Economy Trade and industry

Iceland: Reykjavik pioneers free-trade with Beijing

16 April 2013
Presseurop
Morgunblaðið, EUobserver.com, The Wall Street Journal Europe, Trouw

Iceland and China signed a free-trade agreement on April 15 during an official visit to Beijing by Prime Minister Jóhanna Sigurðardóttir, who was accompanied by about 50 Icelandic business executives. The Nordic island thus becomes "the first European country to sign such an agreement with China," writes Icelandic daily Morgunblaðið. The agreement will "give an advantage to Icelandic businesses and to exports in a rapildly-expanding Chinese market," the paper adds.

Iceland's exports to China "amounted to 7.6bn krona [nearly €50m] in 2012 and has doubled in the last two years," reports Morgunblaðið. Fish and seafood products make up 90 per cent of the exports.

At the signing ceremony, representatives from both countries said, among other things, that they want to "increase their exchanges and their practical cooperation in the Arctic," reports news website the EUobserver. The site says that climate change may explain this rapprochement. It adds –

Some experts say that China is hoping to get a foothold into the area and hopes to obtain permanent observer status at the eight member Arctic Council meeting scheduled for next month. […] The melting of polar ice caps opens the road to new trade routes that could reduce navigation time between Hamburg and Shanghai by one third. The Icelandic foreign minister told the Wall Street Journal that the two countries are also in discussions over exploiting the vast oil reserves lying in the waters to the north-east [of Iceland].

In Amsterdam, Dutch daily Trouw wonders if the "love is truly mutual" between Reykjavik and Beijing. While Iceland just needs capital to relaunch its economy, the Chinese are only interested in the gas and oil in the Arctic and see in Iceland nothing more than a "handy harbour" for the day when the maritime routes of the Arctic will be accessible.

Nonetheless, "Iceland must not feel threatened by Beijing," Arctic expert Alyson Bailes told Trouw, because

China's presence could be a positive balance to possible aggressive behaviour by the Russians. At the same time, a small – for Beijing – financial injection could do wonders for the Icelandic economy.