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Halldór Ásgrímsson, utanríkisráðherra 1995–2004

Erindi flutt á fundi með kínverskum fyrirtækjum (á ensku)

23. ágúst 1995



Ladies and gentlemen,

I would like to thank you for this opportunity to address the Chinese business community at this meeting in Tianjin and would like to start by introducing the Icelandic delegation: Mr. Kristinn F. Árnason, Director, Trade Department, Ministry for Foreign Affairs, Mr. Stefán L. Stefánsson, Counsellor, Trade Department, Ministry for Foreign Affairs, Mr. Ragnar Baldursson First Secretary Embassy of Iceland, Beijing. From the Icelandic Trade Council Mr. Vilhjálmur Guðmundsson and from the business side Mr. Jón Magnús Kristjánsson, from the Icelandic Freezing Plants Corporation and Mr. Björn Ársæll Pétursson from Iceland Seafood International. These two companies are the giants in the Icelandic fisheries sector. From the geothermal sector Mr. Svavar Jónatansson Virkir-Orkint. From the company Silfurtún-Limited, Mr. Friðrik Jónsson Director-General and Mr. Rúnar Sverrisson director and Ms. Vigdís W. Bóasson. From the computer sector we have Mr. Friðrik Sigurðsson from Nordic Technology Solutions, NTS, and Mr. Skúli Jóhannsson from the company Strengur Limited.
Iceland is about 103 thousand square kilometers in size situated in the North-Atlandic and the second largest island in Europe, with a population of about 265 thousand. It is the most sparsely populated country in Europe, the present average density being 2.5 inhabitants per square kilometre. A high standard of living has been achieved in the post-war period, with per capita GDP standing at about US $26.500 (1992).
The move away from subsistence towards a modern and diversified high-income society was led by the fishing industry. The rich fishing grounds around the country, the Icelanders} nautical skills, investment in modern technology and favorable world markets all helped to make fishing a high-productivity industry in Iceland.
The fishing industry, including both fisheries and fish-processing, has throughout this century been the driving force of economic development. It presently provides for around 20 per cent of GDP, occupies 12-13 per cent of the work force, and generated 76 per cent of merchandise exports in 1994.
This is a comparatively recent development. As late as the 1870}s agriculture employed about 75 per cent of the labour force. By the turn of the century the figure was down to about 50 per cent, and in 1991 accounted for only 4.9 per cent of total employment. Agriculture accounts now for about 2.8 per cent of GDP.
Iceland is endowed with valuable energy resources. Only a small fraction of these vast hydro electric and geothermal resources has been exploited so far. The potential for large scale development of power-intensive industry is therefore substantial. Industrial expansion has to a considerable extent relied on abundant energy resources and their attractiveness for power-intensive industries, aided by tariff-free access to the European market. The first major step in this direction was taken in the 1960s when an aluminum smelter, a ferro-silicon plant and a diatomite plant were built. After fishing and fish processing, manufacturing has become the second most important sector in the economy. It contributes about 13 per cent of GDP, and approximately 12 per cent of the labour force works in manufacturing. Manufactured products account for some 17.4 per cent of total merchandise exports with aluminum accounting for 9.1 per cent of the total. There has been a rapid growth of various high-technology industries in recent years, particularly in the production of heavy equipment and electronic appliances for fishing and fish processing. The export of software has grown rapidly in the last years and Icelandic computer specialists are gaining international recognition. Around 4% of Iceland}s GDP comes from the computer sector, which is similar to the European Union. This figure is expected to double in the next decade so the prospects are good for the Icelandic software industry .
During the 1970}s and most of the 1980}s Iceland experienced rapid ecenomic growth based on a considerable expansion of the exportoriented fishing sector. However Iceland has experienced economic setbacks in recent years. This is due to the overall economic recession in Europe as well as cutbacks in the cod catch.
GDP rose by 1.0 per cent in 1991, which was slightly above the OECD average. In 1992, the Icelandic economy went into a deep recession after four years of near-stagnation. GDP fell by 3.7 per cent due to the combined effects of a decreased fish catch and a 20 per cent fall in prices of marine products. In 1993 GDP grew slightly, but contracted by 2.6 per cent between 1993-1994. The reason for this decline is that it was necessary to reduce the cod catch temporarily in order to allow the over-exploited cod stock to recover in the coming years. The forecast level for economic growth is 1-2 per cent for 1995 and 1996. Iceland has managed to maintain a very low inflation rate the last few years, about 1 per cent a year. The stage is set for a vigourous ecenomic recovery.
Conditions for a liberal trade policy have not always been favorable. Markets for the country}s main exports, fish and fish products, have often been restrictive and unstable for long periods. Bilateral trade and payment agreements have therefore proved to be necessary to facilitate exports of fish products. Considering also the fluctuations in fish catches and foreign trade, it is not surprising that Iceland had to maintain a restrictive trade policy longer than most other Western European countries.
With it}s reduced dependence on bilateralism in trade, Iceland was able to participate more actively in international and regional co-operation with the aim of liberalizing trade.
Iceland became a Contracting Party to the GATT in 1968, a member of European Free Trade Association, EFTA in 1970 and in 1973 it concluded a free trade agreement with the European Community as the European Union was called at the time. These developments carried with them very dramatic changes for Iceland}s economy and society. In addition to the above-mentioned agreements, the EFTA countries and the EC concluded an agreement creating the so-called European Economic Area (EEA) in 1992, which took effect on 1 January 1994. This last agreement covers not only free trade in goods but the freedom of capital, services and persons as well. It also provides substantial liberalization in trade with fishery products.
Iceland is highly dependant on foreign trade. The relatively large share of foreign trade is due to the high productivity of the main export industry, fisheries, and to the narrow base of the economy, which means that most manufactured goods, raw materials, grains and fuel have to be imported. Imports have amounted to about 40 per cent and exports to about 35 per cent of GNP. Because of the importance of foreign trade, a liberal trade policy is naturally in Iceland}s interest. This applies especially to fishery products as well as industrial products.
A natural starting point in the general orientation towards liberalization has been close and far-reaching economic co-operation with neighboring countries. A large proportion of Iceland}s foreign trade is conducted with Western European countries. In 1993 they accounted for 69 per cent of its exports and 72 per cent of its imports. An important element of Icelandic trade policy is therefore the liberalization of trade at the regional level.
Given the volume of Icelandic trade with Western Europe, the freest possible access to this market is an important objective of Icelandic trade policy. But it is not the intention of the Government of Iceland to apply for European Union membership, despite the fact that Iceland does not have the foreign and security policy inhibitions that long hindered the neutral countries of EFTA from even considering membership, or the fact that its trade and economic relations are overwhemingly with the European Union. The reason for this caution is the limited size of the population and the nation}s dependence on fisheries. New constitutional ideas in Europe on sharing sovereignty and exercising joint control have less appeal in a country which achieved full independence only fiftyone years ago in nineteenfortyfour Iceland will nevertheless continue to follow closely the evolution of the European Union.
Iceland has for many years had very close links with the other Nordic countries, Norway, Sweden, Denmark and Finland. Nordic cooperation is extensive and far-reaching in various fields, including trade and economy. A passport union, a common labour market and harmonization of various legislation are but a few examples.
Although close commercial cooperation with EFTA and European Union members is both natural and advantageous Iceland continues to show great interest in developing its trade with other countries, such as China and other Asian countries.
The EFTA Countries have already concluded free trade agreements with all Central and East European countries. Iceland has also abolished tariffs on some agricultural goods, based on bilateral agreements with each of these countries. Iceland has also concluded similar free trade agreements with Turkey and Israel. These free-trade agreements will in future give Iceland new opportunities in the export of fish and fish products.
Iceland is one of the founding members of Organization on Economic Cooperation and Development OECD and the World Trade Organization, WTO, and takes an active part in their work.

I would like to turn to the bilateral trade between Iceland and China.
The bilateral trade between Iceland and China has steadily been increasing over the past four years. This is a very positive development in our relations.
Iceland has mainly sold fish products and manufactured goods for fisheries to China. Last year Icelandic exports amounted only to approximately fourhundred and fiftythousand dollars. Icelandic imports from China are of a different magnitude altogether. Iceland imports a wide variety of goods from China, minerals, food, chemicals and manufactured products such as clothing, textile yarn, paper articles and more. Last year these imports were valued at approximately twentyone million fivehundred thousand dollars.
This imbalance in our trade is a cause of concern for the Icelandic authorities and we have to look into ways of addressing this problem in the near future.
In this respect I would like to stress that we have to explore those areas were Icelandic commerce and know-how has excelled. I am especially referring to fisheries, fishing technology and marketing of fisheries products. Furthermore, cooperation in the utilization of geothermal energy for heating has already started in Tanggu township close to Tianjing. This method of heating is much less expensive than heating with oil or coal. The environmental aspect is self evident. In addition I would like to point out that Icelandic companies have great expertise in varied construction in exacting circumstances and Icelandic computer technology has already been making inroads in Asia.
These are the fields where the Icelandic and Chinese authorities should invest their time and efforts in the promotion of trade and in seeking ways to address the trade imbalance between our two countries.
We are very pleased to welcome a special business delegation from China to Iceland in September.

Thank you very much.


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