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Business / Economy

Hopes rise for enhanced trade as China-Iceland FTA comes into force

(Xinhua) Updated: 2014-07-02 11:29

Headstart for Iceland

With Iceland becoming the first European country to sign a FTA with China, Orn Erlendsson, chairman at the seafood exporting company Triton, believed the deal would give a headstart to Icelandic companies in competition with other seafood exporting countries like Norway, Russia and Canada.

Triton has been selling lumpfish to restaurants in China where its thick skin is regarded as a delicacy. Erlendsson said the FTA made it possible for Icelandic companies to offer very competitive prices.

Lower consumer prices

Icelandic companies import clothing and shoes from China, often through a third country. Products imported straight from China will no longer have a 15 percent tariff.

Many Icelanders expect lower consumer prices as a result of the FTA, especially on products imported directly from China.

Shoes manufactured in China can have 13 percent lower prices compared to earlier, according to TV channel Stod 2 in the Icelandic capital Reykjavik.

Increased direct imports

Margret Sanders, chairman at the Federation of Trade and Services, welcomed the FTA, pointing out such agreements are important for small countries like Iceland.

She believed Icelandic companies would be interested in exploring possibilities of increasing imports directly from China.

Rumfatalagerinn is one of the biggest department stores in Iceland. Rumfatalagerinn sells furniture and textile manufactured in China and imports to Iceland through a third country.

Its CEO Magnus Sigurdsson said the agreement offers great opportunities to import products directly from China. The company is now trying to find out how best to utilize the agreement to benefit Icelandic consumers.

A small market

Johannes Gunnarsson, chairman at the consumer federation in Iceland, sincerely hopes consumers will notice lower prices as a result of the FTA.

"The Icelandic domestic market is very small. I'm told that the companies have to make big orders from China so it's hard to see the FTA having a lowering effect on prices in Iceland," he says.

The FTA has boosted other parts of the Icelandic economy. US company Silicor Materials, a leading manufacturer of high-quality solar silicon, has decided to build a new silicon plant in Iceland because of the agreement.

The company's CEO Terry Jester pointed out that the company made the decision to build the plant in Iceland because of cheap energy, the aluminum industry and plans to build more silicon plants in Iceland.

Talking about the FTA to local media, Jester said Silicor Materials' biggest customers reside in China.

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