China-Iceland Free Trade Agreement

12-09-2013

China signed a free trade agreement (FTA) with Iceland earlier this year. This is China's first FTA with a western European state. Once in force it will waive most tariffs in trade between the two countries. However, the tiny size of Iceland's market and the fact that the agreement does not provide low-tariff entry for China's products onto other European markets raises questions over China's motives. In particular, it is suggested that China is using this FTA to promote its strategic goals, such as obtaining better access to shipping routes through the Arctic or to natural resources extracted in the region.

China signed a free trade agreement (FTA) with Iceland earlier this year. This is China's first FTA with a western European state. Once in force it will waive most tariffs in trade between the two countries. However, the tiny size of Iceland's market and the fact that the agreement does not provide low-tariff entry for China's products onto other European markets raises questions over China's motives. In particular, it is suggested that China is using this FTA to promote its strategic goals, such as obtaining better access to shipping routes through the Arctic or to natural resources extracted in the region.