Iceland's Foreign Minister: EFTA countries are champions of free trade

Published 09-03-2018
Guðlaugur Thór Thórðarson, right, at EFTA's Ministerial meeting in Geneva on 24 November 2017.
Gudlaugur Thór Thórdarson has been Iceland’s Minister for Foreign Affairs since January 2017; first in the government of Bjarni Benediktsson and since 30 November in the government of Katrín Jakobsdóttir, formed by the Independence Party, the Left Green Movement and the Progressive Party. Previous to that he was Minister of Health and Social Security 2007 to 2009. He has been a member of Althingi, the Icelandic parliament, since 2003, and is a former chair of the EFTA Parliamentary Committee. Gudlaugur Thór will chair EFTA’s next Ministerial meeting, in Sauðárkrókur, Iceland, on 25 June. He spoke to the EFTA Newsletter.

As the Foreign Minister of Iceland how would you describe your main motivation as regards international trade?

In Iceland we have experienced first-hand the benefits of an open trade policy and, as such, I am a strong supporter of the multilateral trading system and growth of global free trade. Iceland is an export driven economy. We are dependent on the smooth functioning of external trade and our aim is to further increase free trade opportunities often in cooperation with our EFTA partners. As Minister for Foreign Affairs my motivation is to advance Iceland ‘s interests abroad in the broadest sense, from free trade through security and to development cooperation. We need to make use of the opportunities that are present and create new ones. I am a veteran of the EFTA Parliamentary Committee and the EEA Joint Parliamentary Committee (JPC) and this experience has affirmed my view that our foreign trade interests are best advanced through free trade with both established partners and emerging economies. The world has changed a lot in the last quarter of a century with a monumental rise of the middle classes in emerging markets, be they in Asia, South-America or Africa. These are the economic powerhouses of the present and the very near future and Iceland and the other EFTA countries are extremely well positioned to grab the opportunities that these changes present.

Which are the strengths and challenges for EFTA and the EFTA states in the years to come?

EFTA’s strength lies in its flexibility and pragmatic approach. The EFTA countries are not only close partners and like-minded nations, our economic merits and interests are mutually compatible. I believe that international attention has increasingly been shifting towards the inherent strengths of EFTA, which is a very good thing. We are an attractive FTA partner due to our combined economic strength and diverse economic base and EFTA is among world leaders when it comes to trade both in goods and services. At the same time the opportunities for EFTA continue to be further opening of markets to enhance mutual trade between EFTA and the world. Saying this, I also want to underline that we must never let down our guard and vigilance. Ahead of us in the next years are changes and challenges that we need to tackle swiftly. Until now our relatively small size, speed and flexibility has been our strength. We need to constantly improve the way in which we approach trade and that may also entail breaking new ground and approaching tasks in a new way.

To my mind our most pressing task is to secure a comprehensive agreement with the UK and make the most of the opportunities that Brexit will bring to world trade. The Brexit referendum has the potential to unleash great forces for international trade and as EFTA we are in the fortunate position to be active partners in charting the course of future global free trade.

I consider Iceland and our EFTA partners as champions of free trade and in that regard, we need to weigh in on the debate to avoid that new trade barriers rise in Europe. We also have to be vigilant of the opportunities Brexit presents for example when it comes to trade relations with the US which is a hugely important market for all the EFTA States.

Looking further afield it is particularly important to focus on growing markets such as in Asia and South America, where we expect considerable growth and increased purchasing powers over the coming years. We are already negotiating with Mercosur. The world is changing rapidly and as EFTA we need to be able to use our structures to reach the maximum gain for our economies. It is as simple as that.

As for the EEA, are there any areas for the improvement of the Internal Market that you hope to see in the near future?

Iceland has benefited substantially in so many ways from participating in the internal market through the EEA Agreement. It provides access to the European market as well as a stable format for our close relations with the EU and its member states. That being said there is always room for improvement. The EU has made "Better Regulation" a centrepiece of its legislative agenda. Iceland welcomes this, and we would like to see a strong focus on more simple and flexible rules that make it easier for our companies and entrepreneurs to do business throughout the EEA. The internal market is here to serve our citizens and businesses. This is best achieved by establishing a regulatory environment that is simple, transparent, accessible and predictable.

What are the priorities for Iceland when it comes to Brexit?

The UK is Iceland's most important European trading partner and over the past decades we have built up an extensive and deep free trade partnership with the UK that covers most aspects of economic activity. The contractual basis for this has obviously been the EEA Agreement which the UK will leave a year from now. In the short term, our goal is to ensure that any EEA relevant parts of the Withdrawal Agreement, including the foreseen transition period, also apply to the EEA EFTA States.

In the long run a new basis will have to be found for our relationship with the UK and in this respect Iceland’s long-term objectives are simple and we are in close dialogue with the UK on these. We want to ensure at least the same level of trade relations with the UK as we enjoy today – hopefully even better. We also want to maintain close cooperation in key areas which are today covered by the EEA Agreement such as transport, movement of persons, research and development, financial services and so on.

Lastly, we wish to strengthen our ties in other areas where possible, including for example exchange of best practice in the area of fisheries, police cooperation, justice, security and defence. In addition to the Nordic family and our EFTA friends, the UK is one of our closest allies and most important economic partners and we believe we are now in a unique position to further promote free trade between our countries. We think it is very important to seize the opportunity Brexit presents to deliver on furthering free and mutually beneficial trade. I have repeatedly said that the alternative, to have trade barriers erected in Europe during this day and age is simply incomprehensible. In short, Iceland wants to be part of the solution, not part of the problem.

Should the EFTA states aim for a joint agreement with the UK or would you opt for a bilateral agreement between Iceland and the UK?

The short and simple answer is that we prefer the option that will work best for furthering our considerable interests. We keep our options open and we are in constant talks with the UK and our EFTA partners in this respect. The Government of Iceland considers Brexit an absolute priority area and we have been busy in mapping our interests and setting our specific goals and priorities. The ball is in motion between London and Brussels and the coming months will shed light on what exactly lies ahead. After my extensive talks and meetings with UK ministers, EFTA ministers and EU ministers I am confident that Iceland and the other EFTA countries will reach a good solution in the months ahead. This could be a deep and comprehensive bilateral agreement, or this could be a joint EFTA agreement, or this could also entail tying us to a future trade arrangement between the EU and the UK. One thing is clear: the Brexit ship has set sail and we all have a vested interest in its safe journey.

 

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Seminar on the European Economic Area - Brussels 13 September 2018