WT/TPR/M/361/Add.1  
 
5 June 2018 
(18-3376) Page: 1/100 
Trade Policy Review Body  
4 and 6 October 2017  Original: English/ anglais/inglés  
 
  
TRADE POLICY REVIEW  
ICELAND  
MINUTES OF THE MEETI NG 
Addendum  
Chairperson: H.E. Mr. Juan Carlos Gonzalez (Colombia)  
This document contains the advance written questions and additional questions by WTO 
Members, and replies provided by  Iceland .1 
 
 
Organe d 'examen des politiques commerciales  
4 et 6 octobre  2017  
EXAMEN DES POLITIQUE S COMMERCIALES  
ISLANDE  
COMPTE RENDU DE LA R ÉUNION  
Addendum  
Président : S.E. M. Juan Carlos Gonzalez  (Colombie ) 
Le présent document contient les questions écrites communiquées à l 'avance par les 
Membres de l 'OMC, leurs questions additionnelles, et les réponses  fournies par  Islande .1 
 
 
Órgano de Examen de las Políticas Comerciales  
4 y 6 de octubre de 2017 
EXAMEN DE LAS POLÍTICAS COMERC IALES  
ISLANDIA  
ACTA DE LA REUNIÓN  
Addendum  
Presidente: Excmo. Sr. Juan Carlos Gonzalez (Colombia)  
En el presente documento figuran las preguntas presentadas anticipadamente por escrito y 
las preguntas adicionales de los Miembros de la O MC, así como las respuestas facilitadas por  
Islandia .1 
_______________
                                                
1 In English only/En anglais seulement/En inglés solamente.  WT/TPR/M/361/Add.1  
 
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  TABLE OF CONTENTS  
 
ARGENTINA  ................................ ................................ ................................ ......................  3 
AUSTRALIA  ................................ ................................ ................................ ......................  6 
BRAZIL  ................................ ................................ ................................ ...........................  15 
CANADA  ................................ ................................ ................................ .........................  16 
CHINA  ................................ ................................ ................................ ............................  18 
COLOMBIA  ................................ ................................ ................................ .....................  33 
COSTA RICA  ................................ ................................ ................................ ...................  36 
ECUADOR  ................................ ................................ ................................ .......................  39 
EUROPEAN UNION  ................................ ................................ ................................ .........  46 
INDONESIA  ................................ ................................ ................................ ....................  52 
JAPAN  ................................ ................................ ................................ ............................  55 
MOLDOVA, REPUBLIC OF  ................................ ................................ ................................  58 
NEW ZEALAND  ................................ ................................ ................................ ...............  64 
PERU  ................................ ................................ ................................ ..............................  69 
SWITZERLAND  ................................ ................................ ................................ ...............  72 
THAILAND  ................................ ................................ ................................ ......................  76 
UNITED STATES  ................................ ................................ ................................ .............  81 
 WT/TPR/M/361/Add.1  
 
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  ARGENTINA  
1. What is the expectation of the Government of Iceland for the next Ministerial Conference to 
be held in Buenos Aires?  
 
Iceland will continue to engage constructively in the current negotiations in WTO aiming for a 
substantive outcome at MC11. Iceland recognizes that some issues are more advanced than 
others. In this context Iceland would highlight the issue of fisheries subsidies which have clear 
potential to be a major outcome from MC11. In any event the government  of Iceland emphasizes 
the importance of a consensus based outcome from MC11 that reconfirms the commitment of the 
whole WTO membership to the international trading system and the WTO as a central pillar of that 
system. Furthermore, the outcome should also  give trade negotiators a clear and comprehensive 
guidance for the work beyond MC11 for example with work programs in key areas.  
 
Questions on the Report circulated by the Secretariat, document WT /TPR/S/361  
 
In paragraph 3.3 the report notes that Iceland has high costs of border enforcement of imports 
and exports, which gives it a low classification in the category of cross -border trade, according to 
the World Bank 's ease of doing business index.  
 
2. What elements do you attribute to high border compliance co sts? What steps is the 
Government of Iceland developing to reduce the above costs?  
 
On pages 166 and 212 of the "Doing Business 2017 " report it is stated that Iceland has such a 
high documentary compliance cost to import and export that its performance is defined in the 95th 
percentile among all economies in the Doing Business sample.2 The methodology for measuring 
export and import costs is described on the doingbusiness.org website.  
 
For a number of years, the Icelandic government has criticized the concl usions of the World Bank 
report. Iceland considers that the results do not provide a true picture of import and export costs 
in Iceland. In order to correct the figures of the World Bank the Director of Customs has since 
2013 returned detailed answers to q uestionnaires made by the World Bank about Trading across 
borders. Unfortunately, the Customs Manager 's efforts to correct  via the delivery of true 
information has not yielded reasonable results. In short the results of the Icelandic Directorate of 
Customs  show that costs are comparable to costs in the other Nordic countries and as an example, 
the World Bank estimates that the cost of border compliance for imports in Iceland is 660 USD, 
while 125 USD in Norway. The environment for import is highly compatibl e between the countries 
and no explanation for this divide is at hand.  
 
As far as the next steps are concerned Iceland 's main focus is to further reduce border compliance 
costs through the AEO arrangement.  It should also be noted that suggestions of a co mmittee on 
trade facilitation for further reducing border compliance costs and administrative burdens are 
under review.  
 
In line 3.10, the report refers to the implementation of a system of authorized economic operators 
(OAS). In the description, the requirements and background that the operators must comply in 
order to be beneficiaries of this condition are mentioned.  
 
3. While it is mentioned that the system is in the implementation phase, what are the 
procedures for foreign operators to apply for OAS s tatus?  
 
Any economic operator may apply for the AEO status if he is a legal entity established in Iceland 
and registered with the Icelandic Corporate Registry and the Icelandic VAT registry. The applicant 
must also be a part of the international supply cha in regarding import and export to Iceland.    
The usual procedures for foreign operators who cannot be considered established and registered in 
Iceland is to apply for a AEO status in the country they are domiciled in. In line with obligations 
made by Icel and in mutual AEO acceptance agreements with other countries Iceland will accept 
the AEO status of foreign companies.   
 
                                                
2 http://www.doingbusiness.org/Methodology/trading -across -borders#Cost to export: Border 
compliance (USD)  WT/TPR/M/361/Add.1  
 
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  In section 3.14., it is mentioned that under Article 21 of the Customs Law, there are anticipated 
resolutions on customs classification  in the form of binding tariff classification opinions.  
 
4. What is the procedure for submitting the request for an opinion and what documentation is 
necessary to determine the classification of the goods?  
 
The applicant completes a special form of application for a binding opinion on the tariff 
classification of goods. The application must include reliable information on the applicant, the 
product in question, the date of the application, the intended tariff code, the commercial product 
identifier, the details of the application documentation (such as photographs, product samples and 
chemical analysis), references to the issued binding opinion, if applicable and signature of the 
applicant. When the applicant has completed an application, he must send  an original at the 
nearest Icelandic customs office. After an application is submitted to the Directorate of Customs, 
an expert receives the data and reviews them. The expert fulfils his obligation to investigate the 
application thoroughly by immediately contacting the applicant if the data is unclear, blurred, 
information on the product is lacking; the application is incorrectly completed and so on. The 
expert records a case in the relevant document retrieval system and processes the application. The 
expert compares notes with specialists on tariff classification and, if appropriate, convenes a 
meeting with the Customs Classification Team at the directorate of Customs. After collection of 
data, the Directorate of Customs has 30 days to make a written decis ion on binding opinion.  
 
In paragraph 3.35 the report indicates the number of tariff lines with non -ad valorem rates 
maintained by Iceland.  
 
5. Although there is a slight decrease compared to the levels surveyed in 2012: Does the 
Government plan to continue r educing this type of tariff?  
 
At this stage the government has no plans to reduce this type of MFN tariffs on agricultural 
products. However, the government´s policy has rather been to increase market access through 
several free trade agreements, such as t he free trade agreement between Iceland and EU, where 
tariff quotas has been increased substantially, particularly for products which have the highest 
applied tariff rates, in question.  
 
Under Other Fees Affecting Imports (paragraph 3.46) it is mentioned t hat the Customs Directorate 
of Iceland receives certain customs fees for the processing and dispatch of goods.  
 
6. Could you detail what other taxes, other than those referred to, implement the Customs 
Office of Iceland for the processing and dispatch of good s? 
 
The fees referred to in para 3.46 are not taxes in the classical sense but service fees for irregular 
services provided by the directorate of Customs. The main difference is therefore that the fees are 
not levied in the purpose of creating revenue for the state treasury but only to encounter certain 
additional operating costs of the Directorate of Customs. In the state balance sheet the income of 
those fees is therefore declared as revenue of Directorate of Customs as it only support its delivery 
of cer tain additional services.  
  
The legal authority for the directorate of customs to levy the services fees is to be found in Article 
195 of the Icelandic Customs Law. The article authorizes the directorate to collect fees for the 
customs clearance of ships a nd airplanes outside of regular office hours, for customs clearance 
outside of specified regular customs clearance locations, for customs inspections due to temporary 
customs clearance, for issuing emergency customs clearances and special emergency inspect ions, 
for assessment of damage to goods during transport and so on.  
 
The directorate of Customs has issued a rate list for the service fees which is available on its 
website both in Icelandic and English.  
  
Icelandic version: https://www.tollur.is/library/Skrar/Gjaldskrar/gjaldskra.pdf  
English version: https://www.tollur.is/library/Skrar/Gjaldskrar/rate_list.pdf  
 WT/TPR/M/361/Add.1  
 
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  Regarding Public Procurement mechanisms, paragraph 3.153 specifies that Chapter IV of the 
Public Procurement Law states that when a threshold is exceeded, procurement must be carried 
out by open  or restricted procedure.  
 
7. What are the criteria that the entity uses to decide if the contracting should be done through 
open or restricted procedure? Could you expand the explanation of the steps operators should take 
to participate in restricted procedures? What  information should you present for qualitative 
selection?  
 
The main rule is open procedure. Open procedure is used when known solutions are tendered and 
when the requirements and specifications can be set in a clear and transparent manner.  
  
The restricted procedure is used in more complicated tender procedures where the tendered 
solution is complex, but available on the market. In such cases qualitative selection can be used to 
invite qualified tenderers or solutions to participate in the competition. Information required for the 
qualitative selection varies depending on each tender.  
 
 WT/TPR/M/361/Add.1  
 
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  AUSTRALIA  
Report by the Secretariat (WT/TPR/S/361)  
1 Economic Environment  
1.1 Main Features of the Economy  
 
Page 14, Paragraph 1.7  
 
The report states that the Government of Iceland presented its updated capital account 
liberalization strategy in June 2015. The report also states that the strategy has three phases of 
liberalization: reducing the size of outflows through the foreign exchange market, reducing t he 
externality associated with outflows from offshore ISK owners, and a focus on households and 
businesses.  
 
Question 1  
 
What is the timeframe for this strategy?  
 
The strategy was introduced in June 2015 built on a strategy defined in 2011 and underpinned by 
the IMF Integrated Approach to Capital Account Liberalization. It was condition based approach 
with open timeframe and the purpose was to minimize potential neg ative effects on currency 
stability, bank liquidity and economic welfare. When the Krona started appreciating the time was 
right to speed up the process which, with the exception of remaining restrictions on offshore 
krónas, ended with lifting the controls  in March 2017. The milestones were three:  
 
1. Resolution of the failed banks ' estates  
 
 Completed in early 2016 resulting in significant stability contribution payments to the 
Government - used to retire liabilities.  
 
2. Resolution of offshore holdings of króna assets  
 
 Auction in June 2016 following a series of earlier ones - resulted in a sizeable reduction in the 
stock and an isolation of the remaining part for later resolution.  
 Agreement in March 2017 on settling about one half of outstanding offshore assets,  standing 
offer to the rest.  
 At their peak in 2009, the stock of offshore krónas amounted to around 40% of GDP. After the 
abovementioned auctions and agreements, they currently stand at around 3.5% of GDP.  
 The remaining restrictions on offshore króna asset s will be lifted as soon as conditions allow.  
 
3. Removal of restrictions on businesses, households and pension funds  
 
 Comprehensive legislative bill adopted by the Parliament in October 2016 entailing a first 
immediate step and a second step at the beginning  of 2017. In March 2017, capital controls on 
individuals, businesses and pension funds were finally lifted.  
 
The remaining restrictions are minimal and affect few. They consist of measures to prevent 
excessive inflows in relation with carry trading.  
 
Question 2  
 
What measures does Iceland plan on implementing to reduce the size of outflows through the 
foreign exchange market?  
 
There are no measures to reduce the size of outflows through the foreign exchange market. 
Measures have been implemented to tempering carry trade inflow since June 2016. Rules have 
been implemented on special reserve requirements (capital flow management measure) for new 
currency inflows introduced in June 2016 aimed at tempering and affecting the composition of 
capital inflows . 
 WT/TPR/M/361/Add.1  
 
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  Report by the Secretariat (WT/TPR/S/361)  
1 Economic Environment  
1.2 Recent Economic Developments  
1.2.1 Monetary Policy  
 
Page 16, Paragraph 1.14  
 
The report states that the Monetary Policy Committee of the Central Bank of Iceland has started 
lowering int erest rates as inflation expectations ease back towards the inflation target of 2.5 per 
cent. 
 
Question 1  
 
What impact is this lowering of interest rates having on the exchange rate and exports?  Is it likely 
to be sustained?  
 
The current monetary policy framework is "inflation targeting plus ", which targets low and stable 
inflation over the medium term with a floating exchange rate and foreign exchange interventions 
only to dampen excessive exchange rate fluctuations. The main reason the Central Bank has been 
lowering interest rates is to offset a rise in the banks ' real rate as inflation expectations have been 
lowering. Furthermore, the appreciation of the króna constrains demand and has enabled the 
Central Bank to achieve pric e stability with a lower interest rate than otherwise would have been 
possible. In sum, the Bank 's objective is not to affect the exchange rate per se, as it is of the 
opinion that the appreciation of the króna has played a key role in the economy 's adjust ment to 
positive shocks, but rather to prevent excessive daily volatility using foreign exchange 
interventions.  
 
Moreover, with interest rates in Iceland much higher than in main business partner countries, 
there is space for lowering the rates without hig h outflow risk. The krona has depreciated 
somewhat recently after a rapid appreciation in 2016 and the first half of 2017. The appreciation 
phase started with blossoming tourism in recent years, causing foreign currency inflow leading to a 
current account surplus. The appreciation of the Krona has had bad effects on exports including 
tourism. The Central Bank bought currency to temper this development and thankfully it slowed 
down with the lifting of capital controls earlier this year.  
 
The Central Bank ha s been very cautious in lowering interest rates, but lately the inflation 
expectations have lowered towards inflation target in line with very low inflation for over three and 
half years and inflation is not expected to dramatically exceed the target in th e medium term or 
near future. Presumably, lower interest rates in Iceland along with rising interest rates elsewhere 
could lead to capital outflows and the depreciation of the króna, benefitting exports. However, this 
has not been the case so far, nor is i t the objective of the Central Banks ' monetary policy 
committee.  
 
Report by the Secretariat (WT/TPR/S/361)  
1 Economic Environment  
1.2 Monetary Policy  
 
Page 17 – 18, Table 1.4 'Composition of trade in services, 2012 – 2016 ' and 
Paragraph  1.19 
 
The report i ndicates that tourism and tourism -related services form the majority of Iceland 's total 
services exports. It further states that the growth in the services in Iceland was primarily due to 
the strong performance of the tourism sector.  
 
Question 1  
 
Does the  Government of Iceland have plans to increase the growth and share of total exports for 
services sectors other than the tourism sector?  
 
We have had concerns over other labour -intensive services in the international sector, such as 
engineering, innovation and IT, due to the rapid appreciation of the krona. The lifting of capital 
control was an important step to promote a more natural price determination of the króna, make WT/TPR/M/361/Add.1  
 
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  the business environment sounder and improve Iceland 's competitiveness. There are meas ures in 
place to boost this sector f.ex. tax incentives for companies and foreign specialist employees 
employed by these companies.  
 
Report by the Secretariat (WT/TPR/S/361)  
2 Trade and Investment Regime  
2.2 Trade Policy Objectives  
  
Page 26, Paragraph 2. 10 
 
The report states that the 2017 Budgets puts in place a new framework for agriculture with 
support amounting to ISK 1.1 billion.  
 
Question 1  
 
Can Iceland provide further details about its new agricultural framework implemented for the 
period 2017 -2026?  
 
Key elements of the Framework Agreement on horizontal support for agricultural activities, include 
support relating to advisory services, breeding, animal welfare, environmental protection, 
sustainable land management, organic production, land cultivatio n, goat farming, investment 
support for pig farming. Further, the Agricultural Productivity Fund shall allocate funds for 
development projects in the horticultural, cattle and sheep sectors and for increasing employment 
in rural areas. Under this agreement  there is a scheme intended to stimulate recruitment of 
newcomers into the different sectors.  
Question 2  
 
Can Iceland provide further information about how it plans to distribute the 2017 budget allocation 
of ISK1.1 billion across its agriculture sector?  
 
The allocation of the ISK1.1 billion is due to the Agricultural Framework Agreement, between the 
government and the Farmer´s Association. The agreement covers various articles regarding 
general support to agriculture, such as advisory services and breedin g projects. In the table below, 
proportions of the total budget is shown for the articles of the agreement. With reference to the 
Agricultural Framework Agreement: https://www.stjornarradid.is/media/atvinnuvegaraduneyti -
media/media/Acrobat/Agricultural -Framework -Agreement -----English.pdf  
 
  
Advisory services  - Article 3  29.8%  
Breeding projects - Article 4  3.4%  
Land cultivation payments - Article 5  21.2%  
Agricultural Productivity Fund - Article 13  7.3%  
Financial resources for agricultural development projects - Article 11  5.3%  
Organic production - Article 7  2.0%  
Forestry products - Article 12  0.9%  
Investment subsidies in pig farming - Article 10  5.7%  
Farmland payments - Article 5  14.2%  
Assessment of vegetation resources - Article 8  1.7%  
Recruitment - Article 6  7.4%  
Goat farming - Article 9  0.9%  
Genetic Resource Council - Article 14  0.4%  
 
Report by the Secretariat (WT/TPR/S/361)  
3 Trade Policies and Practices by Measure  
3.3 Measures Affecting Production and Trade  
3.3.6 State trading, state -owned enterprises, and privatization  
3.3.6.2 State -owned enterprises and privatization  
  
Page 64, Paragraphs 3.143 – 3.145  
  
The report states that state involvement in the economy in Iceland is quite prevalent, with the 
Government 's stake in the banking sector increasing during the period under review.  The report WT/TPR/M/361/Add.1  
 
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  outlines Government ownership in enterprises across a number of sectors, and s tates that at the 
start of 2016, the State had a majority stake in 34 enterprises.  
 
Question 1  
 
What plans does Iceland have to privatise state -owned enterprises? What are the priority sectors 
for privatisation and what is the like ly timeframe?  
 
The current priority will be to reduce the state 's holdings in the financial services sector, where the 
state has almost 100% share in 2 of the 3 largest commercial banks and a minority share in 1. 
Likely this will start with the listing of Arion banki in the first half of 2018, where the state has a 
13% share. As soon as economically feasible, the state will sell Islandsbanki, where the state holds 
a 100% share and the final step would be to reduce the state 's share in Landsbanki down to 35 -
40%, but there is no fixed timeframe attached to this activity. Of course, this is also subject to the 
priorities of the next parliament, but elections will be held on October 28, 2017.   
 
Question 2  
 
Does the Government of Iceland have any plans to privatise state -owned assets in the services 
sector, such as airports or banks?  
 
There has been no focus on privatising companies in other sectors at this point, aside from what 
could follow from regular re -evaluation of the rational for ongoing state holding in companies.  
 
Report by the Secretariat (WT/TPR/S/361)  
3 Trade P olicies and Practices by Measure  
3.2 Measures Affecting Production and Trade  
3.3.8 Intellectual property rights  
3.3.8.5 Geographical indications (GIs)  
  
Page 72, Paragraph 3.175  
  
The report states that, as a result of an agreement entered into with the European Union, a list of 
1,150 agricultural products and foodstuffs of the European Union will receive the same level of 
protection in Iceland as in the EU market.  
  
Question 1  
 
Does Iceland have objection procedures in relation to geographical indication s protected under its 
agreement with the EU and/or domestic legislation?  
 
Objection procedure in relation to the agreement with EU:  
 
In accordance with an agreement with the EU, a list of names to be protected as registered GI 's in 
Iceland where published by the Icelandic Food and Veterinary Authority with the possibility to 
object within 2 months ' time. The list was published in the end of June 2015 and the objection 
respite ended on August 31st the same year.  
No objections we re filed.  
 
Objection procedure in the national legislation:  
 
Article 15 Statement of objection to applications for the registration of product names . 
   
If the conditions for registration are fulfilled, the Icelandic Food and Veterinary Authority shall 
make public the name of the product and the product specification for which registration is sought.   
Statements of objection to product names and product specifications published according to 
paragraph 1 can be made within a period of two months from the publication date. Statements of 
objections shall be filed in writing to the Icelandic F ood and Veterinary Authority. Statements of 
objection shall be upheld and the application refused if they show that:  
      WT/TPR/M/361/Add.1  
 
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  a. the conditions laid down in this Act are not f ulfilled,     
b. the proposed registration will wholly or partly impinge up on intellectual property rights 
granted by law, or     
c. the product name is a generic name.  
  
Article 16 Decision  
    
The Icelandic Food and Veterinary Authority shall take a decision o n the registration of a product 
name within three months of the date on which the opposition period pursuant to Article 15 
expires.  The Icelandic Food and Veterinary Authority shall publish its decision on the registration 
of a product name and a product specification by way of a public notice in Section B of the 
Government Gazette of Iceland.   A decision on the registration of a product name shall otherwise 
be made in accordance with the provisions of the Administrative Procedures Act.  The Ministry shal l 
maintain and publish updated the register of product names which have been registered according 
to the provisions of this Act.  
  
Question 2  
 
If Iceland has objection procedures per Question 1, could Iceland please provide the details of 
those procedures?  
 
Please see answer to question 1.  
 
Question 3  
 
Does Iceland anticipate registering any geographical indications in the EU market as part of the 
agreement?  
 
The main purpose of the agreement was a mutual recognition of product falling under geo graphical 
indication and to create market conditions for businesses, in order to establish products that fulfil 
the requirements of GIs. This is however, based on the interest of the private sector/producer of 
registering such products.  
 
Iceland has hopes that at least a few geographical indications will be registered within the EU. For 
the time being only one application is currently being processed under the domestic procedure, 
namely ICELANDIC LAMB. Should that application be accepted i n Iceland a protection in the EU will 
be applied for accordingly. Going forwards, Iceland hopes for further registrations within the EU.  
 
Report by the Secretariat (WT/TPR/S/361)  
4 Trade Policies by Sector  
4.2 Mining and Energy  
4.2.1 Regulation  
 
Page 92, Paragraph 4.79  
 
The report notes steps that Iceland has taken to open its energy market to foreign companies and 
integrate with the EU energy market.  
 
Question 1  
 
What impact, if any, is the UK 's withdrawal from the EU likely to have on the proposed 
interconnector between the United Kingdom and Iceland ( "Ice Link ")? 
 
Probably no impact at all. However, it is too early to comment further on that as the possibility of 
an interconnector is still at a very early stage in Iceland and still in a pre -feasibi lity stage.  
 WT/TPR/M/361/Add.1  
 
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  Report by the Secretariat (WT/TPR/S/361)  
4 Trade Policies by Sector  
4.2 Mining and Energy  
4.2.1 Regulation  
 
Page 93, Paragraph 4.81  
 
The report states that Iceland is in the process of preparing a comprehensive energy strategy, 
which it aims t o publish in 2018.  
 
Question 1  
 
Does Iceland envision a role for renewable energy exports as part of the comprehensive energy 
strategy?  
 
The comprehensive energy strategy is still in preparation and therefore it is too early to comment 
on whether energy export will be a part of it. That is primarily a political question which needs to 
be discussed in Parliament.  
 
Report by the Secretariat (WT/TPR/S/361)  
4 Trade Policies by Sector  
4.3 Services  
4.3.4 Tourism  
 
Page 102, Paragraph 4.125  
 
The report states that some of the recent growth in Iceland 's tourism industry can be attributed to 
exchange rate depreciation, which led to Iceland becoming a more affordable destination.  
 
Question 1  
 
How significant a factor is the exchange rate to Iceland 's tourism indus try? 
   
From 2011 a 7 million3 foreign tourists visited Iceland. Accumulated foreign currency revenues 
since 2011 are around 2.000 billion ISK. The number of tourists has increased from 565 thousand 
in 2011 to 1 .8 million in 2016 which is a 39% increase from 2015, when foreign visitors numbered 
around 1.3 million according to Icelandic Tourist Board.  
  
The recent rise of the exchange rate has causes slowdown in the growth in the tourist sector. Even 
though there is no signal of recession, a higher exchang e rate has already caused changes in 
tourist behaviour such as fewer overnights and cheaper selection in food and drink.  
  
Despite the above mentioned, a higher exchange rate has not reduced interests and opinions of 
visitors to Iceland. According to a rec ent survey done by Promote Iceland the overall tourist 's 
satisfaction is relatively high. At the same time fli ght supply is still increasing as well as the 
number of tourists is still increasing. According to forecasts made by ISAVIA, the Icelandic state 
owned Service Company in airport operations and air navigations, the number of tourists will be 
around 2 .4 million in 2017.  
 
Consequently a higher exchange rate has caused slow down or even decrease in turnover 
calculated in domestic currency. At the same t ime companies are challenged by increasing cost of 
labour.  A result from this, some signs of increasing consolidation in the sector are on the horizon.  
 
Altogether it can be concluded that the sector is quite sensitive to exchange rate changes. Current 
experience although, is that the rising exchange rate has slightly cooled down the rapid growth 
without leading to recession in the sector. On the contrary, continuing growth is still to be 
expected in the Icelandic tourist sector.  
 
                                                
3 Departing passengers  WT/TPR/M/361/Add.1  
 
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  Report by Iceland (WT/TPR /G/361)  
1 Introduction  
 
Page 3, Paragraph 1.7  
 
The report states that a primary goal of the Icelandic Government is to maintain a close economic 
and trade relationship with the UK following its withdrawal from the European Union ( "Brexit "). 
 
Question 1  
 
Could Iceland provide more information on its proposed strategy for maintaining a close economic 
and trade relationship with the United Kingdom following Brexit?  
 
The United Kingdom is not only one of Iceland 's most important trading partners but also a clos e 
ally and a key partner in number of areas. Iceland 's long term strategic objective is that our 
relationship with the United Kingdom will become even closer and stronger post -Brexit. However, 
to achieve this objective, there are certain medium term goals that need to be achieved. This 
includes safeguarding the rights of Icelandic nationals currently living in the UK or otherwise 
exercising their rights under the EEA Agreement and taking appropriate measures to avoid any 
kind of a cliff edge scenario in bil ateral trade between Iceland and the United Kingdom when the 
latter exits from the European Union. To achieve these goals, the Icelandic authorities are in close 
dialogue with the United Kingdom, the European Union and the other members of EFTA.  
 
Report by  Iceland (WT/TPR/G/361)  
2 Economic Development and Prospects  
  
Page 4, Paragraph 2.4  
  
The report states that Iceland has faced a number of challenges, such as impacts on the 
environment, housing and labour markets, resulting from the rapid growth in expor ts of tourism 
and tourism -related services.  
  
Question 1  
 
What measures, if any, has Iceland implemented to address the challenges resulting from a rapid 
growth in the tourism services sector?  
 
Iceland is experiencing a rapid growth in the tourist sector, with numbers growing annually on 
average by more than 20% since 2010. The number of foreign visitors quadrupled between 2010 
and 2016, reaching 1.8 million. The surge in tourist numbers has boosted the economy, helping to 
unwind some of the impacts of the financial crisis. New jobs have been created;  foreign currency 
earnings have risen – easing financing constraints on the balance of payments – while the boost to 
tax revenues has contributed to improved public finances.  
 
In order to address the challenges of the rapid growth, the Icelandic authorities have implemented 
many different measures during recent years. In 2015 an action plan, the Road Map for Tourism in 
Iceland 2015 -2020, was launched by the then Minister of Industries and Commerce The Road Map 
emphasises seven key priority tasks which are: coordination, providing a positive visitors 
experience, reliable data, nature conservation, skills and quality, increased profitability and better 
domestic distribution of the visitors. In order to reach this go als the Tourism Task Force, which is a 
collaboration body between the Government of Iceland, the Icelandic Travel Industry Association 
and the Icelandic Association of Local Authorities was established in 2015. The purpose of the Task 
Force is to coordinat e the actions of different stakeholders, public and private, to bolster the 
tourism industry until 2020.  
 
Based on the Road Map the Government established a special Site Protection Fund to provide 
funds for construction such as sidewalks, panoramic platforms etc. under pressure and fragile 
sites.  
 
Referring to better domestic distribution of tourists, the government have established a Route 
Development Fund in order to support airlines for entering new destinations in North and East 
Iceland.  WT/TPR/M/361/Add.1  
 
- 13 - 
 
  The Tou rism Skills and Quality Center has been established in order to support knowledge building 
and quality in the Tourist sector. This is a collaboration between the Government and the the 
Education and Training Service Centre (ETSC) which is owned by the Icel andic Confederation of 
Labour (ASÍ), the Confederation of Icelandic Employers (SA), the Federation of State and Municipal 
Employees (BSRB), the Ministry of Finance and the Association of Local Authorities in Iceland.  
A significant development within the a dministration has furthermore take place. Within the Ministry 
of Industries and Innovation a new Department of Tourism was established in 2017 as a result of 
constantly growing attention to the growth of the tourist sector. An increasing percentage of publ ic 
budget is divided to tourism affairs as well according to the 5 year government budget plan.  
  
Also, the government intends to move tourism related services from the reduced VAT rate to the 
standard VAT rate to even the competition between sectors, to p romote a more sustainable 
increase in tourism and to make space for building up infrastructure. There are plans of improving 
the statistics for the tourist sector and research to help making future decisions in tourism related 
strategy.  
 
Report by Iceland (WT/TPR/G/361)  
2 Economic Development and Prospects  
 
Page 4, Paragraph 2.7  
 
The report notes a substantial exchange rate appreciation of the Icelandic króna in 2016 and 
continued appreciation in 2017.  
 
Question 1  
 
How does Iceland plan to manage the risks associated with an appreciating króna?  
 
Lifting of capital control was the most important single event promoting a more natural price 
determination of the króna. Overall, the exchange rate has depreciated somewhat in 2017, not 
appreciated. It appreciated somewhat until June, but it has been depreciating since. The Central 
Bank was active in the foreign exchange market until late last year with the aim to build up 
reserves and temper excessive volatility of the Krona . The Pension funds have assets summing up 
to 160% of GDP which have been locked in during the capital controls. Some of those assets are 
expected to eventually exit the economy and mitigate the potential inflow from strong service 
exports.   
 
Report by Ice land (WT/TPR/G/361)  
2 Economic Developments and Prospects  
2.1 Lifting of Capital Controls  
 
Page 4, Paragraph 2.9  
 
The report notes that of the capital controls imposed after the financial crisis of 2008, the only 
remaining restrictions are for offshore króna assets and transactions that may give rise to carry 
trading.  
 
Question 1  
 
Under what conditions would Iceland consider removing the remaining capital controls on offshore 
króna assets and transactions?  
 
No decision has been made so far but according to the strategy the remaining capital controls on 
offshore króna assets will be lifted as soon as the economic condition allow.  
 WT/TPR/M/361/Add.1  
 
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  Report by Iceland (WT/TPR/G/361)  
3. Trade Policy  
3.1 WTO  
 
Page 7, Paragraph 3.1  
 
In recent years, Iceland has taken unilateral  steps to liberalise trade, for instance, by eliminating 
tariffs of 90% of the tariff lines on all but the most sensitive agricultural products.  
 
Question 1  
 
Does Iceland have any further unilateral tariff reform in the pipeline?  Will the recent agricultu ral 
market access for the EU be extended to other countries in the future?  
 
At this stage, no unilateral tariff reforms are in the pipeline. However, the government´s policy 
has been to increase market access through free trade agreements. Whether equivalent market 
access, such as for the EU, will be extended to other countries in the future is undetermined.  WT/TPR/M/361/Add.1  
 
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  BRAZIL  
REPORT BY THE SECRETARIAT – WT/TPR/S/361  
 
3 Trade Policies and Practices by Measure  
3.1.4 Tariffs  
3.1.4.2 Applied rates  
 
"3.34. (…) Agricultural products have also seen some reductions since 2012, i.e. 28.6% to 20.2%, 
but they remain high and prohibitive in certain HS chapters, in particular, the meat, dairy, and 
plant and flower chapters ".  
 
Question 1:  
 
Given that customs duties on all non -agricultural  products  were removed as of 1 January 2017, 
could Iceland provide information  whether the country has any intention to further reduce tariffs 
on agricultural products, especially with regard to meat ? 
 
At this stage the government ha s no plans to reduce this type of MFN tariffs agricultural products. 
However, the government´s policy has rather been to increase market access through several free 
trade agreements, such as the free trade agreement between Iceland and EU, where tariff quo tas 
has been increased substantially, particularly for the products in question, which have the highest 
applied tariff rates.  
 WT/TPR/M/361/Add.1  
 
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  CANADA  
PART I: QUESTIONS REGARDING THE SECRETARIAT REPORT  
 
II TRADE AND INVESTMENT REGIME: INVESTMENT INCENTIVES  
Page 34 (Para 2.50)  
 
The Secretariat reports that Iceland offers incentives pursuant to EU regulations. EU Regulation 
No. 651/2014 provides the legal basis for Iceland pursuant to the EEA to offer training aid, aid to 
SMEs, and to environmental protection investment pro jects.  
 
Question:  
 
1. Would it be possible to provide examples of environmental protection investment projects for 
which Iceland offers incentives pursuant to the EEA ? 
 
A specific environmental protection investment project has not been granted incentives so far 
under the legislation. An example of such a project would i.a. be specific technical refurbishment of 
an industrial plant aiming to greatly reduce CO2 emissions f rom it.  
 
Part III TRADE POLICY REGIME: TRADE POLICIES BY MEASURE   
Page 61 (Para 3.123)  
 
The secretariat report notes that imports of raw meat and meat products that have not been fully 
heat treated must be accompanied by certificates confirming that the me at was stored for at least 
one month at -18˚C or colder, and are free of salmonella and contaminants.  
  
Question:  
  
2. Could Iceland provide an update on the status of any revisions made to the conditions for 
importing fresh meat?  
 
The conditions for the imp ortation of raw meat have not been amended during the period under 
consideration in this review. However, the responsibility for deciding on applications has been 
transferred to the Icelandic Food and Veterinary Authority with Act No. 71/2015, amending Act  No. 
25/1993 on Animal Diseases and their Prevention.  
 
IV   TRADE POLICIES BY SECTOR  
Page 78 (Para 4.29)  
 
The Secretariat report mentions that, "Headage payments for winter -fed sheep will be introduced 
from 1 January 2020 with higher payments for new entra nts". 
 
Questions:  
 
3. Could Iceland indicate how much higher the headage payments for winter -fed sheep will be for 
the new entrants?  
 
The Committee for the Implementation of National Agricultural Agreements decides whether to 
make use of the authorisation to apply coefficients and, if so, in what manner. This decision has 
not been made.  
 
4. Could Iceland indicate until when new entrants will keep their new entrants status?  
With reference to Regulation No. 1151/2016 on support for sheep, new entrants are defined as: 
 WT/TPR/M/361/Add.1  
 
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   an individual who is at the age of 18 to 40 years old,  
 is investing fully or partly in a farm for the first time,  
 or has been leasing a farm for less than 5 years,  
 has not been a holder of direct payments for sheep, dairy or horticulture in the past 8 
years.  
Page 83 (Table 4.7)  
 
On table 4.7 of the Secretariat report, one can see that the producer Nominal Protection 
Coefficient (NPC) increases significantly between 2013 (1.5) and 2015 (2.02).  
 
Question:  
 
5. Could Iceland specify the factor(s) that contr ibuted to the increase in its OECD producer NPC 
between 2013 and 2015?  
 
Due to administrative restraints, Iceland has not analysed  in detail the factors contributing to this 
increase in producer NPC between 2013 and 2015. However, an informal examination s uggests 
that the average price received by producers increased by 8 .3% between 2013 and 2015, while 
transfers to producers from consumers increased by 106%. On the other hand, many external 
factors affect the calculation of the coefficient, such as exchang e rates which have historically been 
fluctuating for the Icelandic Krona and world market prices. Due to the fluctuation of the Krona, 
measures such as NPC should be examined over a long period, for instance the producer NPC in 
2005 was 2.72 compared to 2. 05 in 2015. Looking back the trend in producer NPC has generally 
been decreasing between years.  WT/TPR/M/361/Add.1  
 
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  CHINA  
Part I. Questions based on Report by the Secretariat  
 
Summary, para 4  
 
"Practically, all the temporary restrictions on certain types of cross -border capital transfers and 
foreign exchange transactions that were introduced following the collapse of the banking sector 
have been removed. A capital account liberalization strategy was introduced in 2015 and controls 
were progressively reduced. In March 2017 , the restrictions on foreign exchange transactions and 
cross-border movement of domestic and foreign currency were largely lifted. " 
 
Question 1: What are the restrictions on foreign exchange transactions and cross -border 
movement of domestic and foreign c urrency?  
 
The remaining offshore krona assets summing up to 88 bn ISK (approx. 3.5% of GDP) are locked 
in accounts subject to special restrictions. Furthermore measures have been implemented to 
temper carry trade inflow since June 2016. Those are restricti ons regarding:  
 
 derivatives trading for purposes other than hedging  
 foreign exchange transactions carried out between residents and non -residents without the 
intermediation of a financial undertaking  
 lendings from domestic entities to non -resident entities  for the purpose of carry trading  
 cross-border movement of Icelandic krónur in relation to exports of specified securities issued 
in Icelandic krónur  
 Settlement of transactions with financial instruments comparable to those falling under the 
special reser ve requirement (SRR) (see further discussion below)  
 króna -denominated lending by non -residents to residents when the proceeds of the loan are 
used, directly or indirectly, for investment options comparable to those falling under the SRR.  
Furthermore, the Central Bank adopted Rules on special reserve requirements (SRR) for new 
currency inflows in June 2016. Under the SRR, 40% of inflows into bonds and high -yielding 
deposits is deposited at the Central Bank for a year at zero interest rates. The aim at tempe ring 
and affecting the composition of capital inflows. The Icelandic Government does not view the SRR 
as an active long -term policy instrument, but rather as a third line of defence to supplement 
conventional macroeconomic policy and macroprudential tools if needed.  
 
Summary, para 13  
 
"Incentives for regional investment are provided for under new legislation; the previous legislation 
expired at the end of 2013. Some of the projects approved under the expired legislation had been 
found by the EFTA Surveillan ce Authority to be incompatible with the EEA Agreement. Under the 
new legislation, tax incentives apply for investments outside the Reykjavik area which are limited 
to 15-35% of the initial investment depending on the size of the enterprise with the higher  limits 
applying to smaller enterprises. In addition, there are incentives for research and investment 
through tax credits and grants. " 
 
Question 2: Please introduce the incentives for regional investment in detail, including the 
investment areas, types and range  of incentives, etc.  
  
The Regional Incentives, according to Act 41/2015, apply to the whole of Iceland outside the 
capital area. The incentives include:  
 WT/TPR/M/361/Add.1  
 
- 19 - 
 
   Authorization to fix the rate of income tax down to 15% for 10 years  
 In the year when new assets are taken into operation, the company can elect to 
depreciate those assets with a proportional factor of the annual depreciation inst ead of 
full years depreciation  
 Real estate, equipment and moveable assets can be depreciated fully, leaving no residual 
value  
 Authorization to reduce the rate of property tax by 50% for 10 years*  
 Authorization to reduce the rate of the general social secur ity charge by 50% for 10 
years**  
 Exemption from customs duties and excise duties on importation or domestic purchase of 
construction materials, machinery and equipment, and other capital goods, as well as 
spare parts for the building of the investment proj ect and the operation thereof  
 Authorization for the state or the municipalities to sell or lease a site for the investment 
project, at a price which is regarded as below normal market price***  
 
*  Property tax is levied at a municipal level but has a ceiling of 1.65% of the property value. 
Registered sales contracts form the basis of new property valuations, where the sale prices 
are calculated to cash value. For large specialized industrial buildings market value is 
difficult to assess. Generally the assessment value is based on the real construction cost.  
**  The general social security charge is currently 5.9% of the total salaries of employees.  
***  Lease of municipal - or state -owned land, for up to 99 years, is the general rule. Long -term 
land-lease contracts enjoy the same protection as private property.  
See further: http://www.invest.is/doing -business/incentives -and-support/  
 
Question 3: We noticed that there are incentive s for research and investment through tax credits 
and grants. What do tax credits and grants refer to respectively?  
 
The incentives for research and investment through tax credits and grants refers to measures that 
stem from Act No. 79/2016 on the amendmen t of various Acts in support of financing and 
operation of innovative companies and small companies. That Act mainly contains provisions 
amending the Icelandic Income Tax Act with the goal of improving competitiveness of Icelandic 
companies. The provisions  of the Act are partly based on various measures that are and have been 
in place in Scandinavia.  
 
First Act No. 79/2016 includes a change that was made to the tax treatment of income due to the 
purchase of a person on shares in accordance with options granted to him as a result of 
employment for another party. The income is now taxed upon the sale of the securities instead of 
the date of delivery/redemption.  
 
Second the profit of the convertible debt securities converted into shares at a lower price than 
generally applicable on the market are now taxed on the sale of the securities instead of the 
exercise of the convertible rights.  
 
Third a deduction was allowed for foreign professionals employed in Iceland. Foreign professionals 
are subject to certai n conditions taxable only on 75% of their income, with 25% being tax -free and 
exempt from tax on the first three years of employment. To be considered a foreign professional 
an individual must be hired by and receive wages from a company situated in Icelan d, he cannot 
have been resided in Iceland for five years and he has to possess knowledge that is not available 
in Iceland except to a small extent. A minister appointed committee assesses applications from 
foreign professionals and determines if the condit ions for deduction are met.  
 
Fourth a 50% income tax rebate was introduced upon share acquisition with a 3 year holding 
period made by individuals. Currently an individual can having met certain requirements deduct 
from his income tax base 50% his investme nt in a limited liability company or private limited 
company. Among the requirements to be met is that the investment amounted to at least 300.000 
ISK, the investment has been paid for and it is due to a registered stock offering of new shares. 
The max amo unt of rebate is ISK 5.000.000 per individual. The invested company must also meet 
some requirements among which are that it must be situated in the EEA area or Faroe Islands, has 
less than 26 employees, has an annual turnover less than ISK 650 million , is operated on the basis 
of profit, is financially solvent, and is not listed on a stock market. Investments in certain kinds of 
companies are excluded from the measures, among them real estate and movable property WT/TPR/M/361/Add.1  
 
- 20 - 
 
  operators, holding companies, investment co mpanies, financial companies, activities involving 
outsourced services and expert advice, film production companies and so on.  
 
Fifth research and development costs were increased as a reference to tax deductions from 
innovative companies. The maximum amo unt of deductible cost is currently 300 million ISK 
instead of 100 million but if the cost consists of the purchasing of outsourced services the max is 
at 450 million ISK instead of 300 million.  
 
Sixth the turnover criteria for the defining small businesse s was corrected in reference to new 
regulations in the Act on Support for Innovation Enterprises and the Act on Allowances for New 
Investments in Iceland. The definition of a small company is now set at 10 million EURO turnover 
annually instead of 2 millio n.  
 
Summary, para 20  
 
"Since the financial crisis, the banking system has stabilized and recovered. Currently,  there are 
four commercial and four savings banks (compared with nine in 2012). Two of the commercial 
banks are wholly state -owned, while a third has a minority government stake. The restructuring of 
the banks has also resulted in the ratio of non -performi ng loans to total loans declining from a 
peak of 20% in 2010 to 2.1% in 2016. In June 2015, the authorities announced a plan to unwind 
the estates of the failed banks and the remaining offshore ISK holdings (mainly bank deposits, 
treasury securities and eq uity interests). In June 2016, the Central Bank held the first of three 
voluntary euro auctions for offshore ISK holders with the exchange rate based on a sliding scale 
related to the size of the bid. Direct state assistance to the financial sector was the  equivalent of 
about 34% of GDP. However, recoveries were estimated to be about 43% of GDP (mainly bank 
equity and subordinated debt, and stability contributions from the estates of the failed banks). 
Thus, the State is estimated to have made a net gain in  excess of 9% of GDP. During the review 
period, several regulatory changes were introduced including the establishment of new bodies to 
assess the financial system, systemic risk, and financial stability and formulate policies. In 
addition, several other m easures, including new liquidity rules, funding ratios, capital buffers, and 
rules relating to consumer mortgage credit were introduced. " 
 
Question 4: Please introduce the reform measures of supervision and regulation on financial 
industry.  
  
The most impo rtant innovation has been the Financial Stability Council, which brings together the 
Minister of Finance and Economic Affairs, the Central Bank governor and the Financial Supervisory 
Authority director general to consider financial stability and macroprude ntial policy. The Systemic 
Risk Council, which supports the Financial Stability Council, decided at its meeting in January 2016 
to require banks to hold capital for systemic risk and for systemically important financial 
undertakings. The Financial Supervis ory Authority has required counter -cyclical buffers in 
accordance with recommendations from the Financial Stability Council. These actions are 
improving the resilience of the financial sector to possible shocks.  
 
Several regulatory changes have been made i n Iceland in the past years and further amendments 
to regulatory environment are expected. Icelandic banking regulation is in line with Basel III 
standards as implemented in EU law with the CRD IV/CRR framework. Iceland together with 
Norway and Liechtenste in are members of the EU/EEA Internal market through the Agreement on 
the European Economic Area which brings together the EU Member States and the three EEA EFTA 
States in a single market. The three EEA/EFTA States are obliged to adopted EU regulation in some 
specific areas including financial markets so the regulatory environment is harmonized with EU law 
in the EFTA States.  
 
Iceland became part of the EU/EEA European System of Financial Supervision this year which 
consist of the European Banking Authori ty, European Securities and Markets Authority, European 
Insurance and Occupational Pensions Authority and the European Systemic Risk Board.  
 
The EU/EEA Solvency II directive and the Short selling regulation have been implemented in 
Iceland. The government  is working on further amendments to Icelandic financial regulation. The 
EU directive on Bank Recovery and Resolution will be implemented in Iceland next year. Other EU 
law which will be implemented in the coming months include inter alia the EMIR regulati on, AIMF WT/TPR/M/361/Add.1  
 
- 21 - 
 
  directive, UCITS V. MiFID II, MIFIR, new Payment Accounts directive, Transparency directive and 
PSD II directive.  
 
Currently the Ministry of Finance and Economic Affairs is reviewing Act on Financial Supervision as 
regards supervisory powers and t he status of the Icelandic Financial Supervision Authority. The 
Minister of Finance and Economic Affairs has also established special ad hoc committee´s to assess 
structural reforms in Iceland in line with the EU Liikanen proposals, the UK Vickers report a nd the 
US Volcker rule.  
 
Summary, para 22  
 
"Iceland has improved trading and investment conditions since 2012 and partly as a result of this 
the economy has recovered and is expanding rapidly. With a small population and limited natural 
resources, apart from energy and fish, trade remains important but the range of exports is limited 
to tourism, fish and fish products, and aluminium  and products thereof. Therefore, the country 
remains vulnerable to shocks, including the appreciation of the ISK, overheating of the economy, 
and Brexit..  However, short term exposure to external factors has been reduced: at end -2016, 
total external debt was US$23.4 billion compared to US$105.8 billion in 2012 and international 
reserves were over US$7 trillion (partly due to the unwinding of the estates of the failed banks ). 
Furthermore, despite uncertainties relating to Brexit, as growth picks up in the EU, Iceland 's main 
trading partner, opportunities for trade in goods and services should continue to improve. " 
 
Question 5: Please provide specific restrictions for foreign  investments in the aforesaid sectors.  
 
According to Article 4 of Act No 34/1991 Investment by non -residents in Iceland is subject to the 
following restrictions:  
 
1. Only the following may conduct fishing operations within the Icelandic fisheries jurisdic tion 
according to existing laws on Fishing Rights within the Icelandic Territorial Waters or own or run 
enterprises engaged in fish processing:  
 
a. Icelandic citizens and other Icelandic persons.  
b. Icelandic legal persons which are wholly owned by Icelandic pe rsons or Icelandic legal 
persons which:  
 
i. are controlled by Icelandic entities;  
ii. are not under more than 25% ownership of foreign residents calculated on the 
basis of share capital or initial capital. However, if the share of an Icelandic 
legal person in a l egal person conducting fishing operations in the Icelandic 
fisheries jurisdiction or fish processing in Iceland is not above 5%, the share 
of the foreign resident may be up to 33%;  
iii. are in other respects under the ownership of Icelandic citizens or Icelandi c 
legal persons controlled by Icelandic persons.  
 
Fish processing under this paragraph 1 means freezing, salting, drying or any other processing 
which protects fish and other marine products from decay, including the production of fish -oil and 
fish-meal. H owever, processing in this context does not include smoking, pickling, canning and 
retail packaging or further processing designed to render products more suitable for distribution, 
consumption, or cooking.  
2. Only Icelandic citizens and other Icelandic pe rsons are permitted to own energy exploitation 
rights as regards waterfalls and geothermal energy for other than domestic use. The same applies 
to enterprises which produce or distribute energy. Individuals domiciled in another member state 
of the European  Economic Area and legal persons which are domiciled in another EEA member 
state shall have the same right. Investment agreements between Iceland and non -member states 
of the EEA may stipulate that residents of such state or legal persons domiciled in such  states shall 
also have the same right provided that such agreements are submitted to the Althingi for 
ratification by resolution.  
  
A non -resident who obtains ownership or utilization rights over real estate in accordance with the 
provisions of law on own ership and utilization rights of real estate may utilize geothermal energy 
for direct use in his enterprise within the limits set by The Energy Act.  WT/TPR/M/361/Add.1  
 
- 22 - 
 
  3. The combined share of non -residents in Icelandic airline companies may not at any time 
exceed 49%. Individuals domiciled in another member state of the European Economic Area and 
legal persons there domiciled are exempted from the provisions of this subparagraph.  
 
4. Investment in Icelandic enterprises by foreign states, local authorities or other forei gn 
authority involved in enterprises is prohibited except with a special permission from the Minister of 
Commerce.  
 
5. Non-residents may acquire title to real estate in Iceland for direct use in his enterprise in 
accordance with the provisions of the Act g overning the ownership and utilization rights of real 
estate.  
 
Icelandic person in this Article means the State Treasury and local governments as well as 
institutions, enterprises and funds in Iceland which are wholly under their ownership, Icelandic 
citizens resident in Iceland and legal persons domiciled in Iceland which are wholly owned by 
Icelandic public institutions, Icelandic citizens resident in Iceland or other legal persons domiciled 
in Iceland and which are wholly owned by Icelandic citizens resi dent in Iceland. Icelandic legal 
person in this Article means a legal person domiciled in Iceland irrespective of the form of legal 
identity or ownership of the enterprise. A legal person is regarded as being domiciled in Iceland if 
it is registered as dom iciled in this country, if its articles of association state its domicile in this 
country or if its effective management board is in Iceland. Icelandic legal person controlled by an 
Icelandic person or persons in this Article means an Icelandic legal perso n which is under the 
majority ownership of an Icelandic person, as through majority of share capital or majority of 
initial capital, which holds the majority vote or has effective control of the said legal person.  
 
Page 29 , para 2.30  
 
"As of 1 July 2014, the free trade agreement between Iceland and China, the Iceland -China Free 
Trade Agreement, has entered into force and covers trade in both goods and services. It has been 
described as similar to the FTA 's Iceland has entered into as part of EFTA, as it ab olishes the 
majority of tariffs on goods, and covers trade in services, and other areas such as investment, 
trade facilitation, competition, and intellectual property. " 
 
Question 6: To promote the liberalization and facilitation of mining and energy invest ment, what 
specific policy measures have been introduced and what achievements  have been made since the 
signing of the Free Trade Agreement between Iceland and China?  
 
No specific measures to this effect have been introduced since the signing of the Free T rade 
Agreement between Iceland and China.  
 
Page 57, para 3.98  
 
"Under Act No. 41/2015 on Regional Incentives, which applies to Iceland outside the Reykjavik 
area, investment projects may qualify for tax incentives. These incentives include: an income tax 
rate ceiling of 15% for 10 years; accelerated depreciation allowances for real estate, equipment 
and moveable assets; reduction in property tax and the general social security charge by 50% for 
10 years; and exemption from customs duties and excise duties for construction materials, 
machinery and equipment, and other capital goods. In addition, the State and municipalities may 
allow for leasing a site for the project at reduced rates. The Act expires on 1 July 2020. " 
 
Question 7: Please explain in detail th e stipulations on accelerated depreciation  allowances for real 
estate, equipment  and moveable assets.  
 
The depreciation of assets is considered as deductible from the income of legal entities and from a 
person 's income derived from running a business or fr om independent operations or are linked to 
such activities according to item 1 of para 1 of Article 31 of Act No. 90/2003. Therefore 
depreciation indirectly affects the amount of taxable income.  
 
The basic provisions on depreciation of assets are to be fou nd in Articles 33 –47 of Act No. 90/2003 
on income tax. According to Article 34 of Act No. 90/2003 the depreciation time of assets begins at 
the beginning of the business year when they are first used to generate income. In Article 37 of WT/TPR/M/361/Add.1  
 
- 23 - 
 
  the Act assets are to be depreciated to an annual percentage of the depreciation base of a specific 
asset or class of assets, 1% to 35% depending on the asset or the asset class.  
 
According to item 2 of para 2 of Article 8 of Act No. 41/2015 a company which is established f or an 
initial investment project and fulfils all the conditions of the Act for the granting of incentives can 
in the year when new assets are taken into operation elect to depreciate those assets with a 
proportional factor of the annual depreciation instea d of full year´s depreciation. This means the 
company can instead of depreciating an asset of the annual percentage of 1% –35% elect to 
depreciate it in proportion to its use in the first year of use. So for example a company which has 
purchased machinery a nd equipment for soil cultivation and construction and its usage has started 
on 1 July can elect to depreciate it for a minimum of 10% instead of 20% in the first year of 
operation. The result is that a bigger share of the depreciation base is left for dep reciation in the 
years after the first year after the new asset is taken into operation.    
 
According to article 42 of Act No. 90/2003 movable property, including ships, aircraft, automobiles, 
machines and instruments and constructions, including cultivated farmland and buildings, can 
never be depreciated below their scrap value, or 10% of cost v alue. According to item 2 of para 2 
of Article 8 of Act No. 41/2015 a company which is established for an initial investment project and 
fulfils all the conditions of the Act for the granting of incentives has authorization to depreciate it´s 
assets down t o no residual value. The result is that such a company can depreciate moveable 
properties and constructions to a bigger extent.  
 
Page 92, para 4.77  
 
"The National Energy Authority (NEA) is a government agency under the Ministry of Industries and 
Innovation. The NEA 's main responsibilities include advising the Government on energy issues and 
related topics, licensing and monitoring the development and exploitation of energy and mineral 
resources, regulating the operation of the electrical transmiss ion and distribution system, and 
promoting energy research. " 
 
Question 8: What roles does NEA play specifically in the process of formulating policies on 
Iceland 's energy and mineral resources?  
 
NEA is an advisor to the Government when it comes to formulat ing policies in the field of energy.  
 
Question 9: What measures has NEA taken in promoting the transformation of energy structure 
into the pattern relying mainly on clean and renewable energy?  
 
NEA has an Energy Agency ( http://orkusetur.is/ ) which carries out various transformation and 
information on energy shift from fossil fuels to renewable energy.  
 
Page 92, para 4.78  
 
"Under the provisions of these laws, investment and/or ownership of energy exploitation rights and 
the production and distribution of energy are limited to EEA and EFTA residents. Act No. 57/1998 
stipulates that resources within the ground belong to the own er of the land. However, a licence  
from the National Energy Authority is required to survey or prospect on the land; additionally  a 
compensation agreement with the landowner is required. Recent changes to Act No. 57/1998 on 
Survey and Utilization of Ground  Resources and Act No. 65/2003 on Electricity stipulate that:  
 
 The State or municipalities can no longer sell the ownership of resources; however, utilization 
rights can be leased to a developer for up to 65 years with a possibility of extension. Royalties  
for the utilization are determined by the Prime Minister. " 
 
Question 10 : What is the basis for requiring a license from the National Energy Authority to survey 
or prospect on the land in the case of private land ownership?  
 
The ownership of resources inside the ground is attached to a private land, while on public land 
resources inside the ground are the property of the State of Iceland, unless others can prove their 
right of ownership. Even though the ownership of resources is based on the ownership o f land, 
research and utilisation is subject to licensing according to the Act on Survey and Utilisation of 
Ground Resources, No. 57/1998 and the Electricity Act, No. 65/2003. Survey, utilisation and other WT/TPR/M/361/Add.1  
 
- 24 - 
 
  development pursuant to these Acts are also subject  to the Nature Conservation Act, Planning and 
Building Act and other acts relating to the survey and utilisation of land and land benefits.  
 
The Act on Survey and Utilisation of Ground Resources, No. 57/1998, covers resources inside the 
ground, at the bott om of rivers and lakes and at the bottom of the sea within netting limits. The 
Act also covers surveys of hydropower for the generation of electricity. The term resource applies 
to any element, compound and energy that can be extracted from the earth, whet her in solid, 
liquid or gaseous form, regardless of the temperature at which they may be found.  
 
According to the Act Orkustofnun  is permitted to take the initiative in and/or give instructions on 
surveying and prospecting for resources in the ground anywhere in the country, regardless of 
whether the owner of the land has himself or herself begun such surveying or prospecting or 
permitted others such surveying or prospecting, unless the party in question holds a valid 
prospecting license pursuant to the Act. In the same way, Orkustofnun may permit others to 
survey or prospect, in which case a prospecting license shall be issued to th em. A prospecting 
license confers the right to search for the resource in question within a specific area during the 
term of the license, survey extent, quantity and potential yield and to observe in other respects 
the terms which are laid down in the Act and which Orkustofnun considers necessary.  
 
The utilisation of resources inside the ground is subject to a license from Orkustofnun, whether it 
involves utilisation on private land or public land, with the exceptions provided for in the Act. A 
landowner do es not have a priority to an utilisation license for resources on his or her land, unless 
such an owner has previously been issued a prospecting license. A utilisation license permits the 
license holder to extract and use the resource in question during th e term of the license to the 
extent and on the terms laid down in the Act and regarded necessary by Orkustofnun. Before the 
holder of a utilisation license begins extraction on private land the holder needs to reach an 
agreement with the landowner on compe nsation for the resource or obtain permission for 
expropriation and request assessment. In the event of neither an agreement made on 
compensation nor expropriation requested within 60 days immediately following the date of issue 
of an utilisation license, the license shall be cancelled. The same applies if utilisation on the basis 
of the license has not started within three years of the issuance of the licence. This also applies to 
the utilisation of resources inside public land.  
 
Orkustofnun may revoke the  above licenses if their conditions are not fulfilled. If a license holder 
does not comply with the conditions established in the license or contracts relating to the license, 
Orkustofnun shall issue a written warning and provide time limits for rectificat ion. Should the 
license holder not comply with such a warning, the license shall be revoked.  
 
Question 11: What are the differences in terms of management over  resource prospecting and 
developing of privately -owned and state -owned land?  
 
See reply to quest ion 10.  
 
Question 12: For state -owned land, who represents the landowner  to negotiate and sign a 
compensation agreement?  
 
The Prime Minister 's Office and the Ministry of Finance.  
 
Question 13: For state -owned land, how to determine the compensation standar d? 
 
Subject to negotiations. Further information: http://www.nea.is/geothermal/  
 
Question 14: It is stipulated that the owner of the land can no longer sell the ownership of 
resources but can lease the utilization rights. In this case, how to handle those resources already 
sold or under a sale negotiation?  
 
No resources are under a sal e negotiation. The law does not apply to resources sold prior to the 
entry into force of the law.  
 
Questions 15: What is the main consideration for royalties to be determined by the Prime Minister 
instead  of the competent National Energy Authority?  
 WT/TPR/M/361/Add.1  
 
- 25 - 
 
  The NE A does not represent or act as the owner of the resource. Therefore royalties for the 
utilization are determined by the Prime Minister Office, on behalf of the State.  
 
Page 98, para 4.103  
 
"The Electronic Communications Act provides for a general authorization for natural persons and 
legal entities established within the EEA and within WTO Member states to start operations, 
implying that they do not need a licence , unless specific frequencies  are involved. Registration with 
the PTA is required for all operators. An individual licence  is required for all frequencies except 
open spectrum. In most cases the procedure is simple and frequencies are assigned by the PTA 
within six weeks of receipt of  application. " 
 
Question 16: Is there any requirement on the proportion of broadcasted programme contents on 
TV? For example, is it required to broadcast certain amount of Iceland/E.U. programmes every 
year?  
 
Article 33 of the Media Act No. 38/2011  provides that "Audiovisual media service providers 
transmitting content as part of a linear schedule shall strive to have the greater part of  their 
transmission time devoted to Icelandic and other European programmes…Audiovisual media 
service providers transmitting on -demand content shall ensure to the extent possible, using 
suitable methods, that Icelandic and other European works constitute a  prominent part of the 
content they offer. " And in Article 34 on "Programme content from independent producers ": 
 
"Audiovisual media service providers transmitting content as part of a linear schedule shall, as far 
as possible, ensure that every year at le ast 10 per cent of their transmission time, as defined in 
Article 33, first paragraph, second sentence, or at least 10 per cent of their programming budget is 
devoted to European works produced by independent producers. " 
 WT/TPR/M/361/Add.1  
 
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  Follow -up Questions based on Report by the Secretariat  
 
Page 10, summary 22  
 
"Iceland has improved trading and investment conditions since 2012 and partly as a result of this 
the economy has recovered and is expanding rapidly. With a small population and limited natural 
resources, apa rt from energy and fish, trade remains important but the range of exports is limited 
to tourism, fish and fish products, and aluminium and products thereof. Therefore, the country 
remains vulnerable to shocks, including the appreciation of the ISK, overhea ting of the economy, 
and Brexit.. However, short term exposure to external factors has been reduced: at end -2016, 
total external debt was US$23.4 billion compared to US$105.8 billion in 2012 and international 
reserves were over US$7 trillion (partly due to  the unwinding of the estates of the failed banks). 
Furthermore, despite uncertainties relating to Brexit, as growth picks up in the EU, Iceland 's main 
trading partner, opportunities for trade in goods and servi ces should continue to improve."  
 
Question 1:  Iceland has been improving trading and investment conditions in the recent years. 
However, the employees of Chinese investing enterprises are still facing complex visa procedure 
and relatively low passing rate. Will there be any adjustment or relaxation o n working visa issuing 
in the future?  
 
Currently there are no foreseen changes or adjustments in Iceland on working visa issues with 
China. Although Iceland is not a member of the European Union (EU), its relations to the EU is 
mainly based on the EEA Agr eement, which came into effect in 1994. Iceland also signed an 
association agreement on participation in the Schengen cooperation in December 1996, along with 
Denmark, Finland, Norway and Sweden and is therefore bound by the Schengen visa policy. The 
citizens of third countries that have not entered into an agreement on visa liberalization with the 
Schengen states are required to have a valid Schengen visa in their travel document in order to 
enter the Schengen Area. Iceland will therefore monitor the harmo nized visa rules on the 
Schengen Area and make adjustments accordingly.   
 
Page 54, para 3.87  
 
"The New Business Venture Fund (NSA  Ventures) is a state -owned venture capital fund that 
invests in new start -up companies. It was established by parliament and operates under Law No. 
61/1997.87 It provides finance for innovation and start -up businesses primarily through equity 
investments and small bridge loans. Funding for its operations was initially by the State but since 
2005 it has been self -financed and not received any further support. It continues to have an 
Export Credit Guarantee Department to provide export credit insurance and g uarantees to start -
ups. According to the authorities, the export credit guarantee operation has been more or less 
dormant for the last 10 years, as there have not been any new credit guarantees since 2012. " 
Question 2: Why the Export Credit Guarantee Depa rtment of NSA Ventures ceased to provide new 
credit guarantee since 2012?  
 
The demand from the Icelandic export industries for Export Credit Guarantees has gradually 
diminished and for some years now inquiries for this option have totally ceased. Accordingly the 
Export Credit Guarantee Department of NSA Ventures has not promoted this option for many 
years . 
 
Question 3: Export Credit Guarantee Department of NSA Ventures provided export credit insurance 
and guarantees for innovation and start -up busi nesses. Is there any preferential policy to start -ups 
in underwriting? If any, please specify.  
 
Comprehensive support mechanism for enterpreneur´s start -ups is maintained in particular at 
Innovation Center Iceland which provides entrepreneurs with free of  charge guidance, including: 
development of commercial and product ideas; establishment and operation of a company; making 
business plans; search for affiliates; establishment of companies and Intellectual Property 
Protection. Numerours funding categories are available for entrepreneurs and and start -ups, both 
through national funds and internationa programmes.  
 WT/TPR/M/361/Add.1  
 
- 27 - 
 
  Page 69, para 3.3.8  
 
 Law Reference  
Patents  Act respecting Employees ' Inventions  Act No. 72/2004  
 
Question 4: Please introduce the main content and relevant institutions of Act respecting 
Employees ' Inventions. Is there more specific and lower -level regulation?  
 
The main content of the mentioned legal Act is that an employee is entitled to an invention which 
he presents.  
 
In case an employee has presented an invention being within the scope of his work, an employer 
may require conveyance of the right covering the invention to himself, provided that utilization 
thereof be within the employer 's field of work. The employer holds the same right althou gh the 
utilization of the invention be not within his field of work if the employee 's invention is linked to a 
specific task with which the employer has charged him.  
Furthermore, in case an employee has presented an invention he shall without undue delay g ive 
the employer notice in a verifiable manner of the invention, thus granting information about it so 
that the employer can assess the importance thereof.  
In case an employer desire s to acquire the right to an invention he shall advise the employee 
accord ingly within three months of the receipt of notification.  
Prior to the respite expiring an employee is not permitted, without the employer 's approval in 
writing, to advise others about the invention or dispose of it to the effect that it be possible to 
publish information on the invention or use it for the benefit of others. Prior to the end of the 
respite and after having satisfied his duty to give notice the employee may apply for a Patent in 
respect of the invention, but he shall, however, previously adv ise the employer thereof.  
In case an employer acquires the right to an employee 's invention the employee is entitled to fair 
remuneration, u pon determining the remuneration special regard shall be had for the value of the 
invention and its importance for the employer 's activities, the employee 's terms of engagement 
and the employee 's contribution to the invention. If the employee is engaged to present inventions 
it may be negotiated that a fair remuneration for an invention be included solely in the employee 's 
terms of engagement.  
There are no more specific or lower level regulations on this matter .  
 
Page 71, para 3.171  
 
"In 2014, a new Act No. 130/2014 on the protection of product names as designations of origin, 
geographical indications or traditional specialties entered into force. In addition to providing for 
registration of product names (usually referred to as GIs) by the Food and Veterinary Authority, it 
introduced a new Article 14(1)(10) in the Trademark Act. According to the provision , the IPO is 
responsible for verifying if there is a registered GI or if a prior GI application has been filed when 
examining the registration possibilities for trademarks. " 
 
Question 5: Iceland introduced a new act Article 14(1)(10) in the Trademark Act. According to the 
provision, the IPO is responsible for verifying if there is a registered GI or if a prior GI application 
has been filed when examining the registration possibilities for trademarks. Please further explain 
the relation between trademark and  GI.  
 
Mainly, the relationship between GI 's and trademarks is dealt with in Articles 23 and 24 of the Act 
on the protection of product names and designations of origin geographical indications or 
traditional specialities.  
  
During the Icelandic Patent Office 's examination of trademark applications or collective mark 
applications, the IPO will inquire with the Food and Veterinary Authority if a prior registration of a 
GI is valid in Iceland. This is valid for trademarks and GI 's that are registered for a  product of the WT/TPR/M/361/Add.1  
 
- 28 - 
 
  same or similar type. In such cases, the IPO will refuse registration of that trademark due to the 
registration of a GI with validity in Iceland and if use of such a trademark will contravene the 
protection granted for the GI and the applic ation for the trademark is submitted after the date of 
submission of the application for the GI.  
 
However, when assessing an application to protect a GI, the Food and Veterinary Authority will 
seek information from the Icelandic Patent Office on whether t here exists a prior trademark 
registration or collective mark registration for the applied for GI.  
  
If a mark has been registered or the right to a mark has been established by use before the date 
on which an application for the registration of a GI in th is country was submitted, and it is likely 
that the co -existence of a mark and product name will lead to confusion, the mark may only 
continue to be used and renewed if the right to the mark was established in good faith and there 
are no grounds for the ca ncellation or a revocation of that right.    
 
Page 70, para 3.163  
 
"In 2016, Iceland 's Ministry of Industries and Innovation issued the "Intellectual Property Policy, 
2016-2022" following the recommendation of a working group established to examine intelle ctual 
policy matters.139 The policy acknowledges that intellectual property creates a strong competitive 
environment, increases value creation, drives economic growth, and that innovation plays a key 
role in the betterment of society… " 
 
Question 6: What di d the working group examine in terms of employees ' invention? What was the 
conclusion?  
  
The working group examined knowledge of patents and the rules of employees inventions in 
Iceland. Furthermore, the working group noted that this rule of the Act had not lead to an increase 
in patent applications in Iceland as was the purpose of the Act.  
  
The conclusion was mainly that remuneration rules in the Act might be too complicated and that 
the Act does not encourage patent filings as it should. Therefore, the  policy paper suggested the 
revision of the Act on employee 's inventions.  
 
Page 70, para 3.166  
 
"The changes made in 2012 were outlined in the last trade policy review  [WTO document, 
WT/TPR/S/273/Rev.1, para. 105] . The new patent regulation that entered into force in May 2012 
introduced several changes, but mostly clarified the established patent application procedures and 
requirements. The changes from 2013 were minor changes only correcting misspellings and 
wording, and one correcting the period of vali dity of Supplementary Protection Certificates as 
well." 
 
Question 7: What is the main content of Iceland 's Supplementary Protection Certificates? What is 
the content of correction on period of validity in 2013?  
 
Iceland has implemented the EU 's regulations relating to Supplementary Protection Certificates, 
namely Council Regulation No 1768/1992 concerning the creation of supplementary protection 
certificate for medicinal products.  
However, Regulation No. 1901/2006 and Regulation No. 469/2009 h ave just recently been 
preliminarily been incorporated in to EEA agreement and have yet to be incorporated into Icelandic 
law.  
 
Therefore, the current legal status relating to SPC 's in Iceland is that such certificates are granted 
based on regulation No. 1768/1992 in cases where the product in protected by a basic patent in 
force, a valid authorization to place the product on the marked as a medicinal products has been 
granted, the product has not already been the subject of a certificate and the authoriza tion is the 
first authorization to place the product on the market as a medicinal product.  
 
A granted SPC shall take effect at the end of the lawful term of the basic patent for a period equal 
to the period which elapsed between the date on which the appl ication for a basic patent was 
lodged and the date of the first authorization to place the product on the market reduced by a WT/TPR/M/361/Add.1  
 
- 29 - 
 
  period of five years. However, the duration of the certificate may not exceed five years from the 
date on which it takes effect.  
 
The correction made on the regulation in 2013 was to clarify that the protection period granted 
with the SPC is from the date on which the application for the basic patent was filed and that the 
final date is calculated based on the number of days that th e SPC is valid.  
 
Page 72, para 3.171  
 
"During the review period, Iceland enacted its first Act specific to GIs, Act No. 130/2014 on the 
protection of product names as designations of origin, geographical indications or traditional 
specialties; it also has  an accompanying Regulation No. 596/2016.148 The Act and Regulation 
apply to food, wine, spirit drinks, and other products (i.e. wool, feathers, skin/fur, leather, horns 
and bones, cotton, cork, hemp, wicker, natural rubber and resins, natural pigments, fl owers, 
essential oils, tobacco, and mixtures for animal feed) listed in Annex I of the regulation.149 The 
product name may be protected if the product is originating in a specific region, place or country; 
it has qualities or characteristics of the geograp hical area; and the production, processing and 
preparation of the product takes place in the defined geographical area. A name referring to a 
territory may also be protected. The law provides that the name will be protected against any 
misuse, imitation, a nd misleading associations or any other activity that could mislead consumers. 
In order to protect a GI, a registration process must be followed as outlined in the law and 
regulation, accompanied by a fee of ISK 75,000. GIs are registered by the Icelandic Food and 
Veterinary Authority (MAST), with fees regulated by Regulation 596/2016. " 
 
Question 8: Iceland enacted its first Act specific to GIs to protect GI product names from misuse, 
imitation and misleading. Please introduce the role the standard of misle ading play in the 
protection of Iceland 's GI.  
 
Use of a GI that is misleading could f. ex. be any misuse, imitation or evocation even if the true 
origin of the product is indicated or if the protected name is translated or accompanied by an 
expression suc h as 'style', 'type', 'method ', 'as produced in ', 'imitation ' or similar, also including 
when those products are used as raw materials.  
  
Also, misleading use could also constitute any other false or misleading indication as to the 
provenance, origin, nature or essential qualities of the product, on the inner or outer packaging, 
advertising material or documents relating to the product concerned, and the packing of the 
product in a container liable to convey a false impression as to its origin or any ot her practice 
liable to mislead the public as to the true origin of the product.  
 
Page 99, para 4.110  
 
"With regards to procedures and fees, Iceland accords national treatment to both domestic and 
international airline companies. Scheduled air services to certain domestic destinations that are 
not economically viable, but fall within given criteria of public service obligation, are subsidized by 
the Government. Such contracts are awarded to airlines via an open tender. " 
 
Question 9: How did Iceland subsidiz e the air services that did not economically viable but fall 
within given criteria of public service obligation?  
 
The service is subsidized via PSO obligation, based on a tender in accordance with Regulation (EU) 
1008/2008. The winning bidder receives rem uneration from the government to offer the service in 
accordance with the PSO obligation. The passenger charges are prescribed in the tender 
documents as well.  
 
Page 100, para 4.114  
 
"Under the provisions of Act No. 34/1991 on Foreign Investment in Compani es, foreign ownership 
in Icelandic companies involved in airline operations may not exceed 49%. This limitation does not 
apply to nationals of the EEA, who are treated as Icelandic nationals. Additionally, no entity may 
be granted an operating licence unle ss it is effectively controlled by EEA nationals. There are no 
limitations on foreign participation in auxiliary services. " 
 WT/TPR/M/361/Add.1  
 
- 30 - 
 
  Question 10: Is there any access restriction on foreign investment in civil air service like air 
transport, general aviation, airpo rt, air control, aircraft maintenance, ground service, aviation fuel, 
computer reservation system? If any, what are they? And is there any plan or timetable on 
loosening up restriction?  
 
Article 4. 3 of the Act No. 34/1991 on foreign investment in companies stipulates that any airline 
which is established in Iceland and provides air service must be majority owned by nationals of 
Iceland or other EEA Member state. As such, there are limitation as regards air service. Other 
auxiliary services which ar e mentioned in the question are open for foreign investment. The 
government does not have any plans or timetables for lifting or reducing these restrictions.  
 
Part II. Questions based on Report by the Government  
 
Page 4, Para 2.11  
 
"On 1 January 2016, a ne w act on public finance (the Organic Budget Law, OBL) entered into force 
in Iceland. The act proceeds the Financial Reporting Act (FRA) of 1997. The FRA had many good 
features, such as being relatively comprehensive. It was applicable not only to the centr al 
Government 's budget but also to all of the entities and corporations under Government control, 
included a clear categorization of central Government institutions for the purpose of financial 
management and control, and specified the required content of key financial documents, including 
the annual budget and final accounts. " 
 
Question 17: Please summarize the impacts of the new act on public  finance on other countries ' 
investment in resources and mining in Iceland since its entry into force in 2016?  
 
The organic budget law does not directly influence other countries ' investment in resources and 
mining in Iceland. The OBL only applies to the financial management and operations of public 
bodies and ensures that their financial statements are in accordance w ith accepted accounting 
principles, ensures the integrity of long -term and short -term policy on public finances, ensures 
thorough preparation of plans and laws relating to public sector finances and treatment of public 
funds and active supervision and disp osal of public funds, assets and rights.   
 
Page 5, Para 2.18  
 
"In relation to indirect taxation, reform has aimed at improved revenue efficiency of VAT and 
elimination of outdated, distortive taxes. Along these lines, in 2015 the commodity tax on 
numerous  goods and sugary foods was abolished and the VAT rate gap was decreased by lowering 
the standard rate from 25.5% to 24%,  and raising the reduced rate from 7% to 11%. In 2016, the 
VAT base was broadened to include passenger transport and other tourist serv ices previously 
exempt, now subject to the 11% reduced rate. In September 2017, the occupancy tax of 2012 will 
be raised from ISK 100 to 300 per unit. A carbon tax on all liquid fuels and LPG, and a resource 
tax on hot water were adopted in 2010. The temporary resource tax on electricity expired in 
2016. " 
 
Question 18: Please specify the objective and contents of 2012 tax reform, in particular the tax 
reform for such natural resources as energy, mineral resources  and la nd. 
 
The purpose of the carbon tax on all liquid fuels and LPG, a resource tax on hot water and the 
temporary resource tax on electricity, where twofold. First, for environmental reasons and 
secondly, to generate revenue for the treasury.  
 
Question 19: Wha t is the main consideration for adopting a resource tax on hot water? And which 
criteria are based on to determine the tax level?  
 
It is a tax on energy use. Most other neighbouring countries have such taxes. The tax level is 
linked to usage of hot water.  
 
Part III. Other questions  
 
Question 20: What is the policy consideration for Iceland to initiate investment incentive policy in 
2015? How has it been implemented?  WT/TPR/M/361/Add.1  
 
- 31 - 
 
  A Government investment incentive policy was adopted and implemented in 2015 with special 
legislation: Act no. 41/2015 on incentives for initial investments in Iceland.  
https://eng.atvinnuvegaraduneyti.is/media/ac ts/Act -on-incentives -for-initial -investments -in-
Iceland -English -2015.pdf  
The policy consideration and purpose of the act is to promote initial investment in commercial 
operations, the competitiveness of Iceland and regional development by specifying what i ncentives 
are permitted in respect of initial investments in Iceland and how they should be used.  
 
The government authorities are permitted to grant both general and regional incentives for new 
investments in Iceland up to a defined ceiling, in line with E U legislation. The regional incentives 
apply to areas outside the capital area.  
 
Conditions for the granting of incentives are listed in Article 5 of the Act. The Act shall expire on 
1 July 2020.  
 
Following the implementation of the Act the Government has entered into 2 investment 
agreements on incentives for new initial investment in Iceland.  
 
Question 21: Since the last review, the nationalization level of some enterprises in Iceland has 
been increased. When economy permits, does Iceland still allow parti cipation of private enterprises 
and foreign capitals?  
 
Iceland 's understanding is that the question is aimed at the privatization of banks that were 
nationalized in the wake of the banking crisis of 2008. Aside from decreasing the state 's exposure 
to the f inancial services sector, there are no specific privatization plans by the Icelandic 
government. The government regularly re -evaluates the rational for its participation in specific 
companies and promotes participation by private enterprises. It is not a p olicy of the government 
to increase its stake in the market economy and as much as possible the government tries to 
crowd in the private sector.  No policy decisions have been made towards excluding any private 
investors or groups of private investors from investing in the Icelandic banking system at the time 
of privatization. That being said it will most certainly be maintained as a major prerequisite for 
investing in Icelandic banks that the investors be deemed competent to perform as active 
stakeholders i n Icelandic banks.  
 
Question 22: Is there any policy support, such as tax credits and financial support, for film 
shooting cooperation between domestic and foreign film producers, including jointly investment 
and produce as well as locating Iceland as the scene of the films?  
 
Special legislation has been passed in Iceland which aims "to enhance domestic culture and 
promote the history and nature of Iceland " by temporarily supporting motion pictures and 
television programmes produced in Iceland. The reimbursements from the State Treasury is 25% 
of the costs incurred in the production of films and television programmes in Iceland.  
 
Production costs refers to a ll costs incurred in Iceland deductible from the revenues of enterprises 
pursuant to the provisions of the Act on Income. Payments pertaining to employees and 
contractors are only to be included in production costs if they are verifiably taxable in Iceland . 
When more than 80% of the total production cost of a motion picture or television programme is 
incurred in Iceland, the reimbursement is calculated on the basis of the total production cost 
incurred within the European Economic Area. The reimbursement sc heme does not cover 
production of commercials or music videos.  
See: http://www.filminiceland.com/  
 
Question 23: Please introduce related laws and regulations and the development  of broadcasting, 
film and TV ind ustries in Iceland.  
  
The Media Act, No. 38/2011 and The Public Broadcasting Act, No. 23/2013 . The Icelandic 
Government has not made any reports on the de velopment of the media and film industries but 
several reports and analyses has been commissioned by the Nordic Council of Ministers on these 
matters and, like "AD WARS Digital Challenges for Ad -Financed News Media in the Nordic 
Countries " published by Nordicom 2017, where the media situation in the Nordic Countries are 
summarized in this way: "The mobile revolution has fundamentally altered the contact between 
media companies and their audience and thus the contact between advertisers and their target WT/TPR/M/361/Add.1  
 
- 32 - 
 
  groups. However, digitalisation of the media landscape has not just had major consequences in 
terms of how we consume media content, it has also had an impact on w hat media content we 
consume. Digital technology has split up the media audience between various platforms and 
between different content providers. Accordingly, for the traditional news media, this means that it 
is not simply their traditional publication platforms that are coming up against new and ever 
tougher competition – this applies to at least the same extent to the content they produce. " 
 
Question 24: What are the policies regarding access to media for foreign investment?  
 
There is no specific polic y on foreign investment in media. In Section IV of the Media Act No. 
38/2011 are provisions on registration of media, licenses to provide audiovisual media services, 
transparency, provision of information, retransmission of foreign audiovisual broadcasts e tc. 
 
Question 25: What are the stipulations for landing of broadcasting, TV frequencies and channels 
within the territory of Iceland?  
 
Article 15 in the Media Act provides that simultaneous retransmission of satellite broadcast via 
cable and IP -TV shall be  registered with the Icelandic Media Commission. In Article 16 of the same 
Act it 's provided that: A licence from the Media Commission shall be required for the provision by a 
media service provider subject to the jurisdiction of the Icelandic state of aud io-visual services 
which require the allocation of a transmission frequency by the Post and Telecom Administration, 
unless otherwise provided by law.  
 
Process of frequency allocations is governed by Art. 11. in the Telecommunications Act no 81/2003 
by the PTA. The site of broadcast is chosen by the network operator, subject to an approval by the 
PTA. Generally, frequency licenses are allocated upon an application, and possibly after an open 
consultation process, if the supply of frequencies is sufficient. I f there is scarcity of a certain type 
of frequency resource and high demand for it is evident the principal method of allocation is a form 
of bidding contest, i.e. through tenders or auctions. Regarding TV frequencies and channels, 
especially, there is, at  this moment, enough supply for example in the UHF band. However, an 
applicant for frequency for TV broadcasting would require a media license from the Media 
Commission.     
 
 
 
 WT/TPR/M/361/Add.1  
 
- 33 - 
 
  COLOMBIA  
 
Report of the Secretariat WT /TPR/S/361  
2. TRADE AND INVESTMENT REGIME  
2.2 Trade policy objectives  
 
Paragraph 2.8 of the report of the Secretariat states that ... "The Foreign Minister of Iceland 
reports to Althingi every year on matters within its competence, including international trade. In 
the most recent report, r eferring to the 2015 -2016 legislative exercise, the Minister listed a 
number of priorities and objectives in various areas related to trade and investment " 
 
1. Could Iceland explain what mechanisms it is developing to achieve this purpose?  
 
Iceland i.a. plans  to use the mechanism embedded in the new organic budget law to help achieve 
this purpose. The new organic budget law approved by the Icelandic Parliament in December 2015 
(nr.123/2015) is to preserve fiscal discipline, strengthen public fiscal management and aim to 
increase long term decision making and accountability. The policy life cycle starts with a new 
formed government submitting a five -year fiscal policy statement. The fiscal policy then forms the 
basis for the five -year fiscal strategy submitted a nnually to the Parliament. In the five -year fiscal 
strategy submitted, each minister has formulated a five -year policy for those expenditure areas 
and expenditure functions for which that minister is responsible. The policy shall set out targets, 
including  quality and service targets, and explain how these will be achieved with respect to the 
utilisation of funds, timing, execution, responsibility and intended law amendments.  
 
An example of this would be the main objective for the expenditure function External trade which 
is the promotion of Icelandic economic - and trade interests abroad. Within this function there are 
outlined several goals for improved market access for Icelandic industry and culture abroad. One 
of these goals has a target based on a survey of Icelandic businesses asked to rank whether they 
are satisfied with market access and commercial services on a scale of 1 -5. A baseline is set for 
the present year and targets are set over the next five -year period.  
  
At the first meeting of the a utumn legislative session, the Minister of Finance shall submit to the 
parliament a budget bill for the next year. Each Minister is responsible for their expenditure area. 
The budget bill contains the goals and targets for the next fiscal year. Each Minist er shall than no 
later than 1 June each year publish an annual report for the preceding fiscal year. Such reports 
shall present the outcomes of the goals and targets, and report on any deviations.  The Ministers 
first annual report according to the new organic budget law is scheduled on 1 June 2019.  
 
2.3 Trade agreements and arrangements  
2.3.1 WTO  
 
Paragraph 2.13 of the report of the Secretariat states that ... "During the Doha Round, Iceland has 
made proposals or co -sponsored proposals in the areas of services, intellectual property, fisheries 
subsidies and market access, including the liberalization of trade in fish and fishery products. 
Other more recent communications made during the period 2015 -2016 relate to sustainable 
fisheries development and effective disciplines on fisheries subsidies. At the last Ministerial 
Conference in Nairobi, Iceland contributed to a joint ministerial declaration on fisheries subsidies. " 
 
2. Could Iceland state whet her it has implemented any measure to reduce or eliminate subsidies 
for fishery products in order to establish more competitive trade in this sector given its trade 
liberalization objectives?  
 
Iceland does not have any subsidies for fishery products.  
 
3 TRADE POLICIES AND PRACTICES BY MEASURE  
3.1 Measures Directly Affecting Imports  
3.1.5 Other charges affecting imports  
 
Paragraph 3.47 of the report of the Secretariat states that ... "Since 1 January 2006, Iceland has 
imposed a recycling rate on imports of a ll packaging waste from paperboard, paper and plastic in 
accordance with its commitments under the European Union Directive on packaging and packaging WT/TPR/M/361/Add.1  
 
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  waste. Other product categories (listed by their HS code) are also subject to a recycling or disposal 
rate at the time of importation: petroleum products, organic solvents, halogenated compounds, 
isocyanates and polyurethanes, paint, printing ink, batteries and accumulators, photographic 
products, mercury products, pesticides, refrigerants, tires, motor vehic les, synthetic fishing gear 
and electrical and electronic equipment.  
 
At the time of import, importers are required to declare the net weight of all packages imported 
into Iceland, as it is the basis used by the Customs Office for the levying and collectio n of fees. 
Exported packages shall be exempt from the levy provided that the exporter can demonstrate that 
they will be transported out of the country. The regional tax authorities collect the recycling rates 
applied to domestic packaging in the same way a s they collect the consumption tax. The recycling 
rates collected are deposited in a recycling fund managed by a seven -member board of directors 
and allocated to cooperatives managed by local authorities to offset the operating costs of waste 
collection an d disposal facilities. In recent years, the fund has recorded surpluses and has 
committed these additional amounts to meet its future obligations.50 The rate of recycling varies 
depending on the type of packaging or product concerned. Rates have been updat ed several 
times; in January 2017 the recycling rate was 15 Kg / kg for paper or cardboard packaging and 16 
Kg / kg for plastic packaging. Rates for other products vary considerably; namely ISK 0,20 / kg for 
certain oils, ISK 2,880 / kg for certain photogr aphic products and ISK 707 per unit for certain 
vehicle batteries. In 2015, recycling rates on imported goods amounted to 1,147.2 million 
Icelandic kronor. " 
 
3. Is it foreseen that exporters will have to bear the fees imposed by the customs office in Icel and? 
 
Regarding cardboard, paper and plastic packaging:  
 
According to Article 7a(6) of the Act on Recycling Fees the fee on cardboard, paper and plastic 
packaging is not levied when the product is exported. According to Article 7a(7) of the act 
Icelandic p roducer shall not pay recycling fee for cardboard, paper and plastic packaging for 
products which are exported.  
 
4. Are exporters exempt from these fees since its inception?  
 
Yes, in the case of cardboard, paper and plastic packaging.  
 
3.1.1 Customs Procedures and Requirements  
 
Paragraph 3.11 of the report of the Secretariat states that ... "Articles 91 to 108 of the Customs 
Act and Regulation No. 1100/2006 include the provisions applicable to customs warehouses, 
warehouses for duty free zones and fre e zones. In Iceland, customs warehouses may be 
established by legal persons or registered enterprises with a license from the customs authority to 
manage such deposits. Other criteria, such as a guarantee, adequate inspection and storage 
facilities, qualif ied staff, etc. should be met.  
 
Customs warehouses are used for the storage of goods and cannot be traded, sold or processed 
except for simple repackaging, labeling, assembly, testing and cleaning operations that do not 
result in a change in the tariff cla ssification of the goods. In warehouses, both dispatched and 
unpacked goods can be stored, provided they are in different areas or can be differentiated 
sufficiently by the naked eye. In accordance with the recent amendments to the rules on customs 
warehou ses, owners cannot manage their own warehouses, so there are only independent 
operators. The Icelandic rules on free zones contain provisions on the processing of unpatched 
goods and domestic goods which go beyond what is permitted in customs warehouses. I n order to 
manage free zones, the customs authority requires that a licensing procedure similar to that for 
customs warehouses be applied. Iceland has never had free zones in operation, although customs 
legislation has provisions in this regard. According to the authorities, the customs warehousing 
system has been sufficient to date to meet the needs of operators for import / export purposes, so 
no free zones have been established. " 
 
5. Considering that Iceland has never had free zones in operation althoug h its customs legislation 
contains provisions in this regard. Has Iceland not considered operating free zones in order to 
attract foreign investment and improve the international competitiveness of its companies in the WT/TPR/M/361/Add.1  
 
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  international markets in products suc h as fish, fish products, aluminum and its products or other 
goods?  
 
As stated in the report of the Secretariat the provisions for operating a free zone are to be found in 
the Icelandic Customs Act. Licenses for the operation of such zones are in principle  open for 
application. In short Iceland has considered and is still considering the feasibility of reinforcing and 
possibly widening the possibilities of operating free zones in the country. The current economic 
situation does however not call for any hast e. The current international competitive situation of 
fish and aluminum production is strong and does not call for prompt measures in this regard. The 
current level of foreign investment is also satisfactory. Therefore, Iceland is currently looking to 
future possibilities of using the free zone arrangement to promote diversification of its industries. 
On that line it should be noted that Iceland is situated at a crucial point on routes between Europe 
and America and Asia. The combination of the country 's location, its educated workforce, public 
security and infrastructure give grounds for good possibilities of growth in the long term.      
 
3.1.1.1 Trade facilitation  
 
Paragraph 3.13 of the report of the Secretariat states that ... "Iceland submitted the inst rument of 
ratification of the WTO Agreement on Trade Facilitation (CFA) on 31 October 2016.19 No law has 
been adopted or amended to implement this Agreement. Since that date, it has not submitted any 
notifications under the AFC. In October 2015, Iceland ac cepted the revised Kyoto Convention of 
the WCO (International Convention for the Simplification and Harmonization of Customs Regimes), 
which entered into force on 8 January 2016.20 Iceland has also included provisions on trade 
facilitation in many recent f ree trade agreements. " 
 
6. Given that Iceland submitted the instrument of ratification of the WTO Agreement on Trade 
Facilitation and that no national law has been adopted or amended to implement this Agreement, 
it would be understood that Iceland 's custo ms law is sufficient to implement the WTO trade 
facilitation agreement fully, or is there any intention of working on new developments in some 
areas?  
 
Following a thorough assessment of the obligations established under the TFA, it was Iceland 's 
assessment  that the ratification of the Agreement did not require prior amendments to Icelandic 
legislation. However, the implementation of the Agreement in Iceland require s updated procedures 
in certain areas, for example as regards the implementation of provisions  of the Agreement on 
Authorized Economic Operators (AEO), a "single window ", and the publishing of binding opinions 
on tariff classification.  
 
7. In that case what matters are these and what are the possible modifications or adjustments?  
 
Please note the answer to question no. 6.  
 
Paragraph 3.15 of the report of the Secretariat states that ... "Iceland has recently implemented a 
risk management system (see section 3.1.1) and conducts regular post -clearance audits, as 
required by Article 119 of the Customs Act. Post -clearance audits include all types of inspection 
activities to determine the accuracy of import declarations. The Customs Act also contains 
provisions for importers who need to modify an import declaration after customs clearance. In 
accordance w ith the provisions of article 116 of the Customs Law, this option is valid for six years 
from the date of customs clearance. " 
 
8. Could Iceland explain how the post -clearance audits and the main problems identified in the 
inspection activities to determine the accuracy of import declarations operate?  
 
Regarding the accuracy of import declarations, a project was started in which the main purpose 
was to verify the accuracy of a given set of fields in declarations provided by both the importers 
and cu stoms brokers. Analysis of the results gave clear indication as to what could be amended for 
improved results, and that particular work is ongoing.  
 
Additionally, a software project is under way where we analyse on a mass scale all import 
declarations on a  monthly basis using pre -set parameters of known/common factors, which are 
under constant reevaluation, to look for misleading information. Based on higher probability for 
finding errors, the results provide auditors with a list of names for further inspec tion. WT/TPR/M/361/Add.1  
 
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  COSTA RICA  
GOVERNMENT PROCUREMENT  
 
PART I:  QUESTIONS REGARDING THE SECRETARIAT REPORT  
 
3.148. Since 2014, Iceland has placed a priority on improving procurement.  In 2015, Iceland 's 
Ministry of Finance and Economic Affairs created a special working  group to examine and promote 
effective cooperation between the Government and the private sector on procurement. The 
working group suggested new ideas for public procurement and made the following 
recommendations:  
 
 Examine long -term needs for procurement and link to the budget;  
 Government to apply procurement procedures in a targeted manner, e.g. through 
joint purchases, mini -tendering, auctions, and contracting with fewer suppliers;  
 Include additional information so that the Government has a better overvi ew of its 
purchases in order to further optimize procurement;  
 Create an incentive scheme for institutions and suppliers; and  
 Better incorporate market rent prices for institutions in order to optimize their 
office rents.  
 
According to paragraph 3.148 of the Report by the Secretariat, the special working 
group created in 2015 suggested some recommendations including the creation of an 
incentive scheme for institutions and suppliers. Can Iceland give further details about 
this incentive scheme and the resul ts expected from its implementation?  
 
The recommendations from 2015 are still in the implementations process.  The financing model of 
the Icelandic Central Procurement Agency (CPA) has been change. Before the agency got its 
revenue as percentage of the value traded through it 's the framework agreements but now the 
agency gets its financing from the State budget.  
  
Another reform that is still in the implementation phase is the change of framework agreement 
system that the Icelandic CPA is responsible for . Previously the agreements where multi -provider 
framework agreements but now the focus is on single -provider framework agreements. The 
previous set up of the framework agreements did not guarantee the lowest possible price but only 
a certain discount term s. As there where numerus suppliers in the framework agreements and no 
clear commitment that they would acquire any business from the agreements there was no 
encouragement for the suppliers to go to their own value chain and offer agencies better prices.  
 
3.154.  Iceland 's PPA has provisions on electronic means of procurement. It allows for the use of 
electronic auctions but does not make it mandatory. However, a new rule to come into effect in 
2018 would establish the use of electronic methods for all proc urement. It also establishes an 
electronic dynamic purchasing system for making commonly used purchases; however, this is not 
widely used at present. For the communication and submission of documents, the PPA indicates 
that this will be conducted through e lectronic means. As of early 2017, the authorities confirmed 
that all tender documents are available electronically and are free of charge.  
 
According to paragraph 3.154 of the Report by the Secretariat, in 2018 a new rule will 
come into effect to establi sh the use of electronic methods for all procurement. This is a 
topic of much interest to Costa Rica as we are working also on the definition of a unique 
electronic platform for all procurement processes. Can Iceland give further details about 
the content of this new rule, and if it would make mandatory the use of electronic 
methods for all procurement processes?  
       
From October 2018, electronic methods will be mandatory for all pre -award tender procedures.  
This is in compliance with EU rules on public  procurement. The economic operators can access 
procurement documents electronically, free of charge, and submit tenders electronically.  These 
rules do not apply to post -award criteria.  All Icelandic public tenders are advertised electronically 
on a comm on site, http://utbodsvefur.is/ and all tenders above GPA/EU thresholds are also 
advertised on TED (Tenders Electronic Daily).  
 WT/TPR/M/361/Add.1  
 
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  PART I:  QUESTIONS REGARDING THE SECRETARIAT REPORT  
 
Iceland has eight bilateral investment treaties (BITs) in force, with Chile, China, India, Latvia, 
Lithuania, Lebanon, Mexico, and Viet Nam. The agreements with Latvia and Lithuania are being 
evaluated as to their future need. In addition, for example, within the EFTA framework, Iceland 
has signed a multilateral investment a greement with the Republic of Korea, and the EFTA -
Singapore FTA includes a chapter on investment.  In general, investment provisions are covered in 
Iceland 's FTAs, but not investor -state dispute settlement (ISDS) mechanisms. Iceland has 
concluded a BIT wit h Egypt but it has not entered into force as of March 2017 . 
 
According to paragraph 2.38 of the Report by the Secretariat, Iceland´s FTA practice is 
not to include an investor -state dispu te settlement (ISDS) mechanism.  
 
 Can Iceland provide further details on the dispute settlement mechanisms in its 
bilateral investment treaties (BITs)?  
 
Iceland 's bilateral investment treaties contain traditional provisions on the settlement of disputes 
between an investor of either contracting Party and the other contracting Party (ISDS). The 
provisions stipulate that any such dispute shall as far as possible be settled amicably through 
negotiations. If the dispute cannot be settled amicably, the investor may refer the dispute to 
arbitration. The arbitral award sha ll be made in accordance with the provisions of the relevant 
Agreement and shall be binding for the parties in dispute. The arbitral tribunal shall state the basis 
of its decision and give reasons upon the request of either party.  
 
2.4.2  - Table 2.2 Invest ment restrictions  
 
 Can Iceland please provide further information on the restrictions related to 
business establishment through unlimited liability companies and to acquisition of 
real estate? Is this applicable to all kinds of business activities?  
 
Information on Establishment of Companies  in Iceland is available at the following link:   
https://eng.atvinnuvegaraduneyti.is/laws -and-regulations/nr/nr/7348  
 
Foreigners h ave customarily established a branch of a limited company in Iceland. It is also 
possible to establish an independent company (subsidiary) in Iceland or buy stocks in Icelandic 
companies, though not in certain types of them such as those engaged in fisheri es and primary 
fish processing.  
 
Icelandic company law is in line with the requirements of the company law provisions of the 
Agreement on the European Economic Area, and consequently EU company law.  
 
The acts on public and private limited companies, respec tively, are very similar to the Danish 
legislation on such companies.  
 
The public limited companies are mainly for many shareholders where the aim is to seek capital 
from the public, for instance on the stock market. Rules for the private limited companies  are 
simpler than for the public ones. In public limited companies, the minimum is two founders, two 
shareholders, three directors on the board of directors, and a manager is obligatory. In private 
limited companies, on the other hand, the minimum is one f ounder, one shareholder, one director 
in case shareholders are four or less, and there is no obligation to have a manager. In one -party 
private limited companies meetings of the board of directors and shareholders are not held. The 
provisions on branches a re similar for both types of companies except that disclosure requirements 
are somewhat stricter as concerns the public limited companies, and the private limited companies 
have to inform, upon establishment, whether there are one or more shareholders.  
 
As for citizens of OECD countries not residing in Iceland but residing in one of those countries, 
they can, due to a general exemption of the Minister of Industry and Commerce, freely form 
limited companies in Iceland and be board members and managers (for f urther information, see 
Announcement No. 848/2013 respecting General Exemption from the Conditions of Residence of 
the Limited Liability Companies ' Legislation):  
https://eng.atvinnuvegaraduneyti.is/laws -and-regulations/nr/nr/7342  
 WT/TPR/M/361/Add.1  
 
- 38 - 
 
  According to Article 4 of Act No 34/1991 investment in Icelandic enterprises  by foreign states, local 
authorities or other foreign authority involved in enterprises is prohibited except w ith a special 
permission from the Minister of Commerce.  
Act No 34/1991 on Investment by Non -residents in Business Enterprises:  
https://eng.atvinnuvegaraduneyti.is/laws -and-regulations/nr/nr/7448  
 
Non-residents may acquire title to real estate in Iceland  for direct use in his enterprise in 
accordance with the provisions of the Act governing the ownership and utilization rights of real 
estate.  
 
Following is a link to Act on the Right of Ownership and Use of Real Property, No. 19 of 6th April 
1966, with subsequent amendments:  
https://eng.innanrikisraduneyti.is/laws -and-regulations/nr/699  
 
4.111. Act No. 60/1998 as amended on Aviation is the main legislation governing the air transport 
sector. The Act is administered by the Icelandic Transport Authority, which is under the Ministry of 
the Interior.  The authorities stated that the Aviation Act follows  European legislation, thus making 
Iceland compliant with European rules on licensing, access to aircrafts and ground handling, 
competition, slot allocation, airport charges, and aviation safety and security. Furthermore, under 
the provisions of the Act, E EA operators are allowed to engage in cabotage, while non -EEA 
operators are only allowed to engage in cabotage if specified in a bilateral agreement.  
 
 According to paragraph 4.111 of the Report by the Secretariat, under the 
provisions of Act No. 60/1998, EEA operators are allowed to engage in cabotage, 
while non -EEA operators are only allowed to engage in cabotage if specified in a 
bilateral agreement. Can Iceland further explain if these bilateral agreements 
refers to FTAs or bilateral aviation agreements , and what are the provisions 
allowing some countries to engage in cabotage?  
  
EEA Operators are entitled to perform cabotage due to the participation in the EEA Area which 
extends the EU 's Single market to Iceland, Norway and Liechtenstein. In accordance with EU 
Regulation 1008/2008, operators are entitled to operate air service between and within member 
states. Iceland has also concluded Air Service Agreements with other third countries a llowing for 
cabotage . 
 
4.114. Under the provisions of Act No. 34/1991 on Foreign Investment in Companies, foreign 
ownership in Icelandic companies involved in airline operations may not exceed 49%. This 
limitation does not apply to nationals of the EEA, wh o are treated as Icelandic nationals.  
Additionally, no entity may be granted an operating license unless it is effectively controlled by 
EEA nationals. There are no limitations on foreign participation in auxiliary services.  
 
 Can Iceland indicate whether  the restrictions extend to maintenance and repair 
services and whether there are any mode 1 and 2 limitations to provide such 
services?  
 
There are no limitations for ownership or control as regards maintenance and repair services.  WT/TPR/M/361/Add.1  
 
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  ECUADOR  
 
1.  In accordance with page 68, paragraph 3.128. "The entry into Iceland of the harmful 
organisms listed in Appendix I and the plants listed in Appendix III to the Regulation shall be 
prohibited; the entry of plants listed in Annex IV is authorized subject to specific requirements ". 
Can Iceland indicate what specific requirements it refers to in relation to the authorization for the 
entry of plants listed in Annex IV?  
 
Appendix IV of Regulation No. 189/1990 concerning the import and export of plants and plant 
products states that the following requirements shall be fulfilled.  
  
1.  With regards to plants for further growing or propagation.  
 
a) During the last growing season in the country of cultivation the plants must have been 
under official phytosanitary control  for at least 1 month prior to transport to Iceland. 
These plants must then be free from the harmful organisms listed in Appendix I of the 
Regulation.  
b) Wart disease (Synchytrium. endobioticum) shall never have been found at the place of 
growth.  
c) Potato cys t nematode (Globodera pallida and G. rostochiensis) does not exist at the 
place of growth and shall never have been found there. A soil test according to 
approved methods must have been carried out and shall not have shown the presence 
of cysts in the soil .  
d) The Colorado beetle (Leptinotarsa decemlineata) does not exist at the place of growth 
and the place of growth is situated in an area where the beetle does not occur.  
2.  With regards to Christmas trees and coniferous branches.  
 
The importers of Christm as trees and coniferous branches shall guarantee that during importation 
and sale the trees have at no time been stored closer to other conifers than 100 m. It is prohibited 
to sell imported Christmas trees in nurseries that sell conifers for planting.  
 
3.  With regards to potatoes: They shall fulfill the requirements of points a -d listed above.  
 
2.  With regard to Annex IV, paragraph 1 (a), import of plants for growth or propagation, could 
Iceland indicate whether such control would be carried out by the  health authorities of the 
exporting country and whether only the provisions of Annex I need to be complied with?  
 
Import authorisation is performed by the Icelandic Food and Veterinary Authority. Official Controls 
and verification of certificates would al so be performed by the Icelandic Food and Veterinary 
Authority.  
 
3.  In accordance with page 27, paragraph 2.11. "The Customs Directorate also has a policy 
document, called Customs 2020, which is designed to foster confidence, cooperation and progress 
in all sectors of the customs administration. The objective is to obtain various results in the area of 
customs, nam ely: efficient and effective collection of taxes and duties; effective partnerships with 
industry and stakeholders; effective financial management; issues related to health and safety; 
and responsible management of information and data ". 
 
Can Iceland tell us whether, in the area of customs cooperation, there is a specific program, if so, 
which countries could benefit from it?  
 
The policy document Customs 2020 is only intended to set forth the policy objectives of the 
Directorate of Customs. The document w as reviewed by the Ministry of Economy and Finance and 
on that basis the government finalized a performance management contract with the Directorate 
of Customs setting the focus tasks of customs matters until 2020. During the preparation of the 
policy docu ment the Directorate of Customs consulted with representatives of the Icelandic private 
sector both on the import and export sides. Neither the policy document nor the performance 
management contract contain any provisions on a formalized program, the Dire ctorate of Customs WT/TPR/M/361/Add.1  
 
- 40 - 
 
  is simply entrusted with the task of cooperating with all parties who might have opinions on 
Customs related aspects.  
 
4.  In accordance with page 41, paragraph 3.21: tariff duties on agricultural products are fixed 
in Icelandic kroner per kg up to a maximum ceiling. Can Iceland indicate how this adjustment 
works in line with its commitments on tariff bindings and how these variables (CIF price and 
margin for wholesalers) are linked to the maximum ceiling determined? How does such adjust ment 
proceed in the event of a decline in the currency parity for specific duties or charges?  
 
Imports of agricultural products which take place out of quotas, the Customs automatic electronic 
system compares the calculated total duty to the WTO bindings. This is done to make sure that the 
calculated duty never exceeds the bindings.  
 
5.  According to page 60, paragraphs 3.91 and 3.92, "companies whose annual sales of taxable 
goods and services do not exceed KRW 2 million are exempt from VAT, which means th at they do 
not VAT on sales, but they do pay VAT on inputs. VAT on imports is calculated on the basis of the 
import price plus customs duties and other charges. " 
 
Whereas these companies are exempt from VAT on sales and are paid by importers on the basis of 
the price of imports plus customs duties and other charges? Can Iceland indicate how such 
exemption is in line with Iceland 's commitment to national tax treatment where, as explained, an 
imported product could be subject to higher taxes than similar, di rectly competitive or 
substitutable domestic products? Does Iceland consider that normal conditions of competition are 
affected by this measure?  
 
VAT on imports is calculated on the basis of the import price plus customs duties and other 
charges in Iceland . Also, enterprises with annual taxable sales of goods and services of ISK 2 
million or less are exempt from VAT.  
 
The duties, taxes and charges levied upon import of goods are, depending on the product:  
 
1. Customs duties.  
2. Excise duty on Alcohol.  
3. Excise dut y on tobacco.  
4. Excise duty on motor vehicles.  
5. Excise duty on fuels (such as petrol and diesel).  
6. Carbon tax.  
7. Fuel freight cost tax.  
8. Recycling fee.  
9. Inspection fees levied on electronic products.  
10. Service fees levied by the Directorate of Customs for providing  special services, such 
as customs clearances after business hours.  
 
Of the said taxes and charges these are also levied on domestic products and therefore become a 
part of their inland business price which is subject to VAT:  
 
1. Excise duty on Alcohol.  
2. Excise duty on tobacco.  
3. Excise duty on motor vehicles.  
4. Excise duty on fuels (such as petrol and diesel).  
5. Carbon tax.  
6. Recycling fee.  
7. Inspection fees levied on electronic products.  
 
Therefore the question can only be considered to apply to:  
 
1. Customs duties . 
2. Fuel freight cost tax.  
3. Service fees levied by the Directorate of Customs.  
 
Fuel freight cost tax is levied on petroleum products based on calculations of their average inland 
transport costs. The revenue of the tax are solely used to finance inland trans portation of the WT/TPR/M/361/Add.1  
 
- 41 - 
 
  products. Since no production of petroleum products takes place in Iceland levying the tax does 
not distort the conditions of competition.  
 
Service fees levied by the Directorate of customs are service fees for special services, such as 
customs clearances after business hours. They do therefore form a part of transport costs of 
imported products. VAT is levied based on the business price of domestic products. The margin of 
the business price of domestic products must be considered to includ e all inland transport costs. 
Therefore Iceland does not consider that VAT on service fees levied by the Directorate of Customs 
distort the conditions of competition.  
 
VAT is levied on customs duties. This approach is general and is f.ex. applied in the EU : 
https://ec.europa.eu/taxation_customs/individuals/buying -goods -services -online-personal -
use/buying -goods/buying -goods -online -coming -from-a-noneu -union -country_en  
 
In light of the above the ISK 2 million VAT exemption must be considered to be in line with 
Iceland 's commitment to national tax treatment. Imported products cannot be s ubject to higher 
taxes than similar, directly competitive or substitutable domestic products. Normal conditions of 
competition are not affected by this measure.  
 
It should also be mentioned that the argument for the ISK 2 million VAT taxable turnover 
exemption is that taxing such a low turnover would only generate ISK 480.000 VAT revenue at the 
most for Iceland. The costs of the administrative burden of filing VAT return and maintaining a VAT 
bookkeeping system for such a low turnover is considered being out of proportion to the revenue it 
would create for the state. The burden of taxing such a low turnover would also place a great 
burden on the Icelandic tax author ities. The amount of the exemption was ISK 1 million but was 
raised to 2 million last January due to recommendations made by the IMF.  
 
6.  In accordance with page 63, paragraph 3.102: "Iceland, as part of the EEA, applies EU 
legislation on technical regulations, standards, conformity assessment, certification and 
accreditation, including harmonized standards and technical regulations and the CE marking "[...] 
In March 2016, the EFTA Surv eillance Authority stated in a reasoned statement that Iceland " has 
not yet notified several of the technical regulations in question adopted in 2012 and therefore 
continues to fail to comply with its obligations in accordance with Directive 98/34.  
 
As thi s Directive is a provision laying down the procedure for the provision of information in the 
field of technical standards and regulations, could Iceland inform us how it could be verified that 
there is a harmonization between technical regulations, standar ds, conformity assessment, 
certification and accreditation of Iceland in respect of European legislation?  
 
The EEA EFTA States are responsible for implementing all binding acts incorporated into the EEA 
Agreement, including EU legislation on technical regu lations, standards, conformity assessment, 
certification and accreditation that has been incorporated into the Agreement. Furthermore, the 
EFTA Surveillance Authority monitors the implementation of the EEA EFTA States of their EEA 
commitments. Should the E FTA Surveillance Authority find that the EEA EFTA States have not met 
these commitments, the Authority can take actions to ensure compliance by the EEA EFTA States. 
Such action may include initiating infringement proceedings before the EFTA Court.  
 
7.  According to page 66, paragraphs 3.118 and 3.119: Iceland has adopted EU SPS legislation, 
in particular on food products, animal feed and other issues related to the food chain. However, 
the first part of paragraph 3.119 states that Iceland applies most of th e EU food safety standards. 
Does it appear, according to the Report of the Secretariat, that although EU legislation on SPS 
legislation has been adopted, its implementation does not always conform to this legislation? Can 
Iceland indicate the scope of harm onization of its SPS standards with EU food safety policy?  
 
The main difference between the EU legislation on SPS legislation and the Icelandic one is that it is 
stated in Annex I to the EEA Agreement, which covers veterinary and phytosanitary matters, tha t 
the EU Acts shall apply to Iceland, except for the provisions concerning live animals, other than 
fish and aquaculture animals, and animal products such as ova, embryo and semen. Furthermore, 
EU Acts regarding plant health have not been incorporated into  the EEA Agreement. Finally, 
Iceland has certain adaptations to the EU acquis. For instance it is allowed to  feed ruminants with 
fish meal.  
 WT/TPR/M/361/Add.1  
 
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  Additional questions - Report of the WTO Secretariat:  
 
1. page 68, paragraph 3.128:  
 
What are the harmful organisms  listed in the above appendices?  
In relation to the harmful organism: Phytophthora ramorum to which plant species they refer with 
free zones?  
 
The harmful organisms listed in the aforementioned appendices are the following:  
 
APPENDIX I  
 
Viruses, mycoplasmas and relevant related pathogens  
Chrysanthemum stunt viroid  
Potato spindle tuber viroid  
Potato yellow dwarf virus  
Pathotypes  of viruses, mycoplasmas and related pathogens originating from countries outside 
Europe and which are able to infect potatoes.  
 
Bacteria  
Aplanobacter populi  
Clavibacter michiganensis  
Erwinia chrysanthemi  
- pv. chrysanthetni  
- pv. dianthicola  
Pseudomonas caryophylli  
Pseudomonas solanacearum  
 
Fungi  
Angiosorus solani  
Atropellis spp.  
Ceratocystis ulmi  
Cercospora pini -densiflorae  
Chrysomyxa arctostaphyli  
Chrysomyxa abietis  
Chrysomyxa empetri  
Chrysomyxa pirolata  
Elytroderma deformans  
Gremmeniella abietina  
Heterobasidion annosus  
Hypoxylon mammatum  
Lophodermium seditiosum  
Melampsora medusae  
Melampsora pinitorqua  
Mycosphaerella populorum  
Nectria galligena  
Peridermium harknessii  
Peridermium pini  
Phacidium infestans  
Phellinus pini  
Phellinus weirii  
Phialophora ci nerescens  
Phoma andina  
Phytophthora fragariae  
Phytophthora ramorum  
Piptoporus betulinus  
Puccinia horiana  
Scirrhia acicola  
Septoria lycopersici var. malagutii  
Synchytrium endobioticum  
 WT/TPR/M/361/Add.1  
 
- 43 - 
 
  Insects, mites and nematodes  
Acleris variana  
Adelges abietis  
Adelges laricis  
Adelges viridis  
Amauromyza maculosa  
Bemisia tabaci  
Bursaphelenchus xylophilus  
Cacoecimorpha pronubana  
Cydia strobilella  
Dendroctonus spp.  
Diarthronomyia chrysanthemi  
Ditylenchus destructor  
Ditylenchus dipsaci  
Epichoristodes acerbella  
Epirrita autum nata 
Frankliniella occidentalis  
Globodera pallida  
Globodera rostochiensis  
Hylobius abietis  
Ips spp.  
Kaltenbachiola strobi  
Leptinotarsa decemlineata  
Liriomyza huidobrensis  
Liriomyza sativae  
Liriomyza trifolii  
Monochamus sutor  
Nacobbus aberrans  
Opogona sacchari  
Phthorimaea operculella  
Pissodes spp.  
Pityogenes chalcographus  
Pityogenes bidentatus  
Pityogenes quadridens  
Premnotrypes spp.  
Pristiphora erichsonii  
Scolytus spp.  
Thrips palmi  
Tomicus piniperda  
Trialeurodes vaporariorum  
Trogoderma granarium  
Xiphine ma americanum  
 
APPENDIX II  
 
Viruses, mycoplasmas and related pathogens  
Potato leaf roll virus  
Potato virus Y  
 
Bacteria  
Agrobactedum tumefaciens  
Corynebacterium fascians  
 
Fungi  
Botrytis spp.  
Didymella chrysanthemi  
Fusarium spp.  
Phoma exigua var. foveata  
Rhizoctonia tuliparum  
Sclerotinia spp.  
 WT/TPR/M/361/Add.1  
 
- 44 - 
 
  Insects, mites and nematodes  
Aphelenchoides spp.  
Cecidophyopsis ribis  
Eumerus spp.  
Meloidogyne spp.  
Merodon equestris  
Paratetranychus ununguis  
Polyphagotarsonemus latus  
Pratylenchus penetrans  
Pratylenchus vulnus  
Steneotarsonemus fragariae  
Tetranychus urticae  
 
As regards the second question, Icelandic rules do not contain specific provisions regarding  areas 
where the Phytophthora ramorum does not exist.  
  
2. Page 68, paragraph 3.129 .: 
 
Which quarantine agencies do they refer to?  
 
Point 3.129 states:  
 
Iceland maintains controls of quarantine organisms on potato and the ex port of wood packing 
materials.  
 
Iceland maintains controls on import of potatoes and each shipment must be accompanied with an 
Official Certificate  of Origin of Health. As for export of wood packing materials, Iceland has 
implemented the international ISPM15 standard, for the benefits of our exports.  
 
3. page 67, paragraph 3.123  
 
Imports of meat and unprocessed meat products which have not been subje cted to heat treatment 
in full must be accompanied by certificates confirming that the meat has been stored for not less 
than one month at -18 ° C or lower and is exempt salmonella and pollutants.  
 
Question: Could Iceland tell us who would be the competent authority to issue that certificate?  
 
Consignments of raw meat and unprocessed meat products shall be accompanied with a document 
from the producer, verifying that the freezing requirements have be en fulfilled.  Furthermore, 
there shall be a certificate that the meat has been tested negative for Salmonella spp. and a copy 
of the laboratory results. There are no specific requirements as to the laboratories performing this 
testing.  
 
4. Page 67, Paragraph 3.124  
 
When submitting an application for the first time to import unprocessed or non -sterilized products, 
the importer must provide the necessary product information to the MAST for examination and 
approval before the product is shipped from the  exporting country. However, if the importer 
submits an identical application to a previously filed application, MAST may issue an import permit 
once the products have been stored for not less than one month at -18 ° C or lower; storage can 
take place in I celand.  
 
Question: Could Iceland tell us what it means by filing an identical application and how it relates to 
applications to apply for imports of first -time imported products?  
 
Before a product is dispatched from the country of export, the importer must  begin with applying 
for an import permit and provide MAST with the necessary information on the product, i.e. country 
of origin, producer and approval number of establishment. If and when the import permit has been 
issued by MAST the importer must provide  the necessary documents (regarding freezing 
requirements, Salmonella spp. testing, etc.). The WTO report refers to this process as the "first-
time" application.  
 WT/TPR/M/361/Add.1  
 
- 45 - 
 
  For each shipment following this from the same origin the application process need not be 
repeated. However, the requirement for submitting the necessary documents with each 
consignment remains. These applications are referred to as "identical applications " in the report.  
 
5. Page 66, Paragraph 3.119  
 
Iceland applies most of the EU food safety st andards. All food business operators engaged in the 
primary production of food and feed, although not of animal origin, must be registered in the MAST 
and approved by the Authority. Imported foodstuffs must meet the relevant requirements which 
are at least  equivalent to those laid down in EU food law and animal and plant health standards. 
Iceland adopted EU legislation on novel foods through New Food Regulation No. 990/2015.  
 
Question: On the subject of imports, could Iceland indicate how it determines the reference 
standard for verifying compliance with the requirements of third countries and EEA countries?  
 
Iceland applies the reference standards with regards to imports from third countries and EEA 
countries that are required according to the EU rules on i mports from third countries and with 
regards to trade within the EU internal market.  
 WT/TPR/M/361/Add.1  
 
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  EUROPEAN UNION  
 
WT/TPR/S/361 – Secretariat Report  
 
2 TRADE AND INVESTMENT REGIME  
2.4 Investment  Regime  
2.4.2 Investment  restrictions  
Paragraph 2.41, page 32  
 
Iceland 's investment restrictions have remained essentially unchanged since the last review, with 
restrictions remaining in three main sectors (fish/fish processing, energy, and air transport) and, 
according to the report, it seems that there are no plans to remove these restrictions.  
 
EU Question No 1 : Could Iceland indicate whether it envisages to further open FDIs in the three 
main sectors mentioned in the report? (see also Q 11 below)  
 
Investment restrictions except as regards fish/fish processing do not apply to EEA nationals. No 
plans are in place to further open FDIs in fish/fish processing, energy, and air transport. 
Discussions to this effect are of a political nature and subject to  approval in the Parliament.  
 
3 TRADE POLICIES AND PRACTICES BY MEASURE  
3.1. Measures directly affecting imports  
3.1.1 Customs procedures and requirements  
Paragraph 3.3, page 35  
 
According to the report, Iceland 's has very high border compliance costs fo r both imports and 
exports. Iceland 's time to export was 2 hours, similar to OECD high -income countries, while its 
time to import was twelve times that amount (24 hours). This is despite the fact that the import 
clearance process is increasingly conducted through electronic means.  
 
EU Question No 2 : Could Iceland explain the reasons for the high compliance costs? Does Iceland 
consider any measure to reduce those compliance costs and the time needed for the import 
clearance process?  
 
In the opinion of the Icelandic government, the World Bank 's conclusion does not accurately reflect 
the rate of dispatch in customs clearance. On pages 166 and 212 of the „Doing Business 2017 " 
report it is stated that Iceland has such a high documentary compliance cost to impor t and export 
that its performance is defined in the 95th percentile among all economies in the Doing Business 
sample.4 The methodology for measuring export and import costs is described on the 
doingbusiness.org website.  
 
With the attached documents, you ca n see delivery speeds in imports and exports that are 
processed from the Directorate of Customs computer system, which provide a correct view of the 
customs clearance rate. According to the Directorate of Customs data, in 2016, the delivery time 
was 95% of  customs declarations in 19.01 (min / sec) exports, with a total of 100,536 reports 
processed there during the year. In imports, in 2016, the delivery time was 90% of customs duties 
27.44 (min / sec), while deliveries were 497,329. The reason for the diffe rence in handling speeds 
in import and export is that in general, goods in export are not included in product inspection but 
only documentary inspection. However, import in transit may be required to undergo a product 
and document inspection that takes lon ger than just documentary review.  
 
For a number of years, the Icelandic government has criticized the conclusion of the World Bank 
report, since it considers that the results do not provide a true picture of a realistic business 
environment in Iceland. In order to bring the right figures to the World Bank, the Director of 
Customs has answered a questionnaire about Trading across boarders since 2013. Unfortunately, 
the Customs Manager 's efforts to deliver the right information have not yielded the desired re sults. 
Our results show that costs are comparable to those in the other Nordic countries.   
 
                                                
4 http://www.doingbusiness.org/Methodology/trading -across -borders#Cost to export: Border 
compliance (USD)  WT/TPR/M/361/Add.1  
 
- 47 - 
 
  As to the next steps of the Icelandic government to further reduce border compliance costs, the 
Head of Customs is responsible for the introduction of AEO  and other ideas.  
 
3.3.3 Technical barriers to trade  
Paragraph 3.102, page 58  
 
In a reasoned opinion, the EFTA Surveillance Authority stated that Iceland "still has not notified a 
number of the technical regulations in question, adopted in 2012, and is thus still in breach of its 
obligations under Directive 98/34 /…/ In July 2016, the Authority reiterated its assertion that non -
enforceability rules should be  implemented and the Government of Iceland again rejected this 
opinion in a letter dated 13 January 2017.  
 
EU Question No 3 : Iceland has a high number of TBT measures - in AGRI sector - that represent a 
barrier to trade; therefore we are asking whether th ey have any plan to "review/eliminate " those 
measures . 
 
Iceland does not recognize that technical barriers are applied, thus there is no specific plan 
regarding elimination of those measures. Iceland recognises that it may have some TBT 
notifications outstanding and is working towards improving on notifications. However, there has 
been a dispute in recent years regarding imports of raw meat and meat products. This dispute is 
now being handled in court proceedings of both the Supreme Court of Iceland an d the EFTA Court.  
 
3.3.4 Sanitary and phytosanitary requirements  
3.1.6.1 Prohibitions and restrictions  
Paragraph 3.120, page 61 Sanitary  
 
Imports of live animals and animal products are subject to controls through an import permit 
system. Import prohibiti ons are maintained on live terrestrial animals, raw meat, raw eggs, and 
animal products not for human consumption (e.g. meat and fat meal, raw skins and hides which 
have not been disinfected and animal wastes). However, the Minister for Fisheries and Agric ulture 
may grant permits for imports, based on a positive recommendation from MAST.  
 
EU Question No 4:   Could Iceland clarify whether there is any plan to lift the current import 
restrictions on meat and milk products, raw eggs and unprocessed milk produc ts? Could Iceland 
also clarify on what occasions and/what are the eligible criteria at the basis of a positive 
recommendation from MAST to receive a permit?  
 
As is mentioned above this dispute is now being handled in court proceedings of both the Supreme 
Court of Iceland and the EFTA Court.  
 
Currently there are no plans to change the import system as it relates to meat and milk products, 
raw eggs and unprocessed milk products. Iceland does not consider the use of the term "import 
restrictions " to be accurat e. In fact, meat imports have been on the rise for the past years. For 
instance, the volume of imports in 2003/2004 was at 161 tons for a period of one year, while in 
2014 the comparable number was 2357 tons. However, a case concerning the compatibility of  the 
Icelandic rules regarding the import of these products with Iceland 's obligations according to the 
EEA Agreement is currently before the EFTA Court. The case was brought before the Court by the 
EFTA Surveillance Authority. Article 3 of the EEA Agreement states that the Contracting Parties 
shall take all appropriate measures, whether general or particular to ensure fulfilment of the 
obligations arising out the Agreement. Furthermore, Article 33 of the Agreement between the EFTA 
States on the esta blishment of a surveillance authority and a court of justice states that the EFTA 
States concerned shall take the necessary measures to comply with the judgments of the EFTA 
Court.  
  
The Icelandic Food and Veterinary Authority (MAST) no longer gives recomm endations to the 
Ministry of Industries and Innovation. The responsibility for deciding on applications has been 
transferred from the Minister of Fisheries and Agriculture to the Icelandic Food and Veterinary 
Authority with Act No. 71/2015, amending Act No . 25/1993 on Animal Diseases and their 
Prevention. The requirements for an approval for importation are that certificates accompany a 
consignment showing that they are free of salmonella and that they have received the proper 
freezing treatment according t o Regulation (IS) 448/2012.  
 WT/TPR/M/361/Add.1  
 
- 48 - 
 
  Paragraph 3.123, page 61  
 
As described in the report, Iceland demands imports of raw meat and meat products that have not 
been fully heat treated must be accompanied by certificates confirming that the meat was stored 
for at least one month at -18˚C or colder.  
  
EU Question No 5 : The EU believes that this freezing requirement is not in line with relevant 
international standards for animal health and food safety. Could Iceland share its justification 
based on science for this r equirement?  Could also Iceland clarify when is the Supreme Court 
ruling expected?  
 
Iceland is concerned with the possible effects on human and animal health. The concern is for 
instance that the importation of fresh meat and meat products will significan tly increase the 
incidence of human campylobacteriosis and probably also of EHEC/VTEC and MRSA infections. 
There is also the concern of other transmissible agents including trichina. Furthermore, the 
requirement to freeze the products for a certain period provides scope to react in case of 
contamination in the relevant animal population or in slaughter animals ( "quarantine effect "). The 
concerns are not limited to the direct threat to human health in Iceland, but also to animal health, 
as various transmissi on routes from foodstuffs to animals are possible.  
 
The Supreme Court of Iceland has not set a date for the case to be heard. However, the Icelandic 
government estimates that a judgment can be expected in the first quarter of 2018.  
 
3.3.8.3 Trademarks  
Paragraph 3.174, page    
 
According to the report, a product name "can be protected if […] the production, processing and 
preparation of the product takes place in the defined geographical area ". In the EU, this is the case 
indeed for a PDO while for a PGI  only one production step has to take place in the geographical 
area. In the context of a screening of Iceland 's legislation held in 2014, we noted that different 
requirements were foreseen for PDO and PGI and these were similar to those of the EU.  
 
EU Question No 6 : Could Iceland clarify whether there has been any change in the GI provisions in 
this respect, or whether this paragraph reflects a shortened description of the GI legislation 
applying in Iceland?  
 
No changes have been made to the GI provisions since the passing of the bill in 2014. Therefore, 
the requirements for PDO and PGI are similar to those of the EU.  
 
4 TRADE POLICIES BY SECTOR  
4.1 Agriculture and fishing  
4.1.1 Agriculture  
4.1.1.3 Agriculture policies  
Paragraph 4.10, page 75  
 
EU Question  No 7: Regarding Regulation No. 1240/2016 on horizontal support for agriculture, 
could Iceland provide information as to the sectors covered and types of measures available under 
this regulation (in addition to pigs and goats, which are referred to in para graph 4.35)?  
 
The sectors covered in Regulation No. 1240/2016 are most general agricultural sectors in Iceland, 
including horticulture, dairy, sheep, pig, beef and goat farming, as well as general support such as 
advisory services. The regulation is regar ding the Framework Agreement on horizontal support for 
agricultural activities.  
 
Key elements of the Framework Agreement, include support relating to advisory services, 
breeding, animal welfare, environmental protection, sustainable land management, organic 
production, land cultivation, goat farming, investment support for pig farming. Further, the 
Agricultural Productivity Fund shall allocate funds for development projects in the horticultural, 
cattle and sheep sectors and for increasing employment i n rural areas. Under this agreement there 
is a scheme intended to stimulate recruitment of newcomers into the different sectors.  
 WT/TPR/M/361/Add.1  
 
- 49 - 
 
  With reference to the Framework Agreement:  
https://www.stjornarradid.is/media/atvinnuvegaraduneyti -media/media/Acrobat/Agricul tural-
Framework -Agreement -----English.pdf  
 
4.1.1.3 Agriculture policies  
4.1.1.3.1 Trade policies  
Paragraph 4.14, page 76 (Tariff quotas and administration)  
 
A part of Iceland 's agricultural imports are allocated via a quota system, some of which are 
auctio ned.  According to local press this has resulted in domestic agricultural producers buying up 
quotas to maintain high prices, one producer of pork meat being able to buy 70% of the overall 
quota on pork imports. Recently these procedures were changed so th at the quotas are auctioned 
more. According to importers, the new procedures, plus a higher tariff -rate on certain agricultural 
products, have resulted in up to 87% higher prices for some products. Icelandic importers have 
fought these procedures in court and the amount paid is said to have risen steadily over the last 
years.  
 
EU Question No 8:  Does Iceland consider alternatives to auctioning, with the aim of improving the 
present management of import quotas and reducing end prices for consumers?  
 
The main allocation of the Icelandic quotas according to law, are based on applications of tariff 
quotas. If the demand for quota is higher than the quota in question, the quotas will be allocated 
as a main rule, to the highest bidders in an auction. If the demand is less than the quota, the 
quota is allocated to the applicants. In some cases, quotas are allocated by a lottery approach.  
  
Recently Iceland has been considering alternatives to auctioning with the goal of reducing end 
prices for consumers and improving  the present management of import quotas.  However, at this 
stage no decision has been made for what or whether any alternatives to auctioning will be 
considered.  
 
Iceland would like to point out that there is no evidence that agricultural producers have b een 
buying up quotas to maintain high prices in recent years. The quotas are auctioned and the 
auction is open to all companies and individuals.  
 
4.1.1.3.2 Domestic policies  
4.1.1.3.2.1 Dairy and beef  
Paragraph 4.21, page 77  
 
EU Question No 9 : Regarding state aids for dairy beyond 2019, could Iceland advise whether this 
expenditure is expected to increase or decrease relative to current levels?   
 
The Agreement on Cattle Sector, between the government and the Farmer´s Association, states 
that total expenditure on support will decrease throughout the duration of the agreement.  
 
Paragraph 4.25, page 79  
 
EU Question No 10 : Regarding the discretionary measures to balance production and demand 
discussed in this paragraph, can Iceland clarify which p roducts are covered (cattle, beef, dairy, 
other products)?  Are similar measures available in other sectors?  Have any such measures been 
utilized since 2016, and if so, what measures were applied?   
 
The products covered by the measures to balance product ion and demand are dairy and beef. 
Similar measures are not available in other sectors. These measures were first introduced in 2017 
and the Committee for the Implementation of National Agricultural Agreements decides on the 
allocation of the annual paymen ts. In 2017, ISK20 m will be allocated to the building of a 
quarantine facility in connection with the import of genetic material from beef cattle and ISK80 m 
will be allocated to investment aids.  
 WT/TPR/M/361/Add.1  
 
- 50 - 
 
  4.1.2 Fisheries  
4.1.2.1 Features  
4.1.2.2 Trade  
4.1.2.3 P olicies  
Paragraph 4.67, page 90  
 
Reference is made to the foreign ownership in the fisheries sector as presented in the report, 
noting that foreign ownership of fishing operations and primary fish processing (defined as salting, 
freezing, drying, and other  processing to protect from decay, and the production of fish oil or 
fishmeal) is limited to no more than 25% direct and 49% combined direct and indirect ownership. 
In certain circumstances, direct foreign ownership of up to 33% may be permitted.  
 
EU Quest ion No 11 : Could Iceland explain the rationale for keeping these limitations to foreign 
ownership in the fisheries sector?  
 
The primary reason for keeping these limitations to foreign ownership in the fisheries sector is to 
ensure full control of Iceland 's natural resources.  
 
In Iceland the total allowable catch is transferred to fishing vessels. Often those vessels are owned 
by the companies mentioned in the EU question or are closely linked to those companies. Fishery 
and its revenue has always been of ve ry high importance for the Icelandic economy and forms a 
great part of the GDP. It both has relations to how we manage our fishing resources, transfer the 
exclusive right of utilisation to fishing vessels and the economic importance of the sector for the 
economy as whole.  
 
WT/TPR/G/361 – Government Report  
 
3 TRADE POLICY  
3.2 EFTA and 3.4 Bilateral Agreements  
Paragraphs 3.5, 3.6 and 3.11, page 8  
 
Iceland mainly negotiates its free trade agreements in the context of EFTA, but also bilaterally. 
There are curre ntly various trade agreements being negotiated. All new generation EU 's trade 
agreements contain provisions on trade and sustainable development, which also include 
international labour standards.  
 
EU Question No 12 : Could Iceland provide information on whether the free trade agreements, both 
bilateral and in the framework of EFTA, systematically contain provisions on labour or workers ' 
rights and provide information on how they monitor and manage the enforcement of these 
provisions?  
  
Since 2010, the EFT A States have begun to introduce in its FTAs provisions on labour standards in 
a dedicated chapter on sustainable development containing also environmental standards. 
Furthermore, the EFTA States, together with their free trade partners, have begun updatin g older 
FTAs to include such provisions. All EFTA 's free trade agreement concluded since 2010 include 
provisions on labour standards, and some of the older agreements have been amended. As 
regards the monitoring and management of the enforcement of these p rovisions, each of EFTA 's 
FTAs establishes a Joint Committee which supervises and reviews the implementation of the 
relevant FTA.  The Joint Committee shall meet regularly (normally once a year or every other 
year). The meetings of each of the Joint Commit tee provide a forum to review the enforcement of 
provisions on labour standards under the respective FTA.  
 
Furthermore, the FTA between Iceland and China foresees an enhanced co -operation on labour 
matters. On the occasion of the signing of the Free Trade  Agreement the Prime Ministers of the 
two countries issued a joint statement that formalizes a regular political dialogue that will inter alia 
address issues that are outlined in the statement, including on labour issues, Similarly, as under 
EFTA's FTAs, t he FTA with China establishes a Joint Committee ( "FTA Joint Commission ") which 
supervises and reviews the implementation of the FTA.  
 WT/TPR/M/361/Add.1  
 
- 51 - 
 
  3.5 Gender and Trade  
Paragraph 3.12, page 9  
 
Iceland reports that gender equality is integrated horizontally in trade poli cy and that they 
advocate for the gender perspective being central when it comes to trade policies.  
 
EU Question No 13 : Could Iceland provide information on specific measures which are being 
implemented or incorporated to make gender perspective central in their trade policies, in 
particular in free trade agreements?  
 
Advancing gender equality is central to all government policy in Iceland. Therefor, Iceland 
endeavours to look at each field with a gender perspective in mind. No field is gender neutral, 
trade being no exception. Iceland has attempted to explore, with other like -minded partners, how 
we can use trade policy to advance gender equality and women 's empowerment both here at the 
WTO and in our free trade agreements.  
 
Iceland has therefore suppor ted and co -sponsored initiatives, such as the proposal from Canada in 
the Working Party on Domestic regulation, that attempts to ensure that domestic regulation 
cannot entail gender inequality – making it harder for either gender to provide their services.   
 
In the WTO we try to advocate for a gender perspective being central in the work of the 
organisation. Iceland co -chairs with Sierra Leone and the ITC the Informal Working Group on 
Trade and Gender that is working together with like -minded countries to a dvance the gender and 
trade agenda. The group has prepared a declaration on trade and gender that will be launched at 
the margins of the Ministerial Meeting in Buenos Aires and we would like to use this opportunity to 
invite all members to join this import ant initiative.  We also believe it is important to raise 
awareness on the gender dimensions of trade. Last week, with Canada and the ITC, we organised 
an event on gender and trade at the public forum, with the participation of Minister Malcorra, the 
chair of MC11.  
 
As regards free trade agreements and gender, Iceland has followed closely developments in this 
field and welcomes that gender provisions are now starting to be seen in free trade agreements - 
such as in the recently updated Chile -Canada FTA. Ic eland has been analysing how gender 
provisions would best be included in our FTAs. Iceland normally concludes Free Trade Agreements 
with EFTA, the European Free Trade Association, and gender provisions have as of yet not been 
included in EFTAs trade agreem ents. However, the current presidency of EFTA, Liechtenstein, has 
put it as one of the priorities of their chairmanship to examine the feasibility of adding references 
to gender equality considerations to EFTA Free trade agreements. Iceland welcomes this a nd is 
currently exploring this with its EFTA partners. Iceland will take over the chairmanship in January 
and would like to continue this work, if it will not be completed. It can also be mentioned that 
under Iceland 's last presidency, in the latter half o f 2016, EFTA adopted a gender equality policy, 
intended to ensure equal conditions and opportunities for employees at the EFTA Secretariat.  
 WT/TPR/M/361/Add.1  
 
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  INDONESIA   
SECRETARIAT REPORT  
 
Summary  
 
Page 8 Para 9  
"However, tariffs on several agricultural product groups, particularly meat, dairy, plants, and 
flowers, remain high and often take the form of complex non -ad valorem duties. .. It was 
not possible  to calculate the ad valorem equivalents for bound tariffs gi ven the complex nature  
of some of them. " 
 
Question:  
 
1. Would the Government of Iceland clarify the use of these complex non -ad valorem duties 
which are impossible to be equalized to ad valorem duties?  
 
The majority of the imports of the products of these agricultural product groups are through tariff 
quotas under the WTO agreement and a FTA with EU (with reference to Section 3.1.4.4. para. 
3.40-3.43), or certain open quotas due to market situation. Import duties through these quotas 
are lower than the MFN duty or duty -free (The Customs Law sets the in -quota tariffs for WTO 
quotas at 32% and 30% of the base rate). The complexity is due to data classification for each 
individual import. Due to the complex nature and administrative restraints the ad valorem 
equivalents have not been calculated recently.  
 
Page 8 Para 12  
 
"Although a number of amendments have been made  during the review period to the laws 
relating to SPS measures they remain strict  and are justified on the grounds that Iceland 's 
domestic animals are highly susceptible to exotic pests and diseases . Imports of some 
products are prohibited  and others are subject to controls and licensing requirements ." 
 
Questions:  
 
2. Would the Government of Iceland give more elaboration on its reason to keep the strict  laws 
relating to SPS measures because of their animals are highly susceptible to exotic pests and  
diseases?  
 
Since Iceland 's settlement, the import of live animals and untreated animal products has been 
small. Since 1882, there has been a general ban on the import of livestock to Iceland with 
provisions for exemptions subject to very strict quarantine requirements. Because of 1100 years of 
virtual isolation from the outside world, the risk entailed in imports is particularly and unusually 
high as regards diseases against which Icelandic domestic animal populations have not developed 
immunity. This is not only theoretical. Iceland has a tragic history of sporadic imports of sheep 
with severe consequences. In 1933, for instance, importation resulted in 600 t housand sheep 
having to be slaughtered to eradicate three serious neurological / lung diseases (Maedi -Visna and 
Jaagziekte).  
 
Moreover, the low frequency of diseases in the Icelandic livestock is unusual compared with that of 
other countries. Animals in Ic eland are free of numerous infectious agents known to be endemic in 
many parts of the world. Hence, animals in Iceland have never been exposed to vast number of 
transmissible agents and thus have a low level of immunological resistance.  For this reason, ma ny 
known and unknown infectious agents have the potential to start epidemics in animals in Iceland. 
This is reflected in Iceland 's participation in the EU internal market through the agreement on the 
European Economic Area, where Iceland is exempted from a pplying the EU acquis as it relates to 
live animals, other than fish and aquaculture animals.  
Scientific support can be found in "Risk assessments regarding open trade in live animals to 
Iceland " – a report from March 2013, prepared and edited by P. Wille berg Consulting.  
 WT/TPR/M/361/Add.1  
 
- 53 - 
 
  3. On page 7 para 5, it 's said that "Iceland is an active Member of the WTO but has a mixed 
record for notifications with no TBT, import licensing or preferential rules of origin notifications 
and only two SPS notifications were made in the period 2012 to 2016. " We would like 
to clarify whether the Government of Iceland has notified the amendments on its laws relating 
to SPS measures during the review period to the SPS Committee?  
 
On page 60, point 3.116. of the report, the two notifications are described. They concerned 
inspection procedures for imports of animal production originating outside of the European 
Economic Area, and measures on importation of animal products. Point 3.115. of the report lists 
the amendments to Icelandic law relatin g to SPS measures. The Icelandic government does not 
consider these amendments to fall under the obligation to notify according to the SPS Agreement.  
 
4. Would the Government of Iceland give explanation on the prohibition of some imported 
products?  
 
There is not a prohibition of the import of agricultural products. However, there are certain 
conditions that must be met with regards to meat, dairy and egg products for the products to be 
imported. These rules stem from a concern with the possible effect s on human and animal health. 
With regards to meat, imports have in fact increased. For instance, the volume of imports in 
2003/2004 was at 161 tons for a period of one year, while in 2014 the comparable number was 
2357 tons.  
 
5. Would the Government of Icela nd give more elaboration on how "control and licensing 
requirements " are applied on some of Iceland imported products?  
 
The rules regarding control requirements for imports are in conformity with the rules governing the 
import of products into other EEA St ates or EU States. However, with regards to meat, dairy and 
egg products, there are specific rules as described in the answer to question 3. When applying to 
import meat into Iceland, the importer shall send an application to the Icelandic Food and 
Veterin ary Authority. The application shall be accompanied with health certificates and certificates 
of origin, a certificate of freezing having been performed, a certificate that the animals have not 
been given growth hormones, a certificate that the animals wer e slaughtered in approved 
establishments, and a certificate that the products are free of salmonella.  
 
6. Reiterating page 7 para 5 that said "Iceland is an active Member of the WTO but has a mixed 
record for notifications with no TBT, import licensing or pre ferential rules of origin 
notifications and only two SPS notifications were made in the period 2012 to 2016, " we 
would like to seek clarification from Government of Iceland on this matter?  
 
The Icelandic authorities are actively working towards improving its notification performance.  
 
Page 9 Para 17  
 
"Agriculture represents a small part of GDP and employment but remains historically, socially, and 
culturally important for Iceland, as well as  being relatively highly protected and subsidized ... 
During 2012 to 2016, support to agriculture in ISK terms increased under the Green, 
Blue, and Amber Boxes of the WTO ..." 
 
Questions:  
 
7. Would the Government of Iceland elaborate about its decision to protect and support its 
agriculture sector by subsidies?  
 
Although agriculture represents a small part of GDP, it is central to Iceland 's food security, 
sustainability and rural viability. Conditions for agriculture in Iceland are however constrained by 
many external and internal factors, inter alia the country 's remote location just below the Arctic 
circle, challenging climate, difficult topography, low population density, long distances and the 
small home market. These challenges adversely affect the inte rnational price and cost 
competitiveness of the agricultural sector, which is dependent on both direct support schemes and 
market support measures.  
 WT/TPR/M/361/Add.1  
 
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  8. Would the Government of Iceland clarify its increasing support under the Green, Blue, and 
Amber Boxes of t he WTO?  
 
The increasing support is to some extent based on the fact that the amount of support is disclosed 
in ISK terms. Inflation was 9.5% between the years 2012 and 2016 and explains partly the 
increase in support. Increase, regardless of inflation, in the Green Box is mostly based on 
increased contributions to the Food and Veterinary Authority of Iceland and the Agricultural 
Productivity Fund. Regarding the Amber Box, the increase is mostly due to market price support. 
Farm gate price falls under admini strative pricing and the development in pricing follows changes 
in general price levels. In addition, production of milk has increased by 19% over the period, which 
affects the amount of market price support level.  
 
Page 9 Para 18  
 
"Foreign ownership of fishing operations and fish processing is limited to 25% direct and 49% 
direct plus indirect ownership although up to 33% direct foreign ownership may be permitted in 
some cases ." 
 
Question:  
 
9. Would the Government of Iceland provide a m ore detailed explanation on the 'special ' cases 
where 33% of direct foreign ownership is being permitted?  
 
This would be in those cases where a company A holds up to 5% share in Company B which is a 
fishing operation or fish processing company. A foreign o wnership of A is then permitted to be up 
to 33%. If A has more shares than 5% of B - foreign ownership of A is only permitted to be 25%.  
If company holds less than 5% share in a fishing operation or fish processing company it´s foreign 
ownership is permitt ed to be up to 33%. If the share goes over 5% the foreign ownership is only 
allowed to be 25%.  
 WT/TPR/M/361/Add.1  
 
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  JAPAN  
Report by the Government (WT/TPR/G/361)  
2. ECONOMIC DEVELOPMENT AND PROSPECTS  
2.3 Tax and Customs Reforms  
 
(Question 1 Paragraph 2.16, page 5)  
 
According to the report by the government, Iceland introduced numerous measures supporting 
R&D activities and innovation. Could you give us the outline of the measures, especially of the 
requirement for the benefit that firms have to fulfil, and the amount  of benefit firms are to be 
granted? In addition, how much does the government estimate its impact on the revenue to be? 
Finally, could you briefly explain the rationale behind the reform?   
 
In para 2.16 on page 5 of the report made by the government tax and customs reforms 2013 –
2017 are discussed. Among other things new measures supportive of R&D activities and innovation 
are mentioned. It should be noted that these measures only partly relate to measures according to 
Act No. 99/2010 on incentives for ini tial investments in Iceland as described in para 3.97 on page 
57 of the secretariat report.  
  
The measures discussed in para 2.16 of the report made by the government stem from Act No. 
79/2016 on the amendment of various Acts in support of financing and op eration of innovative 
companies and small companies. That Act mainly contained provisions amending the Icelandic 
Income Tax Act with the goal of improving competitiveness of Icelandic companies. The provisions 
of the Act are partly based on various measure s that are and have been in place in Scandinavia.  
 
First a change was made to the tax treatment of income due to the purchase of a person on shares 
in accordance with options granted to him as a result of employment for another party. The 
income is now tax ed upon the sale of the securities instead of the date of delivery/redemption.  
 
Second the profit of the convertible debt securities converted into shares at a lower price than 
generally applicable on the market are now taxed on the sale of the securities instead of the 
exercise of the convertible rights.  
 
Third a deduction was allowed for foreign professionals employed in Iceland. Foreign professionals 
are subject to certain conditions taxable only on 75% of their income, with 25% being tax -free and 
exempt  from tax on the first three years of employment. To be considered a foreign professional 
an individual must be hired by and receive wages from a company situated in Iceland, he cannot 
have been resided in Iceland for five years and he has to possess knowl edge that is not available 
in Iceland except to a small extent. A minister appointed committee assesses applications from 
foreign professionals and determines if the conditions for deduction are met.  
 
Fourth a 50% income tax rebate was introduced upon shar e acquisition with a 3 year holding 
period made by individuals. Currently an individual can having met certain requirements deduct 
from his income tax base 50% his investment in a limited liability company or private limited 
company. Among the requirements  to be met is that the investment amounted to at least 300.000 
ISK, the investment has been paid for and it is due to a registered stock offering of new shares. 
The max amount of rebate is 5.000.000 ISK per individual. The invested company must also meet 
some requirements among which are that it must be situated in the EEA area or Faroe Islands, has 
less than 26 employees, has an annual turnover less than 650 million ISK, is operated on the basis 
of profit, is financially solvent, and is not listed on a sto ck market. Investments in certain kinds of 
companies are excluded from the measures, among them real estate and movable property 
operators, holding companies, investment companies, financial companies, activities involving 
outsourced services and expert ad vice, film production companies and so on.  
  
Fifth research and development costs were increased as a reference to tax deductions from 
innovative companies. The maximum amount of deductible cost is currently 300 million ISK 
instead of 100 million but if th e cost consists of the purchasing of outsourced services the max is 
at 450 million ISK instead of 300 million.  
 
Sixth the turnover criteria for the defining small businesses was corrected in reference to new 
regulations in the Act on Support for Innovation  Enterprises and the Act on Allowances for New WT/TPR/M/361/Add.1  
 
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  Investments in Iceland. The definition of a small company is now set at 10 million EURO turnover 
annually instead of 2 million.  
  
At the time of the transposition of Act No 79/2016 it was considered that its m easures would in 
total, negatively affect the Treasury 's performance in the short term. Due to difficulties performing 
the assessment no specific amount was estimated. The measures of Act No 79/2016 came into 
effect in 2017 and therefore its negative effec ts on the Treasury 's performance are not clear yet.  
 
(Question 2 Paragraph 2.16, page 5)  
 
According to the report by the government, the net wealth tax has expired in 2015. As regards 
this, could you briefly explain the rationale of this reform? To be spe cific, we hear that Icelandic 
government implemented an emergency wealth tax rate for the period of 2010 -2013, increasing 
tax revenue to tackle the financial crisis. Given this, we understand that the abolition of the tax 
implies sudden change in the polic y. Could you please explain the background for this?  
 
It is correct that the net wealth tax was presented as an emergency measure to ensure state 
income to cover expenditures in the wake of the banking collapse of 2008. From the start the tax 
was intended to be a temporary measure and expire in 2015.  
 
Report  by the Secretariat (WT/TPR/S/361)  
 
3. TRADE POLICIES AND PRACTICES BY MEASURE  
3.3 Measures Affecting Production and Trade  
3.3.8 Intellectual Property rights  
 
(Question 3  Paragraph 3.174, page 68)  
 
According to the Report by the Secretariat, Ministry of Industries and Innovations has provided an 
unofficial English translation of Act No.130/2014 (on the protection of product names as 
designations of origin, geographical indications or traditional specialties).  We would appreciate it if 
you would provide u s with the URL of such translation.  
 
Please find an English translation of Act No. 130/2014 attached.  
 
4 TRADE POLICIES BY SECTOR  
4.3 Services  
4.3.2 Telecommunications  
 
(Question 4 Paragraph  4.3.2.4, page 97)  
 
Does Iceland have any measure in effect which restricts cross -border transfer of information 
including personal information? If any, could Iceland describe the purpose and concrete 
regulations of such measure?  
 
No specific rules restrict cross -border transfer of information (other than sector specific  
legislation). As regards personal data restrictions apply according to Act No. 77/2000 on the 
Protection of Privacy as regards the Processing of Personal Data. The purpose is to ensure 
adequate level of protection of cross -border transfer of personal data .  According to Article 29 of 
the Act the transfer of personal data to another country is permitted if the laws of that country 
provide an adequate level of personal data protection.  
A country which complies with the European Union Directive 95/46/EC, on t he protection of 
individuals with regards to the processing of personal data and on the free movement of such 
data, is considered having fulfilled the requirements of Paragraph 1 of Article 29. The same applies 
to those countries or places which the Data P rotection Authority lists in an advertisement in the 
Law and Ministerial Gazette, having considered the decisions of the Commission of the European 
Union.  
 
When considering whether a country, which does not comply with Directive 95/46/EC, fulfils the 
requirements of Paragraph 1 of Article 29, that country 's rules on the processing of personal data 
and on good business practices, and the security measures taken by the recipient, shall be among 
the factors taken into account. Ratification by the respective co untry of the Council of Europe WT/TPR/M/361/Add.1  
 
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  Convention No. 108 of 28 January 1981, for the Protection of Individuals with regard to Automatic 
Processing of Personal Data, shall also be taken into consideration.  
 
The transfer of personal data to a country that does not provide an adequate level of personal data 
protection is according to Article 30 of the same Act prohibited, unless:  
 
1. the data subject has consented to the transfer, or  
2. it is necessary for the fulfilment of obligations under international law or as a result of 
Iceland 's membership of an international organization, or  
3. such a transfer is authorized in another legislative act, or  
4. the delivery is necessary to establish or fulfil a contract between the data subject and 
the controller, or  
5. the transfer is nec essary to establish or fulfil a contract in the interest of the data 
subject, or  
6. the delivery is necessary in order to protect vital interests of the data subject, or  
7. if dissemination is necessary or legally required on important public interest grounds, 
or for the establishment, exercise or defence of legal claims or  
8. the data in question are accessible to the general public.  
 
The Data Protection Authority can authorize the transfer of data to a country referred to in 
Paragraph 1 of Article 30, if it determ ines that special circumstances warrant it, even if the 
conditions of the provision are not met. In such cases the nature of the data, the planned purpose 
of the processing and its duration are among the factors that shall be taken into account. The Data 
Protection Authority can authorize the transfer of data to third countries even if they have not 
been thought of as providing the citizens with an adequate level of privacy protection. This is 
contingent upon the controller having, in the opinion of the Aut hority, provided sufficient 
guarantees to meet these concerns. The Authority can for example require that the controller 
enter into a written contract with the recipient and that the contract contains certain standard 
contractual clauses in conformance wit h a decision which the Data Protection Authority has 
advertised in the Law and Ministerial Gazette, having considered the decisions of the Commission 
of the European Union, cf. Article 29, Paragraph 2 of the Act. The Data Protection Authority may 
issue fur ther instructions regarding the transfer of personal data abroad.  
 
(Question 5 Paragraph 4.3.2.4 , page 97)  
 
Does Iceland have any measure in effect which obliges private companies to store or process data 
obtained inside Iceland on computer facilities loc ated inside Iceland? If any, could Iceland describe 
the purpose and concrete regulations of such measure?  
 
Iceland does not have such measures in place.  
 
 
 
 WT/TPR/M/361/Add.1  
 
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  MOLDOVA , REPUBLIC OF  
SECRETARIAT REPORT (WT/TPR/S/361)  
Para 2.21.  Iceland, as part of EFTA, currently participates in 25 EFTA FTAs which cover trade with 
36 partners (Table A2.2). EFTA has an extensive coverage of FTAs and its members benefit from 
being integrated into the global economy; about 80% of their merchandise trade benefits from 
FTAs. As a group, EFTA countries ranked 8th in world merchandise trade and 5th in services trade 
in 2014. During the review period, EFTA concluded new agreements that have entered into force 
with Bosnia and Herzegovina, Central America,  and the Gulf Cooperation Council. These FTAs have 
generally covered the following subjects: trade in non -agricultural products, trade in services, 
investment, protection of intellectual property, government procurement, competition, trade and 
sustainable development, cooperation, and dispute settlement. Trade in unprocessed agricultural 
products is generally excluded from the EFTA agreements. For the agreements with Bosnia and 
Herzegovina and Central American States, Iceland has substantially eliminated ta riff protection, 
however 6.7% and 5.2%, respectively, of all tariff lines remain dutiable under the agreements. As 
of May 2017, the agreement with the GCC had not been notified to the WTO.  
 
Para 2.22 . As of May 2017, EFTA States were pursuing FTA negotiations with Algeria, Ecuador, 
India, Indonesia, Malaysia, the Russian Federation, Belarus, Kazakhstan, Thailand, and Viet Nam; 
but negotiations were on hold with respect to Algeria, Thailand and the Customs Union of the 
Russian Federation, Belarus an d Kazakhstan. EFTA was also undergoing work to update certain 
existing agreements. The FTAs with Georgia and the Philippines were concluded in 2016 but had 
not yet entered into force as of May 2017.  
 
Question 1: Referring to the FTAs and similar existing b ilateral agreements negotiated (or 
currently in the process of negotiation) and signed by Iceland, could you please specify the 
timeline or how many rounds of negotiations were conducted in the recently undergoing FTAs, for 
ex. Georgia, Bosnia and Herzegov ina?  
 
Free trade negotiations between the EFTA States and Bosnia and Herzegovina were launched in 
March 2011 and the Agreement was signed in June 2013. Free trade negotiations between the 
EFTA States and Georgia were launched in September 2015 and the Agr eement was signed in June 
2016. Free trade negotiations between the EFTA States and the Philippines were launched in March 
2015 and the Agreement was signed in April 2016.  
 
Negotiations with the following countries are currently ongoing: Ecuador (launched in 2016), India 
(launched in 2008), Indonesia (launched in 2011), Malaysia (launched in 2014), Mercosur 
(launched in 2017), and Vietnam (launched in 2012).  
 
Further information regarding the timelines for EFTA 's free trade negotiations can be found at the  
EFTA-website, efta.int.  
 
Question 2:  In terms of the exclusions mentioned in the para. 2.21 from the agreements of the 
unprocessed agricultural products, could you please specify to what extent these products are 
eliminated within FTAs which should cover  "substantially all the trade ", and how does it comply 
with GATT provisions? Are there any FTAs granting full liberalization of mentioned products? 
Referring to granting a better access within these FTAs, please specify the procedure of allocation 
of the e stablished quotas (if any) on these products, is there used any  anti-circumvention 
mechanism?  
 
Under EFTA 's free trade agreements, and Iceland 's bilateral agricultural agreements with EFTA 's 
negotiating partners, Iceland has exempted from tariff concession s agricultural products which are 
produced in Iceland and are considered to be very sensitive, in particular meat products, milk 
products, certain vegetables and flowers.  
 
As to the question how this complies with GATT -provisions, Iceland would like to no te that under 
EFTA's FTAs, Iceland grants tariff elimination for all industrial and fish products, and grants tariff 
elimination or tariff reduction for a large proportion of agricultural products. Tariff elimination and 
tariff reduction is thus provided a s regards substantially all the trade between Iceland and the 
respective trading partner, with regard to both the number of tariff lines covered and actual trade. 
The EFTA FTAs have been notified to the WTO and have therefore been subject to scrutiny by th e WT/TPR/M/361/Add.1  
 
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  Committee on Regional Trade Agreements (CRTA), under which the compliance of the relevant FTA 
with GATT provisions have been addressed.  
 
Iceland has granted full liberalization of agricultural products under only one of its FTAs, namely 
the bilateral ag ricultural agreement between Iceland and the Faroe Islands.  
 
As regards the question on the procedure of allocation of established quotas under Iceland 's FTAs, 
Iceland would like to note that under EFTA 's FTAs, a granting of quotas is generally not forese en. 
Iceland only grants bilateral quotas to the EU, under their bilateral agricultural arrangement. In 
the case of the, the procedure of allocation of the established quotas is based on a request for 
applications for allocation of tariff quotas. First, in the case where applications do not exceed the 
tariff quota in question, the quota is allocated to applicants in accordance to the quantity applied 
for. In cases, where applications exceed the quantity of tariff quota, the quota is auctioned, and 
first allo cated to the highest bidder, second to the second bidder etc.  
 
Question 3: With reference to trade in services, please specify what are the modalities used in the 
negotiations of the current trade in services agreements, in terms of positive, negative or m ix 
approach? What sectors are generally improved comparing to GATS commitments undertaken by 
Iceland under its Schedule of specific commitments?  
 
Iceland has used a mixture of modalities for its services trade agreements and the approach is 
dependent on a number of factors, not least the preference of our negotiating partners and the 
scope of the respective agreements. For instance our agreements with the European Union 
(including the EEA States of Norway and Liechtenstein) and the Faroe Islands foresee a d eeply 
integrated services market along with regulatory equivalence or harmonisation.  
 
The majority of Iceland 's free trade agreements are negotiated with our EFTA partners and include 
a GATS -based positive list approach to market access, GATS -plus provisi ons on disciplines and 
supplemental annexes on areas of common interest. Iceland has also concluded agreements that 
use a negative list approach for scheduling, for instance EFTA -Hong Kong, and we are currently 
negotiating with partners such as Mexico on a  similar basis. Iceland also participated in the TiSA 
negotiations where the scheduling modalities included a hybrid approach for positive and negative 
listing, along with a standstill and ratchet mechanism for national treatment.  
 
Improvements from GATS commitments vary between individual FTAs, based on the outcome of 
respective negotiations. Iceland 's GATS commitments are already relatively ambitious and reflect 
to a large degree the market openings available in legislation. Sectors that have been improv ed 
compared to GATS include Professional services, Business services, Communication Services, 
Construction and Related Services, Environmental Services, Transport Services and horizontal 
improvements with respect to the movement of natural persons.  
 
Para 2.24.  In 2015, Iceland and the European Union concluded new bilateral agreements on 
agricultural products and GIs under the auspices of the EEA Article 19. The new agreements, which 
will supersede the previously applicable agreement, will increase market a ccess for agriculture by 
significantly increasing the number of agricultural products granted duty -free status by Iceland to 
more than 800 tariff lines, and with reduced tariffs on nearly 200 tariff lines. This results in duty 
free trade on nearly all proc essed agricultural products and above 90% of trade of basic 
agricultural products. At the same time, many bilateral quotas are increased to gain better access 
and new ones created; the agreement now provides for Iceland to grant quotas under nine 
categorie s of products and the European Union under eight categories. For processed agricultural 
products, full liberalization was reached on the approximate 500 Icelandic tariff lines covered by 
Protocol 3 to the EEA Agreement, with the exception of around 20 tari ff lines that will continue to 
be subject to customs tariffs. As for GIs, Iceland has committed to the same level of protection as 
the European Union for its 1,150 agricultural and foodstuff GI products. The internal procedures 
for the entry into force of the agreements are still under way; entry into force of the agreements is 
envisaged at the end of 2017 at the earliest.  
 
Question 1:  Referring to the above mentioned Agreements, could you please specify what is the 
period of implementation of these two Agr eements related to agriculture and GIs. Is there any 
preliminary impact analysis of the implementation of these agreements? If yes, please mention the 
basic results in terms of benefits as well as potential challenges.  
 WT/TPR/M/361/Add.1  
 
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  The Icelandic Parliament has already  approved the agreement in question. Recently 
(12 September 2017) the European Parliament has given its legislative resolution on the draft 
Council decision on the conclusion of the agreement. After both parties ratify the agreements in 
the form of an exch ange of letters, the agreement will enter into force in 6 months ' time. 
 
The preliminary impacts have not been analysed in detail, other than the statistics on tariff lines by 
trade mentioned in paragraph 2.24. The agreements will increase market access fo r agriculture. 
The number agricultural products granted duty -free status by Iceland is more than 800 tariff lines 
and tariffs are reduced on nearly 200 tariff lines. This results in duty free trade in nearly all 
processed agricultural products and above 90 % of trade of agricultural products. In addition, 
bilateral tariff quotas will be increased significantly. For Iceland, it will gain better market access 
for several agricultural products and increase opportunities in the future for agricultural production  
of Iceland.  
 
Para 16.  In addition to changes in legislation on various aspects of intellectual property (IP), 
including on geographical indications (GIs), the trademark law, and a new fee structure, more 
changes are foreseen to bring national laws into li ne with the EEA. Furthermore, the Intellectual 
Property Policy, 2016 -2022, issued in 2016, put forward a number of proposals to review laws, 
promote the role of IP in the economy, and improve procedures for registration and enforcement 
of IP rights. The ne w act and regulation on GIs apply to food, wine, spirit drinks, and some other 
products. The product name may be protected if the product originates from a specific area, has 
qualities or characteristics of the area, and the production, processing and prep aration of the 
product takes place in the area. The name must be registered by the Icelandic Food and Veterinary 
Authority (MAST). In addition, as part of the agreement with the EU on trade in agricultural 
products, Iceland is to provide protection for a l ist of 1,150 EU GIs.  
 
Question 1: In the context of the enforcement of IP rights, can you please describe the procedure 
used to determine that goods infringe intellectual property rights upon import and export process 
in the context of the para 16 above?  
 
Tax authorities have powers to stop and confiscate counterfeit goods when entering the country, 
as indicated in Article 132 of the Customs Act, No. 88/2005.  
  
When the tax authorities suspect a shipment to include counterfeit goods, the importing process i s 
stopped and the holder of the trademark right or the copyright is contacted, if possible. Most 
commonly an Icelandic agent on behalf of the holder of the Intellectual Property is contacted. That 
agent will communicate with the proprietor in order to iden tify if a product is fake/counterfeit.  
  
Should a shipment be determined as counterfeit, the customs authorities usually confiscate the 
goods and in most cases, a fine is imposed on the importer. In some instances, a judicial 
procedure will take place.  
  
Please also be informed that Iceland does not have a provision that makes it illegal to import 
counterfeit goods for private use, only for commercial use.  
 
Question 2:  Can you please describe the procedure and the costs for the registration of the GIs  
by the Icelandic Food and Veterinary Authority (MAST)?  
Applications shall be filed with MAST in writing including several documents, see Art. 12.  
MAST will then review the application and notify the Icelandic Patent Office and SA - business 
Iceland and provide  them with the opportunity to comment, Art. 13.  
  
If conditions for registration are fulfilled, MAST shall make public the name of the product and the 
products specification for which registration is sought.  
 
Statements of objections shall be filed within  two months from the publication date, see Article 15.  
According to Art. 15, MAST must take a decision on the registration within three months from the 
date on which the opposition period expires. The decision must be published in Section B of the 
Governme nt Gazette of Iceland.  
 
In relation to fees, the processing of application is subject to a payment of 75 000 ISK by the 
applicant.  WT/TPR/M/361/Add.1  
 
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  For additional information, please see Chapter III of the Act No. 130/2014.  
 
3.1.4.3 Special tariff treatment and duty sus pensions  
 
Para 3.38.  Iceland maintains a number of exemptions to the customs tariff for various reasons; 
these include gifts, temporary import, designated investments, products of designated monopolies, 
special projects, etc. (Table 3.3). Table 3.3.  Mentio ns products like Alcohol and Tobacco with are 
exempted from duty mentioning State Monopoly Board exemption based on Regulation No. 
505/1998 for alcohol and State Tobacco Monopoly referring to the Letter 20/12/95 and 08/10/98.  
 
Question 1:  Can you please sp ecify in more detail what rules apply to the importation of alcohol 
(specially referring to wine). Please describe the procedure used for the exemptions mentioned in 
the Table 3.3 and how does that procedure comply with the GATT?  
It should be stated that t he information in table 3.3 are slightly out of date. This will now be 
explained along with other explanations.  
Everyone, both individuals and legal entities, is free to import alcohol to Iceland for private 
consumption given that the alcoholic products ar e in compliance with laws and regulations on 
foodstuffs and labeling. Strict limitations do however apply to imports and sale of alcohol for 
commercial purposes.  
The production, import and wholesale of alcohol are subject to licenses issued by the distric t 
magistrate. To be issued such a license an applicant must be at the age of 20 or older, he has to 
have announced his operation to the company directorate and to the directorate of internal 
revenue for VAT purposes and he has to have paid a license fee.  
A production licensee is authorized to produce alcohol but also to sell his production in wholesale. 
An import licensee is authorized to import and sell and deliver imported alcohol to those who 
produce, sell or cater alcohol for commercial purposes. Such a licensee is also authorized to sell 
and deliver alcohol to companies for industrial use and to embassies or to duty -free warehouses 
and stores. A wholesale licensee is authorized to sell or deliver alcohol to production licensees and 
sell or supply alcoh ol for commercial purposes. The holder of a wholesale license may also sell or 
supply alcohol for industrial use and sell or deliver imported alcohol from land to embassies and 
duty-free warehouses and stores.  
ÁTVR, a government run institution, has state  monopoly on inland retail sale of alcohol to 
consumers. The monopoly neither applies to bars, restaurants and clubs nor the duty free stores 
at the airports in Keflavík, Reykjavík and Akureyri.  
Upon importation of alcohol for both private consumption and commercial purposes an excise duty 
on alcohol has to be paid. The duty varies, 106,80 ISK per centiliter above 2,25 centiliter of wine, 
117,25 ISK per centiliter above 2,25 centiliter of beer and alcoholic soda and 144,50 ISK per 
centiliter above 2,25 cent iliter of liquor.  
In table 3.3 on page 44 exemptions of duty on alcohol is listed according to regulation No. 
505/1998. The exemptions are however not from tariff as alcohol is tariff free in Iceland. However 
an excise duty is imposed on import and sale of  alcohol and in article 6 of Act No. 96/1995 on 
excise duty on alcohol and tobacco exemption from the excise duty are provided. The first 
exemption is for exported alcohol. The second one is for the import and sale of alcohol to duty free 
stores and wareho uses, to free zones and alcohol which is destroyed and not sold. The third one is 
for the import and sale of alcohol to embassies and according to international agreements. The 
fourth one is for the import and sale of alcohol to production -, import - and wh olesale licensees of 
alcohol. The fifth and last one is for duty free allowances of tourists and crew members of cargo 
ships and international flights.  
The exemptions apply to import of alcohol but if the alcohol happens to be produced or purchased 
inland the excise duty is refunded upon application of reimbursement.  
The exemptions are provided by law, are general in nature and in line with GATT.  WT/TPR/M/361/Add.1  
 
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  Question 2:  Can you please elaborate on the mentioned exceptions based on the provisions of the 
national legal f ramework and the documents specified in the Table 3.3?  
No exemptions are anymore made due to write -offs decided by a write -off committee. Claims that 
are considered to be demonstrably lost are depreciated direct depreciation, which are primarily 
claims on legal entities in which bankruptcy proceedings have bee n completed and expiry of claims 
on individuals. The write -off is currently based on assessment of outstanding tax claims in the 
Government Accounts which is reviewed by the Icelandic National Audit Office.  
Construction materials, machinery and equipment and other investment products and spare parts 
for the aluminum plant at Reyðarfjörður in East Iceland and related structures as well as their 
operations are exempt from tariffs and excise duties according to Article 9 of Act no 12/2003 on 
the Authorization  for Agreements on an Aluminum Plant in Reyðarfjörður. An investment 
agreement was signed between the government of Iceland and Alcoa Inc., Fjarðaál sf. and its 
founders, Alcoa á Íslandi ehf. and Reyðarál ehf. 15 March 2003. Iceland is bound by the 
agreeme nt until 2023.   
The state no longer operates a Tobacco Monopoly. Excise duty is on tobacco is levied on all 
tobacco produced in Iceland or imported to Iceland. Currently the only exemptions are the duty 
free allowances for travelers and crewmembers of int ernational cargo ships and international 
flights. Excise duty on tobacco is refunded to embassies upon application of reimbursement.   
In the year 2000 airports in Iceland enjoyed the right to import building materials and equipment. 
The exemption no longe r applies.  
In 2012 Iceland applied to become a member of the EU. To promote the application, individuals or 
legal persons who were to provide services and/or supplies goods and/or works with a financial 
contribution under the EU agreement were exempt from  all import duties and VAT. The application 
was withdrawn in March 2015. The exemptions were never active.  
PCC BakkiSilicon hf. enjoys exemptions from tariff duties according to an investment agreement 
between the Icelandic government and PCC SE and PCC B akkiSilicon hf. on the building and 
operation of a Silicon plant in north east Iceland.  
 
Since 1977 the ferro -alloy plant in Hvalfjordur in the west part of Iceland has enjoyed an 
exemption from tariff duties and VAT on import.  
  
3.1.4.4 Tariff quotas (TQ s) and administration  
 
Para 3.40.  Iceland maintains a number of TQs on agricultural products. There are essentially 
three different types of quotas – those pursuant to WTO multilateral rules (current and minimum 
access), those pursuant to FTAs (EU, EEA, an d FTAs with third parties), and autonomous quotas. 
Determination of the quota amount, in -quota rate, and allocation is dependent upon the type of 
quota. WTO quotas are established by the statutes, whereas autonomous quotas are determined 
by the Minister wh o administers agricultural affairs on the basis of the provisions in the statutes.  
Para 3.41.  WTO TQs are contained in Annexes IIIA and IIIB of the Customs Law. There are 
currently 141 tariff lines with WTO TQs covering products in the meat & edible offal , dairy, and 
preparations of meat sectors.  42 The Customs Law sets the in -quota tariffs at 32% and 30% of the 
base rate. In a few cases, the in -quota rates are higher than out -of-quota rates.  43 Quotas are 
allocated on a yearly basis based on the recommend ation of a Committee established under the 
Minister in charge of agriculture. Allocation may be on the basis of drawing lots or based on the 
previous level of imports.  
Para 3.42.  Autonomous quotas are contained in Annexes IVA and IVB  and include meat, milk & 
milk products, butter, cheese, eggs, flowers & plants, potatoes, tomatoes, onion, cabbage, lettuce, 
carrots, cucumber, leguminous vegetables, and other vegetables. These quota levels and rates are 
determined by the Minister in cha rge of agriculture once domestic demand and pricing parameters 
have been determined. Annex V contains a subset of the Annex IV quotas for 23 tariff lines of TQs 
on products in HS chapters 2, 4, 6, and 7. These have preferential duty rates but the quota 
volumes are as stated in Annex IV.  WT/TPR/M/361/Add.1  
 
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  Question 1:  Taking into consideration that the latest Islands notification on REPLIES TO 
QUESTIONNAIRE ON IMPORT LICENSING PROCEDURES under Article 7.3 of the Agreement on 
Import Licensing Procedures dates 28 October 2004, and taking into consideration that this 
notification should be updated at least once in 2 years, please update the mentioned notification 
including details related the procedure used to determine and allocate the above mentioned quotas 
in the context of th e para 3.40, 3.41 and 3.42. How does these import licensing procedures 
comply with WTO Agreements, specially, provisions related to transparency and the principles of 
non-discrimination?  
Iceland recognizes and regrets that it in the past years has not subm itted the annual 
Questionnaire on Import Licensing Procedures in accordance with Article 7.3 of the Agreement. 
Iceland will take note of its obligation regarding the situation on the first occasion.  
Question 2: Can you please describe the procedure to dete rmine the allocation of quota by the 
Ministry in charge. Is there any site where the interested economic agents could monitor the filled 
in quotas in real time?  
The Ministry of Industries and Innovation allocates certain tariff quotas under the WTO agreeme nt 
and bilateral agreements, including with the EU, which consists mainly of meat, cheese, eggs and 
processed meat products (in HS chapters 02, 04 and 16). The procedure is in essence that the 
Ministry requests for applications for the allocation of these tariff quotas. First, in the case where 
applications do not exceed the tariff quota in question, the quota is allocated to applicants in 
accordance to the quantity applied for. In cases, where applications exceed the quantity of tariff 
quota, the quota is auctioned, and first allocated to the highest bidder, second to the second 
bidder etc. At this stage, no specific site where economic agents could monitor the filled quotas in 
real time.  
Question 3:  Please provide an updated notification under Article 8.2 (b) of the Agreement on 
Import Licensing Procedures, latest being dated 1999 year.  
Iceland recognizes and regrets that it in the past years has not submitted an updated notification 
on Import Licensing Procedures in accordance with Article 8.2 (b) of the A greement. Iceland will 
take note of its obligation regarding the situation on the first occasion.  WT/TPR/M/361/Add.1  
 
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  NEW ZEALAND  
 
REPORT BY THE WTO SECRETARIAT (WT/TPR/S/361)  
  
SECTION 2: TRADE AND INVESTMENT REGIME  
  
2.3 Trade Agreements and Arrangements  
2.3.1 WTO  
WT/TPR /S/361, section 4.1.1.3.3.1, page 26, paragraph 2.15  
  
Quote/background to question  
 
Regarding notifications, Iceland has had mixed compliance with its notification obligations during 
the review period. For example, there have been no notifications on TBT,  import licensing and 
preferential rules of origin despite Iceland having measures or completing new preferential 
arrangements during the period. There have only been two notifications on SPS (in 2012). 
However, in early 2017 Iceland notified its state tra ding entity, GPA legislation and made its first 
notifications of statistical information under the GPA. An overview of notifications is provided 
(Table A2.1).  
  
Question(s):  
 
 During the reporting period Iceland has not submitted any WTO TBT, import licens ing or 
preferential rules of origin notifications and only two SPS notifications.   When can the 
outstanding notifications be expected?  
 
The Icelandic authorities are actively working towards improving Iceland´s notification 
performance, including notificat ions of draft technical regulations.  
  
SECTION 3: TRADE POLICIES AND PRACTICES BY MEASURE  
  
3.1  Measures Directly Affecting Imports  
3.1.4  Tariffs  
3.1.4.2  Applied Rates  
  
WT/TPR/S/361, section 3.1.4.2, page 40 - 41, paragraph 3.33 - 3.35 
  
Quote/background to question  
 
While Iceland 's simple average tariff rate has been reduced from 8.3% in 2012 to 4.6% in 2017, 
Table 3.2 of the Secretariat Report shows Iceland 's applied tariff on agricultural products are 
highly variable, ranging from 0 to 429.6 percent. The highest rate of 429.6% was for meat of 
swine, and the next highest was 322.6% for milk and cream. In comparison applied tariffs on non -
agricultural products  only range from 0 to 10 percent. Further, 98.3 percent of non -agricultural 
products are duty free, whereas 59 percent of agricultural product tariff lines are duty free. The 
highest average rates of all tariffs falls on animals and products thereof, at 88 .1%, with 16.7% of 
tariff lines for this category being duty free. It is particularly noticeable that no dairy products lines 
are duty free and the average tariff rate for dairy sector products is 73.3%.  
  
Question(s):  
 
 Does Iceland have any plans to addr ess its prohibitive tariff peaks, particularly for those 
agricultural goods with the highest tariffs? What action is Iceland taking to make its agricultural 
sectors more responsive to market forces and thus able to reduce tariff peaks for agricultural 
products?   
 
At this time there are no specific plans in addressing MFN tariff peaks for agricultural goods with 
the highest tariffs. However, the government´s policy has rather been to increase market access 
through free trade agreements, such as the free tra de agreement between Iceland and EU, where 
tariff quotas has been increased substantially, particularly for the agricultural goods in question, 
which have the highest applied tariff rates.  WT/TPR/M/361/Add.1  
 
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  3.3 Measures Affecting Production and Trade  
3.3.4  Sanitary and phy tosanitary requirements  
WT/TPR/S/361, section 3.3.4, page 61 -62, paragraph 3.123 -3.124  
  
Quote/background to question  
 
The Secretariat report details that imports of raw meat and meat products that have not been fully 
heat treated must be accompanied by ce rtificates confirming that the meat was stored for at least 
one month at -18˚C or colder, and are free of salmonella and contaminants. Some products that 
have been treated with methods that are deemed equivalent to full heat treatment, including some 
chees es and meat sausages and salted, dried or smoked meat, can be imported without the 
freezing requirements. Meat must be derived from animals that are slaughtered and processed in 
the establishments approved by the European Union or authorised in the Europea n Economic Area 
(EEA). Products originating from outside the EEA must be accompanied by official certificates 
showing: origin and health, and that the animals from which the products were derived were not 
given growth -promoting substances.  
  
The Secretariat report also details requirements for raw or unsterilized products.   When an 
application is submitted for the first time to import raw or unsterilized products, an importer must 
provide the Icelandic Food and Veterinary Authority (MAST) with  the necessary information on the 
product for consideration and approval before the product is dispatched from the country of 
export. However, if the importer submits exactly the same application as previously, MAST can 
issue an import permit once the prod ucts have been stored for at least one month at -18˚C or 
less, and that storage can take place in Iceland.  
  
Question(s):  
 
 The report notes that Iceland has adopted European Union (EU) legislation on sanitary and 
phytosanitary measures, including foodstuffs, however, the EU does not require this type of 
treatment. What disease(s) is Iceland trying to treat with its heightened regime?  What are the 
risks that Iceland is trying to mitigate?  
 
Iceland is concerned with the possible effects on human and animal health. The concern is for 
instance that the importation of fresh meat and meat products will significantly increase the 
incidence of human campylobacteriosis and probably also of EHEC/VTEC and MRSA infections. 
There is also the concern of other transmissible agents including trichina. Furthermore, the 
requirement to freeze the products for a certain period provides scope to re act in case of 
contamination in the relevant animal population or in slaughter animals ( "quarantine effect "). 
 
 Iceland utilises cold treatment of -18˚C or colder for raw or unsterilized products and meat and 
meat products, however, it is unclear how Icelan d differentiates between these two groupings 
of products. How does Iceland differentiates raw or unsterilized products from meat and meat 
products in its cold treatment of -18˚C or colder?  
 
There are two treatments that can be utilized in order to import m eat and meat products into 
Iceland. For products that fall under the CN Codes 0210 and 1601 can be imported if they fulfil the 
following conditions:  
 
a. heat treatment where the product is in air -tight packaging with an Fc value of 3.00 or 
more, or so that th e core temperature reached 72°C for 15 seconds, or  
b. natural fermenting and maturing. The meat must have received treatment involving 
fermenting or maturing, and have an aw value which does not exceed 0.93 and pH value 
which does not exceed 6.0. Raw ham mus t have been cured for at least 190 days and 
raw loins at least 140 days, or  
c. meat dried, processed for storage. The meat must have received treatment which, in the 
assessment of MAST, is comparable to those treatments in subparagraphs a and b above.  
 
The second type of treatment possible in order to imported foods listed under CN Codes 0202, 
0203, 0204, 0207, 0208, 0210, 1601 and 1602, is that the consignments are  
accompanied by the following certificates:  
  WT/TPR/M/361/Add.1  
 
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  a. an official certificate of origin and health, in the case of products from producers outside 
the European Economic Area;  
b. an official certificate confirming that the animals from which the products derive were not 
given growth -promoting substances during r earing, in the case of products from 
producers outside the European Economic Area;  
c. a certificate confirming that the products have been stored at a temperature of at least - 
18°C for a month prior to customs clearance;  
d. an official certificate confirming that the animals from which the products derive were 
slaughtered in slaughterhouses and the products processed in processing plants 
authorised in the European Economic Area, in the case of products from producers 
outside the European Economic Area;  
e. an official certificate confirming that the products are free of salmonella bacteria;  
f. animal meat products and by -products, dairy products and eggs shall conform to the 
appropriate provisions of the current Regulation on food contaminants;  
g. the product sh all be labelled in conformity with current rules on labelling, advertising and 
promotion of foodstuffs.  
 
SECTION 4: TRADE POLICIES BY SECTOR  
  
4.1.1.3.1 Trade policies  
WT/TPR/S/361, section 4.1.1.3.1, page 76, paragraph 4.12  
  
Quote/background to question  
 
Iceland reserved the right to use the special agricultural safeguard on 390 tariff lines but it has 
never applied it to any tariff line.  
 
Question(s):   
 
The Secretariat reports that the agriculture sector is undergoing reforms in several areas.   This 
includes a reduction in the average applied tariffs over the reporting period, opening of market 
access through free trade agreements and no use of the special agricultural safeguard.   Future 
reforms are also planned, for example consideration of the removal of the dairy and beef 
production quota system and phasing out of support entitlements.   How is Iceland 's membership 
of the WTO G -10 agriculture negotiating group consistent with the reported domestic reform 
processes?  
 
The Icelandic agricultural policy is a long term policy and the duration of the recent agricultural 
agreements between the government and the Farmer´s Association is 10 years.  The aim of the 
policy is a further opening of the market and less trade distorting support, however the 
implementati on of this policy takes time and is based on several internal and external factors.  
  
4.1.1.3.2  Domestic policies  
4.1.1.3.2.1  Dairy and beef  
WT/TPR/S/361, section 4.1.1.3.2.1, page 77, paragraph 4.21  
  
Quote/background to question  
 
In accordance with Article 30 of the Agricultural Products Act No. 99/1993, the Government of 
Iceland and the Farmers ' Association of Iceland concluded its most recent multiannual agreement 
on agricultural policy and support for agriculture for the ten year period from 2017 to 2026, with 
extensive reviews in 2019 and 2023. The Secretariat 's report notes the view of Iceland 's Ministry 
of Industries and Innovation that the agreement in particular represents a change in policy for 
dairy and cattle farming in Iceland.  
  
Within th is agreement, sits Regulation No. 1150/2016 on support for cattle and the agreement on 
the operating environment for the cattle sector. The agreement pn the operating environment for 
the cattle sector states that the 2019 review will consider the feasibili ty of abolishing production 
quotas, based on a vote by milk producers. Furthermore, the system of support entitlements is to 
be phased out over the duration of the Agreement while payments per litre of milk produced are to 
be de -linked from support entitle ments and increased while a new system for supporting beef 
production is introduced.  WT/TPR/M/361/Add.1  
 
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  Question(s):  
 
 New Zealand appreciates and commends Iceland 's commitment to phase out support 
entitlements for dairy and sheep farming by 2025, and its concurrent shift in  focus towards 
sustainable production, animal welfare, sustainable land use and quality (section 4.1.1.3.2.2, 
paragraph 4.28, page 78).  
  
a. Given that the 2019 revision of production quotas in the agreement will be based on a vote 
by milk producers, what outcome does Iceland anticipate that the producers will vote 
for?  For instance, does Iceland expect that production quotas will be abolished?  
 
The commitment to phase out support entitlements has been debatable and of that reason 
the 2019 revision was dec ided in negotiating process of the agreement. At this stage it is 
difficult to predict about the outcome of the voting. The outcome of the voting is not binding 
and the final decision will be hand of Althingi (Icelandic Parliament).  
 
b. Aside from phasing out  support entitlements, how does Iceland plan for its new system for 
supporting beef production to be less trade -distorting? Will this new system include the 
temporarily increased payments per litre of milk produced?  
 
The agreement between the government an d the Farmer´s Association, on the operating 
environment for the cattle sector, states that support will be provided for beef production 
with a view to increasing the supply and particularly quality of beef. Annual payments will 
be allocated to a quarantin e facility in connection with the import of genetic material from 
beef cattle and to payments of slaughter premiums for beef meeting specific quality 
requirements. The payments are intended to encourage production of quality produce.  
 
4.1.1.3.3  Domestic s upport levels  
4.1.1.3.3.1  WTO notifications  
WT/TPR/S/361, section 4.1.1.3.3.1, page 80, paragraph 4.36 -4.37 
  
Quote/background to question  
 
In reference to Iceland 's notifications to the WTO, the Secretariat report notes that Amber Box 
support to dairy far mers in the form of direct payments has grown steadily from 2004, with a 
slight decline in 2015, before resuming growth in 2016. Throughout this period, most Amber Box 
support was to dairy farmers from direct payments (ISK5,622 million in 2016) and market price 
support (valued at ISK12,874 million in 2016). Notably, the market price support element is based 
on the significant difference between the 2016 applied administered price of ISK103.2 per kg and 
the external reference price of ISK6.30 per kg (from su pporting tables to Iceland 's Uruguay Round 
commitments). In comparison, the external reference price used in the OECD 's estimates of 
support was ISK36.95 per kg in 2015. Iceland 's Blue Box support began in 2006 and, with an 
initial peak in 2007, has increa sed steadily to ISK670 million in 2016. All Blue Box payments are 
for bovine animals.  
  
Question(s):  
 
 How does Iceland reconcile its economic objectives to improve efficiency and competitiveness, 
especially in the dairy and sheep sectors (section 4.1.1.3, page 75, paragraph 4.8), with 
maintaining such high tariff rates on agricultural products as well as steadily growing its direct 
payments to dairy farmers and market price support?   What actions is it taking to lower its 
Amber Box support?  
 
Regarding the A mber Box, the increase is mostly due to market price support. Farm gate price falls 
under administrative pricing and the development in pricing follows changes in general price 
levels. In addition, production of milk has increased by 19% between the year 2 012 to 2016, 
which affects the amount of market price support level. On the other hand, Iceland´s aim is to 
reduce support directly linked to production, the regime of direct payments to dairy and sheep 
farmers is however under the 2019 revision of the agr icultural agreements.  
 WT/TPR/M/361/Add.1  
 
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  4.1.2 Fisheries  
4.1.2.3 Policies  
WT/TPR/S/361, section 4.1.1.3.3.1, page 90, paragraph 4.66  
  
Quote/background to question  
 
In terms of fish processing, several long -term trends appear to have come to an end in the 2010 -
17 period. The quantity of fish for oil and fishmeal production, which had been in steady decline 
since the early 2000s when it accounted for about two -thirds of total fish processing, has 
fluctuated since 2010 reflecting reductions in capelin catch which had been mo stly used for meal 
and oil production. On the other hand, the quantity of frozen fish had increased steadily to over 
half of the total by 2010, but has since declined to 40% in 2015 (Chart 4.5). According to the 
authorities, the change from long -term trend s in the mid -2000s is due to climate change and 
mackerel and capelin stocks moving further north.  
  
Question(s):  
  
 The Secretariat reports that Iceland 's fisheries sector is a net contributor to its GDP and 
contributes more money than it receives in suppor t, with no direct government support and 
nearly all tariffs at zero (para 4.66).   What policies does Iceland have to maintain and further 
increase the competitiveness of its fisheries sector and its contribution to exports?  
 
As stated in the TPR report the re is no Government financial transfer to the fisheries sector. The 
government emphasises to maintain sustainable fishery policy and healthy fish stocks to secure 
stabilisation in the total allowable catch and create secure environment for the fishery sect or. On 
that background the quota owners seek themselves to increase the value of their respected quota. 
Both with regard to maximum utilisation of the allowable catch and increasing the value of the 
allowable catch. The government has no direct policy in t his regard and has allowed the market to 
develop in its own course. However there is a governmental fund that supports innovation and 
researches in the fisheries sector. The allocation from the fund is based on competition and a 
committee selects the proje cts which will receive partial governmental funding.  
  
4.12. Iceland reserved the right to use the special agricultural safeguard on 390 tariff lines but it 
has never applied it to any tariff line.  
  
The Secretariat reports that the agriculture sector is u ndergoing reforms in several areas.   This 
includes a reduction in the average applied tariffs over the reporting period, opening of market 
access through free trade agreements and no use of the special agricultural safeguard.   Future 
reforms are also plann ed, for example consideration of the removal of the dairy and beef 
production quota system and phasin g out of support entitlements.  How is Iceland 's membership of 
the WTO G -10 agriculture negotiating group consistent with the reported domestic reform 
processes?  
 
 WT/TPR/M/361/Add.1  
 
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  PERU  
Secretariat Report - WT/TPR/G/361  
 
3. Commercial Policy  
3.5. Gender and Trade  
 
3.12. The promotion of gender equality and the empowerment of women is integrated horizontally 
into all spheres of Iceland 's foreign and domestic policy, including trade policy. The country has 
experienced the economic benefits of greater gender equality. Inclusive trade policies can 
contribute to the promotion of gender equality and the economic empowerment of women, which 
in turn are a key driver of econo mic growth and prosperity, and play an important role in poverty 
and the achievement of sustainable development. Iceland therefore advocates that the gender 
perspective should be at the center of trade policy, both in international fora (eg in the framewor k 
of its development cooperation) and at the national level.  
 
Question 1  
 
Given that Iceland advocates gender equality and women 's empowerment, could Iceland state 
what inclusive trade policies it has implemented or is developing at the national level?  
 
Iceland has focused on giving equal opportunity to men and women in all spheres of society. 
Affordable quality day care and parental leave enable women and men to participate in the labour 
force equally, with labour participation of both men and women bein g the highest in the OECD 
countries. Government budgeting is also gender sensitive, meaning that the possible differences in 
impact on men and women are assessed before the budget is approved.  
  
Iceland passed the Act on Equal Status and Equal Rights of Wo men and Men in 2008, with the aim 
to establish and maintain the equal status and equal opportunities for women and men, and thus 
promote gender equality in all spheres of the society. More specifically, with changes to laws on 
public and private limited co mpanies (Nr. 13, March 8, 2010, came into effect Sept. 1, 2013), it 
became a requirement that each board of State -, public and private owned limited companies with 
50 or more employees, and with 3 person boards include at least one male and one female 
memb er; and for boards with more than 3 members at least 40% of members be from either 
gender.The same should hold for alternate board members. At the same time, details on the 
gender ratios for the boards needs to be included in the report of the BOD in the a nnual financial 
statements. Gender ratios need also be considered for senior management positions. In the 
corporate governance handbook from May 2015, jointly issued by the Chamber of Commerce of 
Iceland, Nasdaq Iceland and Association of Icelandic Industr ies, it is clearly stated that board 
composition should consist of equal gender ratios as much as is possible. The ratio of board 
members that were female, in all registered limited liability companies, was 24% in 2010 
compared to 25,9% in 2015. In total w omen were CEOs at 20,2% of all companies in 2010 
compared to 21,9% in 2015. Women were chairmen at 23,1% of all companies in 2010, but 
24,1% in 2015. At publicly listed companies the ratio was 43% in 2016. Women were chairmen at 
36% of publicly listed comp anies in 2016 but only in 6% of cases were women CEOs.  
  
Iceland is looking to include a reference to gender equality in its free trade agreements going 
forward so that men and women will benefit equally from those agreements, thereby encouraging 
trading partners to do better in terms of gender equality. Women 's empowerment is also a key 
element in our development cooperation. A key issue is ensuring women 's equal access to 
economic resources and financial services.  
 
3. Commercial Policy  
3.5. Gender and Tr ade 
 
3.16. As a member of the International Paladins on Gender Equality initiative, Iceland, together 
with Sierra Leone and the International Trade Center (ITC), chairs an Impact Group on Gender and 
Trade whose task is to explore ways to support gender equ ality and the empowerment of women 
in the field of trade.  
 WT/TPR/M/361/Add.1  
 
- 70 - 
 
  Question 2  
 
Could Iceland deepen the approaches and activities that are currently working within this initiative 
and, if so, share what studies are planned to work in the future?  
 
Iceland is indeed  honored to co -chair the Informal Working Group on Trade and Gender together 
with Sierra Leone and the ITC. The Working Group was established in December last year, under 
the auspices of the International Gender Champions Geneva (IGCG). The Informal Workin g Group 
on Trade and Gender comprises a growing number of WTO members and international 
organizations.  
  
The group believes gender concerns need to be given more attention when it comes to trade policy 
and that promoting inclusive trade policies can contri bute to advancing gender equality and the 
empowerment of women by removing barriers faced by women in the field of trade. We thank Peru 
for this important question that focuses on the work of this group.  
  
The Working Group aims to raise the visibility of trade and gender, to facilitate sharing good 
practices and to identify areas where gender barriers can be addressed, as well as to provide 
practical guidance on how best to do this.  
 
The group has identified key focus areas and an action plan.  
 
One of the focus areas is the Trade Policy Review process. The group aims to address gender 
related issues in their trade policy reviews, as Iceland has now done for this TPR, as well as 
encouraging members to raise gender related trade issues in the review process o f other 
countries.  
 
The group would like to make gender issues a more intrinsic part of the work of the WTO and has 
prepared a joint declaration on trade and women 's economic empowerment to be adopted during 
the upcoming 11th Ministerial Conference in Buen os Aires. The goal is to secure universal adoption 
of the declaration by WTO members at the conference and we hope all members will be able to 
join this important initiative.  
 
The objective of the joint declaration is to provide a framework and platform fo r members to foster 
a more inclusive trade agenda that ensures trade benefits all. Through the declaration WTO 
members will send a strong signal of their support for inclusive economic growth by adopting 
practices and rules that support greater integration  of women, especially MSMEs, into the global 
economy. The declaration sets out key focus areas to help countries to make their trade and 
development policies more gender responsive.  The declaration is at the top of the agenda of the 
group at the moment, no w in the run up to the MC.  
 
Another important focus area for the working group is the issue of representation. The group is 
determined to improve women 's access to decision -making positions in the field of trade. The 
group therefore encourages the WTO to put more women in high -level positions. Iceland indeed 
regrets that there is no female DSG and encourages the Director General to use the next 
opportunit y to address this imbalance. Also, the group would like to see more women represented 
at the highest level in permanent missions and will raise gender representation with capitals. 
Increasing the percentage of women chairs in the WTO is also one of the gro up's aims.  
 
Other focus areas that have been identified include technical assistance. The group aims to 
support that gender is mainstreamed into technical assistance strategies, including the 
representation of women and to support gender related projects.  
 
Exploring how GSP system can be used to promote greater participation of women in trade is 
another focus area and to look at rules in fields such as services, investment, e -commerce, public 
procurement and others.  
  
Another objective of the group is to gather existing data on trade and gender and to analyse the 
need for further studies in this field. The group also aims to compile approaches, language and 
best practices on trade and gender in different regional trade agreements to get an overview of 
how gender concerns are taken concerns in existing agreements.  
 WT/TPR/M/361/Add.1  
 
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  As mentioned in the beginning the group consists of a growing number of members across the 
different geographical areas. It convenes quarterly to discuss progr ess and is open to all WTO 
members and international organizations in Geneva. We hope to see the group increasing and 
gender becoming a more central part of the trade agenda.  
 WT/TPR/M/361/Add.1  
 
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  SWITZERLAND  
Report by Iceland (WT/TPR/G/361)  
 
1 INTRODUCTION:  
 
Para 1.7:  
 
The United Kingdom constitutes an important destination for/of Icelandic exports/imports. Given 
the uncertainty surrounding the aftermath of Brexit: in which countries / regions does Iceland see 
potential to increase bilateral trade?  
 
While Iceland is constantly looking towards possibilities to further increase its trade with its 
traditional markets while also exploring opportunities to expand trade to new markets, when it 
comes to the United Kingdom Iceland 's objective is to work towards building an ev en closer and 
stronger relationship post -Brexit. This includes maintaining to the extent possible the same or 
better access to the UK market.  
 
2 ECONOMIC DEVELOPMENT AND PROSPECTS  
 
Para. 2.4:  
 
Tourism has become Iceland 's largest export sector. Does Icela nd plan measures to reduce its 
dependency on tourism?  
 
Iceland welcomes the diversification of the export sector and tourism is an important addition to 
the real economy. The growth of tourism has however not been sustainable but the outlook is for a 
slowe r and more sustainable growth in the coming years. The government has already tripled the 
accommodation tax from ISK 100 to ISK 300 (0.78 EUR to 2.34 EUR) per night. Furthermore, the 
sharing economy, mainly AirBnB, reduces the economy 's dependency on touri sm and is likely to 
share a part of the burden with the tourism sector in the event of an unexpected adverse shock. 
Furthermore, the government has proposed moving accommodation and most other tourism -
related services from the reduced VAT rate to the stand ard VAT rate. All of the above have the 
effect of either promoting a more sustainable growth of tourism or increasing the resilience of the 
economy in an event of an adverse shock to tourism.  
 
Para. 2.6:  
 
Iceland 's GDP growth since 2012 has been impressi ve. During the same period the unemployment 
rate was reduced to 3%. Does the national labor market still offer enough workers? If not: how 
does Iceland prevent its labor market from overheating?  
 
The Icelandic labour  market is very flexible. In the boom years before the crises immigration of 
labour was very high. After the crises that labour mostly emigrated and therefore the 
unemployment rate was lower than expected in light of the collapse of sectors like constructi on 
and of course banking sector. When the tourism boom started and the construction sector picked 
up the labour market recovered fast and labour immigration picked up and is reaching pre crises 
levels. That has increased potential output and prevented over heating and high inflation. This also 
means that firms meet their labour shortages from abroad rather than competing for a fixed 
number of domestic workers by constantly overbidding wages. However, despite this, wages have 
been rising rapidly lately.  
 
2.3 Tax and Customs Reforms:  
Para 2.20, page 6:  
 
The report states that "[…] the Government intends to guarantee fair taxation of self -employed 
persons and SME 's […] ". Does Iceland have introduced or does Iceland plan to introduce other 
measures to increase the competitiveness of Icelandic SME 's at the international level? From 
Iceland 's perspective, what are the main challenges Icelandic SME 's face to integrate Global Value 
Chains? And what solutions could the WTO bring to solve those issues?  
 WT/TPR/M/361/Add.1  
 
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  The challenges  Icelandic SME 's face to integrate Global value chains are numerous. First it should 
be considered that Iceland has a very small population, only about 343.000 inhabitants, of which 
237.300 where in the age of 16 –74 in December 2016 and about 200.000 worki ng. Icelandic 
SME's are very small compared to their size in the countries Iceland compares to. For example 
according to the EU definition of SME 's companies with between 50 and 250 employees are 
considered to be medium sized. A huge majority of companies are below the 250 employee criteria 
and very many below the 50 employee criteria. In year end 2014 only 146 of 26.801 companies in 
Iceland had more than employees but 23.718 companies had 0 –4 employees. Any ease that can 
be made to administrative burden an d tax burden for Icelandic SME 's will be of relatively big help 
to the international competitiveness of those companies. Broad government support when it comes 
to preparation for foreign marketing should also be of good value to them.            
 
Report by  the Secretariat (WT/TPR/S/361)  
 
3.1.4.2 Applied rates:  
 
It is mentioned that Iceland has implemented unilateral tariff dismantling on non -agricultural 
products. What positive effects does Iceland expect from this measure? What are Iceland 's 
preliminary ex periences with the tariff dismantling? How was the tariff dismantling perceived by 
economic operators?  
 
The Icelandic economy is highly export driven. However the country 's industries and other 
importers also rely on imports of consumer goods and materials  for production. The main expected 
positive effects of the unilateral tariff dismantling on industrial products were considered to be to 
strengthen competitiveness of the inland retail sector which had been losing its momentum for a 
few years mostly due to  increased online purchasing of consumer goods from abroad and 
increased spending of Icelandic travelers abroad. It was also considered that Icelandic producers 
of goods that relied heavily on imported materials for their production would enjoy a better 
competitive position. The measure needs to be considered to be a part of other related measures 
taken to liberalize trade in the recent years, namely the abolishment of the general excise duty 
and the moderation of the Icelandic VAT system.    
 
The tariff dismantling, and the liberalization measured as a whole, where perceived very positively 
by Icelandic economic operators. No negative voices seem to have been raised publicly by any 
them to this date.  
 
The Icelandic government has not performed  a systematic assessment on the experience of the 
tariff dismantling. The Icelandic Confederation of Labour has explored its effects to some extent 
and has for example concluded that the tariff dismantling could hardly be measured in changes in 
retail pric ing of clothing and shoes which could be construed so that Icelandic clothing retailers are 
struggling. It should be noted that it is highly difficult to gain a realistic assessment on the effects 
of the tariff dismantling due to other factors that have in fluenced the behavior of importers, 
retailers and consumers at the same time as the tariff dismantling. Among those are changes in 
the exchanges rate of the ISK, increased purchasing power of consumers, increase of tourists 
travelling to Iceland, higher ra tio of Icelanders travelling abroad due to lower flight ticket prices 
and increased supply of international flights, foreign retail companies opening stores in Iceland this 
year, such as H&M and Costco, low inflation rates (deflation if housing costs are e xcluded) and so 
on.       
 
3.3.5 Competition policy and price controls:  
 
According to para. 3.134 , a reviewed, fuller agreement on exchange of confidential competition -
related information between the authorities of Denmark, Iceland, Norway, and Sweden is e xpected 
to be signed in 2017 or 2018 and is likely to also include Finland, Greenland and the Faroe Islands. 
Could Iceland please provide more details on the scope and content of the agreement and 
elaborate on which provisions will be subject to a review?  
 
A new Agreement on Cooperation in Competition Cases was signed in Helsinki on 8 September 
2017. Signatories to the agreement are the authorities of Iceland, Norway, Sweden, Finland and 
Denmark on behalf of also the Governments of Greenland and the Faroe I slands. The agreement´s 
purpose is to strengthen and formalize the cooperation between the national competition 
authorities of the Nordic countries. The scope of the agreement covers investigations or WT/TPR/M/361/Add.1  
 
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  proceedings that can be expected to affect other partie s´ important interests, i.e. when 
investigations or proceedings concern undertakings that operate cross border or can affect trade 
cross border between the signatory countries.  
 
The agreement stipulates that NCAs shall notify each other of investigations,  proceedings or 
mergers that can have affect cross border. In such events, the NCAs can exchange confidential 
information and any other fact or law that applies for the purpose of applying competition and 
merger control rules. NCAs can also carry out reque st for information from other NCAs and carry 
out inspections on the request or on behalf of another NCA.  
 
The provisions of the agreement mirror that of Council Regulation (EC) 1/2003. Because Iceland 
and Norway are not a part of the EU but are part of the  EEA, provisions of the regulation 
concerning cooperation in instances mentioned above, do not apply. Pursuant to the agreement, 
full cooperation as Council Regulation (EC) 1/2003 stipulates, is possible between the signatories 
even though not all are EU m embers.  
 
Pursuant to art. 8 of the agreement, the content of the agreement can be revised at any time and 
this applies to all its provisions.  
 
3.1.5 Other charges affecting imports  
 
Para. 3.47  indicates that Iceland levies recycling fees with different rat es for certain products.  
Could Iceland indicate how the level of the fees have been determined? Which criteria have been 
used? Are those fees also levied on domestically produced goods?  
 
Recycling fees are levied on goods for the purpose of promoting waste  processing.  The amount of 
recycling fee relates to the estimated costs of processing waste.  
The recycling fee shall cover the cost of handling sorted waste at collection points and transporting 
it from the collection points to a receiving centre or recovery facility, assuming that the recycling 
fee was paid for the goods involved. As applicable, the fees shall also suffice for the recovery or 
disposal of waste. Furthermore, fees shall suffice for the cost of disposing of waste that has 
become combined with goods for which a recycling fee was paid, provided that this mixing is 
inherent in the norma l use of these goods. Recycling fees shall cover the cost of refunding deposits 
and of operating the Icelandic Recycling Fund.   The recycling fees levied on packaging made of 
cardboard, paper, plastic and electrical and electronic equipment shall cover the  outlays needed to 
achieve objectives for the waste in question.  
The fees are levied on goods regardless of whether they are imported to Iceland or produced in 
Iceland.  
3.2.3 Export prohibitions, restrictions, and licensing:  
 
According to para. 3.77  the export fee has increased three -fold in the Law on the Export of 
Horses. Could Iceland provide the reasons why the fee has been increased three -fold? Could 
Iceland indicate the level of the fee?  
 
The export fee was increased from ISK 500 to ISK 1,500, in or der to bear the costs of a Fund 
which is supposed to handle the preservation of the Icelandic Horse breed. The fee remained 
unchanged for many years and was not increased in line with changes in price levels. To put the 
fee in context, ISK500 is just above  the price of one fare with a local bus in Reykjavik. On average 
the increased export fee is around 0.2% of the average export price for an Icelandic horse . 
 
3.1.3 Rules of origin:  
 
Para 3.23, page 38:  
 
The paragraph states that "For non -preferential orig in determination, Iceland generally accepts 
what the importer has declared in the import documentation. " Could Iceland explain in which 
case(s) does Iceland not accept what the importer has declared in the import documentation? WT/TPR/M/361/Add.1  
 
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  Also, would Iceland be in a position to accept, and under which conditions, a proof of origin 
delivered by the exporter?  
 
In case of non -preferential origin, we always accept what the importer declares in import 
documentation as long as it does not affect duties imposed. We have so f ar never disputed non -
preferential origin. In case of disputed non -preferential origin, a proof of origin from the exporter 
would be acceptable.  
 
4.1.1.3 Agriculture policies  
 
Page 76, paragraph 4.15:  
 
"In June 2016, the Ministry of Industries and Innovation amended the system for administering 
the WTO tariff quotas for meat, butter, cheese, eggs and their products, and meat preparations by 
re-questing applications for allocations for the six month period ending 31 December 2016 instead 
of a twelve month period. Once awarded, an allocation is not transferrable. " 
 
Question:  
 
Can Iceland please explain the rationale behind this change in the tariff quota administration from 
awarding allocations for a 12 months period to a 6 months period?  What has been  Iceland 's 
experience with this new system so far?  
 
The rationale behind the change was to distribute tariff quotas of the agricultural goods more 
evenly over time and also between importers. The rationale was that importers which would not 
receive tariff quotas, would have more frequently opportunities to apply for tariff quotas. In the 
light of the experience of the 6 months allocation, it has now been decided to turn back to the 
previous procedure.  
 
4.2 Mining and Energy:  
 
Paragraph 4.81  of the Report by  the Secretariat mentions that part of the energy strategy for 
2020 is a replacement of energy fossil fuels with renewable energy. What are the policies and what 
role does fossil fuel pricing play in order to decrease the use of fossil fuels?  
 
The Government energy strategy and policy is being worked on and is not finalized. It is foreseen 
that fossil fuel pricing will play a role in the policy of decreasing the use of fossil fuels and 
increasing the share of domestic renewable energy.  WT/TPR/M/361/Add.1  
 
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  THAILAND  
WT/TPR/S/361  
 
1. Page 32, Table 2.2  
Sector  Restriction  Legal reference  
Board membership  The manager and at least half 
the board members of Icelandic 
companies must be resident in 
Iceland unless a waiver is 
granted by the Ministry of 
Industries and Innovation. This 
does not apply to citizens of the 
EEA countries, the EFTA 
countries, or the Far oe Islands.  Act No. 138/1994 and Act No. 
2/1995  
 
Question  
 
 As the Ministry of Industries and Innovation can allow the exception for residency 
requirement for Board membership to a waiver, what is the waiver 's condition?  
A request for an exemption from residence requirements for board members and managers in Act 
138/1994 and Act 2/1995 should be sent to the Ministry of Industries and Innovation along with a 
copy of the notification to the Business Register of changes to board members, a copy of the 
passp ort of the party in question and information on his/her residency.  
 
2. Page 98, Para 4.103  
  
Question  
 
 As natural persons and legal entities established within the EEA and within WTO Member 
states to start operations, implying that they do not need a licence , unless specific 
frequencies are involved, why an individual licence is still required for all frequencies except 
open spectrum?  
The provision of electronic communication services per se never requires a license. Service 
providers providing service on  fixed lines , in open spectrum  do not need a license. If a provider of 
electronic communication services needs exclusive rights to use  special frequencies  for example for 
certain mobile services (2G/GSM, 3G/UTMS and 4G/LTE), an individual license for the usage of 
that particular spectrum (now allocated on grounds of auctions) is needed.  
  
3. Page 100, Para 4.114  
  
Question  
 As there is no limitation on foreign participation in auxiliary services, does it mean that 
foreigner can own equity up to 100%?  
 Please provide  scope of such auxiliary services . 
The limitation of ownership under Icelandic law only refers to air transport. As such, any service other 
than air transport is considered as auxiliary services and open to foreign investment.  
4. Page 103, Para 4.128  
  
Questi on 
As the Icelandic Tourist Board is responsible for issuance of licenses, what type of licenses that the 
Icelandic Tourist Board grant for service provider relating tourism and travel services sector?  
 
The Icelandic Tourist Board grants a license to oper ate a travel agency. A travel agency is an 
individual or a legal entity which organizes, offers and sells package tours for a professional 
purpose, whether on own initiative or in response to a customer 's request, within Iceland or 
abroad.   
 WT/TPR/M/361/Add.1  
 
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  The ITB  also grants a license to tour operators, namely a designated party  whether an individual 
or a legal entity who, whether on his own initiative or in complying with a customer 's request, 
organises, offers and sells to the public for a professional purpose, the following travel -related 
services:  
 
a. The organisation and sale of travel to groups or individuals, the planning of travel, stay, 
recreation and leisure activities, in Iceland or abroad.  
b. The organisation of meetings, exhibitions and conferences as well as any related services, in 
Iceland or abroad.  
c. Any form of agency operation or reselling with regard to tickets for travel by ship, car, air or 
rail. 
d. Recreation, such as horse -trekking, snowmobile excursions, river sailing and adventure 
tours in specially equipped vehicles.  
e. Travel and refreshments as part of services rendered.  
 
5. Page 38 Para 3. 20 Customs Valuation  
Question  
 
 As stated in Paragraph 3.20, whether or not the use of "reference prices from foreign countries 
to determinate customs value " may contra dict to GATT 1994.  
As stated in the Secretariat report the basis for customs valuation in Iceland is provided for in the 
provisions of articles 14 –19 of the Customs Act no. 88/2005 and chapter VII of regulation no. 
1100/2006 on Customs procedure. These pro visions are in line with the provisions of the 
Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994.  
The provisions of Article 14 and 15 of Act no. 88/2005 are materially in alignment with the 
provisions of article  1 of the Agreement on Implementation of Article VII of the General Agreement 
on Tariffs and Trade 1994 (hereinafter "the agreement "). (Link to the English translation of act no. 
88/2005 https://www.tollur.is/library/Skrar/Enski -vefurinn/Customs_law_11_3_2015.pdf ). 
  
If the customs value of imported products cannot be determined according to the procedures of 
articles 14 and 15 of act no. 88/2005 transaction value must be determined according to the 
provisions of articles 57 –62 of regulation no. 1100/2006. The same applies if in case there is 
reason to doubt the veracity of invoices and other factors mentioned in Article 14 of act no. 
88/2005 and that which shall be  added to the customs value according to the provisions of Article 
15 of the act.  
 
The use of reference prices from foreign countries is therefore only possible if:  
 
a. The customs value of products cannot be determined according to article 1 of the 
Agreement  on Implementation of Article VII of the General Agreement on Tariffs 
and Trade 1994, or  
   
b. There is reason to doubt that customs value can be determined on the grounds of 
data provided by the importer.  
     
In such circumstances as described above the pro visions of articles 57 –62 of regulation no. 
1100/2006 apply. Article 57 is materially identical with article 2 of the Agreement on 
Implementation of Article VII of the General Agreement on Tariffs and Trade 1994, the same 
applies article 59 of regulation n o. 1100/2006 is materially identical to item a para 1 of article 3 
combined with article 4 of the agreement.  
Articles 60 and 61 of regulation no. 1100/2006 provide for the methods of determining customs 
value in the same way as provided for in articles 5 a nd 6 in the agreement.  
   
The provisions of article 62 of regulation no. 1100/2006 are materially identical to the provisions 
of article 7 of the agreement.  
  
Provisions on the use of reference prices from foreign countries to determine customs value of 
imported products to Iceland is therefore materially in line with the provisions of the agreement. 
The determination of customs value based on retail price of products in foreign countries is only 
applied when it comes to product import of Icelanders returni ng from travels abroad or import due WT/TPR/M/361/Add.1  
 
- 78 - 
 
  to online shopping (consumers). This is a logical procedure as foreign retail price is a strong 
indicator of real consumer price value.  
 
Special safeguard provisions can be found in articles 63 –70 of regulation no. 110 0/2006 regarding 
the import of vehicles. The main goal of the provisions is not to specify a different strategy on how 
to determine customs value of vehicles but to frame the procedure the customs authorities are 
obligated to apply when it comes to the imp ort of vehicles. The reason for the safeguard procedure 
is that excise duty on vehicles tends to be rather high in Iceland and historically speaking 
importers of vehicles have been prone to state low transaction prices upon import. The directorate 
of custo ms is therefore made responsible for collecting and maintaining a registry of foreign 
reference prices for vehicles and to compare those references prices to the transaction price stated 
in import documents for the purpose of determining if it can be consi dered the actually paid or 
payable price. If the need to determine the customs value arises then article 66 of regulation 
1100/2006 provides the method of calculating the customs value according to the f.o.b. price of a 
compatible new vehicle in line with the provisions of article 5 of the agreement.      
 
6. Page 72 Para 3. 177 Appeal and enforcement  
   
Question  
 
 Please elaborate more about filling procedures for an injunction against intermediaries to block 
access to infringing materials and information that copyright collecting societies must submit.  
Article 59a of the Copyright Act, No. 73/1972, as amended, rea ds as follows:  
 
 Article 59a  Organisations recognised by the Ministry in accordance with Article  26a, fourth 
paragraph, with regard to the provisions of Articles  23 and  23a, may request injunction against the 
commenced or imminent dissemination or other use  of any work covered by the recognition and 
protected by this Act, without having received authority to do so from the author or other 
rightholders of the work, subject to the fulfilment of other requirements for injunction laid down in 
the Act on conserva tory attachment, injunction, etc.  
 
 Provided that other requirements for injunction laid down in the Act on conservatory 
attachment, injunction, etc. are fulfilled, individual rightholders or their organisations may obtain 
an injunction against the communic ation by a service provider of data supplied by service 
recipients through communication networks, irrespective of the service provider 's responsibility for 
the communication or the automatic, intermediate or short -term storage of data. Moreover, an 
injunc tion may be obtained against a service provider 's storage of data supplied by a service 
recipient, irrespective of the service provider 's responsibility for the data. Where a demand for 
injunction is filed pursuant to this provision, the service recipient must, as far as feasible, be 
afforded a legal position similar to that of the defendant with regard to the protection of their 
interests at the court hearing for the injunction, in addition to being notified of the injunction 
order, in accordance with Arti cles 14 and  18 of the Act on conservatory attachment, injunction, 
etc., No  31/1990.  
 
 Injunction as referred to in this Article is in other respects governed by the Act on 
conservatory attachment, injunction,  etc. 
Article 24 of the Act on conservatory attac hment, injunction etc., No. 31/1990, provides that an 
interlocutory injunction be may sought at the local district commissioner against a commenced or 
imminent action by an individual or representative of a company or institution if the plaintiff 
presents proof or proves that it is likely that the action infringes or will infringe the plaintiff 's 
legitimate interests, that the defendant has already commenced the said action or will commence 
it, and the plaintiff 's interests will be lost or seriously damaged  if the plaintiff has to wait for a 
verdict by a court. If an interlocutory injunction is awarded the plaintiff must bring an affirming 
action against the defendant before a district court within a week.  
 
According to caselaw it will suffice to show that t he plaintiff (a copyright collecting society) has 
legitimate interests (on behalf of its right holders members) in blocking access to certain websites 
provided by an internet service provider where a large part of the files shared through the website 
const itute unauthorized dissemination of copyrighted works, cf. STEF vs. Simafelagid, District 
Court of Reykjavik, 17 October 2016, case E3784/2015, WT/TPR/M/361/Add.1  
 
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  see:https://domstolar.is/default.aspx?pageid=347c3bb1 -8926-11e5-80c6-
005056bc6a40&id=31e3ef7d -7b6f-48a7-85b6-a74cb6bfbf95  
 
Although it is not deliberated in the court 's decisions it is apparent that the plaintiff presented 
before the district commissioner and the district court information on copyrighted material 
available through file sharing via the infringing website and that the plaintiff (a copyright collection 
society) had legitimate interests in preventing the file sharing of ce rtain files/works owned by 
rights holders represented by the plaintiff.  
 
7. Page 64  Section 3.3.6.2  State -owned enterprises and privatization  
Question  
 
 Could Iceland please provide more details on the legislation or regulation about privatization for 
State -owned enterprises; specifically the objective and strategic direction related to how State -
owned enterprises are chosen for privatization or kept as state enterprises in conducting social 
and welfare - related mission?  
State -owned banks and other fin ancial institutions  
 
After the collapse of the banking system in Iceland in 2008, the majority of Icelandic banks and 
financial institutions were taken over by the state. A special legislation was passed defining the 
long term aim of the state to sell most of its shares in the se financial institutions when the time 
was right. According to the act no. 155/2012, on the sale process of the state´s holdings in 
financial undertakings, the Minister of Finance and Economic Affairs is authorised by law to sell, in 
whole or in part, sha res in all financial undertakings acquired after the collapse except 70% of 
Landsbankinn hf.  
 
Before sale is initiated the Ministry must receive special authority for each sale in the state budget 
act as well as having received proposal for each sale from Icelandic State Financial Investme nts 
(ISFI), which is a special "arm's length " agency created to manage ownership of banks on behalf 
of the Ministry of Finance and Economic Affairs. Before the actual sale can take place the minister 
shall prepare a memora ndum regarding the proposed sale process and submit to the Budget 
Committee and the Economic Affairs and Trade Committee of the Icelandic Parliament.  
 
The Minister shall decide whether a sale process shall commence in accordance with the contents 
of the me morandum. In his decision the Minister can amend individual components of the 
proposed sale process, inter alia taking into account the comments from the Committees on the 
memorandum. When a decision is made on the preparation and execution of a sale proce ss for a 
holding, emphasis shall be placed on an open sales process, transparency, objectivity and 
efficiency.  
 
Other state -owned enterprises  
 
The act 123/2015 on public finances defines methods for selling shares in enterprises where that 
state is a minor ity owner. The Minister of Finance and Economic Affairs has to receive special 
authority in the state budget act if the Icelandic State intends to sell such shares.  
 
If the state, however, owns a majority of a company or a whole company, a special legislat ion has 
to be passed by the Parliament before a sale can commence. The Minister of Finance must submit 
a bill to the Parliament addressing the purpose of the sale, method of the sale and the 
requirements which the sale will be based on. If the bill is pass ed as a law the Minister of Finance 
can proceed with the proposed sale. Emphasis shall be placed on an open sales process, 
transparency, objectivity and efficiency.  
 
No state -owned enterprises have been sold in recent years and there are currently no plans  for 
selling shares in state owned enterprises other than financial institutions. Due to this, criteria for 
defining what enterprises to sell have not been developed. However, the rational for state 
ownership of different enterprises will be defined more c learly than is currently the case in the 
state ownership policy which is now under revision.   
 WT/TPR/M/361/Add.1  
 
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  8. Page 58 Para 3.102; Page 59, Para 3.110 – 3.111 Technical Barriers to Trade  
Question  
 
 We note that during 2012 – 2014 Iceland notified 22 draft technical regulations under EEA 
Agreement. However, Para 3.110 states that Iceland has only made 2 notifications to the WTO 
TBT since 2000. Please clarify the reason for the difference in the number of notifications under 
the EEA Agreement and those notified to the WTO.  
While the notifications procedures under the TBT Agreement and the EEA Agreement are not 
completely identical, the Icelandic authorities are nevertheless taking active measures towards 
improving its notification of draft technical regulations to the T BT Committee.  WT/TPR/M/361/Add.1  
 
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  UNITED STATES  
PART I:  QUESTIONS ON THE SECRETARIAT REPORT (WT/TPR/S/361)  
 
1   ECONOMIC ENVIRONMENT  
 
Page 8, Paragraph 12:   The Secretariat 's Report notes that during the review period, SPS 
measures remain strict because Iceland 's domestic animals are highly susceptible to exotic pests 
and diseases.  Some imported products are prohibited while others are subject to controls and 
licensing requirements. On what basis are some of the imported products prohibited?  
 
The prohibition is  based on Iceland law, namely Act No. 25/1993 on Animal Diseases and their 
prevention and Regulation 448/2012 on the prevention of animal diseases spreading to Iceland. 
Iceland considers these measures to be in conformity with its international obligations . 
 
2 TRADE AND INVESTMENT  REGIME  
2.3 Trade Agreements and Arrangements  
2.3.1 WTO  
 
Page 26, Paragraph 2.15 :  The Secretariat report states that "there have been no notifications on 
TBT, import licensing and preferential rules of origin despite Iceland havin g measures or 
completing new preferential arrangements during the period. "  When does Iceland intend to 
submit the notifications related to TBT, import licensing, and preferential rules of origin, as 
required?  
 
The Icelandic authorities are actively workin g towards improving its notification performance for 
these areas.  
 
3   TRADE POLICIES AND PRACTICES BY MEASURE  
3.1 Measures Directly Affecting Imports  
3.1.1 Customs procedures and requirements  
 
Page 35, Paragraph 3.3:   This paragraph indicates that, accord ing to the World Bank 's Ease of 
Doing Business rankings, Iceland ranks 66th in the category for trading across borders when 
compared to its overall rank of 20th.  The lower rank is attributed primarily to high border 
compliance costs for imports and export s.  As with other OECD countries, Iceland 's time to export 
was 2 hours, while its time to import was 24 hours, twelve times the amount for exports.   Please 
explain the disparity between import and export times.  
 
In the opinion of the Icelandic government,  the World Bank 's conclusion does not accurately reflect 
the rate of dispatch in customs clearance. For a number of years, the Icelandic government has 
criticized the conclusions of the World Bank report. Iceland considers that the results do not 
provide a  true picture of import and export costs in Iceland. In order to correct the figures of the 
World Bank the Director of Customs has since 2013 returned detailed answers to questionnaires 
made by the World Bank about Trading across borders. Unfortunately, th e Customs Manager 's 
efforts to correction via the delivery of true information has not yielded reasonable results. In 
short the results of the Icelandic Directorate of Customs show that costs are comparable to costs 
in the other Nordic countries and as an example, the World Bank estimates that the cost of border 
compliance for imports in Iceland is 660 USD, while 125 USD in Norway. The environment for 
import is highly compatible between the countries and no explanation for this divide is at hand. 
The attach ed documents contain measures of delivery speeds in imports and exports that are 
processed from the Directorate of Customs computer system that provide a more realistic view of 
the customs clearance rate. According to the data, in 2016, the delivery time w as 95% of customs 
declarations in 19.01 (min / sec) exports, with a total of 100,536 reports processed there during 
the year. In imports, in 2016, the delivery time was 90% of customs duties 27.44 (min / sec), 
while deliveries were 497.329. The reason for the difference in handling speeds in import and 
export is that in general, goods in export are not included in product inspection but only 
documentary inspection. However, import in transit is liable to product and document inspection 
that takes longer tha n simple documentary review.  
 WT/TPR/M/361/Add.1  
 
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  3.2 Measures Directly Affecting Exports  
3.2.3 Export prohibitions, restrictions, and licensing  
 
Page 53 -54, Paragraph 3.78:   This paragraph indicates that Iceland adopted and entered into force 
the Law on the Export of Horses in 2011, replacing the previous legislation on the exportation of 
horses.  The new law amends the previous by removing certain restrictions and increasing the 
export fee three -fold.  Please explain why the fee increased three -fold.  Also, please provide mo re 
information on the export fee, such as the fee structure (i.e., numerical values of the prior export 
fee as compared to the new export fee).  
 
The export fee was increased from ISK 500 to ISK 1,500, in order to bear the costs of a specific 
fund which is supposed to handle the preservation of the Icelandic Horse breed. The fee remained 
unchanged for many years and was not increased in line with changes in price levels. To put the 
fee in context, ISK500 is just above the price of one fare with a local bus i n Reykjavik. On average 
the increased export fee is around 0.2% of the average export price for an Icelandic horse.  
 
3.3 Measures Affecting Production and Trade  
3.3.3 Technical barriers to trade  
 
Page 58, Paragraph 3.102:   The Secretariat Report states that Iceland notifies draft technical 
regulations to the EFTA Surveillance Authority and to DG Grow in the European Commission, and 
includes them in the TRIS database.  Does Iceland also notify draft technical regulations to t he 
WTO TBT Committee, in accordance with its transparency commitments under Article 2.9.2 of the 
WTO TBT Agreement?  
 
The Icelandic authorities are actively working towards improving its notification performance, 
including notifications of draft technical r egulations.  
 
Follow -Up Question:   Iceland states in its response to the two questions regarding 
notification under Section 3.3.3 that it is taking active measures towards improving its 
notification of draft technical regulations to the TBT Committee.  Can Iceland please 
explain how Icelandic authorities plan to improve the notification process?  Does the 
plan require a regulatory change or just process improvements?   
 
Page 59, Paragraph 3.111:   The Secretariat states that from 1 January 2012 to 30 April 201 7, 
Iceland made 22 notifications to the EFTA Surveillance Authority and the DG GROW TRIS database 
of draft technical regulations.  Why did Iceland not notify these draft technical regulations to the 
WTO TBT Committee as well, in accordance with its transpa rency commitments under Article 2.9.2 
of the WTO TBT Agreement?  
 
While the notifications procedures under the TBT Agreement and the EEA Agreement are not 
completely identical, the Icelandic authorities are nevertheless taking active measures towards 
improv ing its notification of draft technical regulations to the TBT Committee.  
 
3.3.4 Sanitary and phytosanitary requirements  
 
Page 60, Paragraph 3.116:   The Secretariat states that "Iceland notified two regular SPS measures 
to the World Trade Organization (WTO) between 1 January 2012 and 30 April 2017. "  As a 
member of the World Organization for Animal Health (OIE), the Codex Alimentarius Commission, 
and a contracting party to the International Plant Protection Convention (IPPC), can Iceland please 
explain why it has not notified an SPS measure to the WTO since 2012?   Have there been no 
regulatory changes in that time that would have an impact on trade?   Also, can Iceland please 
explain why it has not notified to the WTO amendments and technical legislation under the 
European Economic Area (EEA)?   
 
The Icelandic authorities are actively working towards improving its notification performance, 
including notifications of SPS measures.  
 
Follow -Up Question : The United States thanks Iceland for their comments on the SPS 
notification process.  However, can Iceland please explain how Icelandic authorities 
plan to improve the notification process?  Does the plan require a regulatory change or 
just process impro vements?  WT/TPR/M/361/Add.1  
 
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  Page 61, Paragraph 3.118:   The Secretariat states that "Iceland,  as a member  of the EEA, has 
adopted  EU legislation  on SPS measures  including  foodstuffs,  feed, and other food chain related  
issues. "  When Iceland "adopts EU legislation, " how are public comments being taken into account 
before adoption into Icelandic legislation?   How does Iceland ensure that the appropriate risk 
assessments have taken into account Iceland 's particular risks to human, animal, or plant health, 
as well as as sessment techniques by relevant international organizations?   When adopting EU 
legislation, please explain Iceland 's process in conducting the appropriate risk assessments 
relevant to their own consumer 's consumption and exposure levels, in order to determ ine their 
appropriate level of protection.   
 
Iceland, as a member of the EU internal market, is permitted to attend committee meetings held 
by the European Commission. Iceland however does not have the right to attend meetings of the 
Council or the Europea n Parliament. Iceland can therefore only have input at the drafting stage of 
Acts within the European Commission. However, due to administrative restraints, the attendance 
at these meetings is limited. When possible, the Icelandic government undertakes con sultations 
with the public and stakeholders when new legislation is being drafted within the EU.  
 
With regards to risk assessments, the European Food Safety Authority performs risk assessments 
which policy is based upon. Iceland is a member of the European  Food Safety Authority.  
 
Follow -Up Question :  Can Iceland explain what is meant by "when possible, " with 
respect to the Icelandic government undertaking consultations with the public and 
stakeholders when new legislation is drafted?  Do laws or rules exist  governing when 
the Icelandic government must hold consultations?  Must Iceland consider the received 
feedback from the public and stakeholders?  
 
Follow -Up Question : EU practices hazard -based rather than risk -based assessments.  
What measures does Iceland have in place that can guarantee that SPS regulations that 
Iceland adopts from the EU are not more trade restrictive than necessary?  
 
Follow -Up Question : In terms of notifying trading partners on adoption dates and entry 
into force dates, can Iceland pleas e clarify if they simply adopt the dates and 
requirements as printed in the EU Official Journal or is there a separate process for 
Iceland to codify the regulation into their domestic law?   
 
Follow -Up Question : Can Iceland confirm that since they are a me mber of the European 
Food Safety Authority (EFSA), they have no other domestic risk assessment body? Using 
pesticides as an example, if EFSA makes a determination that insufficient data has been 
provided by an applicant so no conclusion can be made, does I celand have a domestic 
process to come to their own conclusion?  
 
Page 61, Paragraph 3.119:   The Secretariat states that "Most EU food safety  rules are 
implemented  in Iceland, " and "Imported  food must  comply  with the relevant  requirements  that are 
at least equivalent  to those  set forth in the EU food law and animal  and plant health  rules. "  How 
does Iceland assess that EU legislation is "equivalent " to the plant and animal risks associated 
within the Icelandic territory?   As a WTO and the EEA member, can Ice land please explain the 
public notification process for amending legislation as part of the EEA?  If EEA measures are not 
being notified to the WTO, how would a trading partner know that a change has occurred?   How 
does Iceland ensure they have the appropr iate infrastructure in place to implement and oversee 
regulations promulgated for the EU?   Is there a clearly defined process to assess the fitness of 
purpose for the regulations being adopted?  
 
Rules regarding plant health and animal health, other than fish and aquaculture animals  are not 
incorporated into the EEA Agreement. Therefore, there is not assessment of equivalence in these 
categories.  
 
Although there may be a lack of notifications with regards to EEA measures, a trading partner can 
assume that the rules within Iceland are the same as within other EU or EEA Countries.  
  
As regards ensuring the implementation and oversight of regulations promulgated for the EU in 
field of food safety, the Ministry of Industries and Innovation and the Icelandic Foo d and 
Veterinary Authority cooperate in assessing EU Acts that are incorporated into the EEA Agreement. WT/TPR/M/361/Add.1  
 
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  The Icelandic Food and Veterinary Authority and local authorities run by the municipalities are then 
responsible for the enforcement of acts as they are  implemented into Icelandic law.  
  
With regards to the assessment of the fitness of purpose, Iceland can have input in the drafting 
stage within the EU in the European Commission Working Groups, with regards to the fitness of 
purpose. When adopted, Iceland  can furthermore request adaptations due to specific conditions 
that exist and are unique to Iceland.  
 
Follow -Up Question : Icela nd said in their response that "Although there may be a lack of 
notifications with regards to EEA measures, a trading partner ca n assume that the rules 
within Iceland are the same as within other EU or EEA Countries ".  Predictability is 
important for industry when shipping products to another country.  In order to ensure 
predictability, can Iceland explain where their regulations a nd requirements can be 
found on a public website?  If no public website exists with this information, how can an 
exporter know when Iceland 's requirements differ from EU requirements, and how 
would WTO members be able to provide input without a formal comm ent period?  As an 
EEA country, can Iceland clarify if they are obligated to adopt measures like the EU 's 
trade restrictive endocrine disrupter criteria, or can Iceland take a risk based approach?   
 
3.3.6 State trading, state -owned enterprises  and privatization  
3.3.6.2 State -owned enterprises and privatization  
 
Page 64, Paragraph 3.143:   As explained in the Secretariat Report, regarding state -owned 
enterprises (SOEs) and privatization, government involvement in Iceland 's economy is highly 
preva lent due to the near collapse of its financial sector in 2008, which necessitated a state 
takeover of banks.  The governance of SOEs is established in Iceland 's ownership policy, which is 
modeled a fter relevant OECD guidelines. The Report also indicates th at work is under way to 
update the ownership policy to better reflec t the updated OECD guidelines. Please provide 
information on how Iceland intends to update its ownership policy to better reflect the OECD 
guidelines.  
 
The main focus in the work on updati ng the ownership policies is on the following aspects:  
  
 To include a specific chapter on the rationale for state ownership as well as general 
reasons that can influence or drive the re -evaluation of the state 's involvement in 
companies.  
 More detail on sp ecific governance issues such as gender.  
 Setting guidelines on selecting board members.  
 More detail regarding form and structure of regular communication and information to be 
provided to the ownership steering unit.  
 
3.3.8 Intellectual property rights  
 
Page 68, Paragraph 3.159:  The Report states that further changes are foreseen in the near future 
to incorporate recently added EEA legislation.  Can Iceland provide more details on the specifics of 
such changes?    
 
Iceland is preparing to incorporate two n ew directives on intellectual property rights, namely a new 
trademark directive (directive 2015/2436 to approximate the laws of the Member States relating 
to trade marks) and a directive on trade secrets (directive 2016/943 on the protection of 
undisclosed  know-how and business information (trade secrets) against their unlawful acquisition, 
use and disclosure).  
  
The directives are expected to be fully incorporated into law by the end of next year.  
 
Follow -Up Question : Iceland states that a new directive is being prepared on trade 
secrets (directive 2016/943 on the protection of undisclosed know -how and business 
information (trade secrets) against their unlawful acquisition, use and disclosure). 
Could they describe the  changes from the current TS system?  Are Iceland 's changes 
meant to align with the recently enacted EU Trade Secrets Directive?  
 WT/TPR/M/361/Add.1  
 
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  3.3.8.2 Copyright  
 
Page 71, Paragraph 3.168:   The Secretariat Report notes that there have been several changes to 
the legal f ramework on copyright during the review period. The 1972 Copyright Law remains 
applicable, but was amended four times in relation to authors ' exclusive rights and collective 
agreements, implementation of a directive regarding orphan works, prolongation of the protection 
period for sound recordings, and copying for personal use.  Please provide further information on 
what each of the four amendments to the 1972 Copyright Law entail.  
 
Amendment Act No. 9/2016 to the Copyright Act No. 73/1972 mainly concerns two issues, i.e. to 
amend chapter I of the Act in line with the wording of the substantive provisions of Directive 
2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation 
of certain aspects of copyright and related rights in the information society, and to update and 
introduce new provisions on extended collective licencing. The chapter I amendments include 
updated wording for the concept of reprod uctions and introducing the act of making available 
instead of the concept of making public. The concept of publication is also updated. Provision on 
the legal protection of databases is updated and the interoperability of design protection and 
copyright p rotection is further clarified. The amendment Act introduced four new provisions for 
extended collective licences which are: (1) Contracts for reproductions  of copies and making such 
copies available in museums that fall under Article 12(1) of the Act; (2 ) Contracts for making 
copies of audiovisual broadcasts within public institutions for the benefit of blind and deaf; (3) 
Contracts for reutilization of archives of broadcasting organisations; (4) Contracts for any use of 
works in certain well defined inst ances (a general ECL clause).  
 
Amendment Act No. 10/2016 is a transposition Act for Directive 2012/28/EU of the European 
Parliament and of the Council of 25 October 2012 on certain permitted uses of orphan works into 
the Copyright Act No. 73/1972. The act defines the concepts of orphan work, diligent search for 
right holders that must be conducted before a work can be considered an orphan work, mutual 
recognition of EEA member states that a work is considered an orphan work and the end of an 
orphan work sta tus. Institutions covered by the Act are public libraries, schools, museums, 
archives, including audio -visual archives and public broadcasting organisations.  
 
Amendment Act No 11/2016 is a transposition Act for Directive 2011/77/EU of the European 
Parliame nt and of the Council of 27 September 2011 amending Directive 2006/116/EC on the term 
of protection of copyright and certain related rights. The Act provides for the coordination of the 
term of protection for authors of music and lyrics calculated from the  year of the last surviving 
author, whether it is the author of music or author of lyrics, effective from 1 November 2013. The 
act also provides for extension of the term of protection for performers of phonograms for 20 
years, from 50 years to 70 years ca lculated from the year of first publication or making available 
to the public. For the additional 20 years there is an annual remuneration for the right holders in 
phonograms. For this purpose the producer of a phonogram shall put aside 20 per cent of annu al 
the income for the phonogram for the benefit of the right holder. In the case where the producer 
of a phonogram has not made arrangements to make the phonogram publicly available for sale the 
right holder may withdraw his assignment of rights to the pro ducer and begin with a 'clean slate '. 
 
Amendment Act No. 109/2016 to the Copyright Act No. 73/1972 concerns revision of the copyright 
levy system for reproductions for private use. Amendment Act No. 109/2016 concerns the 
adoption of a new budget funded sch eme of fair compensation to authors for the private copying of 
their works corresponding to a percentage of the customs value of media and equipment capable 
of being used to make analogue or digital recordings for private use.  The Act stipulates that 
autho rs of works which have been broadcast, made accessible to the public in a manner enabling 
individual persons to gain access to the works wherever, whenever and through whatever device 
they choose, or released as audio or audiovisual recordings, are entitle d to fair compensation for 
the reproduction of the works for private use. The compensation is to be paid annually to union of 
collective management organisations  from an appropriation in the National Budget. The payment 
shall constitute a fair compensation  for the reproduction of the abovementioned works for private 
use, and shall be calculated as the following percentages of the customs value of tapes, hard 
disks, optical disks or other storage media, whatever their form, capable of being used to make 
analogue or digital recordings of sound or images, as well as of devices intended to be used to 
make such recordings for private use and which have been imported into, or manufactured in, 
Iceland in the past year:  
 WT/TPR/M/361/Add.1  
 
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  Tariff heading  Description  Percentage (%) of 
customs value  
8523.2922 –
8523.2929  unrecorded magnetic tapes  2 
8523.2912 –
8523.2919  unrecorded videotapes  2 
8523.4112 og 
8523.4113  optical disks  2 
8523.5111 og 
8523.5119  semiconductor memory devices (USB memory keys)  4 
8523.5211 og 
8523.5219  chip cards (SD cards)  4 
8471.3001 –
8471.4909  laptops, tablets and computers  1 
8471.7000  external data storage units (external disk drives, housings with in -built 
hard drives) up to 12 TB  4 
8519.8110 –
8519.8990  sound recording apparatus  1 
8521.1029  
8521.9023  video recording apparatus  1 
8527.1303  reception apparatus for radio broadcasting, with sound recording 
apparatus  2 
8517.1200  hand units for mobile telephone networks or other wireless networks, 
with the capacity to record sound and images  1 
 
The compensation shall be paid to union of collective management organisations  which have been 
recognised by the Minister as competent to exercise such rights on behalf of authors. The 
organisations shall distribute the compensation to their member associations, after deducting a 
reasonable administration fee. The resolution committee set up pursuant to Article 57 of the 
Copyright Act shall, at intervals no longer than three years, review the basis used to calculate fair 
compensation pursuant to the third paragraph, and  submit any proposals for changes to the 
Minister.  
 
The amendment was called for by lobbying groups of rightholders who demanded a broadening of 
the basis on which the copyright levy is calculated, taking recent technical developments into 
account, such th at the levy should be imposed with regard to all types of multifunction devices 
capable of being used to record and reproduce protected audio and audiovisual material, including 
mobile telephones, computers, external disk drives, hard disk drives (HDD) and  similar equipment 
with audiovisual capabilities. Pursuant to Article 11, first paragraph, of the Copyright Act, No 
73/1972, natural persons have the right to make copies of copyright -protected works and material 
for private use, provided that the copying activity does not take place for commercial purposes. 
Previous regime for levies, regulation No 125/2001, contained detailed provisions for the 
implementation of Article 11, third paragraph, of the Copyright Act, which stipulated that the 
authors of works which have either been broadcast or released as audio or audiovisual recordings 
were entitled to a special compensation for the aforementioned copying by natural persons for 
private use on tapes, hard disks, optical disks or other materials, whatever their  form, capable of 
being used to make analogue or digital recordings of sound and/or images. According to Article 
5(2)(b) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on 
the harmonisation of certain aspects of copyrig ht and related rights in the information society 
(hereinafter 'the Directive '), the Member States may provide for exceptions to or limitations on the 
reproduction right provided for in Article 2 of the Directive in respect of reproductions on any 
medium ma de by a natural person for private use and for ends that are neither directly nor 
indirectly commercial, on condition that the rightholders receive fair compensation which takes 
account of the application or non -application of technological measures referr ed to in Article 6 of 
the Directive to the work or subject -matter concerned. Recital 35 of the preamble to the Directive 
recalls the principle that when exceptions or limitations are codified in law, rightholders should 
receive fair and adequate compensati on for the use made of their protected works or other 
subject -matter. When deciding on the form, arrangement and level of the compensation, account 
should be taken of the particular circumstances of each case, including the harm potentially 
sustained by th e rightholders as a result of the act in question. An assessment of this will not 
necessarily lead to compensation being awarded to rightholders. It may be considered sufficient 
for the rightholders to receive payment in some other form, for instance as pa rt of a licence fee. 
Furthermore, technological protection measures implemented in accordance with Article 6 of the 
Directive have the potential to completely prevent private copying, thus extinguishing the 
rightholder 's right to compensation. In other cas es, such as in the case of private photocopying, 
the harm sustained by the rightholder is too insignificant for any obligation for payment to arise. WT/TPR/M/361/Add.1  
 
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  Notwithstanding the aforementioned considerations regarding the right of rightholders to 
compensation, reci tal 36 of the preamble to the Directive states that Member States may provide 
for fair compensation for rightholders when applying the optional provisions on exceptions or 
limitations which do not require such compensation. Recital 37 states that existing national 
schemes on reprography do not create major barriers to the internal market. Member States 
should thus be permitted, in respect of reprography, to provide for an exception to or limitation on 
authors ' exclusive reproduction right. Recital 52 of the  preamble states that when implementing an 
exception to or limitation on private copying in accordance with Article 5(2)(b), Member States 
should likewise promote the use of voluntary measures to accommodate achieving the objectives 
of such exception or li mitation. If, within a reasonable period of time, no such voluntary measures 
to make reproduction for private use possible have been implemented, Member States may take 
measures to enable beneficiaries of the exception or limitation concerned to avail them selves of it. 
The recital further states that voluntary measures by rightholders, including agreements concluded 
with other interested parties, as well as measures taken by Member States, do not prevent 
rightholders from applying technological measures whi ch are consistent with exceptions or 
limitations laid down in national law in accordance with Article 5(2)(b) of the Directive, taking 
account of the condition of fair compensation under that provision and the possible differentiation 
between various condi tions of use in accordance with Article 5(5) of the Directive, such as 
controlling the number of reproductions. In order to prevent abuse of such measures, any 
technological measures applied in their implementation should enjoy legal protection. Recital 38  of 
the preamble to the Directive establishes a distinction between analogue and digital private 
copying. The two types of copying differ, amongst other things, in that harm sustained by 
rightholders as a result of private photocopying is not considered to  warrant the payment of 
compensation, whereas the authors of works which have either been broadcast or released as 
audio or audiovisual recordings, and which are copied to blank tapes, disks or other types of 
storage media, are considered to be entitled to  a compensation for copying of this kind, regardless 
of whether it takes place by analogue or digital means, see Article 5(2)(b) of the Directive. The 
private copying exception has been interpreted as the right of natural persons to make copies for 
their o wn personal use or for other natural persons with which they have a personal relationship, 
such as family members, friends, acquaintances, or even close colleagues. An aspect to consider, 
however, is that the weaker the personal relationship, the higher th e probability that the copying 
must be considered as taking place for commercial purposes. In this context, regard can be had to 
the judgment of Reykjavík District Court of 3 March 2008 in Prosecution v Bjarki Magnússon et.al. 
(Case No S -1743/2007) where t he Court held that the loose relationship between people who only 
had in common the activity of sharing copyright -protected material over the internet was not 
covered by the concept of 'friends ' elaborated on the basis of Article 11, first paragraph, of th e 
Copyright Act, in the form predating the amendment brought about by Act No 9/2006. The 
Supreme Court of Iceland upheld the District Court 's judgment on this point (judgment delivered 
on 11 June 2009 in Case No 472/2008). The copyright levy was introduced  in 1984 by Act No 
78/1984 in order to ensure payment of compensation to authors for such photocopying, 
hectographing, analogue audio recording (recording on audiotape and audiocassettes using 
magnetic tape recorders) and analogue audiovisual recording (re cording on videotape using 
magnetic videotape recorders) as took place in accordance with Article 11, first paragraph, of the 
Copyright Act. The levy was originally imposed on equipment mainly intended to be used for 
recording purposes, such as audiocasset te and videocassette recorders, as well as on blank 
audiotapes, audiocassettes, and videocassettes. The early 1990s saw the start of a development 
characterised by the fusion of information technology, telecommunications and media. This opened 
up the possi bility of digital copying, which soon became widespread, in particular with the advent 
of writable optical disks (CD -R), optical disk burners in computers and, later, high -speed internet 
connections. In its review of a bill subsequently adopted as Act No 6 0/2000, the Althing Education 
Committee added the provisions that now make up Article 11, third to sixth paragraphs, of the 
Copyright Act. The Education Committee 's report included, inter alia, the following comments 
(Parliamentary Document 1110, Case 325 presented at the 125th parliamentary session, 1999 to 
2000): "Rapid technological advances and more efficient methods of distributing intellectual 
property are liable to seriously disrupt the structures protecting the rights of authors, performers 
and prod ucers. This is true in particular of private copying. The commentary accompanying a bill to 
amend the Copyright Act, presented at the 106th parliamentary session, 1983 to 1984, stated that 
with regard to private copying, it should be regarded as appropriat e and, in fact, a matter of 
course to compensate rightholders for the harm sustained as a result of the fall in sales of audio 
recordings to which such copying has led, in addition to payments for the increased use of 
intellectual property which will be th e inevitable result of the new technologies. To accommodate 
these considerations, an amendment to Article 11 of the Copyright Act was implemented by Act WT/TPR/M/361/Add.1  
 
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  No 78/1984, introducing a levy on blank tapes and/or recording equipment. In the present time, 
digital copying for private use has become possible. Digital recordings now hold a very high 
standard, and digital copies can reasonably be said to retain the quality of the original. For these 
reasons, a new proposal to amend Article 11 of the Copyright Act is in troduced, whereby 
rightholders would be entitled to a special compensation for the recording of their works for private 
use on tapes, hard disks, optical disks or other materials, whatever their form, capable of being 
used to make analogue or digital recor dings of sound or images. " The report did not address the 
difficulties which accompany the imposition of a copyright levy on equipment and media used for 
digital recordings, considering that the equipment in question is usually constituted not by 
dedicated  recording devices, but by multifunction equipment such as computers, cameras, mobile 
telephones and hard drives. Computers and external disk drives are important pieces of equipment 
for the recording of artistic endeavours and all kinds of creative produc tion. They are in this sense 
the working equipment of architects, advertising agencies, programmers, designers, film makers, 
photographers, printers, writers and musicians, all of whom use this type of equipment to record 
their work. In this way, hard disk s and memory cards used in computers, cameras and mobile 
telephones have taken over the roles previously played by the film and the magnetic tape. 
Furthermore, computers and hard disk drives play a key role in the fulfilment of services provided 
by telecom munications firms, IT outsourcing companies and data centres to their clients and the 
ultimate beneficiaries of those services. Hard disks or memory cards are now built into a multitude 
of devices. This includes mobile telephones —which have memory cards to  store photographs and 
music files; DVD players —which have hard disks to record television programmes; set -top 
boxes/decoders —which have hard disks to record programme content; portable media players 
(iPod) —which have internal memory cards to store audio a nd video files; computer game 
consoles —which have hard disks to save game progress and download new games from the 
internet; and cameras —which have internal memory cards to store photographs. It is noteworthy 
that when the amendment brought by Act No 60/20 00 was adopted, no research appears to have 
been available on what percentage of digitally copied material is constituted by copyright -
protected works, as compared to material which is either not protected by copyright or created by 
the owners of the equip ment themselves. Nevertheless, the Althing Education Committee appears 
to have considered this point of view to a certain extent, as witnessed by the wording of Article 11, 
fifth paragraph, second sentence: "The amounts provided for in the fourth paragraph , for tapes, 
disks, CDs or other materials, may be lowered if it can be assumed that only a portion of them is 
intended for recording in accordance with the third paragraph. " As it happened, the possibility to 
reduce the levy amounts came into the spotligh t following the issuing of Regulation No 125/2001, 
when the Minister of Education in office at the time received harsh criticism from netizens and 
other people who had a need for digital storage media such as unrecorded optical disks in their 
work. Followi ng a barrage of protestations, addressed to the Minister by email, on blog sites and in 
the media, the intense pressure led to the levy amounts stipulated in the Regulation to be 
reduced. Thus, the copyright levy on blank optical disks was reduced from ISK 35 to ISK17 (see 
Regulation No 186/2001 amending the Regulation on the imposition of copyright levies pursuant to 
Article 11, third and fourth paragraphs, of the Copyright Act). It should be mentioned that, even if 
ISK35 cannot be considered a large amount  of money, it was nevertheless a substantial 
percentage of the cost of a blank optical disk at the time, such disks selling for a retail price of a 
little over ISK100. In the period which has elapsed since the copyright levy was extended to digital 
media t hrough Regulation No 125/2001, the following development has occurred in the revenue 
from the levy, as imposed by customs authorities at the time of import of the products:  
 
ISK63.1m in the 1999 National Budget;  
ISK74.3m in the 2000 National Budget;  
ISK80m  in the 2001 National Budget;  
ISK88.5m in the 2002 National Budget;  
ISK104.3m in the 2003 National Budget;  
ISK92.5m in the 2004 National Budget;  
ISK82.2m in the 2005 National Budget;  
ISK83.8m in the 2006 National Budget;  
ISK80.6m in the 2007 National Budge t; 
ISK37.6m in the 2008 National Budget;  
ISK43.6m in the 2009 National Budget;  
ISK42.3m in the 2010 National Budget;  
ISK34.1m in the 2011 National Budget;  
ISK26.6m in the 2012 National Budget;  
ISK19.9m in the 2013 National Budget;  WT/TPR/M/361/Add.1  
 
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  ISK11.5m in the 2014 National Budget;  
ISK7.8m in 2015;* 
ISK22.6m in the 2016 National Budget.** 
*) According to figures provided by "Innheimtumiðstöð gjalda ". 
**) National Budget, provisional figure.  
 
The above figures only show copyright levy revenue as paid by the National T reasury to the union 
of collective management organisations "Innheimtumiðstöð gjalda " (IHM, the 'Levy Collection 
Centre '). The final revenue is reduced by the amount of any reimbursements granted by IHM to 
individual entities paying the levy. However, info rmation about such reimbursements is not 
publicly available. For the sake of comparison, in 2014, the total amount of fair compensation, 
whether collected in the form of copyright levies or provided through government funds, was 
€32.5m in Belgium, €3.8m in  Denmark, €4.9m in Finland, €228.3m in France, €35m in the 
Netherlands, €5m in Norway, and €13m in Sweden.  
 
In the period referred to above, a further development is reflected in the drop in sales of blank CD -
R and DVD -R/DVD+R disks and in the fact that di gital copying for private use now takes place 
increasingly within the hardware itself, that is in computers and other devices equipped with hard 
disks or memory cards, such as external disk drives, mobile telephones and cameras. Although no 
actual survey h as been conducted in order to map changes in the use of digital devices and media 
for the copying of protected works for private use, there are nevertheless clear indications that 
private copying of audio and audiovisual recordings has declined considerabl y. 
 
A report by Statistics Iceland covered the dwindling DVD market with regard to both sales and 
rentals.5 A study by a focus group set up by the Minister of Education, Science and Culture to 
analyse obstacles in the way of implementing streaming services ,6 which was published in June 
2014, describes the large increase in the share of streaming services in the music and video 
consumption market. It also states that a larger offer of streamed music has changed the way in 
which music is consumed. In Iceland,  users have had access to the domestic music streaming 
service Tonlist.is for a number of years. In 2012, the foreign music streaming services Deezer, 
Rdio and Spotify started offering their services in Iceland. 2015 saw the addition of the streaming 
service Tidal. Those subscribing to the IPTV services of telecom firms Síminn and Vodafone have 
enjoyed access to audiovisual material through their so -called "time roaming " and video -on-
demand services (VOD and S -VOD services). In addition, Icelandic users can stream films and 
television programmes through the streaming services Filma.is, Google Play and Netflix. In the 
future, these developments will inevitably lead to a de cline in the copying of music and the 
recording of films and television programmes for private use. Instead of owning physical copies of 
music and films, users will increasingly access such material through subscription streaming 
services. A larger offer o f streamed music and films will thus reduce the need to "own a copy " in 
order to enjoy music and films. For this reason, the "harm" sustained by rightholders as a result of 
the private copying of music and films will foreseeably diminish in the future. It is inevitable for 
this development to lead in due course to a review of the schemes used to pay compensation to 
authors for the copying of their works for private use. At the level of the European Union, there is 
a long -standing effort to survey the differ ent regulatory systems in place in the Member States 
with regard to private copying levies, with a view to possible harmonisation. In 2010, European 
Union Member States collected over €600 million in private copying levies.7 There are considerable 
differen ces between the countries as regards the equipment covered by such levies, and the 
amounts charged vary. In the opinion of the European Commission, such differences constitute an 
obstacle to the smooth functioning of the inner market, as shown by the compa rison in the table 
below. For example, a blank DVD -R disk was in 2010 subject to a levy of €1.00 in France, €0.48 in 
Denmark, €0.0139 in Germany, 2.5% of the sales price in Poland and 6% of the import price in 
Lithuania. In the same year, a portable media player (MP3 player) was subject to a levy of €1.00 –
20.00 (depending on memory capacity) in France, was not levied at all in Denmark, €5.00 in 
Germany, 3% of the sales price in Poland and €0.43 –11.58 (depending on memory capacity) in 
Lithuania. A mobile tel ephone with an internal memory of 32Gb was subject to a levy of €36.00 in 
Germany (provided it was equipped with a touch screen), €18.00 in Hungary, €10.00 in France, 
€4.34 in Lithuania, €0.9 in Italy and 0.5% of its sales price in Romania. The Commission 
                                                
5 Statistics Iceland news release No 46/2015, publication date 12  March  2015.  
6 Report available at the following address: 
http://www.menntamalaraduneyti.is/media/frettir2014/Streymithjonusta -a-Islandi -fyrir-kvikmyndir, -
sjonvarpsefni -og-tonlist, -skyrsla -fyrir-vef.pdf . 
7 European Commission press release IP/13/80, dated 31  January 2013 . WT/TPR/M/361/Add.1  
 
- 90 - 
 
  Communication of 24 May 20118 on a single market for intellectual property rights stated that 
private copying and copyright levies constituted a field where harmonisation was needed. In 
November 2011, Internal Market and Services Commissioner Michel Barnie r entrusted António 
Vitorino, former Commissioner for Justice and Internal Affairs, with the task of presiding over a 
stakeholder dialogue on levies. António Vitorino 's report, presented on 31 January 2013,9 
addresses various issues that relate to the chal lenges posed by the Member States ' different 
systems of imposing copyright levies and their impact on the free movement of products which are 
subject to such levies within the internal market. The report concludes that despite the flaws of the 
arrangements  currently in place for the collection of copyright levies, and despite technological 
advances in the distribution of music and films, it is foreseeable that such levies will continue to be 
needed for a number of years and will therefore inevitably continu e to apply for a certain period of 
time. The report then lists a number of recommendations aimed at adapting the current levy 
systems to new realities and new technologies. As already stated, the claim by rightholders for 
compensation for the private copyi ng of protected works is based on the provision contained in 
Article 5(2)(b) of Directive 2001/29/EC of the European Parliament and of the Council on the 
harmonisation of certain aspects of copyright and related rights in the information society. Recital 
35 of the preamble to the Directive recalls the principle that when determining the form, detailed 
arrangements and possible level of compensation, an assessment of the interests at stake should 
take place. Thus, the assessment will not necessarily lead to a decision to award compensation to 
rightholders. Article 1, item b, of the bill lays down the principle that fair compensation should be 
calculated on the basis of a specified percentage of the customs value of media and equipment 
used for copying purpose s and which have been imported into, or manufactured in, Iceland in the 
past year. This is intended to create a link between the compensation and those media and 
devices capable of being used to create copies of copyright -protected material. In recent year s, 
the European Court has clarified a number of issues relating to the basis for the imposition of 
copyright levies and to private copying. In the so -called Padawan case,10 the Court considered the 
interpretation of Article 5(2)(b) of Directive 2001/29/EC w ith regard to the imposition of a 
copyright levy on equipment intended for both private and professional use. The judgment stated 
that although the obligation to pay the copyright levy is that of the distributor of the equipment, 
the ultimate liability for  the payment rests with the user pursuant to recital 31 of the preamble to 
the Directive. The Court held that a payment obligation is sufficiently justified where it can be 
presumed that the buyer of the equipment would use it to make copies of copyright -protected 
works. The Court also concluded that a copyright levy should only be paid in the case of the sale of 
reproduction equipment to natural persons who use it for the purposes of private copying, and not 
in the case of the sale of equipment to undertak ings and professional persons, that is for 
commercial use. The judgment is considered to set precedent for countries, including Iceland, 
where no exception to the obligation to pay copyright levies with regard to the sale of reproduction 
equipment to under takings and professional persons is provided for. This part of the Court 's ruling 
is potentially relevant for the Icelandic Copyright Act, considering that Article 11 of the Act does 
not allow for any reimbursements of the levy in the case of professional uses. The Court further 
ruled that fair compensation must be calculated on the basis of the criterion of the harm caused to 
authors of protected works by the introduction of the private copying exception into national law. A 
case known as Thuiskopie, Opus11 concerned a dispute as to whether a German seller or a Dutch 
buyer was liable for the payment of copyright levies to a Dutch organisation representing 
rightholders. The judgment confirmed the principle previously established in the Padawan case, 
namely th at Article 5(2)(b) of Directive 2001/29/EC was to be interpreted as meaning that the 
final user who carries out, on a private basis, the reproduction of a protected work is responsible 
for paying the copyright levies. However, the Court held that it is ope n to the Member States to 
decide the manner in which copyright levies are added to the final sales price paid by the buyer for 
the reproduction equipment, and that each Member State is responsible for ensuring that 
rightholders are paid copyright levies by  the seller, even where the latter is established in another 
Member State, in those cases where it is impossible to ensure recovery of the levies from the 
                                                
8 Communication from the Commission to the European Parliament, the Council, the European 
Economic and Social Committee and the Committee of the Regions : A Single Market for intellectual 
property rights boost ing creativity and innova tion to provide economic growth, high quality jo bs and first 
class products and services in Europe, Brussels, 24.5.2011, COM(2011) 287 final . 
9 Recommendations resulting from the Mediation on Private Copying and Reprography Levies, 
António Vitorino , published in Brussels,  2013.  
10 Padawan SL v Sociedad G eneral de Autores y Editores  (SGA E), Case C -467/08,  judgment of the 
European Court of Justice of 21  October 2010 . 
11 Stichting de Thuiskopie v Opus Supplies Deutschland GmbH, Mijndert van der Lee og Hananja van 
der Lee, Case C -462/09,  judgment of the Europe an Court of Justice of 16  June 2011 . WT/TPR/M/361/Add.1  
 
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  purchaser. A case known as Copydan Båndkopi12 concerned a dispute in relation with the 
imposition of a  copyright levy on detachable mobile telephone memory cards (SD cards) capable of 
being used by the users of the telephones to copy files, including music and films, for private use. 
Nokia Danmark refused to pay levies to Copydan Båndkopi, a Danish body re sponsible for the 
administration of copyright levies in that country with respect to the abovementioned memory 
cards. The Court, referring to the Padawan case,13 considered that the obligation to pay copyright 
levies is justified by the simple fact that the  memory cards may be used by the final users of the 
telephones to record audio and audiovisual material for private use, and that it is unnecessary to 
show that private copying has actually taken place. The appropriate level of 'fair compensation ' in 
the form of copyright levies should be determined by whether the capacity of the equipment to 
make copies for private use is regarded as its purpose, or as an ancillary function, and by 
reference to the relative importance of the medium 's capacity to reproduce works for private use. 
In cases where the harm sustained by the rightholder is regarded as minimal, the capacity of the 
equipment to reproduce works is not considered to automatically warrant the payment of 'fair 
compensation ' in the form of copyright levi es, see recital 35 of the preamble to the Directive. The 
judgment states that it is within the discretion of the Member States to set the threshold below 
which the private copying exception does not give rise to a payment obligation, that is, below 
which t he prejudice sustained by rightholders as a result of private copying may be classified as 
'minimal ', see recital 35 of the preamble to the Directive. However, the Member States must apply 
the principle of equal treatment and ensure that comparable situati ons are treated in comparable 
ways, unless otherwise justified by objective reasons. The judgment considered whether it would 
be justified to make a distinction between the internal memories of devices and detachable 
memory cards with regard to their copyi ng capabilities, stating that in comparable situations the 
discriminative application of copyright levies must be objectively justified. An objective justification 
could be seen to exist where rightholders receive fair compensation in other ways, for examp le 
where music is downloaded to a portable media player (MP3 player) or mobile telephone from a 
legitimate source, such as a music streaming service, which includes a payment to rightholders in 
its subscription fee. The judgment also considered the questio n whether the application by 
rightholders of so -called technological measures to prevent the reproduction of copyright -protected 
material, see Article 50b of the Copyright Act, affects rightholders ' claim to 'fair compensation ' for 
the reproduction of thei r works. In the view of the Court, the existence of technological measures 
can have no effect on the requirement to pay fair compensation, although it may have an effect on 
the actual level of compensation to which rightholders are entitled as determined b y a Member 
State. The Court considered that any authorisation given by a rightholder for the reproduction for 
private use can have no bearing on the fair compensation payable. One of the important questions 
referred to the Court was whether the application  of a copyright levy on the sale of mobile 
telephone memory cards was justified in cases where it is not known whether the final buyer is an 
individual (who might use the card for private copying) or a business customer. The Court held it 
as justified: (1)  For national legislation to require payment of a levy in such situations, on 
condition that the requirement to pay could be justified by the difficulty of determining the 
category of the final user of the memory card;(2) For producers and importers to be exempt from 
the requirement to pay if they can establish that the memory cards are supplied to undertakings 
for professional purposes unrelated to private copying; (3) For the exemption not to be restricted 
to the supply of business customers registered as  exempt with the rightholder organisation 
responsible for administering the copyright levy; (4) For rules to exist on the reimbursement of the 
copyright levy which ensure that the reimbursement is effective and not excessively difficult in 
practice; (5) Fo r only the final user to have the option to obtain reimbursement of the copyright 
levy by submitting an appropriate application to the organisation responsible for administering the 
levy.  A further question referred to the Court was whether it is compatib le with EU law to require 
fair compensation for copying carried out with the aid of equipment belonging to a third party. In 
its answer, the Court pointed out that pursuant to Article 5(2)(b) of Directive 2001/29/EC, the 
private copying exception is applic able to "reproductions on any medium ", and that the provision 
does not contain any reference to the legal nature of the connection which may exist between the 
natural person who makes the reproduction and the device used. The Court considered the 
question to fall short of the criteria laid down in the provision, leaving each Member State free to 
decide whether to include such a requirement in its national legislation. The Court was also asked 
to rule on the question whether it is compatible with EU law to r equire fair compensation to be 
paid to rightholders in respect of copies made using unlawful sources, that is in cases where 
                                                
12 Copydan Båndkopi v Nokia Danmark A/S, Case C -463/12,  judgment of the European Court of 
Justice of 5  March 2015 . 
13 Padawan SL v Sociedad General de Autores y Editores  (SGAE), Case C -467/08,  judgment of the 
European Cou rt of Justice of 21  October 2010 . WT/TPR/M/361/Add.1  
 
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  copyright -protected works have been made available to the public without the rightholder 's 
consent. The Court held that it was nece ssary, in order to maintain a fair balance between the 
interests of the copyright holders and those of the users, for a private copying levy system to 
distinguish the situation in which the source from which a reproduction for private use has been 
made is lawful from that in which that source is unlawful. Consequently, the Court ruled that 'fair 
compensation ' should not be applied for copies made from unlawful sources, that is in cases where 
works are made available to the public without the rightholder 's consent. In this regard, the Court 
held that Article 5(2)(b) of Directive 2001/29/EC should be given a restrictive interpretation such 
that the provision should not be understood as requiring copyright holders to tolerate 
infringements of their exclusive re production rights which may accompany the making of copies for 
private use. The so -called Reprobel case14 concerned the interpretation of the concept of 'fair 
compensation ' contained in Article 5(2)(a) of Directive 2001/29/EC and the question of whether it 
is justified to implement a copyright levy with regard to multifunction devices with reproduction 
capabilities. The Court held that the concept of 'fair compensation ' should be interpreted differently 
according to whether the reproduction is carried out by  a user for private use or directly or 
indirectly for commercial purposes. According to the Court, the harm to be considered is the actual 
harm sustained by copyright owners as a result of the copying activity, rather than any 
hypothetical harm. A case kno wn as ACI Adam15 concerned the compatibility of Article 16 of the 
Dutch Copyright Act with Article 5(2)(b) of Directive 2001/29/EC, which relates to the private 
copying exception. According to Article 16 of the Dutch Copyright Act, the reproduction of a wor k 
or a part thereof was not regarded as a copyright infringement provided that the reproduction was 
made for ends that were neither directly nor indirectly commercial and that it was intended 
exclusively for the own practice, study or use of the natural pe rson making the reproduction. This 
provision of the Dutch Copyright Act had been interpreted as also conferring the right to produce 
copies from a source made accessible without the authorisation of the rightholder, such as illegal 
downloads from the inter net. The Dutch government submitted that the private copying exception 
would no longer apply to the reproduction of works using unlawful sources, although such copying 
activities would not be made subject to penalties. At the end of 2012 the Dutch parliame nt 
rejected this proposal, opting instead for the temporary imposition of a copyright levy on certain 
digital equipment and media. This led to a series of court cases brought by the manufacturers and 
importers of blank data media (CD, CD -R) against two Dut ch rightholders ' organisations. The 
manufacturers and importers maintained that they should not be required to pay copyright levies 
in relation to copying from unlawful sources, considering that only copies made from lawful 
sources were covered by the priv ate copying exception provided for in law. They maintained that 
as a consequence of this, the level of the copyright levies should not take into account the harm 
sustained by rightholders as a result of copying from unlawful sources. ACI Adam and a number of 
other importers appealed their cases to the Supreme Court of the Netherlands. The Supreme Court 
decided to stay the proceedings and to seek the guidance of the European Court. The opinion by 
Cruz Villalón, Advocate General at the Court, which was follow ed by the Court in its entirety, 
stated that various EU Member States, including Denmark, already had legislation in place making 
the private copying exception conditional on the copying activity having a lawful basis. The opinion 
also referred to rulings by national courts in the EU Member States where the private copying 
exception had already been interpreted as excluding copies made from unlawful sources. On the 
other hand, the opinion pointed out that the question whether copies made from unlawful sourc es 
are covered by Article 5(2)(b) of Directive 2001/29/EC had not yet been taken up by the European 
Court. The Court observed that Article 5(2)(b) of the Directive contains no express indication as to 
whether the sources from which copies are made should b e specifically lawful or unlawful. The 
Court stated that, however, one of the main objectives of Directive 2001/29/EC was to strengthen 
the level of protection of intellectual property, and that this entailed a restrictive legal 
interpretation of the excep tions and limitations provided for in Article 5 of the Directive, and an 
obligation on the part of the Member States to respect the three -step test laid down in Article 5(5). 
For the purpose of applying these principles, in particular the restrictive inter pretation of the 
exceptions to and limitations on authors ' exclusive right, the private copying exception should be 
interpreted as excluding copies made from unlawful sources. The Court 's conclusion is in line with 
the requirement of Article 5(5) of the Di rective to apply the three -step test. Had the Court 
accepted the arguments according to which the private copying exception should extend to 
reproduction from unlawful sources, such an outcome might have contributed to an increase in the 
distribution of co pyright -protected material without the rightholder 's consent, thereby eroding the 
                                                
14 Hewlett -Packard Belgium SPRL v Reprobel SCRL, intervention by Epson Europe,  judgment of the 
European Court of Justice of 12  November 2015 in Case C -572/13 . 
15 ACI Adam BV et al. v Stichting de Thuiskopie, Stichting Onderhandelingen Thuiskopie vergoeding, 
Case C -435/12,  judgment of the European Court of Justice of 10  April 2014 . WT/TPR/M/361/Add.1  
 
- 93 - 
 
  basis for the lawful sale of such material. Such an outcome would also have contravened the 
principle that exceptions and limitations must neither conflict with the normal exploitation of a 
work or other subject -matter nor unr easonably prejudice the legitimate interest of the rightholder. 
In a case known as EGEDA,16 an answer was sought to the question whether Member States are 
free to finance 'fair compensation ' for private copying in accordance with Article 5(2)(b) of 
Directiv e 2001/29/EC through contributions from the State budget. The Supreme Court of Spain 
referred the matter to the European Court of Justice for a preliminary ruling in a case concerning 
the question whether the provisions of Spanish copyright legislation on private copying were to be 
considered compatible with the aforementioned provision of Directive 2001/29/EC. The Supreme 
Court of Spain referred the following questions to the European Court: „(1) Is a scheme for fair 
compensation for private copying compat ible with Article 5(2)(b) of Directive 2001/29/EC where 
the scheme, while taking as a basis an estimate of the harm actually caused, is financed from the 
General State Budget, it thus not being possible to ensure that the cost of that compensation is 
borne  by the users of private copies? (2) If the first question is answered in the affirmative, is the 
scheme compatible with Article 5(2)(b) of Directive 2001/29/EC where the total amount allocated 
by the General State Budget to fair compensation for private c opying, although it is calculated on 
the basis of the harm actually caused, has to be set within the budgetary limits established for 
each financial year?  The opinion of one of the Court 's Advocate Generals concluded that 
compensation schemes such as the Spanish one need not be considered to be incompatible with 
European law. In support of this, the opinion listed three arguments: (1) While Directive 
2001/29/EB identifies rightholders as the beneficiaries of fair compensation, it does not specify 
how the c ompensation should be financed: (2) The case -law of the Court, including its judgment in 
the so -called Padawan case, does not establish that the financing of fair compensation through 
contributions from the State Budget is incompatible with the provisions of Directive 2001/29/EC; 
(3) Given the current state of technological development, topics such as copyright levies should 
not be at the centre of the discussion of fair compensation for private copying.  In its ruling, 
however, the Court departed to a sign ificant degree from the opinion of the Advocate General. The 
Court first observed that in accordance with recitals 35 and 38 of the preamble to the Directive, 
the Member States are free to implement a private copying exception in their national law, 
provid ed that this is accompanied by the introduction of a scheme providing for the payment of 
fair compensation to rightholders for any harm sustained as a result of private copying. The Court 
added that the obligation of the Member States to establish a scheme  for the payment of fair 
compensation entailed an obligation to achieve a certain result, that is to guarantee the actual 
compensation of rightholders for the harm sustained. The Court acknowledged that the Directive 
leaves Member States a certain measure of discretion in regard to the choice of means to achieve 
this objective, including the decision on who should pay fair compensation, the form and level of 
the compensation, etc. The Court observed that no provision of the Directive could be regarded as 
precluding, in principle, the financing of the compensation by Member States through contributions 
from the State Budget rather than through the imposition of a copyright levy. On the other hand, 
the Court stated that, ultimately, it is for the persons who r eproduce protected works without the 
prior authorisation of the rightholder concerned, and who therefore cause harm to them, to make 
good that harm by financing the fair compensation provided for that purpose. The Court stated 
that this was not guaranteed by the schemes established by Spain and a number of other 
countries, where the compensation is financed by taxpayers generally. Such systems did not 
ensure that the cost of providing fair compensation would ultimately be borne solely by the users 
of copies  made for private use. The Court thus concluded that Article 5(2)(b) of Directive 
2001/29/EC precludes the use of a compensation scheme which is financed from the General State 
Budget in such a way that it is not possible to ensure that the cost of the fai r compensation is 
borne by the users of copies made for private use.  A case brought against the Dutch government 
for failure to fulfil its obligation to act in order to impose a copyright levy on new data media and 
equipment was resolved by the judgment o f the Supreme Court of the Netherlands (Hoge Raad).17 
The Supreme Court held that it was clear from Article 5(2)(b) of Directive 2001/29/EC and the 
                                                
16 Entidad de Gestión de Derechos de los Productores Audiovisuales (EGEDA), Derechos de Autor de 
Medios Audiovisuales (DAMA),Visual Entidad de  Gestión de Artistas Plásticos (VEGAP)  v Administración del 
Estado, Asociación Multisectorial de Empresas de la Electrónica, las Tecnologías de la Información y la 
Comunicación, de las Telecomunicaciones y de los contenidos Digitales (Ametic),  and the foll owing 
intervening parties: Artistas Intérpretes, Sociedad de Gestión (AISGE), Centro Español de Derechos 
Reprográficos (CEDRO), Asociación de Gestión de Derechos Intelectuales (AGEDI), Entidad de Gestión, 
Artistas, Intérpretes o Ejecutantes, Sociedad de Ge stión de España (AIE), Sociedad General de Autores y 
Editores (SGAE) , Case C -470/14, judgment  of 9 June 2016 . 
17 Judgment of the Supreme Court of the Netherlands, Hoge Raad, of 7  March 2014 in Case 
No 12/03239  (ECLI:NL:HR:2014:523) . WT/TPR/M/361/Add.1  
 
- 94 - 
 
  case law of the European Court of Justice that the Dutch government was obligated to ensure that 
rightholders  receive a fair compensation for the private copying of copyright -protected works. The 
Supreme Court ruled that the failure by the Dutch government to fulfil its obligation to impose a 
copyright levy on equipment and media capable of being used for digital  reproduction (audio and 
audiovisual recording equipment) had caused rightholders to sustain harm for which the 
government was liable. The ruling in the case only concerned liability. The Dutch organisation of 
rightholders subsequently brought another case  to obtain payment of compensation. That case 
was resolved by a court settlement where the Dutch government agreed to pay rightholders the 
sum of €33.5m in compensation for the period 2007 to 2012. The Dutch legislation on the 
implementation of the copyrig ht levy was amended in 2012, after which time new digital recording 
media and equipment have been subject to the copyright levy. With reference to the above 
considerations, it was considered clear that the government of Iceland had a direct obligation to 
act in order to introduce a legal scheme which guarantees that authors receive fair compensation 
in accordance with Article 5(2)(b) of Directive 2001/29/EC. To achieve this, a choice between two 
paths in particular presented itself: either to broaden the ba sis on which the copyright levy is 
calculated by making new digital recording media and equipment subject to the levy, or to finance 
a Copyright Fund through an annual appropriation in the National Budget. Among the advantages 
of implementing the copyright  levy on a broader basis is that the imposition of such a levy ensures 
transparency towards the general public. The levy should only be paid in relation to the private use 
of the works in question. Recording media and equipment for professional use should be exempted 
from the levy, and provisions on reimbursement should ensure that users other than natural 
persons are not subject to the levy. A disadvantage of a broader basis for the copyright levy is that 
the change would push up the prices of digital reco rding media and equipment, as well as those of 
multifunction devices with recording capabilities. A broader basis for the levy could increase the 
administrative costs of both the customs authorities and "Innheimtumiðstöð gjalda ". Broadening 
the basis for t he copyright levy cannot be regarded as a permanent solution, as technological 
change will foreseeably make it necessary, sooner or later, to review which media and equipment 
should be subject to the levy. As shown in the following comparative table, the B ritish, Finnish, 
Norwegian and Spanish governments have chosen to pay fair compensation through 
appropriations in their national budgets. This approach has a number of advantages, including that 
rules governing the imposition of the copyright levy do not n eed to be changed in response to new 
technological developments in the field of audio and video recording, and the administrative costs 
of collective management organisations are kept low, while customs authorities are spared the 
administrative burden of i mposing the levy on importers. Under such an arrangement, collective 
management organisations have no undue copyright levy payments to reimburse, and do not need 
to provide their opinion on requests for exemptions from the levy. However, the aforementioned  
judgment of the European Court of Justice in the EGEDA case18 indicates that any arrangement 
chosen for a compensation scheme financed through contributions from the State budget must 
ensure that the cost of paying the compensation is borne by the natural persons who avail 
themselves of the private copying exception, instead of the burden being placed on taxpayers 
generally.  
 
Follow -Up Question :   Thank you for your comprehensive response to this question 
regarding the four amendments made to the 1972 Copyr ight Law in recent years.  We 
have a follow -up question regarding the implementation of the Amendment Act No. 
9/2016 and its "four new provisions for extended collective licences which are: (1) 
Contracts for reproductions   of copies and making such copies available in museums that 
fall under Article 12(1) of the Act; (2) Contracts for making copies of audiovisual 
broadcasts within public institutions for the benefit of blind and deaf; (3) Contracts for 
reutilization of archives of broadcasting organisations ; (4) Contracts for any use of 
works in certain well defined instances (a general ECL clause). "   
 
Please provide information on how these ECLs are being used in -practice in 
Iceland.   Can you ascertain which ECL is being used the most by users?  
 
                                                
18 European Court of Just ice Case C -470/14, judgment of 9  June 2016 .  
  WT/TPR/M/361/Add.1  
 
- 95 - Comparison of the basis of calculation of private copying levies  
 Magnetic 
audio tapes  Magnetic 
video tapes  CD-R DVD-R USB 
memory 
sticks  Memory 
cards  Compu ters, 
laptops  External 
disk 
drives  Magnetic 
tape 
recorders  Optical 
disk 
burners  MP3 players  Mobile tele -
phones  
Iceland under current 
legislation  ISK35 to 
ISK175  ISK100 to 
ISK500  ISK17  ISK50      1% to 4%  4% 4%  
Iceland after proposed 
legislative 
amendments  No copyright levy; payments to rightholders  through a contribution from the State budget  
Austria  €0.12  €0.18  €0.24  €0.36  €0.10 to 
€0.50  €1.50 to 
€9.00  €12 €17.10 to 
€24.30    €1.50 to 
€10.00  €18 
Belgium  €0.12  €0.40  €0.12  €0.40  €0.15 to 
€1.35  €0.15 to 
€1.35  €3.30 to 
€13.00  €1.30 to 
€9.00  €2.00   €1.00 to €3.00  €1.00 to 
€3.00  
United Kingdom  No copyright levy; payments to rightholders through a contribution from the State budget  
Denmark  DKK0.0723  DKK0.1007  DKK2.27  DKK3.60  DKK5.13  DKK5.13        
Finland  No copyright levy; payments to rightholders  through a contribution from the State budget  
France  €0.43  €1.29  €0.35  €0.90  €0.10 to 
€0.20/Gb  €0.09/Gb  €0.8000/Gb  €8.40 to 
€20   €1.50/Gb  €0.7000/Gb  
Italy €0.23  €0.29  €0.10  €0.20  €0.10/Gb  €3.22 to 
€32.20  €5.20  €0.02/Gb  5%  €0.64 to €2.88  €3 to €5.20  
Japan  3% 1% 3% 1%     1% 1%   
Latvia    6% 6% 4%   €1.42       
Lithuania  6% 6% 6% 6% €0.14 to 
€2.90  €0.14 to 
€2.90  €5.79  €1.45 to 
€4.34  €0.43 to 
€11.58   €0.43 to 
€11.58  €0.43 to 
€11.58  
Netherlands    €0.02  €0.02    €5.00  €1.00    €2.00  €2.5 to €5  
Norway  No copyright levy; payments to rightholders through a contribution from the State budget  
Poland  3% 3% 1.72%  3% 0.47%  0.47%   1% 2.03%  1% 1.14%   
Portugal  €0.14  €0.26  €0.05  €0.3        €1.92 (16Gb)  
Romania  3% 3% 3% 3% 0.5%  0.5%  0.5%  0.5%  0.5%  0.5%  0.5%  0.5%  
Russia  1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%  
Slovakia    6% 6% 6% 6% 3% 3%   3% 3% 
Spain  No copyright levy; payments to rightholders through a contribution from the State budget  
Sweden  SEK0.025  SEK0.025  SEK0.60  SEK4.25  SEK1/Gb  SEK1/Gb  SEK1/Gb  SEK80    SEK1/Gb  SEK3.5/Gb  
Switzerland  €0.266  €0.370  €0.01  €0.30  €0.563/Gb  €0.563/Gb  €0.141/Gb     €0.563/Gb  €1.23 (16Gb)  
Germany  €0.0614/  
hour €0.0870/  
hour €0,06  €0.27  €0.91 to 
€1.56  €0.91 to 
€1.95  €15.1875  €7.00 to 
€9.00  €15.00  €7.00  €5.00  €16.00 to 
€36.00  
Source:  International Survey on Private Copying, Law and Practice 2015, World Intellectual Property Organization, Geneva, 2013.1WT/TPR/M/361/Add.1  
 
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  Page 71, Paragraph 3.168 :  The Secretariat Report states that "[p]ursuant to the copyright reform 
initiative, the Copyright Act continues to be amended and updated in stages as the different 
sections are prepared and incorporated in legal texts. "  What specific sections of Iceland 's 
copyright law are being targeted for reform as part of this initiative?  What sections of the 
Copyright Law are currently in the process of being amended?  What is the expected date of 
completion for the reform initiative?  
 
It must be noted that the progr ess of the copyright reform initiative was slowed considerably 
following the decision of the Althing to implementation austerity measures for the government 
offices of Iceland in the appropriation in the state budget for 2014, cutting 331,000,000 ISK from 
the initial appropriation proposal. As a result, the Ministry of Education, Science and Culture 
resorted to various expenditure cutting measures such as re -priorisation of projects, slowing down 
the progress of some projects and giving up other projects, a s well adjusting the progress of 
ongoing projects to fewer staff than before, due to lay -offs. Due to the unexpected resignation of 
the current coalition government and imminent general elections to the Althing it is foreseen that 
an updated plan for the c opyright reform initiative will not be ready until later this year. However, 
it is obvious that the work in relation to the transposition of recently adopted and EU directives 
and regulations will put focus on Chapter II – Limitations to Copyright and Chap ter III – 
Assignment of Copyright. Directives and regulations that are yet to be implemented into Icelandic 
law include: Directive 2014/26/EU on collective rights management and multi -territorial licensing 
of rights in musical works for online uses; Regula tion (EU) 2017/1128 of the European Parliament 
and of the Council of 14 June 2017 on cross -border portability of online content services in the 
internal market; Directive (EU) 2017/1564 of the European Parliament and of the Council of 13 
September 2017 on certain permitted uses of certain works and other subject matter protected by 
copyright and related rights for the benefit of persons who are blind, visually impaired or otherwise 
print-disabled and amending Directive 2001/29/EC on the harmonisation of cer tain aspects of 
copyright and related rights in the information society; Directive of the European Parliament and of 
the Council on copyright in the Digital Single Market; Regulation of the European Parliament and of 
the Council laying down the rules on th e exercise of copyright and related rights applicable to 
certain online transmissions of broadcasting organisations and retransmissions of television and 
radio programmes; Regulation of the European Parliament and of the Council on the cross -border 
exchang e between the Union and third countries of accessible format copies of certain works and 
other subject -matter protected by copyright and related rights for the benefit of persons who are 
blind, visually impaired or otherwise print disabled. As for Chapter III – Assignment of Copyright it 
is foreseen that certain assumptions of transfer, especially in work for hire relations will come into 
consideration. At this moment there is no certain due date for the completion of the reform 
initiative.  
 
3.3.8.3 Tradema rks 
 
Page 71, Paragraph 3.161 : The Secretariat 's Report notes that Iceland introduced a new Article 
14(1)(10) in the Trademark Act under which the IPO is responsible for verifying if there is a 
registered GI or if a prior GI application has been filed when  examining the registration 
possibilities for trademarks.  Does the IPO or Icelandic Food and Veterinary Authority perform a 
similar function in the opposite scenario to verify if there is a registered trademark or if a prior 
trademark application has been  filed when examining the registration possibilities for GIs?  
 
Yes, please see the following chapter of the law on GIs:  
 
CHAPTER IV   Relations with trademarks  
Article 24 Relations with older trademarks and collective marks  
   
If a mark has been registered  or the right to a mark has been established by use before the date 
on which an application for the registration of a product name in this country was submitted, and it 
is likely that the co -existence of a mark and product name will lead to confusion, the mark may 
only continue to be used and renewed if the right to the mark was established in good faith and 
there are no grounds for the cancellation or a revocation of that right. The Minister may by 
regulation provide further on the implementation of the pr ovision.  
  
MAST will request information from the Icelandic Patent Office about possible trademarks 
registered that could affect registration of a GI. If such a notion is made, the main rule is co -
existence between the GI and the trademark unless there is a danger of confusion. In that WT/TPR/M/361/Add.1  
 
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  situation, the older trademark holds its rights only if it was registered in good faith. This provision 
is in line with the same rules in the EU.  
 
3.3.8.5 Geographical indications (GIs)  
 
Page 71, Paragraph 3.174 : Iceland has  enacted its first Act specific to GIs, Act No. 130/2014 and 
accompanying Regulation No. 596/2016.    Are there opportunities for interested parties to oppose 
and cancel a GI registration and what are the grounds for opposition and cancellation?  What is th e 
term of protection for GIs?  Are translations and transliterations of GIs protected?  Can Iceland 
provide the English translations of Act No. 130/2014 and accompanying Regulation No. 596/2016?  
 
The mentioned Act is fully in line with EU regulation No. 11 51/2012 on quality schemes for 
agricultural products and foodstuffs.  
  
The term of protection:  
  
Protection is not granted with a certain time limit. However, the Act enables for the cancellation of 
a GI should the product behind the GI no have been marketed under a registered name for seven 
years (art. 22.2.a).  
  
Translations and transliterations:  
 
Yes, they are protected according to article 6.1.b.  
  
Article 6 Protection granted to registered product names under Articles 4 and 5  
     
Registered product names according to Articles 4 and 5 shall be protected against:  
 
a. any direct or indirect commercial use of a name registered in respect of products 
not covered by the registration in so far as those products are comparable to the 
products registered  under that name or insofar as using the name exploits the 
reputation of the protected name, including when those products are used as an 
raw materials;     
b. any misuse, imitation or evocation, even if the true origin of the product is 
indicated or if the p rotected name is translated or accompanied by an expression 
such as 'style', 'type', 'method ', 'as produced in ', 'imitation ' or similar, also 
including when those products are used as raw materials;    
c. any other false or misleading indication as to the pro venance, origin, nature or 
essential qualities of the product, on the inner or outer packaging, advertising 
material or documents relating to the product concerned, and the packing of the 
product in a container liable to convey a false impression as to its  origin;     
d. any other practice liable to mislead the public as to the true origin of the product.   
Where a registered name contains within it more than one name and one of the 
names is considered generic the use of that generic name shall not be consider ed 
to be contrary to (a) or (b) in the first paragraph. Registered product names shall 
not become generic names.  
  
Opposition:  
  
Article 15 Statement of objection to applications for the registration of product names  
   
 If the conditions for registration are fulfilled, the Icelandic Food and Veterinary Authority shall 
make public the name of the product and the product specification for which registration is sought. 
Statements of objection to product names and product specifications published according to 
paragraph 1 can be made within a period of two months from the publication date. Statements of 
objections shall be filed in writing to the Icelandic Food and Veterinary Authority.   Statements of 
objection shall be upheld and the application refused if the y show that:  
      
a. the conditions laid down in this Act are not fulfilled,     
b. the proposed registration will wholly or partly impinge upon intellectual property rights 
granted by law, or     
c. the product name is a generic name.  WT/TPR/M/361/Add.1  
 
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  Article 16 Decision  
    
The Icelandic Food and Veterinary Authority shall take a decision on the registration of a product 
name within three months of the date on which the opposition period pursuant to Article 15 
expires.  The Icelandic Food and Veterinary Authority shall publish it s decision on the registration 
of a product name and a product specification by way of a public notice in Section B of the 
Government Gazette of Iceland.  A decision on the registration of a product name shall otherwise 
be made in accordance with the provi sions of the Administrative Procedures Act.   The Ministry 
shall maintain and publish updated the register of product names which have been registered 
according to the provisions of this Act.  
 
Cancellation:  
  
Article 22 Cancellation  
 
If a product name has been registered in contravention of the provisions of this Act, the Icelandic 
Food and Veterinary Authority may take a decision to cancel a registration.   A registration of a 
product name may also be cancelled by a decision by the Icelandic Food and Veter inary Authority 
if: a. the product does not conform to the product specification pursuant to  Article 14;  b. the 
product has not been marketed under a registered name for seven years.  
 
Anyone having a legitimate interest may request that the Icelandic Foo d and Veterinary Authority 
cancel a registration of a product name in case of non -compliance with the provisions of this Act. 
Such request shall be filed in writing accompanied by a justification.   Users of the registered name 
shall be informed about the request for cancellation and be provided with the opportunity to 
comment within a period of two months.   Should the Icelandic Food and Veterinary Authority 
cancel a registration of a product name the institution shall make its decision public by way of a 
public notice in in Section B of the Government Gazette of Iceland.  
  
Please also find attached the pdf document of the translated Act. However, the regulation has not 
been translated at the moment.  
 
Page 72, Paragraph 3.175 : The Secretariat reports that as part of the agreements reached with 
the European Union on agriculture in 2015, Iceland also concluded an agreement on geographical 
indications which resulted in a list of 1,150 protected agricultural products and foodstuffs of the 
European Union that wi ll receive the same level of protection in Iceland as in the EU market.  Did 
interested persons have an opportunity to oppose protection of any of these terms?    Was the list 
of terms published for public comment and if so, for how long?  What was the effe ct of these GI 
registrations on registered trademarks?  
 
The Secretariat Report also notes that the agreement has not yet entered into force. What is the 
proposed or expected time frame for this agreement and the 1,150 protected GIs to enter into 
force?  
 
In accordance with an agreement with the EU, a list of names to be protected as registered GI 's in 
Iceland where published by the Icelandic Food and Veterinary Authority with the possibility to 
object within 2 months ' time. The list was published in the end  of June 2015 and the objection 
respite ended on August 31st the same year.  
  
No objections were filed.  
  
As the mentioned agreement between Iceland and the EU has not entered into force yet, the 
registered and protected list of GI 's has not, to this date,  had any effect on local trademarks or 
registered trademarks in Iceland.  
  
As for the entry into force, the ratification procedures have not been completed as of yet.  
 
3.3.8.6 Appeals and enforcement  
 
Page 72, Paragraph 3.177:   The Secretariat Report states "[t]here were no available statistics on 
IP enforcement. "  Does Iceland not keep track of statistics on IP enforcement or were they simply WT/TPR/M/361/Add.1  
 
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  unavailable during the production of the Secretariat Report?  If Iceland does keep track of 
statistics on IP enforcement, please provide any available statistics regarding IP  enforcement.  
 
Work is currently ongoing on collecting documents on all IP enforcements in Iceland.  
  
Most cases end with an agreement between parties and are therefore not formally registered. 
There are always some judgments on IP matters and accordingly also matters resolved by the 
Board of Appeal for IP. However, court cases are rare due to the high cost of litigation and the 
small market.  
  
Also, the tax authorities have powers to stop and confiscate illegal goods when entering the 
country. Almost all t hose cases end by the confiscation of the goods and usually no other remedy 
for the importer.  
  
It should be noted that Iceland does not have a provision that makes it illegal to import counterfeit 
goods for private use, only commercial use.  
 
Follow -Up Qu estion:   Iceland states that "...the tax authorities have powers to stop and 
confiscate illegal goods when entering the country. Almost all those cases end by the 
confiscation of the goods and usually no other remedy for the importer. "  Do these 
border mea sures apply to both counterfeit and pirated goods?  
 
And, Iceland states that "[i]t should be noted that Iceland does not have a provision 
that makes it illegal to import counterfeit goods for private use, only commercial use. "  
Is there any limitation plac ed on this exemption, e.g., is the importation for private use 
limited to 1 article, or valued under a certain sum, etc.?  And, does this exemption apply 
to both counterfeit and pirated goods?  
 
4   TRADE POLICIES BY SECTOR  
4.1 Agriculture and fishing  
4.1.1  Agriculture  
4.1.1.3 Agriculture policies  
4.1.1.3.2 Domestic policies  
4.1.1.3.2.1 Dairy and beer  
 
Page 77, Paragraphs 4.20 -4.22:   The Secretariat Report notes that under Regulation No. 
1150/2016 and the Agreement on the operating environment for the cattle sector, support is 
provided for dairy and cattle production.  The 2019 revision to this regulation is considering the 
possibili ty of abolishing production quotas, and that the system of "support entitlements " (i.e., 
basic payments to all active dairy and cattle farmers) will be phased out over the duration of the 
Agreement.  Payments per litre of milk produced will be delinked fro m support entitlements and 
increased while a new system for supporting beef production is introduced.  Please provide further 
information on Iceland 's anticipated timeline for phasing out support entitlements.  Also, please 
provide further information on t he type of support that will be provided for beef production under 
the anticipated new system?  
 
Following the 2019 revision, dairy producers will vote whether the production quota system will be 
abolished or not. The outcome of the voting is not binding and the final decision will be in the 
hands of Althingi (Icelandic Parliament). Payments to dairy producers based on support 
entitlements will phase out, step by step, over duration of the Agreement of the operating 
environment for the cattle sector. These payments are shown in the table below.  
 
Support will be provided for beef production with a view to increasing the supply and quality of 
beef. Contributions will be allocated, on one hand, to a quarantine facility in connection with the 
import of genetic material from beef cattle, and, on the other hand, to the payment of slaughter 
premiums for beef m eeting specific quality requirements. During the first year of the agreement in 
2017, ISK100 million will be allocated to the start -up costs of the quarantine facility. The 
Committee for the Implementation of National Agricultural Agreements decides on the  allocation of 
other contributions under this article.  
 WT/TPR/M/361/Add.1  
 
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__________  
in millon ISK 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Payments based on support 
entitlements – Article 3 1.942 1.934 1.927 1.633 1.355 1.074 798 527 260 0