 Goods 2010 GATT Art. XXIV 
EFTA - Canada 01-Jul-09 Goods 2009 GATT Art. XXIV 
EFTA - SACU 01-May-08 Goods 2008 GATT Art. XXIV 
EFTA - Egypt 01-Aug-07 Goods 2007 GATT Art. XXIV 
EFTA - Lebanon 01-Jan-07 Goods 2006 GATT Art. XXIV 
Iceland - Faroe Islands 01-Nov-06 Goods & Services 2008 GATT Art. XXIV & GATS Art. V 
EFTA - Republic of Korea 01-Sep-06 Goods & Services 2006 GATT Art. XXIV & GATS Art. V 
EFTA - Tunisia 01-Jun-05 Goods 2005 GATT Art. XXIV 
EFTA - Chile 01-Dec-04 Goods & Services 2004 GATT Art. XXIV & GATS Art. V 
EFTA - Singapore 01-Jan-03 Goods & Services 2003 GATT Art. XXIV & GATS Art. V 
EFTA - Jordan 01-Sep-02 Goods 2002 GATT Art. XXIV 
EFTA - Former Yugoslav 
Republic of Macedonia 01-May-02 Goods 2000 GATT Art. XXIV 
EFTA - Mexico 01-Jul-01 Goods & Services 2001 GATT Art. XXIV & GATS Art. V 
EFTA - Morocco 01-Dec-99 Goods 2000 GATT Art. XXIV 
EFTA - Palestinian Authority 01-Jul-99 Goods 1999 GATT Art. XXIV 
European Economic Area (EEA) 01-Jan-94 Services 1996 GATS Art. V 
EFTA - Israel 01-Jan-93 Goods 1992 GATT Art. XXIV 
EFTA - Turkey 01-Apr-92 Goods 1992 GATT Art. XXIV 
EU - Iceland 01-Apr-73 Goods 1972 GATT Art. XXIV 
EFTA - Accession of Iceland 01-Mar-70 Goods 1970 GATT Art. XXIV 
European Free Trade 
Association (EFTA) 03-May-60 
01-Jun-02 Goods 
Services 1959 
2002 GATT Art. XXIV 
GATS Art. V 
EFTA - Gulf Cooperation Council 01-Jul-14 Goods & Services Not notified 
CHINA 
China - Republic of Korea 20-Dec-15 Goods & Services 2016 GATT Art. XXIV & GATS Art. V 
Australia - China 20-Dec-15 Goods & Services 2016 GATT Art. XXIV & GATS Art. V 
Switzerland - China 01-Jul-14 Goods & Services 2014 GATT Art. XXIV & GATS Art. V 
China - Costa Rica 01-Aug-11 Goods & Services 2012 GATT Art. XXIV & GATS Art. V 
Peru - China 01-Mar-10 Goods & Services 2010 GATT Art. XXIV & GATS Art. V 
China - Singapore 01-Jan-09 Goods & Services 2009 GATT Art. XXIV & GATS Art. V 
China - New Zealand 01-Oct-08 Goods & Services 2009 GATT Art. XXIV & GATS Art. V 
Pakistan - China 01-Jul-07 
10-Oct-09 Goods 
Services 2008 
2010 GATT Art. XXIV 
GATS Art. V 
Chile - China 01-Oct-06 
01-Aug-10 Goods  
Services 2007 
2010 GATT Art. XXIV 
GATS Art. V WT/REG355/1 
 
- 34 - 
 
  RTA Name Date of 
entry into 
force Coverage GATT/WTO Notification 
Year WTO Legal Cover 
ASEAN - China 01-Jan-05 
01-Jul-07 Goods 
Services 2005 
2008 Enabling Clause 
GATS Art. V 
China - Macao, China 17-Oct-03 Goods & Services 2003 GATT Art. XXIV & GATS Art. V 
China - Hong Kong, China 29-Jun-03 Goods & Services 2003 GATT Art. XXIV & GATS Art. V 
Asia Pacific Trade Agreement 
(APTA) - Accession of China 01-Jan-02 Goods 2004 Enabling Clause 
Asia Pacific Trade Agreement 
(APTA) 17-Jun-76 Goods 1976 Enabling Clause 
The Cross-Straits Economic 
Cooperation Framework 
Agreement (ECFA) 12-Sep-10 Goods & Services Not notified 
Source: WTO Secretariat. 
 
5.8  Government procurement 
5.22.  There are no provisions as such on govern ment procurement in the Agreement. However, in 
Chapter 9, the Parties agree on the importance of cooperation to enhance mutual understanding of their respective Government procurement laws and regulations and to make their laws, regulations and administrative rulings available publicly. They also agree to hold consultations, as soon as 
China accedes to the WTO's Government Procurement Agreement, to consider possible steps to be 
taken with a view to concluding and agreement on Government procurement between the Parties.  
5.9  Intellectual property rights 
5.23.  Chapter 6 on intellectual property rights reaffirms the importance of IPRs in promoting 
economic and social development, particularly in the new digital economy, technological innovation 
and trade, and the need for a balance between the rights of IPR holders and the legitimate 
interests of users and the community with respect to protected subject matter.
17 In this regard, 
each Party shall establish and maintain transparent IPR regimes and systems that; provide certainty over the protection and enforcement of those rights against infringement, including counterfeiting and piracy; minimize compliance costs for business; and facilitate international 
trade through the dissemination of ideas, technology and creative works. 
5.24.  The Parties reaffirm their obligations under the TRIPS Agreement, which is incorporated into 
and made part of the Agreement. They also reaffirm their obligations to international IP 
agreements to which both are party.
18 
5.25.  The Parties aim to further strengthen cooperation in IPRs including in the exchange of 
information, experience and views on issues of  common concern relating to IPRs; exchange of 
information on the protection and enforcement of IPRs; personnel training and information 
systems on IPRs; promotion of mutual understanding  of each Party's IPR policies, activities, and 
experiences; promotion of IPR education and awareness; and other activities and initiatives to be mutually determined by the Parties. The exchange of information is to be facilitated by contact 
points to be designated by the Parties within 60 days of entry into force of the Agreement. Details 
of the contact points as well as any amendments thereto are to be provided promptly by the Parties to each other. According to the Parties such contact points have not yet been established. 
5.26.  In addition to the exchange of information,  a Party may at any time request a dialogue with 
the other Party to seek a timely and mutually satisfactory resolution of any IP issue within the 
                                               
17 IPRs are defined by the Chapter as those ri ghts as defined in the WTO TRIPS Agreement. 
18 The Paris Convention for the protection of Indust rial Property of 20 March 1883, as revised by the 
Stockholm Act of 1967; the Berne Convention for the prot ection of Literary and Artistic Works of 9 September 
1886, as revised by the Paris Act of 1971; the Patent Cooperation Treaty of 19 June 1970, as revised by the Washington Act of 2001; the Budapest Treaty on the International Recognition of the Deposit of 
Microorganisms for the Purposes of Patent Procedures of 28 April 1977; the Protocol relating to the Madrid 
Agreement concerning the International Recognition of Marks of 27 June 1989; and the Nice Agreement 
concerning the International Classification of Goods and Services for the Purposes of  the Registration of Marks 
of 25 June 1957, as revised by the Geneva Act of 1979. WT/REG355/1 
 
- 35 - 
 
  scope of Chapter 6. Unless otherwise agreed, the dialogue shall take place through the contact 
points within 60 days of receipt of the request. A Party may take further action under the Agreement's dispute settlement mechanism only if the dialogue fails to resolve any IP issue. A Party may also take dispute settlement action if, after the commencement of such dialogue, it 
feels that the issue will not be resolved, after notifying the other Party of its decision. 
5.27.  The Parties agree, upon request by any Party to the FTA Joint Commission established by 
the Agreement, and subject to consensus by the Parties and the Commission, to review the 
provisions of the Chapter with a view to further improving the levels of protection and to ensure 
the good functioning of its provisions. 
5.10  Other 5.10.1  Competition 
5.28.  The Agreement acknowledges that anti-competitive business conduct may frustrate the 
benefits arising from it and such conduct is therefore incompatible with its proper functioning insofar as it may affect trade between the Parties. Chapter 62 which deals with competition also 
extends to undertakings that have privileges and exclusive rights authorized by law. This will 
however not prevent them from fulfilling their le gal functions. The Chapter will also not be 
construed to create any legally binding for the obligations for the undertakings and its provisions 
are also without prejudice to the independence of the Parties' competition authorities, according to 
their respective competition laws. 
5.29.  The Parties' competition authorities shall cooperate and consult on matters pertaining to the 
Chapter and the Parties will apply their respective laws with a view to removing anti-competitive 
business conduct. Cooperation between the Partie s may include the exchange of information in 
accordance with their respective laws and regulati ons as well as their confidentiality obligations. 
The Chapter on competition is not subject to the dispute settlement provisions of the Agreement 
and any disputes must be settled through consultations between the Parties. 
5.30.  With respect to trade in services, the Parties' maintain their rights and obligations in respect 
of business practices under Article IX of the GATS which is incorporated into and made part of the 
Agreement (Article 77). Their rights and obligations with regard to monopolies and exclusive 
service suppliers are governed by paragraphs 1,  2 and 5 of Article VIII of the GATS, which are 
incorporated into and made part of the Agreement (Article 76). 
5.10.2  Cooperation 
5.31.  The Parties, in Chapter 9, agree to establish close bilateral cooperation aimed inter alia at: 
promoting economic and social development; stimulating productive synergies, creating new opportunities for trade and investment and promoting competitiveness and innovation; and 
increasing and deepening collaborative activities in areas of mutual interest. They also reaffirm the 
importance of cooperation in order to implement the objectives of the Agreement. To strengthen 
trade and economic relations, the Parties agree to  encourage and facilitate as appropriate policy 
dialogue and exchange of information and views on ways to promote and expand trade in goods 
and services between the Parties; information ex change on important economic and trade issues 
and on any impediments to furthering economic cooperation between them; provision of assistance and facilities to business persons and trade missions visiting each other's country with 
the knowledge and support of relevant agenci es; development of existing mechanisms for 
providing information and identifying opportunities for business cooperation, trade in goods and services and investment; and the actions of public and/or private sectors in areas of economic 
interest. 
5.32.  Specific areas of economic cooperation further identified by the Chapter are: (i) research, 
science and technology, with a particular focus on seismology, volcanology, geophysics, 
earthquake engineering and countermeasures for seismic hazard reduction, marine and polar 
science as set out in the Memorandum of Understanding on Cooperation between the Parties in the field of Marine and Polar Science and Techno logy signed on 20 April 2012, geothermal and 
geosciences, as set out in the Memorandum of Understanding between the Parties on Geothermal 
and Geosciences Cooperation, dated 20 April 2012, and education and research in health; (ii) WT/REG355/1 
 
- 36 - 
 
  labour and environment including in accordance with the Memorandum of Understanding on 
Environmental Protection Cooperation between the State Environmental Protection Administration 
of the People's Republic of China and th e Ministry of the Environment of Iceland;19 (iii) 
development, to promote the economic and soci al development of China including by jointly 
identifying priority tasks for development cooperation and considering the conclusion of a 
framework agreement on forms and procedures for future cooperation; (iv) education; and (v) government procurement, including publication of laws, regulations and administrative rulings of 
general application, and consultations following China's accession to the WTO Government 
Procurement Agreement, to consider possible steps to be taken to conclude an agreement on Government procurement between the Parties. 
5.33.  A national contact point will be established to facilitate communication on possible 
cooperation activities by working with government agencies, private sector representatives and 
educational and research institutions. These contact points have not yet been established according to the Parties. The FTA Joint Commission will oversee implementation of the cooperation 
framework established by the Chapter; encourage the Parties to cooperate; and make 
recommendations on the cooperation framework in accordance with the strategic priorities of the Parties (Article 100). Cooperation on government procurement is however excluded from 
Article 100 of the Agreement.  
5.34.  The Parties do not have recourse to the Agreement's dispute settlement mechanism on any 
issue arising from, or relating to, the Chapter on cooperation. 
  
                                               
19 These memoranda of understanding do  not form part of the Agreement. WT/REG355/1 
 
- 37 - 
 
  ANNEX 1 
1. A comparison between the scheduled elimination of tariffs by the Parties and their average 
MFN duties is shown in Table A1.1 for Iceland and A1.2 for China by total, and agricultural (WTO definition) and non-agricultural products. 
2. In 2014 Iceland's overall applied MFN average duty was 4.4%, 2.4% for non-agricultural 
products and considerably higher at 11.4% for agricultural products. Around 70.2% of the tariff was duty free, with around 74.6% duty free for non-agricultural products and 55.5% for 
agricultural products. Upon entry into force of the Agreement in 2014 Iceland implemented all its 
tariff elimination commitments. As a result the total share of duty free tariff lines for imports from China increased to 95.4% overall, of which 100%  for non-agricultural products and 79.5% for 
agricultural products. The relative margin of pr eference for Chinese exporters to Iceland was 75% 
overall, 100% for non-agricultural products and 56.1% for agricultural products.  
Table A1.1  
Iceland: Indicators of MFN tariff rates and preferential rates for imports from China
 
Origin of 
goods Year ALL PRODUCTS Agricultural products a Non-agricultural products  
Average applied 
tariff Share 
of duty-
free 
tariff 
lines 
(%) Average applied 
tariff Share 
of 
duty-
free 
tariff 
lines 
(%) Average applied 
tariff Share 
of 
duty-
free 
tariff 
lines 
(%) Overall 
(%) On 
dutiable 
(%) Overall 
(%) On 
dutiable 
(%) Overall 
(%) On 
dutiable 
(%) 
MFN 2014 4.4 15.0 70.2 11.4 26.6 55.5 2.4 9.6 74.6 
China 2014 1.1 28.5 95.4 5.0 28.5 79.5 0.0 0.0 100.0 
a WTO Definition. 
Note: For the calculation of averages, specific rates are excluded and the ad valorem  component of 
compound rates are included. 
 Based on the HS 2012 nomenclature. 
Source:  WTO estimates based on data  provided by Iceland authorities. 
 
3. In 2014 China's overall applied MFN average duty was 9.8%, 8.9% for non-agricultural 
products and 15% for agricultural products. Around 8.4% of the tariff was duty free, with around 8.6% duty free for non-agricultural products and 7.8% for agricultural products. Upon entry into 
force of the Agreement in 2014 95.6% of China's tari ff became duty free for imports from Iceland, 
of which 96.3% for non-agricultural products an d 91.2% for agricultural products. The relative 
margin of preference for exporters from Iceland to China was 92.9% overall, 95.5% for non-agricultural products and 80.7% for agricultural  products. By the end of liberalization in 2024, 
95.9% of the overall tariff will be duty free, with  96.7% of non-agricultural lines becoming duty 
free and no change for agricultural products. 
Table A1.2  
China: Indicators of MFN tariff rates and preferential rates for imports from Iceland
 
Origin of 
goods Year ALL PRODUCTS Agricultural products a Non-agricultural products  
Average applied 
tariff Share 
of duty-
free 
tariff 
lines 
(%) Average applied 
tariff Share of 
duty-free 
tariff 
lines 
(%) Average applied 
tariff Share 
of duty-
free 
tariff 
lines 
(%) Overall 
(%) On 
dutiable 
(%) Overal
l (%) On 
dutiabl
e (%) Overal
l (%) On 
dutiable 
(%) 
MFN 2014 9.8 10.7 8.4 15.0 16.3 7.8 8.9 9.7 8.6 
Iceland 2014 0.7 16.1 95.6 2.9 32.7 91.2 0.4 9.6 96.3 
 2015 0.7 16.0 95.6 2.9 32.7 91.2 0.3 9.5 96.3 
 2016 0.7 15.9 95.6 2.9 32.7 91.2 0.3 9.3 96.3 
 2017 0.7 15.9 95.6 2.9 32.7 91.2 0.3 9.2 96.3 
 2018 0.7 15.8 95.6 2.9 32.7 91.2 0.3 9.1 96.3 
 2019 0.7 16.9 95.9 2.9 32.7 91.2 0.3 9.9 96.7 
 2020 0.7 16.8 95.9 2.9 32.7 91.2 0.3 9.9 96.7 
 2021 0.7 16.8 95.9 2.9 32.7 91.2 0.3 9.9 96.7 WT/REG355/1 
 
- 38 - 
 
  Origin of 
goods Year ALL PRODUCTS Agricultural products a Non-agricultural products  
Average applied 
tariff Share 
of duty-
free 
tariff 
lines 
(%) Average applied 
tariff Share of 
duty-free 
tariff 
lines 
(%) Average applied 
tariff Share 
of duty-
free 
tariff 
lines 
(%) Overall 
(%) On 
dutiable 
(%) Overal
l (%) On 
dutiabl
e (%) Overal
l (%) On 
dutiable 
(%) 
 2022 0.7 16.8 95.9 2.9 32.7 91.2 0.3 9.9 96.7 
 2023 0.7 16.8 95.9 2.9 32.7 91.2 0.3 9.9 96.7 
 2024 0.7 16.9 95.9 2.9 32.7 91.2 0.3 10.0 96.7 
a WTO Definition. 
Note: For the calculation of averages, specific rates are excluded and the ad valorem  equivalent of specific 
rates are included. 
 Based on the HS 2012 nomenclature. 
Source:  WTO estimates based on data  provided by Chinese authorities. 
 
4. Tables A1.3 shows market access opportunities for China's top 25 exports in Iceland 
resulting from the Agreement. These products ac counted for 29.7% of China's global exports in 
2011-2013 and were covered by 57 tariff lines at the HS eight digit level. Of these lines 30 were already duty free on an MFN basis. In 2014 when Iceland implemented its tariff commitments, 
tariffs on all the remaining 27 lines were eliminated. 
Table A1.3  
Iceland: Market access opportunities under the agreement for China's top 25 exports to 
the world
 
China's top export products in 2011-2013 Access Conditions to Iceland's import 
markets 
MFN (2014)  Duty-
free in 
2014 HS number and description of the product Share in 
global 
exports 
(%) Average 
MFN 
applied 
rate 
(%) No. of tariff lines 
Duty-
free Dutiable 
847130 - portable automatic data processing 
machines, weighing not more than 10 kg 5.4 0.0 3   
851712 -- telephones for cellular networks or for 
other wireless networks 3.9 0.0 1   
851770 - parts 2.0 0.0 1   
901380 - other devices, appliances and 
instruments 1.7 0.0 2   
847330 - parts and accessories of the machines 
of heading 84.71 1.4 0.0 1   
854231 -- processors and controllers, whether or 
not combined with memories, 
converters, logic ci rcuits, amplifiers, 
clock and timing circuits, or other 
circuits 1.3 0.0 1   
851762 --machines for the reception, conversion 
and transmission or regeneration of voice, images or other data, including switching and routing apparatus 1.3 0.0 1   
890190 - other vessels for the transport of goods 
and other vessels for the transport of 
both persons and goods 1.2 0.0 2   
854140 - photosensitive semiconductor devices, 
including photovoltaic cells whether or not assembled in modules or made up 
into panels; light emitting diodes 1.0 0.0 1   
711319 -- of other precious metal, whether or 
not plated or clad with precious metal 1.0 10.0  1 1 
847170 - storage units 0.8 0.0 1   
850440 - static converters 0.8 0.0 1   
640299 Footwear with outer soles and uppers of 
rubber or plastics 0.8 15.0  1 1 WT/REG355/1 
 
- 39 - 
 
  China's top export products in 2011-2013 Access Conditions to Iceland's import 
markets 
MFN (2014)  Duty-
free in 
2014 HS number and description of the product Share in 
global 
exports 
(%) Average 
MFN 
applied 
rate 
(%) No. of tariff lines 
Duty-
free Dutiable 
271019 Medium oils and preparations, of 
petroleum or bituminous minerals, not 
containing biodiesel, n.e.s. 0.7 0.6 8 1 1 
854232 Electronic integrated circuits as 
memories 0.7 0.0 1   
852580 -television cameras, digital cameras and 
video camera recorders 0.7 0.0 1   
853400 Printed circuits. 0.6 0.0 1   
852872 Reception apparatus for television, 
colour, whether or not incorporating 
radio-broadcast receivers or sound or 
video recording or reproducing 
apparatus, designed to incorporate a 
video display or screen 0.6 7.5  2 2 
847150 - processing units other than those of 
subheading 8471.41 or 8471.49,  0.6 0.0 1   
844331 -- machines which perform two or more 
of the functions of printing, copying or 
facsimile transmission, capable of 
connecting to an automatic data 
processing machine or to a network 0.6 0.0 1   
950300 Tricycles, scooters, pedal cars and 
similar wheeled toys; dolls' carriages; dolls; other toys; reduced-size ("scale") models and similar recreational models, working or not; puzzles of all kinds. 0.6 10.0  18 18 
711590 Articles of precious metal or of metal 
clad with precious metal, n.e.s. 0.5 5.0 1 1 1 
420212 -- with outer surface of plastics or of 
textile materials 0.5 10.0  1 1 
852990 Parts suitable for use solely or principally 
with transmission and reception 
apparatus for radio-broadcasting or 
television, television cameras, digital 
cameras, video camera recorders, radar 
apparatus, radio navigational aid 
apparatus or radio remote control 
apparatus, monitors and projectors, 
n.e.s.  0.5 3.8 1 1 1 
611030 - of man-made fibres 0.5 15.0  1 1 
Total of above 29.7  30 27 27 
Note: Based on the HS 2012 nomenclature. 
Source: WTO estimates based on data provided by Iceland authorities and UN SD, Comtrade database.  
 
5. Table A1.4 shows market access opportunities for Iceland's top 25 exports in China resulting 
from the Agreement. These products accounted for 75.6% of Iceland's global exports in 2011-
2013 and were covered by 50 tariff lines at the HS eight digit level, all of which were subject to MFN duties. In 2014 on entry into force of the Agreement China eliminated tariffs on 46 of the 50 
products. A further 2 lines are to be eliminated in 2019 and one line in 2024. Following the end of 
implementation one line relating to frozen fish will remain subject to duties for which the MFN rate in 2014 was 10%. WT/REG355/1 
 
- 40 - 
 
  Table A1.4  
China: Market access opportunities under th e agreement for Iceland's top 25 exports to 
the world  
Iceland's top export products in 2011-2013 Access Conditions to China's import markets 
MFN (2014)
Duty-free in 
Remain dutiable HS number and description of the product 
Share in 
global 
exports 
(%) Average 
MFN 
applied 
rate 
(%) No. of 
tariff 
lines Duty-free 
Dutiable 
2014 
2019 
2024 
760110 - aluminium, not alloyed 33.5 5.0  2 2    
230120 - flours, meals and pellets, of fish 
or of crustaceans, molluscs or 
other aquatic invertebrates 3.5 3.5  2 2    
030354 -- mackerel  3.4 10.0  1 1    
720221 -- containing by weight more than 
55 % of silicon 3.1 2.0  1 1    
030562 -- cod  2.5 16.0  1 1    
030499 Frozen fish meat n.e.s. (excl. 
fillets) 2.3 10.0  1 1    
030389 Frozen fish, n.e.s. 2.2 10.0  4 3  1  
030453 -- fish of the families 
bregmacerotidae, euclichthyidae, 
gadidae, macrouridae, 
melanonidae, merlucciidae, 
moridae and muraenolepididae 2.2 12.0  1 1    
300490 Medicaments consisting of mixed 
or unmixed products for therapeutic or prophylactic purposes, put up in measured doses "incl. those in the form of transdermal administration" or in forms or packings for retail sale  2.1 3.6  10 10    
030471 -- cod  2.0 10.0  1 1    
150420 - fats and oils and their fractions, 
of fish, other than liver oils 2.0 12.0  1 1    
760719 Aluminium foil, not backed, rolled 
and further worked, of a thickness 
of <= 2 mm  1.8 6.0  1    1 
271019 Medium oils and preparations, of 
petroleum or bituminous minerals, not containing biodiesel, n.e.s. 1.8 6.5  11 11    
030444 -- fish of the families 
bregmacerotidae, euclichthyidae, 
gadidae, macrouridae, 
melanonidae, merlucciidae, 
moridae and muraenolepididae 1.4 12.0  1 1    
030495 -- fish of the families 
bregmacerotidae, euclichthyidae, gadidae, macrouridae, melanonidae, merlucciidae, moridae and muraenolepididae, other than alaska pollack (theragra chalcogramma) 1.4 10.0  1 1    
030331 -- halibut  1.4 10.0  2 1 1   
760120 - aluminium alloys 1.3 7.0  1 1    
030572 -- fish heads, tails and maws 1.2 16.0  1 1    
160521 -- not in airtight container 1.1 5.0  1 1    
760511 -- of which the maximum cross-
sectional dimension exceeds 7 
mm 1.1 8.0  1 1    WT/REG355/1 
 
- 41 - 
 
  Iceland's top export products in 2011-2013 Access Conditions to China's import markets 
MFN (2014)
Duty-free in 
Remain dutiable HS number and description of the product 
Share in 
global 
exports 
(%) Average 
MFN 
applied 
rate 
(%) No. of 
tariff 
lines Duty-free 
Dutiable 
2014 
2019 
2024 
030532 -- fish of the families 
bregmacerotidae, euclichthyidae, 
gadidae, macrouridae, 
melanonidae, merlucciidae, moridae and muraenolepididae 1.0 10.0  1 1    
030473 -- coalfish (pollachius virens) 1.0 10.0  1 1    
030390 - livers and roes 1.0 10.0  1  1   
030351 -- herrings  0.7 10.0  1 1    
030472 -- haddock (melanogrammus 
aeglefinus) 0.7 10.0  1 1    
Total of above 75.6  0 50 46 2 1 1 
Note: Based on the HS 2012 nomenclature. 
Source: WTO estimates based on data provided by Chinese authorities and UN SD, Comtrade database. 
 
__________