Economy of Iceland - External Trade

External Trade

Iceland's economy is highly export-driven. Marine products account for the majority of goods exports. Other important exports include aluminum, ferro-silicon alloys, machinery and electronic equipment for the fishing industry, software, woollen goods. Most of Iceland's exports go to the European Union (EU) and European Free Trade Association (EFTA) countries, the United States, and Japan. The 2005 value of Iceland's exports was $3.215 billion FOB.

The main imports are machinery and equipment, petroleum products, foodstuffs and textiles. Cement is Iceland's most imported product. The total 2005 value of imports was $4.582 billion. Iceland's primary import partner is Germany, with 12.6%, followed by the United States, Norway, and Denmark. Most agricultural products are subject to high tariffs; the import of some products, such as uncooked meat, is greatly restricted for phyto-sanitary reasons.

Iceland's relatively liberal trading policy has been strengthened by accession to the European Economic Area in 1993 and by the Uruguay Round, which also brought significantly improved market access for Iceland's exports, particularly seafood products. However, the agricultural sector remains heavily subsidized and protected; some tariffs range as high as 700%.

The fishing industry is one of the most important industries. It provides 40% of export income and employs 7.0% of the workforce; therefore, the state of the economy remains sensitive to world prices for fish products.

The following table should be considered in light of the dramatic depreciation of the currency in 2008 of approximately 50%, corrected to EUD or USD. Corrected in this manner imports since the 2007 peak have been negative, not positive. See Wikipedia entry on Icelandic króna.