U.S. Statement on the Trade Policy Review of Iceland

WTO Trade Policy Review of Iceland
Statement delivered by David Shark,
Deputy U.S. Permanent Representative to the WTO

Geneva,
November 13, 2012

Thank you, Chair.

The United States is pleased to participate in Iceland’s fourth Trade Policy Review.  We extend a warm welcome to Mr. Högni Kristjánsson of the Ministry of Foreign Affairs, and to the entire Icelandic delegation.  We thank the Secretariat and the government of Iceland for their reports, which give us a thorough overview of recent developments in Iceland’s trade and economic policy.  I would also like to thank our discussant, Ambassador Selim Kuneralp (Turkey), for his meaningful contributions.

We begin our comments today by recognizing the positive relationship between the United States and Iceland – a relationship that is founded on cooperation and mutual respect.  We each appreciate the powerful role that international trade plays in global economic and political stability.

The economic relationship between the United States and Iceland is positive and growing.  Total two-way goods trade between the United States and Iceland totaled $843 million in 2011, with U.S. goods exports to Iceland up 93.2% from 2010, encompassing a wide range of products including inorganic chemicals, mineral fuel, aircraft, machinery, and many other products.  During the period since its last review, the United States and Iceland signed the U.S.-Iceland Trade and Investment Cooperation Forum Agreement, which provides a forum for further expanding and strengthening bilateral trade and investment relations between the United States and Iceland.

We are encouraged by the indications that economic recovery is under way in Iceland.  As the Secretariat report noted, exports recovered quickly following the crisis and significantly contributed to Iceland’s recovery.  The key role that international trade plays in the Icelandic economy is clearly demonstrated by the increase in total merchandise trade as a proportion of GDP, rising from 47% in 2005 to 70% in 2011.

We commend Iceland for its clear and unwavering commitment to the multilateral trading system during the period under review, which remained steadfast in the face of the global economic crisis.  The United States and Iceland share a common fundamental desire to ensure the health and vitality of an open global trading system, which we view as critical to promoting economic growth and development for all Members.  The United States supports Iceland’s view that a strong, rules-based system is the best guarantee against protectionism, and provides important transparency and predictability for traders around the world.  Iceland has been an active participant in the WTO, including in all rounds of multilateral trade negotiations and most of the plurilateral negotiations and arrangements conducted within the framework of the WTO, with the exception of the Agreement on Trade in Civil Aircraft.

While we note that Iceland maintains a relatively liberal trade and investment regime, there are areas where Iceland could make further improvements.  We point first to agriculture, where production is directly protected from competition through trade measures, chiefly high tariffs that lack transparency.  Not only are tariffs relatively high for imports that compete directly with production in Iceland, but also quite complicated as a result of compound tariffs with both an ad valorem component and a specific duty component.  The Secretariat report notes that since the average ad valorem equivalent of these compound tariffs varies considerably, it is not possible to calculate ad valorem equivalents, which further creates difficult conditions for traders of agricultural products.

This lack of competition for agriculture products is also reflected in Iceland’s approach, along with its EFTA partners, to the negotiation of FTAs, which eliminate tariffs on markedly fewer agricultural tariff lines than non-agricultural tariff lines, raising questions about whether “substantially all trade” with an FTA partner is covered.  We continue to encourage Iceland to increase the market orientation of its agricultural production and trade policies.

In addition to very high levels of protection for agricultural and food products, traders also encounter problematic SPS barriers in Iceland.  Iceland prohibits the import of beef from animals treated with hormones, despite decades of scientific evidence demonstrating that this practice poses no risks to health and relevant international food safety standards for its use.  We are also concerned that Iceland’s new measures related to labeling requirements for genetically engineered products will create barriers to trade.  In light of more than 20 years of experience with products of modern biotechnology, and not a single indication of a safety problem, we urge Iceland to reexamine its measure.

We would also highlight the references in the Secretariat report to a number of outstanding notifications, such as those to the Import Licensing, SPS and TBT Committees.  In some cases, Iceland has not notified measures taken since 2004.  We welcome more information about Iceland’s plans for submitting these notifications.  We encourage Iceland to promptly notify proposed measures to the appropriate WTO Committees in advance of their adoption, irrespective of how the measures were developed or whether they are notified to other particular trading partners, so that all Members may provide comment, as outlined in the WTO agreements.

Finally, we would like to take this opportunity to note our deep concern with respect to Iceland’s continued practice of commercial whaling and its whale products export practices, which undermine the International Whaling Commission’s moratorium on commercial whaling and also remains an obstacle to our otherwise fruitful relationship.  We urge Iceland to listen to international public opinion and cease these practices.

The United States submitted advance written questions on certain aspects of Iceland’s trade and economic regime, which requested additional information regarding some of the points that I have mentioned.  We appreciate Iceland’s efforts to respond to our questions prior to this meeting.

In closing, the United States and Iceland have important common interests, including our long-standing, shared support for the multilateral trading system.  I would like reiterate that we value our continued work with the Icelandic government and our other WTO partners to strengthen and build upon the WTO’s critical role.  We wish Iceland a successful review, and we look forward to further discussions on trade matters with Iceland, both here at the WTO and in our bilateral exchanges.

Thank you.