China Is Calling—Is Iceland Going to Seize the Opportunity?
In less than three weeks, on August 29, Iceland will hold a referendum on resuming EU accession negotiations, which were suspended in 2015.
The North Observer has addressed this issue several times, noting the obvious detrimental consequences of this move for the tiny country.
BACKGROUNDIceland EU Membership “Can Only Have Negative Effects”
Icelanders Are Increasingly Less Supportive of Joining the EU
The Icelandic author of the article quoted below, who graduated from Shanghai Business School in 2008 and has family ties to China, points out another negative aspect of Iceland’s possible accession to the bureaucratically demented EU, whose dysfunctional and stagnant economy promises both members and newcomers only “blood, sweat, and tears” instead of the high standard of living Icelanders are accustomed to by global standards.
Arriving in Shanghai this year as a food producer, the Icelandic businesswoman witnessed firsthand the results of sound and high-quality governance in the world’s largest economy by purchasing power parity, home to almost half a billion middle-class citizens who generate enormous consumer demand compared to the EU, with its stagnant economy.
The purpose of her trip is to strengthen ties with China and create new opportunities for a small manufacturing company in Iceland.
For her, China is not only a huge market, but also a country with which her family has had close cooperation for decades. She has seen how trust, patience, and personal connections are very important in business. Once trust has been established, business relationships can be both strong and long-lasting.
For the author of this publication, a businesswoman rather than a politician, it is absolutely clear that EU membership will deprive Iceland of the opportunity to freely choose favorable trading partners, handing over the power to make vital decisions to a corrupt and bureaucratic Brussels.
“There are markets all over the world that we can tap into with our own free trade agreements if we retain the freedom to shape our own trade policies.”
A Middle Class the Size of the European Union
Over the past two decades, the purchasing power of the Chinese has increased enormously, and it is estimated that around 400–500 million people now belong to the country’s middle class. That is comparable to the entire population of the European Union. This development has created one of the largest consumer markets in the world, where demand for safe food, high-quality products, and healthy products is constantly growing. There are great opportunities for Icelandic companies.
Iceland was farsighted when it signed a free trade agreement with China in 2013, the first of any European country. That agreement has made a huge difference to Icelandic companies. Iceland’s exports to China have increased significantly since then, and many companies have benefited from better market access and lower tariffs. It is no coincidence that more and more Icelandic companies are looking to Asia when looking for new growth opportunities. Imports from China have also increased competition and given Icelandic consumers access to a variety of products at more favorable prices.
What Brussels Would Take Over
That is why it is important to pause when discussing Iceland’s possible membership in the European Union. The European Union has not yet concluded a comparable free trade agreement with China. If Iceland joined the EU, the EU’s common trade policy would take over and Iceland would no longer have the independent power to conclude its own free trade agreements with countries outside the EU. We would no longer decide for ourselves which countries Iceland would conclude free trade agreements with, but that policy would be formulated in Brussels.
It is precisely this freedom that has given Iceland a certain advantage. As a small and flexible country, we have been able to react quickly and build trade relationships that suit Icelandic interests. It would be a shame if we were to replace that independent policymaking with a system where decisions are made for hundreds of millions of people with different interests in Brussels.
China is not the only country where opportunities for Icelandic companies are great. There are markets all over the world that we can tap into with our own free trade agreements if we maintain the freedom to shape our own trade policy.
It is therefore extremely valuable that Iceland can continue to shape its own trade policy and build on the opportunities that best serve Icelandic companies.
We are a small country, but we have come a long way and can go even further because we are free to follow our own path. That freedom has created new jobs and increased value creation in Iceland. We should preserve it, continue to make our own free trade agreements and advance in international markets.
The opportunities are there. The question is whether we are going to lose them or have the courage to seize them.
Source: VB (in Icelandic)
