WT/REG243/M/1  
 
28 April 2017 
(17-2341) Page: 1/3 
Committee on Regional Trade Agreements  
Eighty -fourth Session    
 
FREE TRADE AGREEMENT  BETWEEN ICELAND AND THE FARO E ISLANDS   
(GOODS  AND SERVICES ) 
NOTE ON THE MEETING OF 3 APRIL  2017 
Chairman: Ambassador Daniel BLOCKERT (Sweden)  
1.1.  The 8 4th Session of the Committee on Regional Trade Agreements (hereinafter 'CRTA' or the 
'Committee') was convened in Airgram  WTO/AIR/RTA/ 9/Rev.1  dated 24 March  2017. 
1.2.  Under Agenda Item F.I of the session, the CRTA  considered the  Free Trade Agreement (FTA) 
between Iceland and the Faroe Islands, goods and services, (hereinafter "the Agreement").  
1.3.  The Chairman  recalled that during the CRTA meeting of 4 March 2009, Members had agreed 
to consider RTAs involving non -Members under the Transparency Mechanism's procedures and had 
agreed that those RTAs notified since 14 December 2006, including future notif ications, should be 
taken up before the others. Members had made it clear that consideration of such agreements by 
the Committee did not have any implication for the views or positions of any Member with respect 
to the consistency of that RTA with WTO rule s and would be without prejudice to the rights and 
obligations of Members under the WTO Agreements, as clearly stated in paragraphs 1 and 5 of the 
Transparency Mechanism Decision. Members had also agreed that the consideration of such 
agreements in the CRT A would be organized under a separate agenda item.  
1.4.  The Agreement had entered into force on 1 November 2006  and had been notified to the 
WTO by Iceland on 10 July 2008 under Article XXIV:7(a) of the GATT 1994 and the Understanding 
on the Interpretation of A rticle XXIV of GATT 1994 as an Agreement establishing a free trade area 
(document WT/REG243/N/1) and under GATS Article V:7(a) as an Agreement providing for the 
liberalization of trade in services within the meaning of Article V of the GATS (document 
S/C/N /465). The text of the Agreement was available, together with its Annexes, on the Parties' 
official websites.  
1.5.  The Factual Presentation on the goods and services aspects (document WT/REG243/1 dated 
19 December 2016) and questions and replies on the Agreemen t (document WT/REG243/2 dated 
24 February 2017) had been issued.  
1.6.  The representative of Iceland  thank ed the Secretariat for its preparation of the factual 
presentation and the CRTA for the transparency and understanding it provid ed to its Members with 
its considerations on regional trade agreements  (RTAs)  in force.  He thanked the European Union 
and Japan for the questions raised  and his  Faroese colleagues and the Danish mission for the ir co-
operation in preparing these discussions.  
1.7.  The FTA between Iceland a nd the Faroe Islands, or the Hoyvík  Agreement, had been  signed 
in the Faroese town of Hoyvík  on 31 August  2005. It had entered into force on 1 November 2006 
and had been fully implemented from that date.   
1.8.  The Agreement was one of three bilateral FTAs Iceland had notified to the WTO.  The other 
two were the bilateral agreement with the E uropean Union and the FTA with China, which had 
been reviewed by the CRTA the previous autumn . Iceland had  been a member of the European 
Free Trade Assoc iation (EFTA) since 19 70 and had  been gradually expanding its network of FTAs 
around the world  through its EFTA membership . To date 27 FTAs had been concluded by EFTA with WT/REG243/M/1  
 
- 2 - 
 
  38 countries  and a number of others were under negotiation with countries such as India, 
Malaysia, Indones ia and Viet  Nam. S oon EFTA would  start negotiations with Mercosur.  
1.9.  The Hoyvík  Agreement was Iceland 's most comprehensive FTA and a unique Agreement in 
many ways. Its aim was to establish a single economic area within the territory of Iceland and the 
Faroe Islands and to abolish all obstacles to trade and establish full economic integration between 
the partners. The Agreement covered  all sectors of economic activity  and contain ed articles on 
trade in goods, trade in services, movement of persons and the righ t to residence, movement of 
capital and investment, right of establishment, competition, state monopolies, state aid and public 
procurement as well as co -operation in other areas such as culture, education, training, sport and 
youth, energy, environment, h ealth services, telecommunications, tourism and transport.  
1.10.   The Agreement prohibit ed any discrimination between Icelandic and Faroese natural persons 
based on nationality as well as between legal persons domiciled within the territorial scope of the 
Agreem ent on the basis of place of establishment. Any discrimination between goods originating in 
the territory based on their place of origin was also prohibited. The Agreement thus prohibit ed 
tariffs or measures having equivalent effect, as well as quantitativ e restrictions , etc. The 
Agreement also specifie d a prohibition on discrimination in the fields of trade in services, 
movement of persons and the right to residence, movement of capital and investment, right of 
establishment, competition, state monopolies,  state aid and public procurement.  
1.11.   In 2016 exports to the Faroe Islands had accounted for 1 .1% of Iceland 's global exports, up 
from 0 .7% in 2015. In 2016, 0.6% of global imports came from the Faroe Islands, up from 0 .4% 
in 2015.  
1.12.   The FTA established  a Joint  Committee that should ensure the effective implementation and 
operation of the Agreement and carry out exchanges of views and information. The FTA also 
established  a Council that should  give political impetus for the Agreement's implementation and 
give gu idance to the Joint Committee.  
1.13.   Overall, there wa s a general view that the FTA had proven to be successful and beneficial 
for the general public and the industries in Iceland,  that it ha d deepened and broadened the 
already excellent cooperation between Icel and and the Faroe Islands and had provided a useful 
framework for further enhancing cooperation between the two nations.  
1.14.   On behalf of the Icelandic delegation, he thank ed Members for their questions and their 
participation in th e Session, as well as the S ecretariat for preparing the meeting. He looked 
forward to a discussion and would endeavour to answer additional questions as they aro se.  
1.15.   The representative of the Faroe Islands  thank ed the Secretariat for the factual presentation 
on the FTA between the F aroe Islands and Iceland. Participating on an equal basis with other 
countries, and securing smooth, free and fair trade flows was very important to a small nation like 
the Faroe Islands. Therefore, the Faroe Islands were very pleased to be able to attend meetings 
like this. The Faroe Islands were an independent customs territory, but as part of the Danish 
Kingdom, the Faroe Islands were comprised by the Danish membership of the WTO.  
1.16.   The Faroe Islands had endeavour ed to expand its network of FTAs around th e world. The 
Faroe Islands export ed everything that they produce d and import ed everything that they 
consume d. Therefore, the Faroese economy was very dependent on access to external markets. 
However, as a small nation, concluding bil ateral FTAs had been an d was still a struggle for the 
Faroe Islands. The Faroe Islands wer e not a member of the EU, the EEA or EFTA.  
1.17.   The Hoyvík Agreement was one of four FTAs concluded by the Faroe Islands currently in 
force. The Faroe Islands also had bilateral FTAs with Norwa y, Switzerland, and the EU. These 
agreements had been notified to the WTO, respectively, by Norway in February 1996, by 
Switzerland in February 1996 , and by the EU in February 1997  and cover ed trade in goods only.  
The Faroe Islands and Turkey had signed a FTA in 2014, and ratification was in process.  
1.18.   The Hoyvík Agreement was an important Agreement in many ways for the Faroese 
Government and the economy of the Faroe Islands. It was the Faroe Island 's most comprehensive 
FTA, establishing a single economic are a within the territory of the Faroe Islands and Iceland.  WT/REG243/M/1  
 
- 3 - 
 
  1.19.   The Agreement established  a Council, which was the highest decision -making body. The 
Foreign ministers were represented i n the Hoyvík Council, which set  out the guidelines for overall 
cooperation un der the Agreement . 
1.20.   A Joint Committee that met at least once a year ensured  the effective implementation and 
operation of the Agre ement.  It had been functioning well, and the Parties had been able to solve or 
clarify most of the issues that in one way o r another had caused concern  through the Committee . 
The Joint Committee referred  to the Council any issue giving rise to difficulty.  Furthermore, the 
Parties had established a Parliamentary Committee  that served  as a consultative body and could 
be a good chann el of information to the Parliaments of the Parties as well as to society at large.   
1.21.   Exports to Iceland accounted for 2 .6% of the Faroe Island 's global exports  in 2016, for  
1.9% in 2015  and for 1% in 2014 . In 2016 , 3.8% of global imports came from the Iceland, 
compared to 2.5% in 2015 and 3 .9% in 2014 . Therefore a development in the right direction  could 
be seen .  
1.22.   As the Hoyvík Agreement was the most comprehensive FTA completed by the Faroe Islands, 
it had developed some valuable experience within the Faroe se administration, which ha d been very 
useful in its endeavours to strengthen trade relations with other nations. In addition, it ha d 
strengthened the cooperation between the Faroese and Icelandic Government s in several areas 
and continued  to do so, also i n non -trade related areas.  
1.23.    The Faroe Islands were pleased to receive the questions from the delegations of Japan and 
the EU and hope d that the answers had been found to be satisfactory. He hoped to answer further 
questions that Members might have, as they  arose.  
1.24.   He thanked his Icelandic colleagues, with whom it was always a pleasure to collaborate. The 
cooperation in  preparing the Session had  been no exception. He thanked as well the Danish 
Mission and Danish colleagues , with whom it was always a pleasure  to cooperate , and the 
Chairman  for his time and he hoped for a fruitful discussion.  
1.25.   The representative of the European Union  said that the EU had submitted a number of 
advance questions on fisheries and services and thanked the Parties for the very detail ed and 
satisfactory replies.  The EU did not have additional questions.  
1.26.   The representative of Japan  thanked both Parties for their written response to the advance 
questions and said he did not have additional questions. He appreciated the achievement of ful l 
liberalization in terms of trade in goods between the Parties. He also noted that the Agreement 
provided for the non -discrimination principle regarding state monopolies, subsidies, and state aid, 
as well as for implementation and cooperation relating to competition. Finally, in terms of 
commitments under the Joint Declaration including investment, Japan was interested in how to 
create and maintain favourable conditions for investors of the other Party and how to guarantee 
the free transfer of funds betwee n Parties in connection with investment and trade in goods and 
services  
1.27.   The Chairman  said that the consideration of the Goods and Services Aspects of the FTA 
between Iceland and the Faroe Islands  had allowed the Committee  to clarify a number of questions 
and it could now  conclude oral discussion of th e RTA in accordance with paragraph  11 of the 
Transparency Mechanism. If any delegations wish ed to ask follow -up questions they were invited 
to forward submissions in writing to the Secretariat by 10 April 2017 and Parties were asked to 
submit replies in writing by no later than 24 April 2017 . In accordance with paragraph  13 of the 
Transparency Mechanism all written submissions,  as well as minutes of this meeting would  be 
circulated promptly, in all WTO  official languages, and would  be made available on the WTO 
website.  
1.28.   The Committee took note  of the comments made.  
 
__________