TRADE POLICY REVIEW: ICELAND
7 and 9 June 2006

Concluding remarks by the Chairperson


See also:
> Press release: Openness and specialization have led to high living standards


1. This third Trade Policy Review of Iceland has been highly informative, providing us with valuable insights into the trade policies and practices underpinning Iceland's economic success story. We owe this to the participation of Ambassadors Johannsson, Sigurdsson and Arnason and the rest of the Icelandic delegation, the very thoughtful interventions by Mr. Ehlers, and the active involvement of Members. Throughout the review process, the authorities of Iceland have shown a strong commitment to transparency and thus made a key contribution to the success of this Review.

2. Members commended Iceland's impressive economic performance and export diversification since its last Review in 2000. They noted that this could be attributed in great part to Iceland's generally open trade regime, a continuous process of structural reforms as well as its specialization and close integration in the global economy. Some Members pointed to the short-term challenges currently facing the Icelandic economy, including the large current account deficit, but also pointed out that it remains one of the world's most competitive.

3. Iceland acknowledged that a strong multilateral trading system is of particular importance for smaller Members like itself. Members appreciated Iceland's active participation in the WTO, as reflected by its leadership role in the on-going negotiations on fisheries subsidies, and the valuable contribution made by its representatives to the work of WTO bodies. They also highlighted the growing number of preferential trade initiatives entered into or under consideration by Iceland, which Iceland sees as complementary to the multilateral system. Some Members were concerned about restrictions affecting investment from non-EEA or non-OECD countries, and invited Iceland to reconsider them, and to secure any future reforms in the WTO. Iceland indicated that work was under way to prepare a review of its legislation on inward direct investment.

4. Iceland was praised for not having had recourse to contingency measures, and its accession to the Government Procurement Agreement was welcomed. Members urged Iceland to carry on the process of reform of its trade regime, including by reducing high tariffs, binding all of its industrial tariffs, and closing the gap between bound and applied rates. Members encouraged Iceland to complete outstanding WTO notifications, which Iceland engaged to do as appropriate. Iceland provided clarification on a range of intellectual property issues, as well as on its SPS regime.

5. Iceland drew attention to the difficulties it faces in agricultural production, and Members acknowledged Iceland's efforts to gradually align its policies with market-based solutions. However, they also noted that Iceland's agriculture continues to be heavily supported, which imposes a cost on taxpayers and consumers and may affect trade. Members thus urged Iceland to continue its reform efforts in this area, with Iceland stating that it expected the completion of the DDA to result in the further restructuring of its agricultural sector.

6. Members noted the importance of the services sector in Iceland. Iceland was commended for its programme of privatization and liberalization, in particular in the areas of financial services and telecommunications, and was encouraged to expand the scope of its GATS commitments.

7. In conclusion, I believe that Iceland offers an excellent real-world example of how small island economies may overcome the limitations of size and location by engaging in structural reforms and taking advantage of international specialization. Members encouraged Iceland to carry out its own liberalization efforts on an MFN basis to help broaden its economic relations. Members also greatly appreciated Iceland's strong commitment to the multilateral trading system, and invited it to continue playing an active and constructive role to ensure a successful conclusion of the DDA.