As a member of the European Free Trade Association (EFTA), Iceland is working to conclude a bilateral free trade agreement under EFTA. This means that Switzerland, Norway, Iceland and Liechtenstein can negotiate a free trade agreement with a third country through EFTA. The trade surplus with Iceland was $72 million in 2019, down 70.1% ($169 million) from 2018. In addition, Iceland has bilateral agreements with its two neighbours, Greenland and the Faroe Islands. The EEA agreement is Iceland`s largest and most comprehensive agreement ever. The agreement came into force on 1 January 1994 and created an internal market between the EU and three of the four EFTA states, Iceland, Norway and Liechtenstein. With regard to trade, the agreement provides for the abolition of tariffs on all industrial products originating from a contracting party. In addition, Protocol 3 of the agreement provides for the liberalisation of tariffs for processed agricultural products and Protocol 9 provides for the liberalisation of tariffs on fish products. The rules of origin are contained in Protocol 4 of the agreement. Iceland, Liechtenstein, Norway and Switzerland are members of EFTA. The EFTA Convention established a free trade area between its member states in 1960. In addition, EFTA countries have free trade agreements with a number of Central and Eastern European countries, as well as in the Mediterranean, Mexico and Singapore.

An agreement with Denmark on trade between Iceland and Greenland provides for certain tariff preferences between countries. (a) Protocol 6 of the Iceland-EU Free Trade Agreement (formerly the EEC) of 1972: Protocol 6 of the 1972 Free Trade Agreement between Iceland and the EU (1972) provides tariff preferences for imports of Icelandic fisheries products into EU markets. The preferences granted under Protocol 6 remain in force, as they provide for better market access than the preferences granted in Protocol 9 of the EEA agreement. b) Agricultural Products Agreement: In addition to Protocol 3 of the EEA Agreement, which provides tariff preferences for processed agricultural products, a bilateral agreement on tariff preferences for unprocessed agricultural products between Iceland and the EU is in force from 2007. The agreement is being replaced by a new tariff preference agreement for agricultural commodities, which will come into force on 1 May 2018. NOTE: There is no commercial data for services provided with Iceland. Iceland`s economic and trade relations with the EU are mainly governed by the European Economic Area (EEA) agreement. The free trade agreement between Iceland and China came into force on 1 July 2014.

Agriculture and fisheries are not covered by the EEA agreement. However, the agreement underlines the parties` commitment to a gradual opening of agricultural trade, which requires the conclusion of separate agreements. The European Free Trade Association (EFTA) is an intergovernmental organisation that promotes free trade and the economic integration of its four members. Liechtenstein, Norway and Switzerland.