s164-3_e.doc - WT/TPR/S/164 Page 20 III TRADE POLICIES AND...

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WT/TPR/S/164 Trade Policy Review Page 20 III. TRADE POLICIES AND PRACTICES BY MEASURE (1) I NTRODUCTION 1. Iceland pursues a liberal trade policy except with respect to certain agricultural products. No major changes have been made to Iceland's import regime since its previous Review in 2000 notwithstanding the entry into force of a new customs law on 1 January 2006. Iceland's average MFN applied tariff is 5.9%. A high percentage of tariff lines (70%) benefit from duty free treatment. The average MFN applied tariff rate for agricultural products is 18.3% (WTO definition) compared with 2.5% for other goods. Most non- ad valorem tariffs apply to agricultural products. All agricultural tariffs lines as well as some 94% of manufactured lines are bound but the average bound rate is much higher than applied rates, which reduces the predictability otherwise injected by Iceland's comprehensive tariff bindings. 2. In practice, most of Iceland's trade and investment relations take place under preferential rules. Iceland offers preferential tariffs on imports from 37 WTO Members under various free-trade agreements. Regional liberalization has advanced the most within the framework of the European Economic Area (EEA); nevertheless, the average tariff on products from EEA partners is still 3.2%, reflecting the exclusion of several agricultural products from duty-free treatment. Iceland's growing number of preferential agreements has increased the complexity of its trade regime, although this may be lessened somewhat by Iceland's application of the Pan-European Cumulation System for rules of origin. 3. Other than tariffs, charges affecting imports include a value-added tax, excise taxes, and some other specific charges. As with other small economies, the burden of these charges is in many cases significantly heavier than that of the tariffs themselves, and falls mostly on imports as Iceland relies on imported products to meet most of its domestic needs. 4. Iceland has not used contingency measures since the WTO's establishment. Iceland notified the State Alcohol and Tobacco Monopoly (ATVR) as its only state trading enterprise. The ATVR has monopoly rights for the retail distribution of alcoholic beverages, and the importation and wholesale of tobacco and tobacco products. 5. Iceland notified the WTO of its measures to implement the TBT Agreement in 2000. It notified only one technical regulation under the TBT Agreement during the period under review. In contrast, during the same period it made 41 notifications to the EFTA Surveillance Authority concerning draft technical regulations. Iceland's EEA membership requires it to apply EU legislation on technical regulations, standards, testing, and certification. 6. Imports of a number of agricultural products are prohibited for sanitary and phytosanitary reasons, unless an exemption is granted by the Minister of Agriculture. Iceland has a wide derogation from EEA sanitary legislation and is only required to transpose EU sanitary measures relating to fishery products.
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