Hope for enhanced trade as China and Iceland sign FTA

Want China Times, Xinhua 2014-07-03

China's minister of commerce Gao Hucheng, right, and Iceland's minister
 for foreign affairs Ossur Skarphedinsson shake hands at the signing ceremony
of the free trade agreement, April 15. (Photo/CNS)

As the free trade agreement between China and Iceland came into force Tuesday, Icelandic companies believe the FTA will lower consumer prices in Iceland and boost the trade between the countries.

According to the FTA, China will implement zero tariffs on goods under 7,380 tariff numbers imported from Iceland, which accounted for 81.6% of China's total imports from Iceland, including its aquatic products after the agreement comes into effect.

Iceland will implement zero tariffs on all industrial products and fishery products imported from China which accounts for 99.8% of China's total exports to Iceland.

After the final establishment of the FTA between China and Iceland, zero tariffs shall apply to 96% of goods in terms of tariff numbers, or 100% in terms of trade volume.

Adolf Gudmundsson, chairperson at the Federation of Icelandic fishing vessel owners, believed the free trade agreement would be of great importance for fishing companies in Iceland.

"China, the biggest market in the world, is opening up for Icelandic seafood products," Gudmundsson said.

"The Chinese market will offer enormous opportunities for the Icelandic companies," he said. He added that it will of course be important that Iceland is able to offer competitive prices.

"I believe the free trade agreement will bring good fortune to both Iceland and China and strengthen the Icelandic fishing industry," Gudmundsson said.

With Iceland becoming the first European country to sign a FTA with China, Orn Erlendsson, chairperson at the seafood exporter Triton, believes the deal will give a headstart to Icelandic companies in competition with other seafood exporting countries like Norway, Russia and Canada.

Triton has been selling lumpfish to restaurants in China where its thick skin is regarded as a delicacy. Erlendsson said the FTA made it possible for Icelandic companies to offer very competitive prices.

Icelandic companies import clothing and shoes from China, often through a third country. Products imported straight from China will no longer have a 15% tariff.

Many Icelanders expect lower consumer prices as a result of the FTA, especially on products imported directly from China.

Shoes manufactured in China will see a 13% price reduction, according to TV channel Stod 2 in the Icelandic capital Reykjavik.

Margret Sanders, chairperson at the Federation of Trade and Services, welcomed the FTA, stating that such agreements are important for small countries like Iceland.

She believes Icelandic companies will be interested in exploring the possibility of increasing direct imports from China.

Rumfatalagerinn is one of the biggest department stores in Iceland. Rumfatalagerinn sells furniture and textiles manufactured in China and imported to Iceland through a third country.

Its CEO Magnus Sigurdsson said the agreement offers great opportunities to import products directly from China. The company is now trying to find out how best to utilize the agreement to benefit Icelandic consumers.

Johannes Gunnarsson, chairperson at the consumer federation in Iceland, sincerely hopes consumers will feel the effect of the lower prices as a result of the FTA.

"The Icelandic domestic market is very small. I'm told that the companies have to make big orders from China so it's hard to see the FTA having a lowering effect on prices in Iceland," he says.

The FTA has also boosted other parts of the Icelandic economy. US company Silicor Materials, a leading manufacturer of high-quality solar silicon, has decided to build a new silicon plant in Iceland because of the agreement.

The company's CEO Terry Jester said that the company made the decision to build the plant in Iceland because of cheap energy and the aluminium industry and plans to build more silicon plants in Iceland.

Talking about the FTA to local media, Jester said Silicor Materials' biggest customers reside in China.