A local researcher said Thursday that China's announcement of the launch of feasibility study on a free trade agreement (FTA) with Iceland is "of great significance. "

The start of such a study would not only benefit the two sides, but also help to promote the economic and trade cooperation between China and European countries, said Song Hong, a research fellow with the Chinese Academy of Social Sciences. Iceland has abundant hydro and geothermal resources and is well-developed in fishery, service and tourism industries.

China and Iceland forged diplomatic relations in 1971 and maintained frequent exchanges of high-ranking officials and good economic and trade cooperation. The announcement was made Thursday during Icelandic president Olafur Ragnar Grimsson's state visit to China.

Trade between the two countries reached 73.28 million US dollars last year, seven percent higher than that of pervious year, according to statistics from Chinese Ministry of Commerce.

Iceland is also the first West European country to recognize China's full market economy status. This laid a solid foundation for the final establishment of Chinese-Icelandic FTA, Song said.

China and Iceland could supplement each other in many economic and trade fields, and China can learn from Iceland's technology and management experience in areas such as energy, telecommunications, transport and environment, Song said. The launch of the study would promote the cooperation for mutual benefit and offer new momentum for the two countries to further economic and trade ties.

"Although Iceland is not an European Union (EU) member country, the Chinese-Icelandic cooperation could still set a good example for the EU member countries, and Chinese businesses could be further integrate into EU market by using Icelandic partner's promotion and sales networks," Song said.

As a regional trade arrangement, the FTA member countries will provide each other with most-favored-nation treatment and relevant investment opportunities, which will largely lower the trade and investment costs, Song added.

China has been trying to establish FTAs with the 10-member Association of Southeast Asian Nations (ASEAN), the six-member Gulf Cooperation Council and the five-member South African Customs Union, Chile and New Zealand.

Source: Xinhua