Attachment

Brussels,

Sir,

I have the honour to refer to the trade negotiations between the European Community and the Republic of Iceland on agricultural products, held from 6 March 2005 to 14 December 2006, undertaken on the basis of Article 19 of the Agreement on the European Economic Area.

With the aim of fostering a harmonious development of trade between the Parties, the European Community and the Republic of Iceland have agreed to additional bilateral trade preferences concerning agricultural products, with due consideration to the respective agricultural policies and circumstances, including the evolution of the bilateral trade and trade with other partners.

I hereby confirm that the results of the negotiations were as follows:

1. 1..

   From 1 March 2007, the European Community and the Republic of Iceland will reciprocally consolidate at bilateral level the existing zero duty lines, be it applied duties or existing concessions, and, if not already at zero level, to reciprocally eliminate duties on bilateral imports, for all products originating in the parties, which are listed in Annex I.

2. 2..

   From 1 March 2007, the European Community will provide tariff quotas on imports into the Community of products originating in Iceland, which are listed in Annex II.

3. 3..

   From 1 March 2007, the Republic of Iceland will provide tariff quotas on imports into Iceland of products originating in the Community, which are listed in Annex III.

4. 4..

   From 1 March 2007 the Republic of Iceland will grant the European Community the preferential tariffs listed in Annex IV.

   These bilateral concessions replace and consolidate all existing bilateral concessions in agricultural products that are currently in force, in application of Article 19 of the Agreement on the European Economic Area^f1.

5. 5..

   The Republic of Iceland agrees to end its unilateral and temporary erga omnes reductions in applied tariffs on agricultural products put in place in 2002 and prolonged so far on a yearly basis.

6. 6..

   The provisions of Protocol 3 to the Agreement between the European Economic Community and the Republic of Iceland^f2 concerning the definition of the concept of ‘originating products’ and methods of cooperation shall apply mutatis mutandis to the products mentioned in Annexes I, II, III and IV.

7. 7..

   The Parties will take steps to ensure that the benefits, which they grant each other, will not be jeopardised by other restrictive import measures.

8. 8..

   The Parties agree to take the necessary steps in order to ensure that tariff quotas will be managed in such a way that imports may take place regularly and that the quantities agreed for import can effectively be imported.

9. 9..

   The Parties agree to strive for promoting trade of eco-friendly products and products with a geographical indication. The Parties agree to engage in further bilateral discussion with a view to better understanding respective legislation and registration procedures, in order to identify ways to enhance the protection of geographical indications in the territories of both Parties.

10. 10..

    The Parties agree to exchange at regular intervals information on traded products, tariff quota management, price quotations and any useful information concerning the respective domestic markets and the implementation of the results of these negotiations.

11. 11..

    Consultations will be held at the request of either party on any question relating to the implementation of the results of these negotiations. In case of difficulty in the implementation of the results of these negotiations, these consultations will be held as promptly as possible, with a view to the adoption of appropriate corrective measures.

12. 12..

    The first consultations relating to the results of these negotiations will be held before those implementing arrangements are put in place, with a view to facilitating the smooth implementation of these negotiations.

13. 13..

    The results of these negotiations will be implemented as from 1 March 2007^f3. Where necessary, tariff quotas will be opened on a pro-rata basis.

14. 14..

    The Parties agree to resume bilateral negotiations in the framework of Article 19 of the Agreement on the European Economic Area in two years' time, with particular consideration to the outcome of the WTO negotiation process in agriculture.

I have the honour to confirm that the European Community is in agreement with the contents of this letter.

I should be obliged if you would confirm that the Government of the Republic of Iceland is in agreement with the above.

Please accept, Sir, the assurance of my highest consideration.