FX.co ★ China signs its first European free trade pact

Chinese government has signed a free trade agreement with Iceland. The announcement was made by the Icelandic Ministry for Foreign Affairs in its press release. This is the first suchlike agreement between China and a European country.
Iceland’s Minister of Foreign Affairs Ossur Skarphéoinsson and China’s Minister of Commerce, Gao Hucheng signed the agreement during the visit of Prime Minister Johanna Sigurdardottir to Beijing. The parties expect that the mutual preferences will help to reduce the cost of goods.
China and Iceland established diplomatic relations in 1971 and there were six-year long negotiations for a free trade agreement. Iceland is trying to rebound its previous pace of economic growth after the financial meltdown in 2008 resulted in its three largest banks’ default on $85 billion.
Bloomberg said that Iceland had high hopes for selling its technologies and expertise in geothermal energy to China. This type of energy enables the country to meet a quarter of its needs. Eventually, Reykjavik is aimed to diversify its exports to China. Today, marine products account for 90 per cent of Iceland's exports to China.
In 2012 sales of Icelandic goods in China rose to 7.6 billion kronur ($ 64 million). To compare, average of monthly exports was about 50 billion kronur last year. Imports from China to Iceland came in at 42.6 billion kronur.