Terms of trade inside and outside the EU

1. Terms of trade inside and outside the EU Aðalsteinn Leifsson Viðskiptaráð 22. október 2007

2. The issue... The European Union is the largest market and the largest trading power in the world Trade Agremeents fall, at least to the greatest extend, under the competence of the European Union Trade between Iceland and the European Union is governed by the Agreement on the Economic Area (EEA Agreement) External trade is outside the scope of the EEA Agreement – and Iceland is therefore in principle not part of the external trade policy of the EU

3. The Economic Giant Trade in Goods Trade in Services

4. Iceland – inside or in-between? • Best of both worlds? or • Located midway between Kringlan and Smáralind!

5. #1: Our trade is with the EU

7. #2: Outside does not mean unaffected “…establishing a dynamic and homogeneous European Economic Area, based on common rules and equal conditions of competition…“ Annexes: Veterinary and phytosanitary matters Technical regulations Public procurement State Aid Just a few practical examples Fish from Russia Ketchup from the US Salami to the Faroe Islands Open skies (EU – US) Beef from SACU Þorrablót finally possible?!?

8. #3: Free Trade Agreements • We mostly follow in the footsteps of the EU – with notable exceptions like China • Homogenity is the primary concern • The EU (17 in force, approx. 30 being negotiated) is even more active than EFTA (15 in force, 7 being negotiated) in creating a free trade network for it’s members and has a wider network of various trade agreements • The challenge is to ensure that Icelandic companies enjoy the same terms of trade as competitors in the EU – and Iceland has done extremely well in this regard

9. #4: Fully on the inside • All restrictions on trade with the EU will be lifted • Part of the strongest trading power in the world • Negotiations among the insiders – and with the European Commission - on a common position • Access to a wide network of trade agreements, over flight agreements, fisheries agreements etc. • A partial delegation of sovereignty in exchange for open market, increased influence and greatly enhanced negotiation position

10. Back to the question Iceland – inside or in-between? • Best of both worlds? or • Located midway between Kringlan and Smáralind!

11. Conclusion • The fact is that we are not in-between • We are de facto members of the European Union • Trade with the EU is primary concern • Homogeneity of the EEA • An establishment partly inside and partly outside Kringlan with a lease agreement with limited rights and limited freedoms... Borgarkringlan!

12. 16+ Free Trade Agreements