WORLD TRADE ORGANIZATION  
ORGANISATION MONDIALE DU COMMERCE  
ORGANIZACIÓN MUNDIAL DEL COMERCIO WT/TPR/M/164/Add.1 
7 August 2006 
 (06-3803) 
Trade Policy Review Body 
7 and 9 June 2006 Original:  English/ 
                 anglais/                  inglés 
  
TRADE POLICY REVIEW 
ICELAND 
Minutes of Meeting
 
Addendum  
Chairperson:  H.E. Mrs. Claudia Uribe (Colombia) 
 This document contains the advance written questions, and replies provided by the Iceland.1 
__________________________________________________________________________________  
Organe d'examen des politiques commerciales 
7 et 9 juin 2006  
EXAMEN DES POLITIQUES COMMERCIALES 
ISLANDE 
Compte rendu de la réunion
 
Addendum  
Présidente:  S.E. Mme Claudia Uribe (Colombie) 
 
 Le présent document contient les questions écrites communiquées à l'avance et les réponses fournies par l'Islande.
1 
__________________________________________________________________________________ 
 
Órgano de Examen de las Políticas Comerciales 
7 y 9 de junio 2006  
EXAMEN DE LAS POLÍTICAS COMERCIALES 
ISLANDIA 
Acta de la reunión
 
Addendum  
Presidenta:  Excma. Sra. Claudia Uribe (Colombia) 
 
 En el presente documento figuran las pre guntas presentadas anticipadamente por escrito, 
junto con las respuestas facilitadas por Islandia.1 
                                                      
1 In English only./En anglais seulement./En inglés solamente.          WT/TPR/M/164/Add.1 
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ADVANCE WRITTEN QUESTIONS BY MEMBERS 
 
COLOMBIA  
In compliance with Paragraph 12 of the Rules of Pr ocedure for Meetings of the Trade Policy Review 
Body, COLOMBIA has the honour to address the following questions to ICELAND, regarding its 
upcoming June 7 and 9 review and based upon  documents WT/TPR/G/164 and WT/TPR/S/164. 
 1. Could you please elaborate on your statemen t that Iceland is fully committed to the 
establishment of a fair and market – oriented ag ricultural trading system (Para. 42 WT/TPR/G/164)? 
 
2. According to the WTO Secretariat, market access has been left unbound with respect to the 
presence of natural persons, with some exceptions  (Para. 76 WT/TPR/S/164).  However, since 
Iceland’s previous review the services sector has con tinued to expand to around 80% of GDP in 2004.  
How is Iceland’s immigration policy related to the temporary entry of service providers? 
 
3. Although it has never been used, what are the parameters for the application of the authority 
not to allow foreign investment in the event of serious economic, social or environmental difficulties in particular economic sectors or particular areas whic h are likely to be of lasting nature? (Para. 15 
WT/TPR/S/164)  
4. The Secretariat’s report highlights the several tr ade agreements of which Iceland is a Party.  
Given that Iceland has a small economy dependent  on few production activities and export goods, what 
has driven its authorities to negotiate so many regional trade agreements? 
 The Permanent Mission of Colombia to the WTO woul d like to assure the Icelandic Government of the 
great appreciation that our country and government have for yours. 
 
UNITED STATES 
 
TRADE PRACTICES AND POLICIES BY MEASURE  
Measures Directly Affecting Imports – Customs Valuation
 
 1. According to paragraph 28 on page 23 of the Secretariat Report, Iceland has not yet incorporated the Interpretative No tes of the Agreement on Implementation of Article VII of the GATT 
1994 into its respective laws and regulations; th e provisions of the Decision on the Treatment of 
Interest Charges in the Customs Value of Imported Goods have not been implemented; nor have the 
provisions of paragraph 2 of the Decision on the Valu ation of Carrier Media Bearing Software for Data 
Processing Equipment.  
Does Iceland have plans to amend its new customs law to include these elements of the WTO Agreement on Customs Valuation? 
 
Measures Directly Affecting Imports – Sanitary and Phytosanitary Measures
 
 2. In paragraph 81 on page 38, the Secretaria t Report advises that Regulation 509/2004, which 
bans the importation of certain agricultural products  (Table III.6 on p. 39), has not been notified to 
other WTO members.  According to our records, Iceland has notified only seven SPS measures to the 
WTO.  
When does Iceland intend to notify Regulation 509/2004 to the WTO and to allow for public comment?  What steps is Iceland taking to ensure that newly imposed measures are properly 
notified to WTO? WT/TPR/M/164/Add.1 
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3. In paragraph 85 on page 39, the Secretariat Report indicates that “the Genetically Modified 
Organisms Act No. 18/1996 regulates the contained use and deliberate release of genetically modified 
organisms (GMOs).”  
Please provide further detail as to whether the “c ontained use and deliberate release” covers the 
regulation of non-living, genetically-modifie d material not intended for cultivation? 
 4. Paragraph 85 also advises that GMOs appr oved in the EU would not require approval in 
Iceland.  In addition, the Secretariat Report states that the Ministry of Environment established a Special Advisory Committee to address GMOs. 
 
(a) Please clarify whether a lack of approval in the EU in any way influences a review for approval in Iceland.  
 
(b) Would Iceland’s regulatory system be able to approve a submission in the absence of any 
review of a product by the EU? 
 
(c) Please explain what would be the basis of any advice or information emanating from the Specialist Advisory Committee?  (d) Would the Specialist Advisory Committee be  involved with performing risk assessments? 
 
(e) If not solely a scientific body, what role and influence does this Advisory Committee have 
on determining human health or environmental safety? 
 Measures Affecting Production and Trade – Intell ectual Property Rights – Geographical Indications
 
 
5. In paragraph 187 on page 62, the Secretariat Re port indicates "there is no specific legislation 
concerning geographical indications in Iceland but that the Trademarks Act and the Competition Act 
contain provisions that grant protection to such indi cations." Please elaborate on the type of protection 
GIs receive under these laws.  
 (a) Do the laws provide the legal means for inte rested parties to prevent the use of misleading 
 geographical indications as required unde r Article 22 of the TRIPS Agreement? 
 
 (b) What mechanisms are in place to take into account the exclusive rights of trademark 
 owners, consistent with Articles 16(1) and 24(5) of the TRIPS Agreement that require 
 trademarks to be protected from confusingly sim ilar and later in time geographical indications?  
 
 (c) Does Iceland provide the means to challenge  the protection and/or registration of a later 
 established GI on the grounds that it is c onfusingly similar to the prior trademark? 
 
 (d) What mechanisms exist for owners of foreign GIs to apply or seek protection for their 
 geographical indications  under Iceland's laws? 
 Measures Affecting Production and Trade – Intellectual Property Rights – Enforcement
 
 6. Paragraph 191 on page 63 of th e Secretariat Report states that injunctions can be granted in 
intellectual property infringement cases against an alleged infringer. 
 
 Do the administrative and/or judicial authoriti es have the authority to initiate injunctive relief 
 inaudita altera parte  as required in TRIPS Article 50? 
          WT/TPR/M/164/Add.1 
Page 5 
 
 
7. According to paragraph 192 on page 63 of the Secretariat Report, the Head of Customs is 
authorized upon request from the right holder to delay the release of imports for 14 calendar days. 
 
 Is there a mechanism for this time limit to be  extended in appropriate cases by an additional 14 
 calendar days as required in TRIPS Article 55? 
 
8. In paragraph 192 on page 63, the Secretaria t Report states that upon request from the right 
holder, the Head of Customs will examine the app lication to determine if the imports should be 
delayed.  
 Is there a requirement that the customs aut hority inform the applicant within a reasonable 
 period whether they have accepted the application as required in TRIPS Article 52?  
 
CHILE 
 
II.  Régimen de la Política Comercial:  Marco y Objetivos
 
 
3) Régimen de Inversión Extranjera  
 
1. En los párrafos 14 y siguientes  del informe de  Secretaria se establece que Islandia, a pesar de 
haber liberalizado su régimen de inversiones extranje ras, continúa siendo uno de los países de la OCDE 
con mayores restricciones generales a la inversión extran jera directa. ¿Está dentro de la agenda futura 
de Islandia el continuar reduciendo las restriccion es a la inversión extranjera en general, y 
especialmente respecto de  sectores como  pesca,  energía y la explotación de líneas aéreas?   
 
III.  Políticas y Prácticas Comerciales por Medidas  
 
2) Medidas que afectan Directamente a las Importaciones  
 iv) Aranceles
 
 
En el párrafo 39 del informe se señala que todas las líneas arancel arias de productos agrícolas, y 
aproximadamente el 95% de las líneas corre spondientes a productos manufacturados, están 
consolidadas. Se indica que el arancel consolid ado medio final es de 31,5%, pero que los tipos 
ad valorem consolidados son más altos que los tip os ad valorem aplicados. ¿Islandia tiene pensado 
disminuir esta diferencia existente entre los tipos ad valorem consolidados y los aplicados? En el 
evento que la respuesta sea afirmativa ¿Qué medidas específicas va a aplicar para lograr ese objetivo? 
 ix) Medidas sanitarias y fitosanitarias
 
 
1. En el párrafo 74 del informe se señala que Isla ndia mantiene controles estrictos  para mantener 
altos niveles de sanidad animal y vegetal, y que est os controles son ejercidos por diversas autoridades. 
¿Puede aclarar Islandia en que cons isten las funciones que ejercen el Ministerio de Agricultura y el 
Ministro de Pesca a este respecto y como opera el Co mité de Alimentos en su labor de coordinar las 
normas y reglamentos relativos a la ca lidad e inocuidad de los alimentos? 
 
BRAZIL  
 
WT/TPR/S/164, I, (3), paragraph 14 
 
1. Could you please present and explain the pre-determined schedule and procedure for the 
announcement of interest rate decisions, adopted  this year by the Central Bank, according to 
WT/TPR/S/164, I, (3), paragraph 14?  WT/TPR/M/164/Add.1 
Page 6  
 
WT/TPR/S/164, I, (3), paragraph 19 
 
2. The report informs that “Real exchange rate appreciation has helped the Icelandic economy to 
accommodate the large-scale investment projects in aluminium and power. This has led some analysts 
to observe that Iceland is experiencing symptoms of ‘Dutch disease’. Others have argued that Iceland 
has suffered from "Dutch disease" for a long time, as re flected in a stagnant export-to-GDP ratio of 
around 33% since at least 1945, among other factors”.  Could the Government of Iceland provide an 
outline of the measures adopted, if any, to prevent the effects of “Dutch disease”? 
 WT/TPR/S/164, I, (7), paragraph 36 
 
3. In view of the recent developments of the I celandic Economy, what changes, if any, are to be 
expected in the outward investment by Icelandic co mpanies that have been very dynamic in recent 
years?  WT/TPR/S/164, I, (8), paragraph 37 
 
4. Do you expect the forecasts of GDP growth ra te presented in WT/TPR/S/164, I, (8), paragraph 
37 to suffer major changes, or would they still be valid? 
 
WT/TPR/S/164, IV, (2), (ii), paragraph 17 
 
5. According to the Secretariat, “Support to the agricultural sector is provided through both 
internal and border measures. As reported by the Cent ral Bank of Iceland, Icelandic agriculture is the 
most heavily supported in the world.  The vast ma jority of this support is for the sheep and dairy 
segments and takes the form of direct payments  to farmers based on support targets (negotiated 
between the Minister of Agriculture and the Farmer s Union).  Support to producers as measured by the 
% PSE, is estimated at more than twice the OECD  average, though it has fallen from 77% in the 1986-
88 period to 70% over the period under review.” C ould the Icelandic Government comment whether 
those support to producers have effects similar to subsidies?  
WT/TPR/S/164, IV, (2), (iii), paragraph 27 
 
6. The report says that “Producers of lamb meat, are obliged to export a certain percentage of 
their annual production, in order to regulate the dom estic supply of lamb” How can the Government of 
Iceland guarantee that those measures are not  used as a way of subsidizing exports? 
 WT/TPR/S/164, IV, (2), (iv), paragraph 32 
 
7. Does Iceland intent to review the auctioning q uota system for TRQ, applied when applications 
exceed the available quota?  
Additional Written Questions by Brazil
 
 
WT/TPR/S/164, (4), paragraph 11 
 
According to the document, ”a reciprocal quota system is due to come into operation with the European 
Union in 2007”.  Given that, so far, quotas have not been assigned for specific countries.  Brazil seeks 
clarification regarding the application of such measure. 
 
WT/TPR/S/164, III, (2), (iii), paragraph 29 
 
Could Iceland provide the list of authorities that issue the certificate of origin, in the case that 
certificate is required from importing countries?          WT/TPR/M/164/Add.1 
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WT/TPR/S/164, III, (2), (vi), paragraph 51 
 
Could Iceland please indicate the administrative procedure costs on the processing of prior 
authorization? 
 
WT/TPR/S/164, III, (4), (ii), paragraph 115 
 
The document states that Iceland’s Competition Au thority (CA) coordinates its responsibilities and 
jobs with sectoral supervisors.  "There is a divisi on of tasks between the CA and the Financial Services 
Authority; a cooperation agreement has been reached  between the Competition Authority and the Post 
and Telecoms Administration, and one is envisaged with the authorities in the energy sector".  Could 
Iceland provide further explanation about such coor dination?  What is the legal and administrative 
interface between the CA and regulated markets?  HONG KONG, CHINA  Financial Services
 
 
(WT/TPR/S/164, P. 85, 86 & 88, Paras. 104, 105, 117, 118 & 120)  
1. We note from the Secretariat’ s report that while founders, ma nagers and board members of 
banks and insurance companies established in Icel and are subject to certain citizenship and/or 
residency requirements, the Ministry of Commerce can waive these nationality and residency requirements.  We would like to know more details on the factors that the Ministry would take into 
account in considering a waiver request. 
 2. It is further noted that foreign and domestic i nvestment that is aimed at acquiring 10% or more 
of the capital or voting rights of a bank or an in surance company, or which enables the exercise of a 
“significant influence” over the bank’s/company’s manage ment, is subject to the approval of Financial 
Supervisory Authority (FME), and that FME approv al is also required when a foreign or domestic 
investor’s participation in a bank exceeds the thr esholds of 20%, 33%, or 50%.  Would Iceland advise 
how these prior approval requirements are considered to be compatible with its services commitments undertaken in the GATS schedule of specific co mmitments, in which no limitations on foreign 
investment have been inscribed for the relevant services?  
3. Besides, we also note that foreign insura nce companies licensed outside the EEA and with 
head offices outside the EEA may not set up bran ches in Iceland unless their home countries grant 
reciprocal treatment to Icelandic companies.  Would Iceland provide more information on the 
reciprocity requirement in question, including whet her less favourable treatment would be accorded to 
certain foreign insurance companies as a r esult of the reciprocity consideration? 
 SINGAPORE  Goods/Tariffs
 
 
1. We note that Iceland has a fairly liberal ta riff regime. About 95% of all tariff lines are bound. 
70% of all tariff lines are duty-free.  We would however appreciate it if Iceland could clarify the 
following  weaknesses or distortions in its otherwise liberal tariff regime  (i) As highlighted in para. 38 of the Secretariat report, there is an issue of tariff escalation. The 
report notes that Iceland’s ta riff escalation is unusual in that average MFN applied
 tariff 
protection is high  (10.7%) at the first stage of processi ng, very low for semi-processed products 
(0.8%) and high again fo r fully processed products  (7.5%). 
 WT/TPR/M/164/Add.1 
Page 8  
 
(iii) (para 39) for lines with strictly comparab le codes between HS96 and HS2002, and valorem 
applied rates
 appear to be higher  than the corresponding ad valorem  bound rates  for seven 
items 
 2. In addition, para 35 states that non- ad valorem  duties apply to 382 items, representing 4.7% of 
total tariff lines.  Does Iceland have plans to convert these non- ad valorem  duties to their ad valorem  
equivalents?  If so, within what time -frame would Iceland do this conversion? 
 
Services
 
 
3. Para. 78 of the report states that national tr eatment is accorded to subsidiaries of non-EEA 
companies formed in accordance with the law of, and established in, an EEA State, but not  to branches 
or agencies.   It would be useful if Icela nd could indicate why it  accords different treatment for subsidiaries 
and branches & agencies? What type of regula tions are branches and agencies subjected to? 
 4. Para 82 states that as at end 2005, the telecommunications market in Iceland was a de facto  
duopoly with Iceland Telecom a nd Og Vodafone providing basic telecommunications services. 
  Given the benefits that could accrue from greate r competition, does Iceland plan to allow more 
telecoms service suppliers to supply this service? If so, within what time-frame would these service 
suppliers be allowed into Iceland?  5. According to para 107, foreign banks may set up a branch in Iceland.  However, only banks 
established and licensed in the EEA benefit from an automatic approval process, 
 
 What is Iceland’s rationale for according auto matic approval process for banks established and 
licensed in the EEA and not to other banks?  What type of approval process are other banks subjected 
to?  What criteria would be used to determine wh ether a bank (which is not established and licensed in 
the EEA) can operate as a branch in Iceland?  Trade Contingency Measures
 
 
6. Iceland is exemplary with regard to tr ade contingency measures.  Though Iceland has 
legislation relating to anti-dumping or countervailin g measures, it has never applied these measures.  
 
 In addition, para. 52 states that Iceland  do es not use safeguard measures, nor does it have any 
safeguard legislation.  Does Iceland has any plans in the future to draw up a safeguard legislation?  If 
so, when?  
JAPAN 
 
Report by ICELAND (WT/TPR/G/164) II THE ECONOMIC ENVIRONMENT (3) STRUCTURAL REFORMS 
(ii) Competition Policy (Page 10, paragraph 25) 
  According to the Report by ICELAND, a new Co mpetition Act which came into force in 2005 
gives the Competition Authority stronger and clearer powers of intervention. 
 
1. Please explain specifically “the powers of inte rvention” held by the Competition Authority. 
          WT/TPR/M/164/Add.1 
Page 9 
 
 
Report by the Secretariat (WT/TPR/S/164) 
IV. TRADE POLICIES BY SECTOR (5) ENERGIES 
(i) Main features (Page 77, paragraph 65) 
  According to the Report by the Secretariat, a Ministry of Commerce Action Plan for 2004-07 
states that work will be done on the restructuri ng of electricity companies and state ownership. 
 2. Is the Government considering future priva tization of electricity companies?  Please provide 
more information for the work on the restructuri ng of electricity companies and state ownership. 
 
(6) SERVICES 
(i) Main features (Page 79, paragraph 79) 
 
 With regard to motion picture and video tape  production and distribution services (CPC 9611), 
motion picture projection service (CPC9612) and sound recording:  3. Are there any specific limitations for market access and national treatment in Iceland?  If any, 
is the Government considering a relaxation of those limitations? 
 
CANADA  
WTO Secretariat Report (WT/TPR/S/164)
 
 
Part II.  Trade and Investment Framework, (3), Foreign  Investment Regime, page 12, paragraph 13: 
 
The Secretariat report says that, in the context of  Iceland’s 2000 Trade Policy Review, Icelandic 
authorities had set up a committee to formulate reco mmendations on reforms to the foreign investment 
regime but that the committee did not issue any recommendations.  1. Could Iceland specify whether this committee is sued a report?  If so, is this report publicly 
available? 
 
Part II. Trade and Investment Policy Framework, (3) Foreign Investment Regime, page 14, 
paragraph 19: 
 The Secretariat report indicates that the managers and a majority of the board of directors of non-
financial, unlimited liability companies domiciled in Iceland must be EEA/EFTA citizens and residents 
unless they obtain a waiver from the Mi nister of Industry and Commerce. 
 2. Could Iceland outline the waiver process for non EEA/EFTA citizens and residents? 
 
Part III. Trade Policy and Practices by Measur e, (4) Measures Affecting Production and Trade, 
(vi) Intellectual property rights, (a) Copyright, page 58, paragraph 164: 
 
The Secretariat Report says that Icelandic copyright legislation was amended in 2000.  The amendments included, inter alia, a time-limit on clai ms for fees paid to the visual artists’ copyright 
fund in the absence of an identified legal heir, an d a requirement for parties handling the resale of 
works of art on a commercial basis to submit a summary of sales of art works during the preceding period attested to by a certified accountant (Article 25b).  3. Can Iceland please provide more information on these amendments to its copyright legislation? WT/TPR/M/164/Add.1 
Page 10  
 
Part III.  Trade Policy and Practices by Measur e, (4) Measures Affecting Production and Trade, 
(vi) Intellectual Property Rights, (e) Geogr aphical Indications, page 62, paragraph 187:  
 
The Secretariat report says that there is no specific legislation concerning geographical indications in 
Iceland, but the Trade Marks Act  and the Competition Act  contain provisions that grant protection to 
such indications. Article (14) of the Trade Marks Act  prohibits the registration of a mark that causes 
confusion regarding its origin, or of a trade mark fo r wines and spirits that implies a geographical name 
unless the product originates at the location in question.  4. Can Iceland please provide some further informa tion on how their GI regime works in general? 
 
5. Can Iceland explain what process is used to  determine whether a product "originates at the 
location in question?"  
Part IV, Trade Policy by Sectors, (6) Services; (i) Main features, page 79, paragraph 78: 
 With respect to the GATS horizontal mode 3, the Se cretariat Report says that “national treatment is 
accorded to subsidiaries of non-EEA companies formed  in accordance with the law of, and established 
in, an EEA State, but not to branches or agencies.”  
This appears to conflict with Iceland’s revised GATS offer which states:  “…may not  be extended to 
branches or agencies….”  Note that the word “not” has been struck out. 
 6. Can Iceland please clarify which statement accurately captures their domestic regulatory status quo?  EUROPEAN COMMUNITIES  
 
II. TRADE AND INVESTMENT POLICY FRAMEWORK
 
 (2) T
RADE POLICY FORMULATION AND IMPLEMENTATION  
 
Sustainable development  
• In what ways does Iceland think trade policy can  best contribute to sustainable development? 
 
• Does the issue of trade and sustainable develo pment fit into Iceland’s overall development 
strategies?  What steps does Iceland take to ensure that its trade policy does not have any negative effects on sustainable development in Iceland and elsewhere? 
 
Trade and environment 
 
• What mechanisms does Iceland have in place to ensure adequate coordination of environmental 
policy and trade policy? 
 Trade and social development  Report by Iceland, page 6, paras 9-10  
The EC welcome the exceptionally high employment rate in Iceland, including a high female 
participation rate. Iceland has also seen a rise in fo reign workers which has dampened wage inflation. 
          WT/TPR/M/164/Add.1 
Page 11 
 
 
• What policies are in place to manage this rise in foreign workers, and are the labour rights of 
foreign workers the same as nationals? 
 
(4) I NTERNATIONAL RELATIONS  
 
Report by Iceland, page 14-15, paras 50-55  
Bilateral, regional and global trad e liberalisation is vital for pr omoting prosperity, growth and 
development to the benefits of the world at larg e.  The EC considers that the WTO and multilateral 
liberalisation is the most certain way for promo ting global interests for industrialised countries and 
developing countries at large. 
 
• How does Iceland judge the relative importance and weight of bilateral and regional FTA 
policies and the further development of the WTO system in terms of its own trade and 
development needs? 
 
• Does Iceland intend to negotiate further FTA s outside the EFTA framework?  Does Iceland 
think that a merely bilateral approach might in  some cases be more appropriate than using the 
EFTA instrument? 
 
• Are the trade agreements with the Faroe Islands  and Greenland merely bilateral?  Does Iceland 
have any further merely bila teral agreements on trade issues with other regions/countries? 
 
• Which are the preferred countries/regions for a po ssible FTA policy for Iceland, to be realised 
either via EFTA or via bilateral negotiations? 
 
• Depending on the results of the feasibility st udy currently underway, in case Iceland and China 
decide to start negotiations for an FTA, how woul d this be put into practice in the textiles and 
footwear sector? 
 
• In this context, please inform how the rules of origin are to be applied for Chinese goods 
entering in Iceland? 
 
III. TRADE POLICIES AND PRACTICES BY MEASURE
 
 (2) M
EASURES DIRECTLY AFFECTING IMPORTS  
 
PROCEDURES  
 WTO Secretariat’s Report, page 21, para 12 ff. 
 
• Could Iceland clarify if all customs inspections are carried out on the basis of risk analysis? 
 
• What are the new provisions regarding the operation of customs brokers? 
 
Sanitary and phytosanitary measures 
 WTO Secretariat’s Report, page 37, para 12 ff. 
 
• Could Iceland provide further information on its import regime for live animals?  Does Iceland 
intend to revise the current import formalities for live animals? 
 WT/TPR/M/164/Add.1 
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IV. TRADE POLICIES BY SECTOR
 
 
(3) Fisheries and Fish Processing 
 WTO Secretariat’s Report, page 74, para 46 ff. 
 
• How does Iceland evaluate the current situat ion of its domestic fisheries industry as 
regards the openness for foreign investment?  Would Iceland consider further liberalising 
foreign investment in the fisheries industry?  How does Iceland evaluate its interests in 
Icelandic investments outside of Iceland? 
 
(4) Other Manufacturing  Textiles and clothing  WTO Secretariat’s Report, page 75 page 75, para. 52 and table IV.4 
 Manufacturing activities in Iceland are mainly concen trated in power-intensive industries based on 
Iceland's natural endowment of energy-generating sources.  Some 16,900 people were employed in 
manufacturing (not including fish processing) in 2004 .  According to data from Statistics Iceland, the 
main activities by value of sales are food products an d beverages (about 55% of the total) followed far 
behind by basic metals (14%).  It appears that textile and clothing amount only to 1.3%. 
 
• Apart of fur skin has Iceland any textile and clothing industry? 
 
• If not, why is Iceland charging its highest duty rates on imports of clothing and footwear? 
 
• Most of the imports of manufactured goods enter Iceland duty free, with an average MFN tariff 
that was 2.5% in 2004.  Is the 15% duty rate a pplicable to fur skin im ports only, or to other 
textile/clothing and footwear products? 
 
TURKEY  
 
I.  ECONOMIC ENVIRONMENT 
(7) FOREIGN DIRECT INVESTMENT 
 
Secretariat Report mentions that “the stock of foreign direct investment (FDI) in Iceland increased around four-fold between 1999 and 2004 to  around 1.4 billion Euros.  This has been driven by large 
increases in stock of inward FDI in manufacturing and software and research which accounted for 
slightly more than 90% of the total FDI stock in Iceland in 2004.”  
• Could delegation of Iceland provide further information about the government strategy 
towards increasing the inward FDI? 
 
II. TRADE AND INVESTMENT POLICY FRAMEWORK 
(1) OVERVIEW 
 In the Secretariat Report, under paragraph 3, it is stat ed that “In addition,  Iceland’s legislation gives 
the State the authority to limit foreign investment  in the event of serious economic difficulties in 
particular sectors”.  
• Could Iceland Delegation kindly provide further information about the content of 
economic difficulties that leads to such a limitation mentioned in the report?          WT/TPR/M/164/Add.1 
Page 13 
 
 
Paragraph 14 of the Secretariat Report states that, although Iceland has greatly liberalized its foreign 
investment regime since 1980, it is among the OE CD countries with the highest level of overall 
restrictions to foreign direct investment.  It is further noted in the paragraph 21 that Iceland maintains various sector-specific investment 
restrictions including  in fishing, energy and air transport. 
 
• On the basis of the above mentioned informati on by the Secretariat, we would like to request 
Icelandic Delegation to express if Iceland has an  intention to further open up her investment 
market. 
 (4) INTERNATIONAL RELATIONS (i) World Trade Organization 
 
Paragraph 24 states that “Iceland met most of its  notifications obligations  between January 2000 and 
December 2005.  Exceptions include notifications  on special safeguards and export subsidies in 
agriculture;  preferential rules of origin and government procurement.” 
 
• Could Iceland delegation kindly elaborate if there are any provisions for making 
notifications on the above mentioned exceptions? 
 
III. TRADE POLICIES BY MEASURE 
(2) MEASURES DIRECTLY AFFECTING IMPORTS 
(ix) Sanitary and Phytosanitary Measures  
Paragraph 74 of the Secretariat report mentions that I celand applies strict border controls with a view to 
maintain high animal and plant health standards.  
• Could officials of Icelandic Delegation elaborate on these controls including their types 
and compliance  with the rele vant international standards? 
 
IV. TRADE POLICIES BY SECTOR 
(5) ENERGY (i) Main Features 
 
According to the Secretariat Report, “All major el ectricity companies are publicly owned, occasionally 
jointly by the  State and some municipalities.  The authorities noted that a Ministry of Commerce Action Plan for 2004-2007 states that work will be done on the restructuring of electricity companies 
and state ownership.”  
• Could Delegation of Iceland provide further information about the works on the 
restructuring process of electricity sector in terms of state ownership? 
 
 
 WT/TPR/M/164/Add.1 
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ARGENTINA 
 
III. POLÍTICAS Y PRÁCTICAS COMERCIALES, POR MEDIDAS 
 Medidas que afectan directamente a las importaciones. 
 
ii) Valoración en aduana  
Pregunta 1: 
En la página 27, párrafo 24, el informe de la S ecretaría indica que para la valoración en aduana, 
Islandia no utiliza precios mínimos o de referencia, pero a veces utiliza el promedio de los precios 
aplicados a las partidas arancelarias en el país exportador. ¿Podría explicar en que casos se aplica este 
segundo criterio? 
 
v) Otros gravámenes que afectan las importaciones  
 
Pregunta 2: En la página 33, párrafo 41, el informe de la Secretaría hace referencia que además del V.A.T. 
(Impuesto al Valor Agregado) y del Impuesto al Consumo, existen otras cargas específicas que se aplican a las importaciones. ¿Podrían indicar cuáles son esas cargas? 
 
Pregunta 3: 
En la página 34, párrafo 44, el informe de la Secr etaría menciona que el V.A.T. (Impuesto al Valor 
Agregado) se aplica con diferentes coeficientes e incluso exenciones dependiendo del bien o servicio 
que se trate. ¿Podría informar en que casos se prevén lo s tipos más bajos con relación al tipo normal y 
en que casos se prevén excepciones?          WT/TPR/M/164/Add.1 
Page 15 
 
 
RESPONSES PROVIDED BY ICELAND TO ADVANCE WRITTEN QUESTIONS 
Trade Policy Review 7 June 2006 
  
ARGENTINA 
 
III. TRADE POLICIES AND PRACTICES BY MEASURE Measures directly affecting imports 
 
(ii) Customs valuation 
 
Question 1:   Paragraph 24 on page 23 of the Report of th e Secretariat states that Iceland does not use 
minimum prices or reference prices for customs va luation, but sometimes it uses average prices for 
tariff headings in the exporting country.  In what cases are the latter used? 
 Answer
: 
 
The latter criteria is applied in the cases of importa tion of used cars.  The director of customs 
examines whether the transaction va lue of the vehicle in question is abnormally low, taking into 
account the vehicle’s condition, the import price of an identical vehicle which is or has been imported 
to Iceland at the same time or the market price of comparable vehicles abroad. The Directorate of 
Customs gathers information from neutral parti es abroad on comparable values of vehicles in the 
countries from which importation is considered most likely.  If the examination by the director of 
customs gives reasonable grounds for doubting the vera city of the import declaration or supporting 
documents, the case shall proceed in accordance w ith the other main WTO rules of valuation. 
 
(v) Other charges affecting imports 
 
Question 2:  
 Paragraph 41 on page 27 of the Report of the Secretariat states that there are other specific 
charges in addition to the value added tax (VAT) and excise taxes that are applied to imports.  Could 
you please tell us what these charges are? 
 
Answer
: 
 
The term “other specific charges”  in the context of paragraph 41 refers to charges which shall 
be paid upon customs treatment of goods apart from  customs duties, general excise taxes and VAT. The 
charges are for example inspection taxes on electr onic equipment, plants, etc., deposit charges, 
recycling taxes, intellectual property right taxes and transport equalization tax. 
 Question 3: 
  According to paragraph 44 on page 29 of the Report of the Secretariat, VAT is applied at 
different rates depending on the goods or services concerned, and there are even exemptions.  In what 
cases are rates lower than the normal rate applied, a nd in what cases are exemptions provided for? 
 
Answer
: 
 
The standard VAT rate is 24.5%.  A reduced rate of 14% applies to the supply of the following 
goods and services: 
 WT/TPR/M/164/Add.1 
Page 16  
 
1) hotel rooms, rooms in guest houses and other accommodations, as well as  campground facilities;  
2) newspapers, magazines and periodi cals (local or nationals);  
3) books;  4) licence fees to use radio and television broadcasting services;  5) warm water, electricity and fuel oil used for the heating of houses and swimming pools;  
6) certain food and other goods inte nded for human consumption; and  
7) admission tolls to land transportation projects.  
The exemptions without credit for input tax are insurance and insurance s ervices, health sector 
services, social services, educationa l services, cultural services, stat e-regulated lotteries and gaming, 
the services of funeral directors and undertakers, sporting activities, the supply and letting of real 
property and rights to real property and a number of financial services, including those offered by 
banks.   The most important exemptions with credit for input  tax (zero rated) is the export of goods and 
services;  sales and hiring out of certain ships and ai rcrafts; building, repair etc. of certain ships and 
aircraft;  certain services that are rendered abroad fo r the account of foreign residents, which do not 
operate a business in Iceland;  certain services with re gard to real estate situated abroad;  supplies to 
ships and aircrafts in international transport, transport and services directly to or from abroad. 
 
BRAZIL 
 
Could you please present and explain the pre-determined schedule and procedure for the 
announcement of interest rate decisions, adopted  this year by the Central Bank, according to 
WT/TPR/S/164, I, (3), paragraph 14? 
 
Answer
: 
 
In order to enhance the transparency of moneta ry policy the Central Bank of Iceland (CBI) 
announced in November 2005 that it would adopt a formal calendar for its interest rate decisions. 
Previously, the CBI had no preannounced schedule fo r its monetary policy decisions, although interest 
rate decision had often coincided with the publicat ion of the Bank's inflation forecast (published in 
Monetary Bulletin on a quarterly basis).  The deci sion implied that the CBI would give detailed 
explanation of its decision, irresp ective of whether the Bank changed interest rates or not. Six dates for 
interest rate decisions were pre-announced for 2006,  January 26, March 30, May 18, September 14 
and November 2.  Tree of them coincide with the pu blication of inflation forecast (in the March, July 
and November issues of Monetary Bulletin, henceforth  published three times a year).  Intra-meeting 
moves are not precluded, but have not been applie d so far.  Interest rate decisions are the 
responsibility of the Board of Governors (consisting of the governors) but are preceded by two 
monetary policy meetings attended by the governo rs and senior staff members, which provide forecasts 
and extensive economic analysis.  By giving the CBI the opportunity to deliver its policy message more 
frequently, a formal calendar for interest rate deci sion is expected to facilitate the formation of market 
expectations and the efficient tr ansmission of monetary policy. 
 
The report informs that “Real exchange rate a ppreciation has helped the Icelandic economy to 
accommodate the large-scale investment projects in aluminium and power.  This has led some analysts to observe that Iceland is experiencing symptoms of ‘Dutch disease’. Others have argued that Iceland 
has suffered from "Dutch disease" for a long time, as re flected in a stagnant export-to-GDP ratio of 
around 33% since at least 1945, among other factors”.  Could the Government of Iceland provide an 
outline of the measures adopted, if any, to prevent the effects of “Dutch disease”? 
          WT/TPR/M/164/Add.1 
Page 17 
 
 
Answer : 
 
The real exchange rate (ep*/p) consists of th ree components, namely the nominal exchange 
rate (e), the price level in the home country (p) and  the price level in trading partner countries (p*).  
Should the value of the currency strengthen (lower e) or the price level at home rise more than abroad, 
the competitive position of firms in the country beco me more difficult. In Iceland the nominal exchange 
rate is determined on the foreign exchange market as  the Central Bank has adopted a monetary policy 
strategy of inflation targetting with a floating exchange rate. This means the government primarily 
alters the policy interest rate to achieve its inflation target of 2,5% per annum. The interest rate, at the 
same time, has an impact on the exchange rate. In recent years, inflation has risen above the inflation 
target, notably on the back of rapidly rising housing pr ices (Iceland is alone in Europe to incorporate 
housing prices in headline inflation), itself caused by innovations in hous ing financing and access to 
cheaper capital on the euro market. This has resulte d in the Central Bank raising interest rates to 
relatively high levels in an effort to stem the rise in inflation. As a result, a market developed for swap 
instruments in the fall of 2005, whereby foreigners issued bonds denominated in Icelandic krónur in 
order to exploit the interest rate d ifferential. This had an effect to  strengthen the currency (reduce e) 
and hence the real exchange rate. At the same time,  the large scale investments have promoted an 
upturn in the economy and unemployment has fallen to  low levels. This has led to wage inflation 
accelerating. with both the exchange rate strengthening and price levels rising more than abroad, the real exchange rate appreciated. In the spring of 20 06, turbulence in international financial markets 
was transmitted to Iceland and concerns over th e sustainability of economic and financial 
developments arose. This led to a nearly 30% drop in  the nominal exchange rate (rise in e) from late 
February to late April 2006. Since then the market has calmed down and the exchange rate has 
regained about one third of the drop. Neverthele ss, the over 20% decline in the exchange rate has 
improved the competitive position of Icelandic firm s in international competition. However, an 
inflation spike, as occurred in 2001, is expected to pass through in the coming twelve months. The 
fiscal policy has also been restrictive, with the degr ee of tightening from 2003  to 2005 amounting to 
5,5% of GDP, one of the most restrictive fiscal positi ons in the OECD area over that time. The fiscal 
surplus is currently projected to amount to 2,4% of  GDP in 2006, which is restrictive. The interest 
rates of the Central Bank are expected to stay high until the inflation is again brought down to the 
target level, which is expected to o ccur around the middle of next year.  
 
Iceland does not qualify for being considered to suffer from the “Dutch disease” on two 
accounts. First, it has not had perennial current a ccount surpluses driving the nominal exchange rate 
higher. Second, the real source of a high real exchange  rate (low ep*/p) are labour costs that have 
risen more than abroad due to fast growth of dema nd and labour supply constraints. To the extent the 
economy has suffered from a high real exchange rate it has been termed a case of “Island illness” to 
better characterise the nature of the problem. Th e recent opening up of the labour market, associated 
with membership in the EEA agreement since 1994, has  however helped to lift that constraint in many 
sectors. Still, wage developments in  sheltered services secto rs in the economy continue to be vulnerable 
to demand shocks such as the economy has experien ced in recent years due to temporary FDI booms. 
 
In view of the recent developments of the Icel andic Economy, what changes, if any, are to be 
expected in the outward investment by Icelandic co mpanies that have been very dynamic in recent 
years? 
 
Answer
: 
 
The outward expansion is continuing, but perhaps the rate has been slowing down of late.  A 
lot depends on liquidity (financing) conditions in  the markets of the neighbouring countries where the 
expansion has been taking place. 
 
Do you expect the forecasts of GDP growth rate presented in  WT/TPR/S/164, I, (8), paragraph 
37 to suffer major changes, or would they still be valid? WT/TPR/M/164/Add.1 
Page 18  
 
Answer
: 
 
The growth profile appears largely unchanged desp ite the recent bout of turmoil in financial 
markets. GDP growth is expected to remain robust this year.  The most recent projections by the 
OECD suggest GDP growth will be 1,4% in 2007 .  Some recent domestic projections suggest GDP 
growth will be in the range of 0% - 2% next year. 
 
Could Iceland provide the list of authorities that issue the certificate of origin, in the case that 
certificate is required from importing countries?  
Answer
: 
 
The Directors of Customs in their respective admin istrative districts have the authority to issue 
certificate of origin, and there are 26 Directorates in Iceland. 
 
Could Iceland please indicate the administrative procedure costs on the processing of prior 
authorization? 
 
Answer : 
  The administrative cost is usually 0,5-1,0% of the customs price.  This is not a charge for a 
licence, but a fee that is intended to meet the su rveillance and enforcement cost of the administrative 
procedures and notifications. 
 
The document states that Iceland’s Competition Authority (CA) coordinates its responsibilities 
and jobs with sectoral supervisors.  "There is a division of tasks between the CA and the Financial 
Services Authority; a cooperation agreement has be en reached between the Competition Authority and 
the Post and Telecoms Administration, and one is e nvisaged with the authorities in the energy sector". 
Could Iceland provide further e xplanation about such coordinati on?  What is the legal and 
administrative interface between the CA and regulated markets?  
Answer
: 
 
The Competition Authority has a well-defined role  in the newly applied Competition Act.  The 
Competition Authority is responsible for the enforcement  of the Competition Act, the object of which is 
to promote active competition in business activities.  The Competition Authority is charged with the 
task of achieving the objectives of the Compe tition Act by preventing unreasonable barriers and 
restrictions on freedom in business operations, oppos ing harmful oligopoly an d facilitating the access 
of new competitors to the market.  These duties are performed by the Competition Authority with the 
tools provided by the Act.  The Competition Aut hority keeps a constant administrative communication 
to the regulated market regardless of whether or not an investigation is taking place. 
 
Other sectoral supervisors are responsible for keeping tabs on d ifferent sectors of the market. 
The Post and Telecom Administration (PTA) is responsible for adminis tration of electronic 
communications and postal affairs in Iceland while the role of the Financial Supervisory Authority 
(FME) is to ensure that the activities of parties,  such as banks, stock exchange, pension funds, 
insurance companies, etc., subject to supervision are in accordance with laws and regulations in that 
particular sector.  The same applies to the supervision in the energy sector.  
 
To effectively perform their du ties these authorities must focus on the foundation of their roles 
to promote efficiency.  This is done by coor dinating the responsibilities and jobs of the sectoral 
supervisors, keeping constant communication between  the sectoral supervisors.  In terms of 
enforcement of competition rules, provisions on con fidentiality have not raised obstacles as to the 
abovementioned cooperation.          WT/TPR/M/164/Add.1 
Page 19 
 
 
According to the Secretariat, “Support to the agricultural sector is provided through both 
internal and border measures.  As reported by the Ce ntral Bank of Iceland, Icelandic agriculture is the 
most heavily supported in the world.  The vast ma jority of this support is for the sheep and dairy 
segments and takes the form of direct payments  to farmers based on support targets (negotiated 
between the Minister of Agriculture and the Farmer s Union).  Support to producers as measured by the 
% PSE, is estimated at more than twice the OECD  average, though it has fallen from 77% in the 1986-
88 period to 70% over the period under review.”  C ould the Icelandic Government comment whether 
those support to producers have effects similar to subsidies?  Answer
: 
 
Support to producers near exclusively takes the form  of direct payments and border protection.  
Market price support measures have been abolished in  all sectors with the exception of the dairy 
sector.  Iceland has duly notified its support me asures to the WTO (covering the years 1995-2003) and 
there are no support measures with equivalent effect s that are not captured by those notifications. 
 
The report says that “Producers of lamb meat, ar e obliged to export a certain percentage of 
their annual production, in order to regulate the dom estic supply of lamb”.  How can the Government 
of Iceland guarantee that those measures are not used as a way of subsidizing exports?  Answer:
 
 
Support to sheepmeat producers takes the form of  direct payments that are not linked to 
production (Green Box payments).  World market pr ices dictate the terms of trade of sheepmeat 
exported from Iceland and the support received by producers plays no role therein.  
 
Does Iceland intent to review the auctioning quota system for TRQ, applied when   
applications exceed the available quota?  Answer
: 
 
 There is at present no intention to review the TRQ system in force except as part of the possible 
results of our ongoing negotia tions in the Doha Round. 
 
According to the document, ”a reciprocal quota system is due to come into operation with the 
European Union in 2007”. Given that, so far, quot as have not been assigned for specific countries. 
Brazil seeks clarification regarding the application of such measure. 
 Answer
: 
 
 These quotas are an addition to the WTO quota system and therefore fall outside the scope of 
the WTO minimum access requirements.  The quotas in question were introduced as an extension of the 
EEA Agreement, the free trade agreement betw een three of the EFTA countries and the EU. 
 
CANADA 
 
Foreign Investment Regime 
 
The Secretariat report says that, in the context of Iceland’s 2000 Trade Policy Review, 
Icelandic authorities had set up a committee to formulate recommendations on reforms to the foreign investment regime but that the comm ittee did not issue any recommendations. 
 
 Could Iceland specify whether this committee is sued a report?  If so, is this report publicly 
available? WT/TPR/M/164/Add.1 
Page 20  
 
Answer
: 
 
The committee set up in 2000 never really fo cused on the reforms and was subsequently 
disbanded.  It is, however, on the agenda of the presen t government to review the current legislation on 
inward direct investment.  Work is underway in the Ministry of Industry and Commerce to prepare this 
review.  
The Secretariat report indicates that the managers and a majority of the board of directors of 
non-financial, unlimited liability companies domiciled in Iceland must be EEA/EFTA citizens and residents unless they obtain a waiver from the Minister of Industry and Commerce. 
 
Could Iceland outline the waiver proces s for non EEA/EFTA citizens and residents? 
 Answer
: 
 
This question is of a hypothetical nature as  waivers to become managers or board members of 
non-financial, unlimited liability companies domiciled in  Iceland have not, in practice, been sought by 
citizens and residents of non-EEA/EFTA countries.  In such a case, the waiver should be addressed to 
the Minister of Industry and Commerce.  When ev aluating the reply the Minister would have special 
regard to the liberal rules, as regards limited co mpanies for citizens of OECD-countries who need not 
to seek a waiver, as well as the possible special poi nts as regards financial responsibility in the case 
concerned.  
Copyright 
 
The Secretariat Report says that Icelandic copyright legislation was amended in 2000.  The 
amendments included, inter alia, a time-limit on clai ms for fees paid to the visual artists’ copyright 
fund in the absence of an identified legal heir, an d a requirement for parties handling the resale of 
works of art on a commercial basis to submit a summary of sales of art works during the preceding period attested to by a certified accountant (Article 25b).   
Can Iceland please provide more information on these amendments to its copyright legislation? 
 
Answer
: 
 
The Icelandic Copyright Act, No. 73/1972, with  later amendments, was amended in 2000. 
These amendments are derived from the transpos ition of Copyright Directives of the European 
Parliament and the Council, that have been in corporated into the Agreement on the European 
Economic Area (EEA Agreement).  The 2000 amendm ent focused on implementing Directive 96/9/EC 
of the European Parliament and the Council of 11 March 1996 on the legal protection of databases. 
The 2006 amendments were related to implementa tion of Directive 2001/29/ EC of the European 
Parliament and of the Council of 22 May 2001 on th e harmonisation of certain aspects of copyright 
and related rights in the information society and Directive 2001/84/EC of the European Parliament 
and of the Council of 27 September 2001 on the resale ri ght for the benefit of the author of an original 
work of art.  Droit-de-suite – artist’ resale right
 
 
Provisions on artists’ resale ri ghts (droit-de-suite) were first introduced into Icelandic law in 
1987 with amendments to the Act on Art Auctions, No. 36/1987, and la ter in 1992 with amendments to 
the Copyright Act, which formed a new article, Artic le 25 b.  The introduction of artists’ resale rights 
was supported with a reference to similar rights bei ng introduced in other European countries.  A 
special reference was made to th e Berne Convention for the Protection of Literary and Artistic Works,          WT/TPR/M/164/Add.1 
Page 21 
 
 
which is optional to Member States of the Union, but  provides for a reciprocity rule for those Member 
States who introduce such a right for authors.  
The rate of the royalty on auctioned works of ar t or art sold second or successive sales in art 
galleries was from the beginning 10 per cent. 
 
The collection of royalties was organised through a fund, the Artists Copyright Fund cf. 
regulation No. 97/1988.  The successor of that fund was the Icelandic Art Fund established with regulation No. 244/1993 on Artists’ Resale Rights.  
Amendments to the artists’ resale right in Copyright Act in 2000
 
  The original bill of law for the 2000 amendments  to the Copyright Act was mainly concerned 
with the implementation of Directive 96/9/EC.  Under parliamentary proceedings, the education 
committee of Parliament suggested further amendmen ts to the bill before its third reading, including 
amendments to the above mentioned Article 25 b.   These changes consisted of two new paragraphs 
replacing the previous third paragraph of Article 25 b.  The changes included: 
 
- The Icelandic Art Fund was dissolved and its function was transferred to the Copyright 
Collection Society of Visual Artists.  
- The Collection Society could deduct its adminis trative expenses from distributed royalty 
payments. 
- A claim a royalty payment from the Collecti on Society must be presented within three years 
from the end of the year of the resale, after that the claim becomes obsolete. 
- Professional auction houses and art galleries must submit their quarterly sales reports to the 
Collection Society, verified by an accredited acc ountant. Such reports shall be handed in even 
for those reporting periods where there are no sales. 
  Following the entry into force of these ame ndments the previous regulation No. 244/1993 on 
Artists’ Resale Rights was replaced by regulation No. 486/2001.    
 
Geographical Indications  
 
The Secretariat report says that there is no specific legislation concerning geographical 
indications in Iceland, but the Trade Marks Act  and the Competition Act  contain provisions that grant 
protection to such indications. Article (14) of the Trade Marks Act  prohibits the registration of a mark 
that causes confusion regarding its origin, or of a trade mark for wines and spirits that implies a 
geographical name unless the product originates at the location in question. 
 
Can Iceland please provide some further informati on on how their GI regime works in general? 
 Answer
: 
 
GIs  can be registered as trade marks in Iceland.   The GI has to fulfill the same requirements 
as trade marks regarding establishments of rights and th e rights granted to a GI owner are the same as 
with trade marks.  Marks, which are likely to cause c onfusion, for instance as to the origin of goods are 
not registered.  
 
Can Iceland explain what process is used to determine whether a product "originates at the 
location in question?"  WT/TPR/M/164/Add.1 
Page 22  
 
Answer
: 
 
 The determination of whether a product originates at a certain location is made by reviewing 
the data submitted, the list of products and th e location of the applicant in question. 
 
Services 
 
With respect to the GATS horizontal mode 3, the Secretariat Report says that “national 
treatment is accorded to subsidiaries of non-EEA co mpanies formed in accordan ce with the law of, and 
established in, an EEA State, but  not to branches or agencies.” 
 
This appears to conflict with Iceland’s re vised GATS offer which states:  “…may not  be extended 
to branches or agencies….”  Note that the word “not” has been stru ck out.  Can Iceland please clarify 
which statement accurately captures their domestic regulatory status quo?  
Answer
: 
 
 Iceland's revised GATS offer does not contain an express statement that national treatment be 
accorded to branches or agencies, as it is with subsidiaries, but rather an expression of good will to 
extend national treatment to branches or agenci es according to circums tances in each case. 
 
CHILE 
 
Foreign investment regime 
 
Paragraphs 14 et seq. of the Report of the Secretariat state that Iceland, in spite of having 
liberalized its foreign investment regime, continu es to be among the OECD countries with the highest 
level of overall restrictions to foreign direct i nvestment.  Does Iceland plan to continue reducing 
restrictions to foreign investment in general, and pa rticularly in sectors such  as fisheries, energy and 
airline operations? 
Answer : 
 
It has been on the agenda of the present govern ment to review the current legislation on 
inward direct investment.  Work is underway in the Ministry of Industry and Commerce to prepare this 
review. 
 
Tariffs 
 According to paragraph 39 of the Report, all agricultural tariff lines and some 95 per cent of 
manufactured lines are bound.  The Report states that  the final average bound rate is 31.5 per cent, but 
the ad valorem bound rates are higher than the ad valo rem applied rates.  Does Iceland plan to narrow 
this difference between the ad valorem bound and a pplied rates?  If so, what specific measures will it 
be taking to achieve that objective? 
 
Answer : 
 
The possible reduction of Iceland’s bound duties awaits the outcome of ongoing negotiations in 
the Doha Round. 
          WT/TPR/M/164/Add.1 
Page 23 
 
 
Sanitary and phytosanitary measures 
 
According to paragraph 74 of the Report, Iceland a pplies strict border controls with a view to 
maintaining high animal and plant health standard s, and these controls are exercised by various 
different authorities.  Could Iceland please explain the functions exercised by the Ministry of 
Agriculture and the Minister of Fisheries in this  respect, and how the Food Stuffs Committee operates 
in coordinating food quality and safety standards and regulations? 
 Answer
: 
 
The Minister of Agriculture, advised by the Chie f Veterinary Officer  is responsible for matters 
concerning the supervisory tasks of veterinarians wh ich include the import and export of livestock 
products, communicable livestock diseases, the handling, inspection and classification of 
slaughterhouse products and the health inspection of farmed fresh water fish.  The Minister of 
Fisheries similarly holds responsibility for the handli ng, transport, storage and processing of marine 
products for export, the Minister is advised by the Directorate of Fisheries. The Food Stuffs 
Committee, made up of representatives from the advis ory bodies, has the role of coordinating the 
different rules and regulations concerni ng the quality and safety of food.  
 
COLOMBIA 
 
Could you please elaborate on your statement that Iceland is fully committed to the 
establishment of a fair and market – oriented ag ricultural trading system (Para. 42 WT/TPR/G/164)? 
 Answer
: 
  The statement is simply a reiteration of the long-term objective of the Agreement on Agriculture and the ongoing reform process under negotiation in the Doha-Round.  
 
According to the WTO Secretariat, market acce ss has been left unbound with respect to the 
presence of natural persons, with some exceptions  (Para. 76 WT/TPR/S/164).  However, since 
Iceland’s previous review the services sector has con tinued to expand to around 80% of GDP in 2004.  
How is Iceland’s immigration policy related to the temporary entry of service providers? 
 Answer
: 
 
The access of services providers, that are not citizen s of EEA countries, is regulated by the Act 
on Foreigners, No. 96/2002 and Foreign Nationals Right to Work Act, No. 97/2002.  As a general rule, 
a non-EEA citizen that needs a visa to enter the country,  can only stay for the time specified in the visa, 
unless a special permit is granted.  Other foreigners t hat do not need a visa, can stay in the country for 
up to three months from the arrival.  To stay fo r a longer period of time than three months, a special 
permit is needed.  A foreigner intending to seek empl oyment, whether for remuneration or not, or to 
work independently in the country, needs a permit to stay and a permit for work, according to Art. 9, 
par. 1 of the Act on Foreigners.  Certain categori es of foreign service providers or foreign nationals 
are exempt from seeking a work permit, for up to four weeks of work every year.  These are for 
example business representatives of companies that do not have a subsidiary in Iceland, employees, 
consultants, etc. that have specialised skills in rel ation to reparation, inst allation or supervision of 
machines. 
 
This legislative framework relates to all foreigners seeking to provide services in Iceland. 
 
Although it has never been used, what are the pa rameters for the application of the authority 
not to allow foreign investment in the event of serious economic, social or environmental difficulties in WT/TPR/M/164/Add.1 
Page 24  
 
particular economic sectors or particular areas whic h are likely to be of lasting nature? (Para. 15 
WT/TPR/S/164)  Answer
: 
 
As is clearly stated in Para 15 (pg 13), no foreign investment has been rejected on the ground 
referred to in the paragraph. The hypothetical answ er to the question is that the Minister would take 
into consideration the importance of  the said investment for the economy, or for a particular segment 
of the economy, or a region, and the general state of the economy at the time, when the decision is 
being taken. 
 
The Secretariat’s report highlights the several trad e agreements of which Iceland is a Party.  
Given that Iceland has a small economy dependent  on few production activities and export goods, what 
has driven its authorities to negotiate so many regional trade agreements? 
 
Answer : 
Within the EFTA co-operation, Iceland enjoys th e joint resources and strength of our partners, 
Norway, Switzerland and Liechtenstein.  The EFTA co-operation has provided our exporters and 
businesses with very important opportunities, sometim es ahead of their competitors in Europe.  In 
addition to our own export interest, we try to secure our business operato rs and traders the same 
conditions as the EU provides for its businesses and exporters.  We therefor e follow closely the EU 
neighborhood policy and the free trade negotiatio ns of the EU, and have within EFTA concluded 
agreements and are in the process of negotiating with various countries that we see as future partners.  
We see the regional and plurilateral process of free trade negotiations not as a threat to the 
multilateral trading system, but as a complementa ry process, that may facilitate and enhance the 
possibilities of liberalisation in multilateral trade. 
 
EUROPEAN  COMMUNITIES 
 Sustainable development  
In what ways does Iceland think trade policy can  best contribute to sustainable development? 
 
Does the issue of trade and sustainable develo pment fit into Iceland’s overall development 
strategies?  What steps does Iceland take to ensu re that its trade policy does not have any negative 
effects on sustainable developm ent in Iceland and elsewhere? 
 
Answer
: 
 
As can be read from the report of the Secretaria t, and Iceland’s own report, our trade policy is 
largely intertwined with sustainable development.  Our fisheries resources are of vital importance to 
the economy and export, and we have managed them we ll, based on the advanced research of our 
marine institute.  The sustainability of the fisheri es is a cornerstone of our trade and economic policy. 
 
In other sectors, such as energy consumption, Iceland has a  unique situation as regards its 
energy resources.  It is the poli cy of the Government of Iceland to  increase the utilization of the 
renewable energy resources in harmony with the envir onment.  All electricity production in Iceland is 
totally carbon-free.  Iceland is the only western c ountry that produces all its electricity from renewable 
natural resources, and almost 90% of all heating is ba sed on geothermal sources.  In fact, 72% of the 
total gross energy used in the c ountry comes from renewable energy resour ces, the highest share in the 
world.  This is the result of making renewabl e energy a long-term priority in Iceland. 
          WT/TPR/M/164/Add.1 
Page 25 
 
 
In 1998 the Government made a clear statem ent towards a Sustainable Hydrogen Economy. 
The long term aim is that renewable hydrogen fuel w ill replace the fossil fuels, as soon as it becomes 
economically and technically possible. Several step s have been taken towards the hydrogen economy – 
one of them was eliminating all taxes on hydrogen vehicles in 2005. Iceland was one of the founding 
members of the International Pa rtnership for the Hydrogen Econom y – IPHE in Washington 2003 – 
which was an important step towards global hydroge n economy. Because of IP HE, hydrogen is higher 
on the global agenda, building a global public-pri vate partnership is easier and important hydrogen 
steps have been taken, such as an ECTOS pr ogram in co-operation with General Motors. 
 
The long term effect of such policies and innov ation will hopefully cont ribute to a cleaner 
world and more opportunities for developement and progress due to new and increased energy 
resources. 
 
Trade and environment 
 
What mechanisms does Iceland have in place to ensure adequate coordination of environmental 
policy and trade policy?  Answer
: 
 
Iceland is a small country and its administration works in very good and close co-operation. 
Environmental policy and trade policy are intert wined as our main resources demand a huge respect 
for the nature and the environment.  We have bu ilt our policies on research and specialist advice, for 
example as regards marine resources and their utilisa tion.  This has allowed us to use our resources 
wisely, without overfishing our stocks.  The long term policies, as regards hydrogen energy and 
investment in aluminium production based on renewabl e energy resources, are also good examples of 
trade policies that take into effect not only Icelandic interest, but the environment as a whole. 
 
Iceland is also party to various international environmental agreements.  
Trade and social development  
 
The EC welcome the exceptionally high employme nt rate in Iceland, including a high female 
participation rate.  Iceland has also seen a rise in foreign workers which has dampened wage inflation. 
 
What policies are in place to manage this rise in foreign workers, and are the labour rights of 
foreign workers the same as nationals? 
 
Answer
: 
 
 Workers from the EEA countries (EU and EFTA) do not have to apply for work permits or 
visas to enter Iceland, and have the right to seek employment and work in Iceland like nationals.  
Icelandic labour market has had a surplus demand for wo rkforce for the past years.  As for nationals of 
other countries, they have to apply for a visa and a wo rk permit, according to the provisions in the Act 
on Foreigners, and Foreign Nationals Right to Work Act,  referred to in the Secret ariat report.  Before 
issuing a work permit, the administration reviews th e need of employers in a certain sector and seeks 
consultation with the labour organisation in the relevant sector.  
 The labour rights of those foreigners entering th e Icelandic employment market are the same 
as nationals regarding minimum wages, working conditions and the regulatory framework of the labour law, in conjunction with the prov isions and conditions of the work permit. 
 WT/TPR/M/164/Add.1 
Page 26  
 
International Relations 
 
 Bilateral, regional and global trade liberalisati on is vital for promoting prosperity, growth and 
development to the benefits of the world at larg e.  The EC considers that the WTO and multilateral 
liberalisation is the most certain way for promo ting global interests for industrialised countries and 
developing countries at large.    How does Iceland judge the relative importanc e and weight of bilateral and regional FTA 
policies and the further development of the WTO sy stem in terms of its own trade and development 
needs? 
 
Answer
: 
 
Regional free trade agreements are very impor tant for the Icelandic export of goods and 
services.  Iceland has a very extensive agreement w ith the EU, the Agreement on the European 
Economic Area, which allows Icelandic legal and na tural persons to move freely and operate within 
the 28 states of the EEA without discrimination as far as the agreement prov ides.  The free trade 
agreements concluded within the EFTA co-operation do not go as far as that, but they provide 
Icelandic providers of goods and in some cases ser vices, benefits that can enhance trade between the 
free trade partners and increase the opportunities for trade and investment.  Although a very extensive 
part of our external trade is conducted within the auspices of free trade relations, it is however most 
important to maintain and enhan ce the multilateral liberalisation.  Iceland sees regional and bilateral 
agreements as complementary to  the multilateral trading system.  As the network of free trade 
agreements is expanding all over the world and increa sing number of states are participating in free 
trade negotiations, it is ever more important to finalise an ambitious Doha Round within the WTO 
system as a whole.  The states that will benefit the mo st from that are the smaller, more vulnerable and 
less developed countries. 
 
 Does Iceland intend to negotiate further FTA s outside the EFTA framework?  Does Iceland 
think that a merely bilateral approach might in some cases be more appropriate than using the EFTA 
instrument? 
 
Answer : 
 
Iceland has very few bilateral trade agreements.  Th e latest agreement that was concluded and 
is now in the process of being ratified is a new agreem ent with the Faroe Islands.  This is an exception, 
as Iceland usually negotiates within the EFTA framew ork.  The special status and situation of the 
Faroe Islands as a neighbour in the Atlantic w ith very close ties and similar cultural heritage, was a 
predominant factor when Iceland decided to update and expand the free trade relations it has had with 
the Faroe Islands since 1992.  This is a very cl ear case where bilateral relations may be more 
appropriate.  As regards the feasib ility study Iceland is currently doing with China, that is in very 
preliminary stages and the possibility of EFTA negotiati ons in the future has in no way been excluded. 
 
 Are the trade agreements with the Faroe Islands  and Greenland merely bilateral?  Does Iceland 
have any further merely bila teral agreements on trade issues with other regions/countries? 
 Answer
: 
 
Both Agreements are bilateral, although th e Kingdom of Denmark is a party to both 
Agreements. The list in Table II.2, page 18, in the Secretariats report shows the full list of preferential 
trade agreements that Iceland has in force or have been signed. 
  Which are the preferred countries/regions for a po ssible FTA policy for Iceland, to be realised 
either via EFTA or via bilateral negotiations?          WT/TPR/M/164/Add.1 
Page 27 
 
 
Answer : 
 
As for future relations, Iceland would be looking strongly to both the west and the east.  EFTA 
has had negotiations on hold with Canada for some years now and Iceland would be very interested in 
finalising those negotiations, as I celandic exporters are keenly int erested in the Canadian market, and 
there is in fact a very strong cultural link with th e descendants of Icelanders that moved to Canada at 
the beginning of last century.  The United States is  of course an interesting future free trade partner.  
Looking to the east, we see Ukraine and Russia as  future free trade partners, when they have finished 
their accession negotiations and China and Japan are of great interest as well.  In addition to our own 
export interest, we try to secure our business ope rators and traders the same conditions as the EU 
provides for its businesses and exporters.  We therefor e follow closely the EU neighborhood policy and 
the free trade negotiations of the EU, and have within EFTA concluded agreements and are in the 
process of negotiating with various countries that we  do not necessarily have much trade with at the 
moment, but could be future partners. All of those ne gotiations we would foresee to conclude within the 
EFTA co-operation. 
 
Depending on the results of the feasibility st udy currently underway, in case Iceland and China 
decide to start negotiations for an FTA, how would this  be put into practice in the textiles and footwear 
sector?  Answer
: 
 
Since its membership of EFTA, Iceland has usually  granted full free trade for industrial goods 
(HS Chapters 25 to 93) to all of its FTA partners, incl uding textiles and footwear.  While it is too early 
to comment on any outcome of any possible free trad e negotiations with China, there is no reason to 
assume that a different position would be taken vi s-à-vis negotiations China than other free trade 
partners.  
• In this context, please inform how the rules of or igin are to be applied for Chinese goods entering 
in Iceland? 
 Answer
: 
 
A feasibility study with China is in its prelimi nary stages, and it is much too early to elaborate 
on how rules of origin would be applied for Chinese goods entering in to Iceland, should Iceland and 
China decide to start to negotiate an FTA.  
 
Measures Directly Affecting Imports 
 
Could Iceland clarify if all customs inspections are carried out on the basis of risk analysis? 
 Answer
: 
 
Customs inspections are carried out on the basis of risk analysis as a primary rule.  Some 
inspections are carried out at rand om and on scene as the occasion arises.  This answer is put forward 
with reservation as the term risk analysis is  not defined in the question posed.  What are the new 
provisions regarding the operation of customs brokers?  Answer
: 
 
The relevant rules on customs brokers are th e following; more detailed rules on customs 
brokers will be included in a regulation shortly:  
Chapter XI, Art. 47 of Customs Act states that a customs broker is author ized to act before the WT/TPR/M/164/Add.1 
Page 28  
 
customs authorities on behalf of importers and exporters and perform the following services in 
connection with the customs clearance of goods:  
1. Consultancy with regard to completing custom s documentation, such as tariff classification 
 and calculation of import charges. 2. Completion of customs declar ations for imports and exports. 
3. Requests for the customs clearance of goods. 
4. Payment of import charges on behalf of an importer.  
Articles 48 and 49 further state provisions on th e conditions for being a customs broker and 
the obligations of a customs broker.  Customs br okers are subject to control by the Director of 
Customs in Reykjavik. The Director of Customs in  Reykjavik must notify the Minister of alleged 
infringements by customs brokers of this Law or other laws regarding the customs treatment of goods 
and the Minister has the power to revoke an operating licence if he no longer fulfils the conditions or 
grossly neglects his duties according the law. 
 Sanitary and phytosanitary measures  
Could Iceland provide further information on its import regime for live animals?  Does Iceland 
intend to revise the current import formalities for live animals?  
 
Answer
: 
 
Iceland occupies a unique position in that it is rela tively free from contagious plant and animal 
diseases.  Mainly as a result of historical isola tion, Icelandic livestock has not developed congenital 
immunity to animal diseases that may be prevalent el sewhere.  Great care is taken to ensure that this 
positive sanitary situation remains unchanged through im port regulations, that of course must comply 
with Iceland’s international obligations.  Dom estic production takes place against the very highest 
quality standards to safeguard plant, animal and hu man health.  The importation of live animals is 
prohibited, subject to the authorization of the Minister of Agriculture upon recommendation of the 
Chief Veterinary Officer.  The recommendations of th e CVO concerning disease control shall be based 
on risk assessments which inter alia take account of OIE and CODEX standards and guidelines and 
are consistent with the provisions of the SPS Agreem ent.  The importation of live animals is subject to 
stringent health measures, in cluding quarantine.  There are at  present no plans to revise current 
import formalities. 
 
Fisheries and Fish Processing 
 
How does Iceland evaluate the current situation of  its domestic fisheries industry as regards the 
openness for foreign investment?  Would Iceland consid er further liberalising foreign investment in the 
fisheries industry?  How does Iceland evaluate its in terests in Icelandic investments outside of Iceland?  
 
Answer : 
 
As stated in the Secretariat’s report, foreign di rect investment in Icelandic fisheries is allowed 
up to a certain limit, and indirect foreign investment as  well.  Due to the importance of the fisheries 
sector for the Icelandic economy and export, this po licy has been important in keeping the economic 
link between the fisheries and the people.  This is es pecially important as the access to the fisheries 
resources is connected with the ow nership of ships.  There has b een no political discussion on further 
liberalisation of the investment  in the fisheries industry. 
 
As regards Icelandic investment outside of Icel and, there have certainly been some companies 
investing in fisheries and fish processing, so as to ge t closer to the consumer ma rket elsewhere, mainly          WT/TPR/M/164/Add.1 
Page 29 
 
 
in the EU.  This follows from easier flow of cap ital and investment within the EEA framework and is a 
sign of diversified interest on the part of the companies. 
 
Textiles and Clothing 
 
Manufacturing activities in Iceland are mainly con centrated in power-intensive industries based 
on Iceland's natural endowment of energy-generatin g sources.  Some 16,900 people were employed in 
manufacturing (not including fish processing) in 2004 .  According to data from Statistics Iceland, the 
main activities by value of sales are food products an d beverages (about 55% of the total) followed far 
behind by basic metals (14%).  It appears that textile and clothing amount only to 1.3%. 
 
Apart of fur skin has Iceland any textile and clothing industry? 
 Answer
: 
 
Manufacture of textile wearing apparel (36 companies) and dressing and dyeing of fur 
(6 companies) amounted to 3959.9 mill. ISK in terms of sold products in the year 2004, which equals 
1,2 % of the total value of sold production in the year 2004. 
 
If not, why is Iceland charging its highest duty rates on imports of clothing and footwear? 
 
Answer : 
 
Customs duties on clothing and footwear a re levies which were imposed for protection 
purposes at a time when such production was in  Iceland.  Even though there is currently little 
production in Iceland,, the duties are considered n ecessary and any amendments to the current bound 
and applied tariffs will be reviewed in light of a pos itive conclusion in the negotiations of the current 
Doha Round. 
 
Most of the imports of manufactured goods enter Iceland duty free, with an average MFN tariff 
that was 2.5% in 2004.  Is the 15% duty rate applicable to fur skin imports only, or to other textile/clothing and footwear products? 
 
Answer
: 
 
The 15% duty is applicable to clothing and f ootwear products as a general rule.  Few 
exceptions are applicable to some medical clothi ng, safety clothing and children’s wear. 
 
HONG KONG, CHINA  
 
1. We note from the Secretariat’ s report that while founders, ma nagers and board members of 
banks and insurance companies established in Icel and are subject to certain citizenship and/or 
residency requirements, the Ministry of Commerce can waive these nationality and residency 
requirements. We would like to know  more details on the factors that the Ministry would take into 
account in considering a waiver request.  Answer
: 
 
The legislation stipulates that these restrictions do not apply to EFTA and EEA member 
residents (founders) or to EFTA, EEA and OECD member residents (managers and board members). Although no request for a waiver from these restrictions  has been filed, the main factor that would 
influence the decision-making in su ch circumstances, would be whet her the applicant was considered 
fit and proper to be a founder, manager or board me mber of a bank or an insurance company by the 
Financial Supervisory Authority.  WT/TPR/M/164/Add.1 
Page 30  
 
2. It is further noted that foreign and domestic i nvestment that is aimed at acquiring 10% or more 
of the capital or voting rights of a bank or an in surance company, or which enables the exercise of a 
“significant influence” over the bank’s/company’s manage ment, is subject to the approval of Financial 
Supervisory Authority (FME), and that FME approv al is also required when a foreign or domestic 
investor’s participation in a bank exceeds the thr esholds of 20%, 33%, or 50%.  Would Iceland advise 
how these prior approval requirements are considered to be compatible with its services commitments 
undertaken in the GATS schedule of specific co mmitments, in which no limitations on foreign 
investment have been inscribed for the relevant services?    Answer
: 
 
Iceland is a member of the EEA. As such, Iceland adopts, through the EEA agreement EU 
acquis on the four freedoms, including regulatory framework in the financial sector.  The prior 
approval requirement referred to in the question is part of the EU acquis applicable to all EEA 
member states.  
 
Besides, we also note that foreign insuran ce companies licensed outside the EEA and with 
head offices outside the EEA may not set up bran ches in Iceland unless their home countries grant 
reciprocal treatment to Icelandic companies.  Would Iceland provide more information on the 
reciprocity requirement in question, including whet her less favourable treatment would be accorded to 
certain foreign insurance companies as a r esult of the reciprocity consideration? 
 
Answer : 
 
The reciprocity requirement is important and its  aim is to safeguard equal treatment of 
supervised activity.  It is also important that th e supervision requirements of the home state of the 
foreign insurer is sufficient and in line with universa l or common supervisory requirements (standards 
and practice). 
 This is a binding rule and therefore "less fav ourable treatment" would not be accorded to 
certain foreign insurance companies as a result of the reciprocity consideration.  If the home country 
of a foreign insurer would not grant reciprocal treatment to Icelandic companies willing to conduct 
insurance business this might, however, have a bear ing on the possible granting of the license of a 
foreign insurance company in Iceland. 
 The Financial Supervisory Authority (FME) has not  yet received a request from an  insurer 
licensed outside the EEA to set up a branch in Icel and, therefore there is no practical experience 
regarding this issue.  The FME does not foresee  that the reciprocity requirement should pose a 
problem. 
 
JAPAN 
 
Competition Policy 
 
According to the Report by Iceland, a new Co mpetition Act which came into force in 2005 
gives the Competition Authority stronger and clearer powers of intervention.  Please explain specifically “the powers of intervention” held by the Competition Authority. 
Answer
: 
 
According to Art. 16 of the Competition Act No. 44/2005, the Competition Authority’s action 
may include measures needed to bring an end to viola tions of the provisions of  the Act or to respond to 
actions of public entities which may be detrimenta l to competition.  The Competition Authority may 
take action both to change behaviour and structure in proportion to the infringement committed and as          WT/TPR/M/164/Add.1 
Page 31 
 
 
necessary to bring such infringement effectively to  an end.  However, structural remedies may only be 
imposed if it is shown that no effective behavioural remedy exists or if an equally effective behavioural 
remedy will be more burdensome for the party  in question than a structural remedy. 
 The provision on structural remedies was added to the Competition Act with the amendments 
made to the act in 2005.  Thus, th at provision is the basis for the st atement referred to in the question, 
i. e. that the new Competition Act has given the Competition Authority stronger and clearer powers of 
intervention.  
Other powers of intervention held by the Co mpetition Authority incl ude the following: 
• In Art. 14 of the Competition Act, it is stipulat ed that, in the case of public undertakings or 
undertakings operating to some extent under exclusive rights or protection granted by the State, the Competition Authority may order financ ial segregation on the one hand between part 
of the operation of the undertaking conducted under exclusive rights or protection and on the 
other hand the operation conducted in free compe tition with other parties. Measures shall be 
taken to ensure that the operation in competition is not subsidised by the operation conducted 
under exclusive rights or protection. 
• If the Competition Authority is of the opinion th at a merger will obstruct effective competition 
by giving one or more undertakings a dominant position or by strengt hening such a position, 
the Authority may annul a merger that has already taken place, according to Art. 17 of the Competition Act.  The Competition Authority may also set conditions for such a merger that 
must be met within a given time. 
• According to Art. 37 of the Competition Act, the Competition Authority will impose 
administrative fines on undertakings or associati ons of undertakings violating Articles 53 and 
54 of the EEA Agreement or the prohibitions of  the Competition Act or decisions pursuant 
thereto, unless the violation is deemed insignific ant or such fines are not  considered necessary 
for other reasons in order to promote and stre ngthen effective competition. Decisions on fines 
shall take regard of the nature, extent and duration of restrictive practices. 
• In the event of non-compliance with a decision taken in accordance w ith the Competition Act 
the Competition Authority may decide to impo se periodic penalty payments on the party or 
parties at which the decision is directed, until the decision is complied with, cf. Art. 38 of the 
Competition Act. 
 Energy 
 
According to the Report by the Secretariat, a Ministry of Commerce Action Plan for 2004-07 
states that work will be done on the restructuring of  electricity companies and state ownership.Is the 
Government considering future privatization of electricity companies?  Please provide more information for the work on the restructuring of electricity companies and state ownership. 
 Answer
: 
 
The Policy Statement of the Coalition Governme nt of the Independence Party and Progressive 
Party from 2003 only states that parliamentary authorization for the sale of the state’s share in Iceland Telecom will be followed through.  There is no men tion of privatization of state owned electricity 
companies and currently there are no priva tization plans for those companies. 
 
The State is the sole owner of two electric ity companies, Rafmagnsveitur ríkisins (Icelandic 
State Electricity) and Orkubú Vestfjarða hf. (the We stfjord Power Company Ltd.). Furthermore, the WT/TPR/M/164/Add.1 
Page 32  
 
State has a 50% share in Landsvirkjun (the National Power Company) and a 15% share in Hitaveita 
Suðurnesja hf. 
 The plans for the restructuring of the state owne d electricity companies is mainly twofold. On 
one hand the Government decided to establish a lim ited liability company to operate Rafmagnsveitur 
ríkisins. This has been done with Act No. 25/2006  and Rafmagnsveitur ríkisins will, as of 1 August 
2006, be operated as a limited liability company.  On the other hand the Icelandic State has been 
looking into the possibility of buying out the co-o wners (the City of Reykjavík and the Township of 
Akureyri) of the National Power Company.  If ag reement could be reached the intention was to 
increase the cooperation of the National Power Co mpany and the two other fully state owned 
companies (Rafmagnsveitur ríkisins and Orkubú V estfjarða).  The parties could not reach an 
agreement on this and discussions betw een the parties were suspended in January this year.  However, 
the three companies, Landsvirkjun, Rafmagnsveitur ríki sins and Orkubú Vestfjarða, established earlier 
this year Orkusalan ehf.  The purpose of the comp any is to organize production, purchase and retail 
sale of electricity. 
 
Services 
 
With regard to motion picture and video ta pe production and distribution services (CPC9611), 
motion picture projection service (CPC9612) and sound recording:  
Are there any specific limitations for market access and national treatment in Iceland?  If any, 
is the Government considering a relaxation of those limitations? 
 
Answer
: 
 
There are no region specific limitations on the import ation, distribution or public display of 
cinematographic works in Iceland.   
However, the Broadcasting Act No. 53/2000 (cf. Ar ticle 7 of the Act) stipulates a requirement 
for broadcasting organisations to up hold a certain ratio of European media content, as derived from 
international obligations of the Agreement on th e European Economic Area and relevant Directives 
(Directive 97/36/EC of the European Parliament and of the Council of 30 J une 1997 amending Council 
Directive 89/552/EEC on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities) 
and the Council of Europe European Convention on Transfrontier Television, Strasbourg, 5.V.1989, 
later amended according to the provisions of the Pr otocol (ETS No. 171), which entered into force, on 
1 March 2002. Similarly, in the case of the public display and rental of copies of cinematographic 
works, an Icelandic translation or synchroni sation is a requisite supplement.  
 
National treatment is not directly applicable here as there is no criterion in the relevant 
legislation for a film producer to be an EEA citizen or have a residence within an EEA country.  The 
subject or theme of a cinematographic work is the on ly criterion related to Iceland, as regards access 
to Icelandic and Nordic funds for production of cinematographic works.  
 
The Cinematography Act, No. 137/2001 provides in Article 6(2) that a film funded by the 
Icelandic Film Centre (the state agency for film fu nding) shall have a reference to Icelandic culture, 
unless special cultural reasons apply.  For a film to  be considered Icelandic it has to be produced and 
funded by Icelandic entities or be a co-production between Icelandic entities and foreign entities, cf. 
Article 1 of the Act.  
Iceland has ratified two international agreemen ts for production of cinematographic works; 
European Agreement on the co-production of cinema tographic works, done in  Strasbourg 2 October          WT/TPR/M/164/Add.1 
Page 33 
 
 
1992, ratified in Iceland 1. September 1997;  and a co-production agreement between the governments 
of Iceland and Canada, done in Washington 15 October 1997, ratified in Iceland 2 February 1998.  
Iceland is contracting party to the Nordic Film and TV fund (NFTF).  The purpose of the 
Nordic Film & TV Fund is to promote the production of audio-visual projects in the Nordic countries 
by participating in the top-up fi nancing of feature films, TV-fiction,  TV-series, short films and creative 
documentaries.  In order to obtain support from th e Fund, the film has to be suitable for theatrical 
release, television broadcasting or other forms of  distribution.  For further information see: 
http://www.nftf.net/ 
 
SINGAPORE 
 
Goods/Tariffs 
 
We note that Iceland has a fairly liberal tariff regime.  About 95% of all tariff lines are bound. 
70% of all tariff lines are duty-free.  We would however appreciate it if Iceland could clarify the 
following  weaknesses or distortions in its otherwise liberal tariff regime  (i) As highlighted in para 38 of the Secretariat re port, there is an issue of tariff escalation.  The 
report notes that Iceland’s ta riff escalation is unusual in that average MFN applied
 tariff 
protection is high  (10.7%) at the first stage of processi ng, very low for semi-processed products 
(0.8%) and high again fo r fully processed products  (7.5%). 
 Answer
: 
 
 As is stated in the Secretariats report, ar ound 70% of all tariff lines are free and over 90% 
have tariffs lower than 15%.  The agricultural sector  however has higher tariffs on the products that 
are most sensitive, both in primary and secondary st ages of processing.  The customs duties on all 
products will of course be reviewed in light of the positive conclusions of the Doha Round. 
 
(iii) (para 39) for lines with strictly comparab le codes between HS96 and HS2002, and valorem 
applied rates  appear to be higher  than the corresponding ad valorem bound rates  for seven 
items 
 Answer
: 
 
 Iceland is currently reviewing the applied tariff rates and our data in the WTO databases.  In 
some instances there have been discrepencies due to  technical errors when documents are transposed 
from one format to the other.  As fore the few in stances that were pointed out in the Secretariat report 
on relations between bound and applied tariffs, this is  being reviewed as par t of our transposition of 
data on bindings from HS96 to HS2002 wh ich we hope to conclude this summer. 
 
In addition, para 35 states that non-ad valorem duties apply to 382 items, representing 4.7% of 
total tariff lines.  Does Iceland have plans to conv ert these non-ad valorem duties to their ad valorem 
equivalents?  If so, within what time -frame would Iceland do this conversion? 
 Answer
: 
  Iceland has at present no plans to abandon use of specific duties, either separately or in 
conjunction with ad valorem duties. 
 
Services 
 WT/TPR/M/164/Add.1 
Page 34  
 
Para 78 of the report states that national treat ment is accorded to subsidiaries of non-EEA 
companies formed in accordance with the law of, and established in, an EEA State, but not
 to branches 
or agencies.    
It would be useful if Iceland could indicate why it accords diffe rent treatment for subsidiaries 
and branches & agencies? What type of regula tions are branches and agencies subjected to? 
 
Answer
: 
 
Iceland is not obliged to accord national trea tment to branches or agencies of EEA States’ 
companies, but is committed to doing so for subsidia ries of those companies.  However, this does not 
mean that national treatment will not be accorded to such branches or agencies, and this will be 
evaluated in each case. 
 
 Para 82 states that as at end 2005, the teleco mmunications market in Iceland was a de facto 
duopoly with Iceland Telecom a nd Og Vodafone providing basic telecommunications services. 
 
Given the benefits that could accrue from greate r competition, does Iceland plan to allow more 
telecoms service suppliers to supply this service?  If so, within what time-frame would these service 
suppliers be allowed into Iceland?  
Answer
: 
 
There is a factual duopoly in the telecom sector , but not a legislative one.  The Telecom Act 
(No. 81 from 2003) states that telecom companies estab lished in the EEA or in a Member State of the 
World Trade Organisation, are allowed to operate te lecom services in Iceland, according to the rules 
of the Act and regulation issued under the Act.  El ectronic communications undertakings that provide 
telecommunication networks, servi ces or facilities that are asso ciated with telecommunication 
networks must announce their intentions to the Post  and Telecom Administration before commencing to 
operate.  Activities must consequently be conducted in accordance with legislation and rules which the 
PTA has set regarding general authorisations fo r the operation of telecom networks and services.   
  According to para 107, foreign banks may set up a branch in Iceland.  However, only banks 
established and licensed in the EEA benefit from an automatic approval process,  
What is Iceland’s rationale for according auto matic approval process for banks established and 
licensed in the EEA and not to other banks?  What type of approval process are other banks subjected 
to?  What criteria would be used to determine wh ether a bank (which is not established and licensed in 
the EEA) can operate as a branch in Iceland?  Answer
: 
 
 Iceland is a member of the EEA. As such , Iceland adopts, through the EEA agreement EU 
acquis on the four freedoms, including regulatory framework in the financial sector.  The regulatory 
framework is therefore harmonised for the banks and credit institutions in the EEA.  One of the 
advantages of the EEA agreement is that all ba nks and credit institutions, requiring an operating 
licence, will be able to provide their services with in whole of the EEA area on the basis of a single 
licence/single passport. Thus, such services provid ers do not need to apply for an operating licence 
with supervisory or regulatory authorities in other EEA member states.  
Trade Contingency Measures 
 
Iceland is exemplary with regard to trad e contingency measures.  Though Iceland has 
legislation relating to anti-dumping or countervailin g measures, it has never applied these measures.           WT/TPR/M/164/Add.1 
Page 35 
 
 
 
In addition, para 52 states that Iceland does not  use safeguard measures, nor does it  have any 
safeguard legislation.  Does Iceland have any plans in  the future to draw up a safeguard legislation?  If 
so, when? Answer
: 
 
Iceland has decided in principle not to apply sa feguard measures.  Icel and has no plans for the 
time being to draw up safeguard legislation. 
 
TURKEY 
 
Foreign Direct Investment 
 
Secretariat Report mentions that “the stock of  foreign direct investment (FDI) in Iceland 
increased around four-fold between 1999 and 2004 to around 1.4 billion Euros. This has been driven by 
large increases in stock of inward FDI in manufact uring and software and research which accounted for 
slightly more than 90% of the total FDI stock in Iceland in 2004.” 
 
Could the delegation of Iceland provide furthe r information about the government strategy 
towards increasing the inward FDI?  
Answer
: 
 
The increase in FDI, notably since 2003, has b een driven by investment in power intensive 
industry, namely in electricity generation  (hyd roelectric and geothermal) and aluminium production.  
The investment is estimated to amount to over 9%  of GDP per year in 2005 and 2006. The share of 
software and research FDI is far less. 
 
Iceland is considered an attractive destination for power intensive investments due to clean 
energy sources, compe titive energy costs, available emission quotas under the Kyoto protocol, 
advantageous geographic location, stable political system and well trained work force. 
 
As the national power company is run as an independent limited liability company, the 
government is not involved in decisions to develop power sources or negotiate electricity prices with 
interested parties about investment in aluminium production.  Trade and Investment Policy Framework 
 
In the Secretariat Report, under paragraph 3, it is stated that “In addition, Iceland’s legislation 
gives the State the authority to limit foreign investme nt in the event of serious economic difficulties in 
particular sectors”. 
 
Could Iceland Delegation kindly provide furthe r information about the content of economic 
difficulties that leads to such a limitation mentioned in the report? 
 
Answer
: 
 
Act on investments by non-residents in business ente rprises in Iceland dates from 1991.  This 
Act was the outcome of a year-long debate on to which extent non-residents should be allowed to invest 
in Icelandic business enterprises.  During most of the sixties, seventies, eighties and beginning of the 
nineties, Iceland was faced with rampant inflation,  exchange rate volatility and restrictions on inward 
and outward flow of capital.  When the law was drafted, these unfortunate economic circumstances 
were all fresh in the minds of th ose drafting the provisions.  These provisions, altho ugh not applied 
since the Act came into force, have to be assessed in this context.  Even though legislation on inward WT/TPR/M/164/Add.1 
Page 36  
 
direct investment were to be amended, it is very probable that some kind of precautionary provisions 
would be retained.   
Paragraph 14 of the Secretariat Report states that , although Iceland has greatly liberalized its 
foreign investment regime since 1980, it is among th e OECD countries with the highest level of overall 
restrictions to foreign direct investment. 
 
It is further noted in the paragraph 21 that Icel and maintains various sector-specific investment 
restrictions including in fishing, energy and air transport.  
On the basis of the above mentioned informati on by the Secretariat, we would like to request 
Icelandic Delegation to express if Iceland has an in tention to further open up her investment market. 
 
Answer
: 
 
It has been on the agenda of the present govern ment to review the current legislation on 
inward direct investment.  Work is underway in the Ministry of Industry and Commerce to prepare this 
review  World Trade Organization  
 
Paragraph 24 states that “Iceland met most of its notifications obligations between 
January 2000 and December 2005. Exceptions includ e notifications on special safeguards and export 
subsidies in agriculture;  preferential rule s of origin and government procurement.” 
 
Could Iceland delegation kindly elaborate if th ere are any provisions for making notifications 
on the above mentioned exceptions? 
 
Answer
: 
 
Iceland takes its notification obligations seriously and strives to fulfil them in a timely manner. 
Regarding the exceptions listed in Chapter 2. par. 24  of the Trade Policy Review, missing notifications 
on special safeguards and export subsidies in agriculture are currently under review and will be 
available shortly.  On preferential rules of origin , the Icelandic authorities are looking into whether 
Iceland’s notifications from 1997 and 1998 need updating.  The Icelandic State Trading Centre 
(Ríkiskaup) is currently in the pr ocess of creating a statistical datab ase that will in the near future 
enable Iceland to meet its notification obligations  in the area of government procurement. 
 
Sanitary and Phytosanitary Measures  
 
Paragraph 74 of the Secretariat report mentions that  Iceland applies strict border controls with a 
view to maintain high animal and plant health standards.   
Could officials of Icelandic Delegation elaborat e on these controls including their types and 
compliance with the relevant  international standards? 
 
Answer
: 
 
Iceland occupies a unique position in that it is rela tively free from contagious plant and animal 
diseases.  Mainly as a result of historical isola tion, Icelandic livestock has not developed congenital 
immunity to animal diseases that may be prevalent el sewhere.  Great care is taken to ensure that this 
positive sanitary situation remains unchanged through im port regulations, that of course must comply 
with Iceland’s international obligations.  Dom estic production takes place against the very highest 
quality standards to safeguard plant, animal and hu man health.  The importation of live animals and          WT/TPR/M/164/Add.1 
Page 37 
 
 
various products that may contai n infectious agents considered dang erous to animal and human health 
is restricted.  The Minister of Agriculture is, how ever, authorized to permit the importation of the 
products in question upon recomme ndation by the Chief Veterinary Officer.  The recommendations of 
the CVO concerning disease control shall be based on risk assessments which inter alia take account 
of OIE and CODEX standards and guidelines and are c onsistent with the pr ovisions of the SPS 
Agreement. 
 Energy  
According to the Secretariat Report, “All majo r electricity companies are publicly owned, 
occasionally jointly by the State and some municipa lities.  The authorities noted that a Ministry of 
Commerce Action Plan  for 2004-2007 states that work will be done on the restructuring of electricity 
companies and state ownership.” 
 
Could the Delegation of Iceland provide fu rther information about the works on the 
restructuring process of electricity sector in terms of state ownership? 
 Answer
: 
 
The Policy Statement of the Coalition Governme nt of the Independence Party and Progressive 
Party from 2003 only state’s that parliamentary authorization for the sale of the State’s share in 
Iceland Telecom will be followed through.  There is  no mention of privatization of State owned 
electricity companies and currently there are no privatization plans for those companies. 
 
The State is the sole owner of two electric ity companies, Rafmagnsveitur ríkisins (Icelandic 
State Electricity) and Orkubú Vestfjarða hf. (the Wes tfjord Power Company Ltd.).  Furthermore, the 
State owns 50% share in Landsvirkjun (the Nati onal Power Company) and 15% share in Hitaveita 
Suðurnesja hf.  
The plans for the restructuring of State owned el ectricity companies are mainly twofold.  On 
one hand the Government decided to establish a lim ited liability company to operate Rafmagnsveitur 
ríkisins.  This has been done with Act No. 25/200 6 and Rafmagnsveitur ríkisins will, as of 1 August 
2006, be operated as a limited li ability company. On the other hand the Icelandic State has been 
looking into the possibility of buying out the co-o wners (the City of Reykjavík and the Township of 
Akureyri) of the National Power Company.  If agreemen t could have been reached the intention was to 
increase the cooperation of the Nation al Power Company and the two companies in the full ownership 
of the State (Rafmagnsveitur ríkisins and Orkubú V estfjarða).  The parties di d not reach an agreement 
on this and discussions between the parties were suspende d in January this year.  However, earlier this 
year the three companies, Landsvirkj un, Rafmagnsveitur ríkisins and Orkubú Vestfjarða, established a 
company named Orkusalan ehf.  The purpose of th e company is to organize production, purchase and 
retail sale of electricity. 
 
UNITED STATES OF AMERICA 
 
Customs Valuation  
 
According to paragraph 28 on page 23 of the Secretariat Report, Iceland has not yet 
incorporated the Interpretative No tes of the Agreement on Implementation of Article VII of the GATT 
1994 into its respective laws and regulations; th e provisions of the Decision on the Treatment of 
Interest Charges in the Customs Value of Imported Goods have not been impl emented;  nor have the 
provisions of paragraph 2 of the Decision on the Valu ation of Carrier Media Bearing Software for Data 
Processing Equipment.  WT/TPR/M/164/Add.1 
Page 38  
 
Does Iceland have plans to amend its new customs law to include these elements of the WTO 
Agreement on Customs Valuation? 
 
Answer
: 
 
Interpretative Notes are not, according to Icelandi c legal tradition, incorporated into laws and 
regulations.  The Agreement on Implementation of Artic le VII of the GATT 1994 has been incorporated 
into the Icelandic Customs Law and relevant regulations.   
Icelandic authorities regard the decision as an interpretative document but Iceland does not 
have plans to include the decision in its Customs La w and regulation.  It shall be noted that interest 
charges are not included in the cust oms value according to the basic ru les of the mentioned Article of 
the GATT 1994.  
The transaction value is the primary basis of va luation under Icelandic law, as it is in the 
Agreement on Implementation of Article VII of th e GATT.  Iceland does not have plans to amend its 
Customs Law to include these spec ial rules on valuation with regard to carrier bearing software for 
data processing equipment.  It should be stated in th is regard that software is not subject to duty under 
the Customs Law 
 
Sanitary and Phytosanitary Measures  
 
In paragraph 81 on page 38, the Secretariat Report advises that Regulation 509/2004, which 
bans the importation of certain agricultural products  (Table III.6 on p. 39), has not been notified to 
other WTO members.  According to our records, Iceland has notified only seven SPS measures to the 
WTO. 
 
When does Iceland intend to notify Regulation 509/2004 to the WTO and to allow for public 
comment?  What steps is Iceland taking to ensure that newly imposed measures are properly notified to 
WTO?  Answer
: 
 
Regulation 509/2004 does not intr oduce any new or additional import restrictions that were 
not in place at the establishment of the World Tr ade Organization or in any subsequent year.  The 
primary purpose of Regulation 509/2004 was to  increase transparency through the merger of 
provisions contained in several other regulations th at were subsequently abolished and to clarify the 
procedures under which importation of th e restricted products can take place. 
 
In paragraph 85 on page 39, the Secretariat Re port indicates that “the Genetically Modified 
Organisms Act No. 18/1996 regulates the contained use and deliberate release of genetically modified 
organisms (GMOs).”  
Please provide further detail as to whether the “c ontained use and deliberate release” covers the 
regulation of non-living, genetically-modifie d material not intended for cultivation? 
 Answer
: 
  The law covers all genetically modified organi sms, without exception.  There have been very 
limited use of GMOs in Iceland but a Special Advi sory Committee is established for consultation and 
scientific advice for the Ministry of Envir onment regarding any interpretive issues. 
          WT/TPR/M/164/Add.1 
Page 39 
 
 
Paragraph 85 also advises that GMOs approve d in the EU would not require approval in 
Iceland.  In addition, the Secretariat Report states that the Ministry of Environment established a Special Advisory Committee to address GMOs.   
a) Please clarify whether a lack of approval in  the EU in any way influences a review for 
approval in Iceland.  
 Answer
: 
 
 That would not be the case, an approval in th e EU is not a prerequisite for an approval in 
Iceland. 
 
b) Would Iceland’s regulatory system be able to approve a submission in the absence of any 
review of a product by the EU? 
 
Answer : 
 
 Theoretically that should be possible, but re garding resources, scientific advice etc. this might 
be sought elsewhere to complete the process.  
 c) Please explain what would be the basis of  any advice or information emanating from the 
 Specialist Advisory Committee? 
 Answer
: 
 
The role of the committee is to provide scien tific advice on issues relating to the Act No. 18 
from 1996 on GMOs, including the implementation and interpretation of the legislation, advice on 
further regulatory framework and to provide information and education on GMOs. 
 
 d) Would the Specialist Advisory Committee be  involved with performing risk assessments? 
 Answer
: 
 
 Yes, the Committee has the role of estima ting and reviewing scientific  data and information 
before an authorisation is issued on the basis of the legislation.  
e) If not solely a scientific body, what role and influence does this Advisory Committee have 
on determining human health or environmental safety? 
 Answer
: 
 
 As there is no specific scientific body, it is with in the mandate of the Committee to take into 
account security issues regarding health and environment when giving its advice.  
 
Intellectual Property Rights – Geographical Indications 
 
 In paragraph 187 on page 62, the Secretariat Re port indicates "there is no specific legislation 
concerning geographical indications in Iceland but that the Trademarks Act and the Competition Act 
contain provisions that grant protection to such indica tions."  Please elaborate on the type of protection 
GIs receive under these laws.  a)  Do the laws provide the legal means for inte rested parties to prevent the use of misleading 
geographical indications as required unde r Article 22 of the TRIPS Agreement? 
 WT/TPR/M/164/Add.1 
Page 40  
 
Answer
: 
• According to the Act on Trade Marks (TMA) No. 45/1997, Art. 22, the reg istration of a trade 
mark can be opposed within two months from its official publication in the Trade Mark 
Gazette.  The party opposing it can base its opposition on i.e. that it is likely to cause confusion 
on the origin of the products (Art. 14, par. 1, section 2 of the TMA) or that the trade mark 
refers to wines and spirits that entail geographical indications (Art. 14, par.3 TMA).  The registration can be cancelled with a decision of the courts, if a trade mark is used in such a 
way as to be misleading (Art. 28 of the TMA).  A court order can also be obtained to prevent 
the infraction of trade mark rights (Art. 41 of the TMA).  
b)  What mechanisms are in place to take into  account the exclusive rights of trademark owners, 
consistent with Articles 16(1) and 24(5) of the TRIPS Agreement that require trademarks to be 
protected from confusingly similar and later in time geographical indications? 
Answer
: 
 According to Article 4 of the Trade mark Ac t, Trade mark right prevents anyone other than the 
proprietor of the trade mark from using commercially a sign which is the same as or similar to his 
trade mark if: 
1. it is used for the same or similar goods or ser vices as are covered by the trade mark right and  
2. there is a danger of confusion,  including the conclusion that there is a connection between the 
 marks. 
According to Article 8 of the Trade mark Act,  a later right to a registered trade mark may 
enjoy protection parallel to the right of an earlier mark, even though the marks may be confusingly similar, if an application for registration was filed in good faith and the proprietor of the earlier trade 
mark, despite knowledge of the later mark, has raised  no opposition to its use in this country for a 
continuous five-year period from  the date of registration. 
In these articles geographical indications are not specially mentioned.  The articles apply to 
trademarks, whether they are geographical indications or not. 
c)  Does Iceland provide the means to challenge the protection and/or registration of a later established 
GI on the grounds that it is confusingly similar to the prior trademark? 
Answer
: 
If a trade mark has been registered contrary to  the Icelandic Trade Mark Act the registration 
may be cancelled by  decision of a court (Article 28 of the TMA).  GI have the same status as Trade 
marks if they have been registered as such or are being used in Iceland to identify goods or services.  If 
GI is registered or the use of  the mark initiated after registrat ion of another mark and the GI is 
confusingly similar to the earlier mark the owner of the earlier mark could possibly hinder the use of 
the GI mark.  The owner of a mark can although not prohibit others from using in trade description of 
the origin of the goods or services. 
d)  What mechanisms exist for owners of foreign GIs to apply or seek protection for their geographical 
indications under Iceland's laws? 
Answer : 
Foreign owner of GI can apply for a trade mark protection, according to the Icelandic Trade 
mark Act.  The owner can file an application thro ugh an agent residing in Iceland, to the Icelandic 
Patent Office or by using the Madrid Protocol. 
 
           WT/TPR/M/164/Add.1 
Page 41 
 
 
Intellectual Property Rights – Enforcement  
 
Paragraph 191 on page 63 of the Se cretariat Report states that in junctions can be granted in 
intellectual property infringement cases against an alleged infringer.  
Do the administrative and/or judicial authorities have the authority to initiate injunctive relief 
inaudita altera parte as required in TRIPS Article 50?  Answer
: 
 
 According the Customs Act, Art. 132, par. 3, the Director of Customs can on his own initiative 
decide to postpone the customs cl earance if he has sufficient data to indicate that the goods to be 
cleared infringe intellectual property rights.  He shall than inform the proprietor of the IPR of his 
decision in writing immediately and allow him three da ys from the receipt of the letter to demand a 
further postponement of the customs clearance.  If  the proprietor does not do this, the goods can be 
cleared through customs.  
 
According to paragraph 192 on page 63 of the Se cretariat Report, the Head of Customs is 
authorized upon request from the right holder to delay the release of imports for 14 calendar days. 
 
Is there a mechanism for this time limit to be  extended in appropriate cases by an additional 
14 calendar days as required in TRIPS Article 55? 
 Answer
: 
 
 According to the Customs Act (Art. 132, par. 2), the Director of Customs can, in case sufficient 
data has been submitted, postpone the release of im ports for a further 10 days.  This delay can be 
extended for another 10 days in addition, if special circumstances require.  
 
In paragraph 192 on page 63, the Secretariat Report states that upon request from the right holder, 
the Head of Customs will examine the application to determine if the imports should be delayed. 
 
Is there a requirement that the customs author ity inform the applicant within a reasonable 
period whether they have accepted the application as required in TRIPS Article 52?  Answer
: 
 
Customs Act, Art. 132, par. 1 allows the Director of Customs, if suspicion has arisen that 
importation is ongoing of a product that infringes intellectual property rights, to suspend the customs clearance of the goods while the proprietor seeks te mporary action with the appropriate authorities, 
and subsequently takes the case to court.  The furt her conditions for doing this are elaborated in the 
provision in par. 1.  
There is no positive provision in the law stating t hat the Director of Customs should inform the 
applicant whether his application has been accepted.  However, the Administrative Procedures Act is a 
horizontal regulatory framework for administration.  In the Act it is stated (Art. 20) that the 
administration shall notify the party to a case,  when it has reached a decision, unless such a 
notification is obviously unnecessary.  Art. 9 of the same Act states t hat all decisions by administrative 
authority shall be taken as soon as possible. 
 
__________