Trade relations between the EU and Iceland are covered by the free trade agreement between Iceland and the EEC from 1972 and the EEA Agreement which entered into force in 1994. The EEA Agreement extends the Single Market, with the exception of Agriculture and Fisheries, to the EEA countries. Under the EEA Agreement and its procedural provisions, Iceland implements into Icelandic law EU directives and regulations governing the free movement of goods, persons, services and capital.
The EEA is Iceland's largest export and import market. According to figures from Statistics Iceland almost 83% of all export goods from Iceland in 2011 went to the EEA and more than 78% to the EU. The Netherlands, Germany and the UK were the largest export countries. Of total import to Iceland in 2011, import from EEA states was almost than 62% and 46% from the EU.
As the Common Agricultural Policy and the Common Fisheries Policy of the EU are not part of the EEA Agreement, free movement of goods within the framework of the Agreement does not apply to all products.
Protocol 9 of the EEA agreement deals with trade in seafood products. The protocol contains provisions on the abolishment of tariffs on Iceland's most important seafood products into the EU or gradual tariff decrease that encompasses most of Iceland's seafood products.
Most trade in agricultural products is not included in the EEA Agreement. However, the parties of the Agreement have undertaken to make efforts with a view to achieving progressive liberalisation of agricultural trade. In addition, the Agreement determines preferential trade arrangements for certain limited categories of processed agricultural products. Trade in agriculture is covered by Article 19 of the EEA Agreement. Protocol 3 of the Agreement particularly regulates preferential trade in processed agricultural products.