Iceland: World Trade Organization

Without global trade, the extraordinarily isolated country of Iceland would likely not be able to survive as a developed country. In 2016, Iceland's trade to GDP ratio (the summed value of all imports and exports as a percentage of the total economy) was 91.6%. This was balanced nearly equally between imports at 42.5% and exports at 49.1%. ("Trade Policy Review: Iceland.") For a frame of reference, the trade to GDP ratio of the United States in the same year was 26.5%. (“U.S. Trade to GDP Ratio 1970-2020.”) This statistic shows, on a base level, that Iceland's is very connected to the global economy.  Thus, it is understandable that Iceland has positioned itself as an ardent supporter of the WTO and trade liberalization in general.

Interestingly, Iceland's largest export sector is tourism, ("Trade Policy Review: Iceland.")  a service export which is less bound to the rules of international trade than it is to simple free movement. When the consumer comes to your country rather than vice versa, there is less ability for meddling by foreign governments, whether or not there is free trade. But Iceland also has many other large exports, including aluminum and fish. ("Iceland (ISL) Exports, Imports, and Trade Partners.) For these exports to be competitive, it is crucial that there are as little tariffs, quotas, and restrictions as possible, especially since relatively high wages already put Iceland at a disadvantage. 

Nonetheless, there are still some downsides to Iceland's continued participation in the WTO. Firstly, like many Western countries, their agricultural sector is uncompetitive when compared to cheap imports. For this reason, Iceland still has some tariffs on agriculture. ("Trade Policy Review: Iceland) Membership in the WTO makes it harder for Iceland to protect its agriculture sector, and reduces the voice of farmers on the decisions of the country. Secondly, Iceland's status as a very small country may reduce its sway over globally consequential decisions made by the WTO. This is exacerbated by the fact that Iceland's primary trade partners are EU members and the United States, (“Iceland (ISL) Exports, Imports, and Trade Partners.”) making Iceland a small fish in a large pond. WTO opponents in Iceland could argue that its complete dependence on international trade reduces its autonomy, and makes it subject to the decisions of larger, more powerful nations.


 “Iceland (ISL) Exports, Imports, and Trade Partners.” OEC, oec.world/en/profile/country/isl.

“Trade Policy Review: Iceland.” WTO, www.wto.org/english/tratop_e/tpr_e/tp461_e.htm.

“U.S. Trade to GDP Ratio 1970-2020.” MacroTrends, www.macrotrends.net/countries/USA/united-states/trade-gdp-ratio. 

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