WT/REG 355/M/1  
 
24 November 2016 
(16-6450) Page: 1/4 
Commi ttee on Regional Trade Agreements  
Eighty -third  Session   
 
 FREE TRADE AGREEMENT  BETWEEN ICELAND  AND CHINA  
(GOODS AND SERVICES ) 
NOTE ON THE MEETING OF 7-8 NOVEMBER 2016 
Chairman: Ambassador Daniel BLOCKERT (Sweden)  
1.1.  The 8 3rd Session of the Committee on Regional Trade Agreements (hereinafter 'CRTA' or the 
'Committee' ) was convened in Airgram  WTO/AIR/RTA/ 8/Rev. 1 dated 28 October 2016. 
1.2.  Under Agenda Item D.I of the session, the CRTA considered the  Free Trade Agreement  (FTA)  
between Iceland and China , goods and services , (hereinafter "the Agreement").  
1.3.  The Chairman  said th at the Agreement had entered into force  on 1 July 2014.  It had been  
notifie d to the WTO by the Parties on 10  October  2014 under Article  XXIV:7(a) of the GATT  1994 
and the Understanding on the Interpretation of Article  XXIV of GATT 1994 as an Agreement 
establishing a free trade area (document  WT/REG 355/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/ 771). The text of the Agreement was availabl e, together with its Annexes, 
on the Parties' official websites.  The Factual Presentation on the goods and services aspect s 
(document  WT/REG 355/1 dated 7 July 2016) and questions and replies on th e Agreement 
(document WT/REG355 /2 dated 6 September 2016 ) had been distribut ed. 
1.4.  The representative of Iceland  thank ed the Secretariat for its preparation of the  Factual 
Presentation , the Committee for the transparency it provid ed to Members with the consideration o f 
RTAs,  Members  for the questions raised on the Agreement , and the Chinese delegation for its 
co-operation in preparing the discussions.  
1.5.  The Agreement which had been signed on 15 April 2013 and had entered into force on 1 July 
2014, was the third bilateral FTA that Iceland ha d notified to the WTO . The oth ers were firstly its 
bilateral agreement with the European Union and secondly, its FTA  with the Faroe Islands. Iceland 
had been a member of EFTA, the European Free Trade Association, since 1970 and ha d through its 
EFTA membership been gradually expanding i ts network of FTAs around the world, including in 
Asia. To date EFTA ha d concluded 27 FTAs with 38 countries.  
1.6.  According to the Agreement , 95.4% of all tariff lines had become duty free upon entry into 
force for Chinese imports to Iceland. The value of impo rted goods on the remaining 4.6% of tariff 
lines where duties remain ed was only 2.9% of Iceland 's imports from China in 2011 -2013. The 
products where duties remain ed on imports to Iceland were mainly animal products and foodstuff, 
for example , dairy and me at products.  
1.7.  In services, the P arties had agree d to provide each other 's services and services suppliers 
market access in accordance with GATS rules. In its GATS schedule, Iceland had made 
commitments in 113 out of 155 services sectors and sub -sectors. Th e commitments were based on 
Iceland 's revised offer tabled in 2005 under the GATS negotiations that had taken  place in the 
context of the Doha Development Agenda. The commitments largely follow ed Iceland 's GATS 
commitments.  WT/REG3 55/M/1 
 
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  1.8.  Other provisions of the Agreemen t include d for instance rules of origin and trade facilitation, 
intellectual property rights, investment, competition, cooperation, institutional issues and dispute 
settlement.  
1.9.  In 2015, the first full year since the  Agreement's  entry into force, merchandis e exports from 
Iceland to China had almost doubled from the previous year, from US $41 million  in 2014 to 
US$73 million in 2015. At the same time, imports from China to Iceland  had increased from 
US$394 million in 2014 to US$417 million in 2015.  In 2015, Ch ina was Iceland 's fourth  largest 
source of imports  and its 15th largest destination for exports .  
1.10.   In addition to the increase in exports from Iceland to China after the conclusion of the 
Agreement, there was now a larger variety of goods exported to China.  Exports of expensive fish 
products ha d increased, and the market ha d improved substantially for exports of different 
machinery and equipment.  
1.11.   The Agreement provided for the creation of  a China -Iceland FTA Joint Commission that was 
to meet regularly to di scuss the functioning of the Agreement. These meetings provide d a good 
forum to identify challenges and opportunities in bilateral trade between the Parties and to solve 
differences that might arise.  Overall, there was a general view that the Agreement ha d prove d to 
be successful and beneficial for the general public and industries in Iceland. It had provided an 
excellent platform for the further strengthening of the good trade relations that already existed 
between the Parties. He thanked M ember s for their  questions and their participation in th e session, 
as well as the Secretariat for preparing the meeting. He looked forward to a fruitful discussion and 
would  endeavour to answer additional questions.  
1.12.   The representative of China  thank ed the WTO Secretariat  for preparing the Factual 
Presentation , Members for their interest and questions , and his Iceland colleagues  for their close 
and fruitful cooperation during th e process.  
1.13.   China ha d launch ed its FTA strategy in 2003 and  deem ed FTAs to be  a new platform to 
further open up to the outside and speed up domestic reforms, as an effective approach to 
integrate into the global economy and strengthen economic cooperation with other economies, as 
well as an important supplement to the multilateral trading system. Cur rently, China ha d 22 FTAs 
under construction, among which 14 had been signed and implemented already, including the 
China -Iceland FTA.  
1.14.   Together with  Iceland, China had achieved many records in its economic and trade 
cooperation with European countries. Iceland was the first developed European country to 
recognize China as a full market economy and the first European country to negotiate and sign a n 
FTA with China.  
1.15.   In 2006, China and Iceland had embarked on negotiations of a comprehensive FTA covering 
goods , services and investment which would deliver positive benefits to both economies. After six 
rounds of discussions, the negotiations had concluded in April 2013 and the Agreement had 
entered into force on 1 July 2014. The Parties had convened the first mee ting of the Joint 
Committee established under the Agreement in July 2015  in Iceland  and the second meeting in 
September 2016 in Beijing.  
1.16.   The Agreement was rich in content, consisting of 12 chapters and nine appendixes. With 
regard to trade in goods, the hi gh standard of the Agreement was clearly reflected.  In terms of 
trade volume, Iceland would eventually eliminate tariff s on close to 100% of its imports from 
China, and China would liberalize 96.2% of its imports from Iceland by the end of the phase -out 
period in 2024. In the end, duties on 95.5% of Iceland's tariff lines would be eliminated , while 
China would  eliminate  95.9%.  
1.17.   Concerning rules of origin, the Agreement was  one of China 's first two FTAs that had 
adopt ed the self -claim declaration by Approved Exporters modality, which would greatly improve 
the level of trade facilitation and lower the cost for enterprises.  WT/REG3 55/M/1 
 
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  1.18.   In services, based on both Parties ' WTO GATS commitments, China and Iceland had reached 
further agreement to open up related service sectors , including in the area of  the movement of 
natural persons, and computer and related services, etc.  
1.19.   Since its entry into force, the Agreement ha d been a catalyst for lifting China -Iceland trade. 
According to China 's statistics , during the second year  of implementation, namely from July 2015 
to June 2016, bilateral trade in goods had reached US$0.48 billion , representing  15.4% growth 
compared with the first year  of implementation. Meanwhile, during the above -mentioned period, 
bilateral  trade in service s had increased to US$0.28 billion, and China 's import s from Iceland had 
reached US$0.26 billion, among which travel services had contributed 98%. Furthermore, 
investment flows  between the two countries had been increasing  with a great potential for further 
cooperation. With the benefits provided by the Agreement and the deepening economic 
cooperation  of both countries, China  had every reason to believe that th e positive momentum  
would  be sustained and furthered.  
1.20.   The Agreement was  a milestone in the history of the bilateral relationship between the two 
countries  and was also a significant step in the implementation of China 's FTA strategy. China 
would  continue to work actively with Iceland to promote and implement the Agreement and make 
it a sound and comprehensi ve platform to promote and develop bilateral trade and investment, 
and to address related trade and economic matters arising in bilateral economic and trade 
relations.  
1.21.   At present China was Iceland's fourth largest trading partner and its largest Asian trad ing 
partner since 2006. He thank ed the Secretariat for its good work and Me mbers for their questions 
and participation. The Parties had  provided replies to the questions by the EU and Thailand. They  
looked forward to a fruitful discussion and would  endeavo ur to answer additional questions as they 
arose . 
1.22.    The representative of the European Union  thanked the Parties for their comprehensive and 
interesting presentations of the Agreement. The EU noted that for China the Agreement marked 
the first FTA concluded with a European country, followed shortly afterwards by the conclusion of a 
second FTA with Switzerland. As regards market access for goods, the EU noted that the 
Agreement paved the way for significant reductions in customs duties between the Parties, 
particular ly for  non-agricultural products. In services, the Parties'  commitments in the Agreement 
largely followed their GATS commitments. The EU had submitted a few questions in advance of the 
meeting, focusing on TBT, IPR and cooperation  and s he than ked th e Parties for the replies. She 
wanted to come back to a  question the EU had posed on economic cooperation in the area of 
labour and environment. In their reply, the Parties had stated their willingness to promote 
cooperation in the area, especially in natu re resource protection, the environmental industry and 
technics, but the y had not replied to the EU's question on the types of cooperation activities 
foreseen on environment and labour. The EU would be interested in examples or if any activities 
were fores een in the future.  
1.23.   The representative of Japan  commended the Parties for the high level of liberalization in 
trade in goods. However, Japan regretted that there was no chapter on electronic commerce and 
was disappointed that the chapters on investment and competition provided for information 
exchange or cooperation between authorities in general terms only. Japan wanted  to look closely 
at how to address disciplines that were not covered by the WTO framework in individual RTAs.  
1.24.   The representative of Thailand  thanked China for its response to its question on 
commitments in financial services and transportation services . She also thanked the Parties for 
their responses on the implementation of competition policy in their countries. Thailand had no 
further quest ions but would submit any additional questions in writing.  
1.25.   The representative of Iceland  said the Parties would look into the response provided to the 
EU and would try to improve the answer. He had taken note of the comments made by Japan and 
Thailand.  
1.26.   The Chairman  said that the consideration of the goods and services Aspects of the FTA 
between Iceland and China ha d allowed the Committee  to clarify a number of questions and it now 
conclude d oral discussion of the RTA  in accordance with paragraph 11 of the T ransparency WT/REG3 55/M/1 
 
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  Mechanism. If any delegations wish ed to ask follow -up questions they were invited to forward 
submissions in writing to the Secretariat by 14 November 2016 and Parties were asked to submit 
replies in writing by no later than 28  November 2016. In  accordance with paragraph 13 of the 
Transparency Mechanism all written submissions, as well as minutes of th e meeting would  be 
circulated promptly, in all WTO  official languages, and would be made available on the WTO 
website.  
1.27.   The Committee took note  of the comments made.  
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