Business

China-Iceland FTA to come into force on July 1

China's first two free trade agreements with European nations, signed with Iceland and Switzerland, respectively, will simultaneously enter into effect on July 1 of this year. While the commencement date of the China-Switzerland agreement was previously known, it was announced last week that the deal with Iceland, signed on April 15 last year, will come into force on the same day.

The governments of China and Iceland issued a joint statement describing the spirit of economic cooperation behind the agreement and its facilitation of trade and investment. Pursuant to these ideals, tariffs are to be abolished on the majority of goods traded between the two nations, including Icelandic exports of seafood, electrical scales and ferrosilicon. A small class of exports to China will have their import tariffs removed over a 5 or 10 year transition period.

In contrast, duty on all Chinese exports to Iceland will be abolished immediately upon the agreement's entry into force. Both countries have retained the right to exclude certain classes of products from tariff exemptions, e.g., dairy and meat products from Iceland and paper from China.

The agreement is the product of a complex series of negotiations begun in December 2006 and shelved three years later, only to be restarted in April 2012. After two further rounds of talks, terms were finally settled in January of this year. Together, the two FTAs are expected to guide the future development of China's trade relations with Europe. Earlier this year, China secured a promise from the European Union to review plans for a China-EU free trade agreement.

The EU is China's largest trading partner, with bilateral trade valued at over US$1.37 billion per day.