WT/TPR/M/273/Add.1

6 March 2013

(13-1228) Page: 1/60

Trade Policy Review Body 13 and 15 November 2012

Original: English/ anglais/ inglés

TRADE POLICY REVIEW

ICELAND

RECORD OF THE MEETING

Addendum

Chairperson: H.E. Mr. Eduardo Muñoz Gómez (Colombia)

This document contains the advance written questions, and replies provided by Iceland.1

Organe d'examen des politiques commerciales 13 et 15 novembre 2012

EXAMEN DES POLITIQUES COMMERCIALES

ISLANDE

COMPTE RENDU DE LA RÉUNION

Addendum

Président: S.E. M. Eduardo Muñoz Gómez (Colombie)

Le présent document contient les questions écrites communiquées à l'avance et les

réponses fournies par l'Islande.1 Órgano de Examen de las Políticas Comerciales 13 y 15 de noviembre de 2012

EXAMEN DE LAS POLÍTICAS COMERCIALES

ISLANDIA

ACTA DE LA REUNIÓN

Addendum

Presidente: Excmo. Sr. Eduardo Muñoz Gómez (Colombia)

En el presente documento figuran las preguntas presentadas anticipadamente por escrito,

junto con las respuestas facilitadas por la Islandia.1

1 In English only./En anglais seulement./En ingles solamente.

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REPLIES PROVIDED BY ICELAND TO ADVANCE WRITTEN QUESTIONS ARGENTINA Report by the Secretariat (WT/TPR/S/273) III. TRADE POLICIES AND PRACTICES BY MEASURE (1) MEASURES DIRECTLY AFFECTING IMPORTS (iii) Tariffs (a) Applied MFN tariff

According to paragraph 21, Iceland grants at least MFN treatment to all trading partners. The MFN tariff includes 8,513 lines at the eight-digit HS level (HS2012) in 2012, of which 94.9 per cent are duty free or have ad valorem duties (Table III.2 and Chart III.1). Over 70 per cent of all tariff lines are duty free. Question 1 Does Iceland plan to narrow this difference between the ad valorem bound and applied rates? If so, what specific measures will it be taking to achieve that objective?

Answer This question is directly related to the negotiations in the Doha Round, to reduce bindings in the WTO. Iceland has been and will participate actively in these negotiations when they will continue. (v) Import prohibitions, restrictions, and licensing

Paragraph 35 states that the only major changes to import licence and/or permit requirements are under Regulation No. 448/2012 on Defence Against Animal Diseases, which amended some rules covering imports of animal products (see more details on SPS and TBT-related measures in section (3)(iv)):

Imports of live animals are prohibited, with the exception of import consignments licenced by the Minister for Industries and Innovation on the basis of recommendations from the Chief Veterinary Officer. Imports of animal products also require the permission of the Minister;

imports of plants and plant products require a licence from the Agricultural Research Institute, and imports of animal fodder, fertilizers, and seeds from the Agricultural Authority of Iceland (MAST);

narcotics and psychotropic substances require an import licence from the Ministry of Welfare;

imports of radioactive goods require the permission of the Icelandic Radiation Protection Institute;

firearms and ammunition imports require a permit from the Commissioner of the Icelandic Police;

machines for public works must be registered with the Administration of Occupational Safety and Health before import and inspected by the Administration after import; and

toxic chemicals and other goods with health and environment concerns are subject to a conditional prohibition, with imports only allowed subject to certain conditions and approval from the Ministry for the Environment and the Environmental and Food Agency.

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Question 2 What are the functions exercised by the Ministry of Agriculture and the Ministry of Fisheries in this respect? How does the Foodstuffs Committee [IS note: Food and Veterinary Authority] operate in coordinating food quality and safety standards and regulations? Answer The Ministry of Industries and Innovation (formerly the Ministry of Fisheries and Agriculture) is responsible for policy making and regulation. It also grants import licences where necessary upon recommendation of the Food and Veterinary Authority. The Food and Veterinary Authority is an implementation agency responsible for the execution of the legislation in question, including food safety control, general import and export procedure, as well as animal and plant health. For regional enforcement the Food and Veterinary Authority is assisted by the Local Health Committees, which act under the supervision of the Authority. Question 3 Could Iceland please provide information regarding the regime for the importation of live animals? Answer According to Art. 2 of Act No. 54/1990 all import of live animals is forbidden. The Minister of Industries and Innovation has the right to give derogation to this rule upon recommendation from the Chief Veterinary Officer (CVO). The CVO has to make a risk assessment in each case when there is an application to the Minister for imports of live animals. The risk has to be based on international risk assessment following standards laid down by OIE and not the least articles of the SPS agreement. Question4 Are there any plans to review the current formalities for importing live animals? Answer No, the current policy is to keep up the strict legislation regarding the ban on live animal imports and to preserve the very good animal health status of the country.

(2) MEASURES DIRECTLY AFFECTING EXPORTS (v) Intellectual property rights Geographical indications Paragraph 117 states that Iceland does not have any specific legislation that covers geographical indications. However, provisions in the Trademarks Act and the Competition Act provide protection to these indications. The Trade Marks Act contains provisions that prohibit the use of deceptive trademarks, including geographical indications. Furthermore, the registration of a mark that causes confusion regarding its origin, or of a trademark for wines and spirits that implies a geographical name, unless the product originates at the location in question, is also prohibited. Misleading use of geographical indications is also implicitly forbidden under the Competition Act. The authorities also stated that a few collective marks containing geographical indications have already been registered in Iceland. Question 5 Could Iceland provide further information on the provisions of the Trademarks Act and the Competition Act as regards the protection of these geographical indications? Answer The Trademark Act No. 45/1997, as amended, contains provisions that protect Geographical Indications as required by the TRIPS Agreement and so does the Act on the Surveillance of Unfair Business Practices and Market Transparency No. 57/2005. The Consumer Agency is responsible for the enforcement of Act No. 57/2005. Names of products comprising a GI or potential GI at national level are protected under Article 14.1.2 of the Trademark Act. According to the Article, a trademark may not be registered if the mark is likely to cause confusion, for instance, as to the type of product, condition or origin. Further, a trademark for wines and spirits which implies a geographical name for wine or spirits

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may not be registered unless the product originates at the location in question, cf. Article 14.3. In Article 36 the use of deceptive signs is prohibited. All trademark applications are subject to the same conditions and the GI-conditions are therefore considered even when the application in question involves non-agricultural products. With regard to the Act No. 57/2005, Article 9 (f) states that commercial practices are misleading if these are likely to deceive consumers or are of such a nature that consumers are granted incorrect information for the purpose of influencing their decision concerning trade. This refers to incorrect information concerning the rights, qualification and other factors pertaining to the vendor's circumstances or those of his representative, his position in the market, duties, trademarks and other software rights. I. TRADE POLICIES BY SECTOR (1) AGRICULTURE (iii) Agriculture policies (a) Trade policies Paragraph 14 states that under its Uruguay Round Schedule, Iceland reserved the right to provide export subsidies for 1,797 tonnes of sheep meat up to a limit of SDR 9.3 million, and 3.16 million litres of milk up to a limit of SDR 2.6 million. However, according to the notifications made to the Committee on Agriculture, Iceland did not provide any export subsidies between 31 August 1998 and 31 August 2008. However, under Regulation No. 535/2003 on Price Equalization for Exports of Goods made from Agricultural Raw Materials, the Ministry for Fisheries and Agriculture may authorize the Customs Office to refund the exporter the difference between the cost of raw materials in the international and domestic markets. In 2011, ISK 2.7 million (about US$ 23,274) was budgeted for the price compensation mechanism.

Question 6 Could Iceland please explain the circumstances that led it to consider that these refunds to exporters are not a way of subsidizing exports? Answer In 2011, a total of 2.7 million ISK (about US$ 23,274) were allocated to the measure in the state budget. However, the total utilized amount was 1.8 million ISK (about US$ 15,750) according to the Icelandic State Account. The measure is thus of a highly limited application. As stated the aim of the measure is to compensate producers for higher costs of raw material due to the domestic agricultural policy.

(b) Domestic support Paragraph 15 states that under Regulation No. 913/2010 on dairy production, support is provided through production quotas, direct payments, and minimum producer prices. The national production quota is set each year by the Minister of Fisheries and Agriculture and is divided among producers based on historical production. Production in excess of quotas is permitted provided all such production is exported. Direct payments are based on the number of animals (headage payments) and the size of a producer's quota (support entitlements). Headage payments are provided for up to 100 cows, with full payment for each of the first 40 dairy cows then at a reducing rate for each additional cow. The average payment per cow in 2011 was ISK 22,000 (see Table IV.4 for total annual budgetary allocations). Question 7 How does this programme affect trade, both domestic and foreign? Answer A system of production quotas is applied for dairy farms. The production quota for each dairy farm is a specific share of the production quota for the whole country, which is based on sales in the previous year, to ensure an appropriate supply of milk and dairy products for the domestic market. If a dairy purchases milk from an individual farmer exceeding his production quota the dairy shall export dairy products equivalent to the milk in excess. The measure is governed by the Act on the Production, Pricing and Sale of Agricultural Products No. 99/1993, and Regulation No. 913/2010 on Support Entitlements for Milk Production on Registered Farms and Direct Payments to Dairy

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Farmers for the year 2011. Production over the yearly quotas has to be exported. However, due to low export prices limited interest is for trade externally. Secretariat Report (WT/TPR/S/273) III. TRADE POLICIES AND PRACTICES BY MEASURE (1) MEASURES DIRECTLY AFFECTING IMPORTS (iv) Standards and other technical requirements (b) Sanitary and phytosanitary measures

With respect to Table III.10 "provisionally prohibited imports, 2012" (page 45):

Question 8 Could Iceland explain why imports of live animals as well as their genetic substances (Act No. 54/1990) and products of animal origin (Act No. 25/1993 and Regulation No. 448/2012) are provisionally prohibited? Answer Due to the geographic isolation and restricted imports of live animals and their genetic substances for centuries, animals in Iceland are free from many infectious agents known to be endemic in many parts of the world. It is estimated that only a small number of known infectious agents found in other parts in the world can be found in Iceland. Therefore, animals in Iceland are immunologically naïve to various transmissible agents. The animals least resistant to diseases are: horses, sheep, cattle and goats. Previous disease outbreaks in Iceland show that the susceptibility of the Icelandic stocks to novel pathogens is extremely high. This is not only the case for pathogens known to cause severe diseases but also for agents that are considered to cause only mild clinical symptoms in other countries. This situation makes Icelandic livestock highly vulnerable to the introduction of infectious agents or new strains of infectious agents not endemic in the country. Question 9 Could Iceland specify whether these prohibitions are related to the outbreak of a disease regulated by the World Organisation for Animal Health (OIE)? Answer Previous imports of live sheep have in the past centuries brought several diseases to Iceland previously not introduced, for example Scrapie, Sheep scab, Paratuberculosis, Jaagsiekte and Maedi/Visna. Therefore Iceland needs strict import legislation to control imports of live animals. In this way previous experiences from importation of live animals (mainly sheep) to Iceland have disclosed the high risk of accidental introductions of new transmissible agents to the country that may have unforeseeable catastrophic consequences Question 10 Does Iceland only import pets? Answer According to Article 2 of Act No. 54/1990 on import of animals all import of live animals is forbidden. The Chief Veterinary Officer (CVO) is permitted to deviate from this ban regarding pets, cf. Article 4a of the Act. Such a permit is based on the condition that the importer commits to comply in every respect with all conditions of Regulation No. 935/2004 on the importation of pets (companion animals) and dog semen into Iceland. The CVO is working within the Icelandic Food and Veterinary Authority (MAST) which is the institution performing the task of monitoring the import of pets to Iceland. All information and necessary forms can be obtained on the www.mast.is Question 11 Under what conditions could Iceland permit imports of raw meat and other animal by-products? Answer Article 10 of Act No 25/1993 on Animal Diseases and Disease Prevention stipulates a ban against import of raw meat and raw eggs. The same applies to non-disinfected raw skins and hides, farmyard manure and compost mixed with manure, import of which is not authorised. According to

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Article 4 of Regulation No. 448/2012 on measures to prevent the introduction of animal diseases and contaminated products into Iceland, the Industries and Innovation of Fisheries and Agriculture has the authority, following a positive recommendation from MAST, to permit the importation of products otherwise prohibited by the aforementioned Article 10, the recommendation has to be based on international risk assessment following standards laid down by OIE, CODEX and not the least articles of the SPS agreement, of which Iceland is a member, cf. Article 9 of Regulation No. 448/2012. The required permit from the Ministry and the certificates in order to permit importation are listed in the aforementioned Regulation. These documents have to be shown before customs clearance can take place. CANADA Report by the Secretariat (WT/TPR/S/273) II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES (1) GENERAL CONSTITUTIONAL AND LEGAL FRAMEWORK Paragraph 4, page 11 This section contains no reference to the Court of Arbitration (Gerðardómur), as referenced in law 53/1989 um samningsbundna gerðardóma (Laws on contract bound Arbitration). Canada understands that under this law, parties can bring a dispute before an arbitral tribunal, provided a contract is in place, and that the arbitration ruling is final and cannot be appealed to another court. Question 1 Could Iceland provide more information on the status and operation of the Court of Arbitration and confirm the nature of the Court's relationship with other aspects of the legal system? Answer According to the Act No. 53/1989 on contractual arbitration, parties to a dispute can voluntarily resort to such a "ad hoc" dispute settlement alternative. The Court of Arbitration is thus not a permanent court and not a part of the general court system. Parties can agree to submit a dispute to arbitration concerning civil matters in respect of which they may reach a settlement. The parties must agree to abide by the findings of the arbitral body. A court of law shall dismiss a case if it is subject to or has been settled by such arbitration. The 3 arbitrators must fulfill the requirements to serve as district court judges and the case is decided by a majority decision. Some procedural matters can be referred to the general courts for ruling. For further information on the Act No. 53/1989 on contractual arbitration, please consult the unofficial English translation of the act provided by the Iceland Chamber of Commerce at: http://www.vi.is/files/Act%20on%20Contractual%20Arbitration_849555187.pdf. IV. TRADE POLICIES AND PRACTICES BY MEASURE (3) MEASURES AFFECTING PRODUCTION AND TRADE (iv) Standards and other technical requirements Paragraph 85, page 45 Although a number of notifications have been submitted to the WTO, particularly on agriculture and regional trade agreements, as of end-July 2012 a considerable number of regular notifications remained outstanding. In particular, Iceland's most recent annual domestic support notification covered the years 2001 to 2003. Question 2 Could Iceland please indicate when it will submit its annual domestic support notifications for more recent years to the Committee on Agriculture?

Answer Iceland intends to submit its outstanding domestic support notifications before end of February 2013.

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IV. TRADE POLICIES AND PRACTICES BY MEASURE (3) MEASURES AFFECTING PRODUCTION AND TRADE (iv) Standards and other technical requirements Paragraph 85, page 45 According to the WTO Secretariat Report, "imports of raw meat and other products covered by Regulation No. 448/2012 may be permitted by the Minister of Fisheries and Agriculture upon the recommendation of MAST." Question 3 What factors are used by MAST in developing its recommendation on whether to permit the imports of raw meats and other products?

Answer According to Article 4 of Regulation No. 448/2012 on measures to prevent the introduction of animal diseases and contaminated products into Iceland the Minister of Industries and Innovation has the authority, following a positive recommendation from MAST, to permit the importation of products otherwise prohibited by Article 3 of Act No. 25/1993 on animal diseases and defenses against these. The recommendation has to be based on international risk assessment following standards laid down by OIE, CODEX and not least relevant articles of the SPS agreement, of which Iceland is a member, cf. Article 10 of Regulation No. 448/2012. The required permit from the Ministry of Industries and Innovation2 and the certificates in order to permit importation are listed in Regulation No. 448/2012. The text of the regulation is available at: http://www2.mast.is/Uploads/document/Reglugerdir/Reglugerd448_2012english.pdf. IV. TRADE POLICIES AND PRACTICES BY MEASURE (3) MEASURES AFFECTING PRODUCTION AND TRADE (iv) Standards and other technical requirements Paragraph 84, 86; page 45-46 According to the WTO Secretariat Report, "products arriving from outside the EEA must be accompanied by certificates showing: …that the animals from which the products were derived were not given growth-promoting substances…." As well, according to the WTO Secretariat Report, Iceland is a member of the Codex Alimentarius and the World Organization for Animal Health. In a recent Codex commission meeting, Codex members voted in favour of new maximum residue limits (MRLs) for ractopamine in animals. Question 4 As a member of Codex Alimentarius, on what basis does Iceland require documentation that "animals from which products were derived were not given growth-promoting substances"?

Answer It should be stated that at the above mentioned recent Codex commission meeting, Iceland voted against a new maximum residue limits (MRLs) for ractopamine in animals, as did other countries in the European Economic Area – i.e. the EU and Norway. This was based on the fact that Iceland has never permitted the use of growth-promoting substances in animals, both the use of hormones and antibacterial substances. Iceland deems it is the appropriate level of protection for the public health of the Icelandic population, not to be exposed to any possible residues from these substances in imported products of animal origin. IV. TRADE POLICIES AND PRACTICES BY MEASURE (3) MEASURES AFFECTING PRODUCTION AND TRADE (iv) Standards and other technical requirements Table III.10, page 45 According to Regulation 448/2012 (found on http://stjornartidindi.is/Advert.aspx?ID=4868a848-2b30-455a-bd7e-435bb6433679), [translated from Icelandic to English], "when applying for the

2 On 1 September 2012 the Ministry of Fisheries and Agriculture, the Ministry of Industry and part of the Ministry of Economic Affairs were merged into a new Ministry of Industries and Innovation.

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import of raw or first time for permission under product…the importer shall provide the Ministry of Industries and Innovation with the necessary information about the product under consideration and approval before the product is dispatched from the exporting country." Question 5 Could Iceland indicate how far in advance of shipment from the exporting country the importer should seek necessary approvals?

Answer Usually it takes 1-3 weeks to process an application, provided that the importer provides the appropriate information. IV. TRADE POLICIES AND PRACTICES BY MEASURE (3) MEASURES AFFECTING PRODUCTION AND TRADE (iv) Standards and other technical requirements Paragraph 87, page 46 According to the WTO Secretariat Report, in practice, documents (i.e. certificates) [concerning the importation of chilled and frozen meat and meat products] must be submitted to MAST, which processes them and makes a recommendation to the Ministry of Industries and Innovation, which must give prior approval for each import consignment of frozen products. Question 6 How long does this recommendation and approval process take for each import consignment of frozen product?

Answer It is normally done in one day and documents are sent by e-mail. Question 7 Does this process have a cost for importers?

Answer The process is free of charge. IV. TRADE POLICIES BY SECTOR (1) AGRICULTURE (iii) Agriculture policies Paragraph 7, page 57 The Secretariat Report indicates that the Farmers' Association of Iceland represents farmers in discussions on agriculture policy and has been contracted by the Icelandic Food and Veterinary Authority (MAST) to process direct payments to farmers. Question 8 Could Iceland please clarify the different roles of MAST and the Farmer's Association of Iceland with regards to these direct payments? For example, does MAST determine the eligibility and amount of these payments? Is the farmers' association reimbursed for administrative and operating costs?

Answer The Farmer's Association handles calculation and payments of agricultural support (e.g. direct payments) based on farmer entitlement units, according to the relevant legislation. The Farmer's Association is also responsible for providing information to farmers on their payment rights. However, MAST has overall responsibility for the payment procedure. MAST is responsible for all changes to and keeping records of lists of entitlement holders. The Farmer's association receives reimbursements for their work relating to the administration of payments.

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IV. TRADE POLICIES BY SECTOR (1) AGRICULTURE (iii) Agriculture policies (a) Trade policies Paragraph 14, page 59 Iceland reported that it did not provide any export subsidies between 1998 and 2008. However, under Regulation No. 535/2003 on Price Equalization for Exports of Goods made from Agricultural Raw Materials, the Ministry of Industries and Innovation may authorize the Customs Office to refund the exporter the difference between the cost of raw materials in the international and domestic markets. According to the Secretariat Report, ISK 2.7 million (about US$ 23,275) was budgeted for the price compensation mechanism in 2011. Question 9 What types of raw materials are eligible for reimbursement?

Answer The raw materials eligible for reimbursement are milk, semi skimmed milk, cream, milk powder, low fat powder, butter, cheese, eggs, meat of beef, sheep, pigs, chicken and horse meat. Question 10 What are the criteria for program eligibility?

Answer The Applicants have to send an application to the Ministry. Products in question should be processed agricultural products, and the application must specify different basic raw material and ingredients in the products, recipe and information regarding customs classification. The measure is to compensate producers for higher costs of raw material due to the domestic agricultural policy. In 2011 the total utilized amount were 1.8 million ISK (about US$ 15,750) according to the Icelandic State Account. The measure is thus of a highly limited application, even given the limited amount available. Question 11 Is receiving the refund contingent on export of the final product?

Answer The final product cannot be sold within the customs area of Iceland. IV. TRADE POLICIES BY SECTOR (1) AGRICULTURE (iii) Agriculture policies (a) Trade policies Paragraph 19, page 59 The Secretariat Report indicates that in addition to direct payments and minimum prices, dairy processors also benefit from indirect support for breeding, land cultivation, and development programs. Question 12 Could Iceland please provide examples of this indirect support?

Answer Dairy farmers are eligible for several general support measures, which are of indirect support to their operations. Such programs may entail re-cultivation, grain cultivation (rare in Iceland for climate reasons), grazing control and land utilization, economic and management consultation, educational programs, transition to organic/environmentally sound farming, environmental efforts, maintenance of land drainage an calcium spreading of fields. Breeding support relates to development work and relates to keeping of livestock breeding records and artificial insemination.

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Environmental programs which may entail diversification aspects include the Regional Afforestation Projects, the Land Reclamation Forests Project and the Land Healing program. Report by Iceland (WT/TPR/G/273) III. TRADE POLICY OBJECTIVES AND DEVELOPMENT (5) EUROPEAN UNION ACCESSION NEGOTIATIONS Paragraph 61, page 14 It is noted that upon accession to the European Union, Iceland would as a new Member State join the trade agreements of the EU. Question 13 Could Iceland specify whether accession to the European Union will be subject to a national referendum?

Answer According to the Parliamentary resolution on the membership application to the EU, a referendum shall be held on the accession agreement, ensuring the Icelandic nation the final say on whether to join the EU. COLOMBIA Government Report, WT/TPR/G/273 (2) FOREIGN TRADE (i) General According to paragraph 17 of the Government Report, "[a]s a remote and insular island in the far north, faced with difficult topography and climate, Iceland's economy depends to a large extent on few sectors. External trade is therefore of vital importance to Iceland. Imports and exports of goods and services amount to around 40 per cent of GDP. Fisheries products have historically accounted for the overwhelming majority of exports and foreign currency income. They still are, but aluminium products have grown to account for a comparable share of export earnings and GDP in recent years. Icelandic exports are becoming more diverse every year due to a growing science and research community and high-tech industry". Question 1 Which of Iceland's policies have generated the growth of the science and research community and the high-tech industry, which has led to the diversification of their exports? Answer The growth has to a great extent been driven by the private sector. The Government has enhanced this development by increasing allocations to the competitive funds on research, development and innovation. In addition the Act on Support to Innovative Companies No. 152/2009 opens for a possibility to reimburse SMEs through the income tax for up to 20% of their R&D expenditure - up to a modest annual maximum. Fishing According to pages 13 and 14 of the Government Report, "Aid for Trade-related activities represent a substantial part of Iceland's ODA, approximately 28 per cent. These activities are mainly within the priority sectors of fisheries and renewable energy, as sustainable use of natural resources is one of three focus areas in the Strategy for Iceland's International Development Cooperation. Within these two sectors, ODA has been targeted towards technical assistance and infrastructure, as well as productive capacity building. The latter includes education and training of government officials from developing countries at the UNU Geothermal and Fisheries Training programmes in Iceland. In addition, contributions have gone towards geothermal energy and fishery research and development, as well as policy and administrative management within these sectors. Priority is given to sub-Saharan Africa and least developed countries, and funds are channelled through multilateral organizations and bilateral partners".

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Question2 Although other countries are larger recipients of this type of cooperation, the Colombian government would like to know more about the productive capacity and research and development programmes in the Icelandic fisheries sector.

Answer Fisheries have been at the core of Iceland's bilateral development efforts since its inception, as a result of requests from developing countries for cooperation in an area where Iceland possesses both expertise and experience. Iceland has built up significant knowledge of development cooperation in the fisheries sector through the years and today the fisheries sector is included in both bilateral and multilateral cooperation. Fisheries have been identified as a priority sector under the Strategy for Iceland's International Development Cooperation 2011-2014 and allocations to projects in fisheries amounted to 20% of Iceland's ODA in 2011. Capacity Building programmes In regards to capacity building Icelandic authorities have contributed both bilaterally through the Icelandic International Development Agency (ICEIDA) and multilaterally to various international organizations. These efforts include education and training, as well as institutional capacity building. Support to Quality Assurance for Fish Marketing Project in Uganda The project is a cooperation of ICEIDA and the Ugandan authorities. The overall objective of the Project is to reduce poverty among fishing communities through improved quality and safety of fish for the domestic, regional and export market as well as improving the livelihoods of fish dependent communities. The immediate objective is to increase volume of marketed fish both in the domestic and export markets through reduction in post-harvest losses. The project includes the building up of human resources, capacity building and construction in order to assure quality in fishing and fish processing. Assistance to the Fisheries Sector in Mozambique The support was initiated in 2009 and is based in a trilateral agreement between Iceland, Mozambique and Norway. The programme aims to strengthen the fisheries sector's contribution in improving food and nutrition security for the population; improve living conditions for the communities of artisanal fishermen; increase the industrial fisheries' contribution to achieving the national objective of poverty eradication; increase net contribution from the sector to the country's balance of payments in a framework of a more effective fisheries administration which promotes sustainable exploitation of the fish resources. The programme focuses not only on the development of competence and capacity in the fisheries institutions as such, but also on the implications this support has for the development of the sector at large and for poverty alleviation. Training courses in cooperation with the Caribbean Regional Fisheries Mechanism (CRFM) The Ministry for Foreign Affairs provided funds for two training courses carried out by CRFM in 2009-2010 under Iceland's Island Growth Initiative. The Initiative was founded to increase cooperation between Iceland and Small Island Developing States (SIDS).

1. Caribbean Stock Assessment Training Course: The overall objective of the training course was to contribute to the development of institutional capacity required for achieving more effective and active fisheries management and policy in the Caribbean region.

2. Leadership Training for Heads of National Fisheries Department in the CARICOM states: The main purpose of the training course was to strengthen leadership skills of key fisheries people who are responsible for promoting and facilitating fisheries management and development at the national and regional levels in the Caribbean.

The United Nations University's Fisheries Training Programme in Iceland The most prominent capacity building measure funded by Icelandic authorities is the United Nations University's Fisheries Training programme (UNU-FTP), which has operated in Iceland since 1998. Its main objective is to support developing countries achieve their development goals in fisheries through training, education and institutional capacity building. From inception, 263 specialists from developing countries have attended the programme. In addition, UNU-FTP also provides grants for further studies at the University of Iceland and conducts training workshops in developing countries.

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Support to DOALOS The organization's role is to provide states and intergovernmental institutions a range of legal and technical services, such as information, advice and assistance as well as conducting research and preparing studies in relation to UN conventions on the law of the sea. Iceland has contributed to trust funds under DOALOS that relate specifically to offshore issues in developing countries. PROFISH Iceland is one of the states which initiated the establishment of the PROFISH-program within the World Bank in 2005, with the purpose of strengthening sustainable fisheries management, promote economic growth, ensure healthy fish stock and enhance their yield. In addition to financial support, Iceland has seconded an employee to the program in, in order to further strengthen the cooperation with the bank. Research and development programmes Strengthening the Capacity of the Benguela Current Commission (BCC) to implement an Ecosystem approach to Fisheries (EAF) management in Namibia, Angola and South Africa ICEIDA partnered with the United Nations Development Programme and the Governments of Angola, Namibia and South Africa in 2008-2011 to develop an ecosystem approach to control the waters of South Africa, Namibia and Angola. The support focused on building up of human resources and the training of researchers. Research, Monitoring and Development of the Fisheries in the Cahora Bassa Resevoir in Mozambique Mozambique's Fisheries Research Institute and ICEIDA partnered in 2006-2011 on a project which involved research on a reservoir in the Cahora Bassa Damn that has been utilised for fish farming. The overall objective of the project was to contribute to the sustainable utilisation of the fisheries resources of Cahora Bassa Reservoir through the development of scientifically based management plans, the implementation of which was to increase food security, livelihood standard and employment of the local lakeshore-communities. Small Scale Offshore Fishery Technology Development in Malawi The Small-Scale Offshore Fishery Technology Development Project (SOFTDP), a community-based project, was initiated in 2005 and implemented by ICEIDA in collaboration with the Directorate of Fisheries, now under the Ministry of Industries and Innovation. The overall goal was to aid in the development of an offshore fishery to allow small-scale fishers to expand their operations to under-exploited resources in the deep offshore water demersal and pelagic zones of Lake Malawi. The aim was to improve both food security and income of rural fishing communities. This was done by developing appropriate offshore fishing technology and creating awareness of navigational safety for the small-scale fishery on Lake Malawi. This was concluded during the first five year pilot phase of the project. In the second phase the technology was developed further and promoted in the fishing communities. The project was based in the Nankumba Peninsula in the Mangochi District and had three main components: Gear and Craft Technology, Fishery Research and Capacity Building. The project concluded in 2009. NACA – Strategies for Development of Asian Reservoir and Lake Fisheries Management ICEIDA partnered with the Network of Aquaculture Centres in Asia-Pacific (NACA) in 2006-2010 to identify research and development needs for the effective utilisation of reservoirs and lakes in Sri Lanka, Thailand, China, India, Nepal and Pakistan for fish production and develop capacity for the management of such fisheries. Paragraph 57 of the Government Report states that "[a] Generalised System of Preferences (GSP scheme) was first introduced in Iceland in 2001 and is not limited in time. Duties on goods originating in the least developed countries of the world, as defined by the UNCTAD/Committee on Enterprise, Business Facilitation and Development, shall be waived in conformity with procedures applicable to duties on goods originating in the European Economic Area according to the EEA Agreement. The rules of origin applied do not provide for the possibility of cumulation. The scheme covers the same products as the EEA Agreement". Question 3 In 2001 Iceland introduced the Generalised System of Preferences, which is not limited in time. Is it still in force?

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Answer Yes, the system is still in force. Question 4 Which least developed countries have made use of this System?

Answer In the period 2007-2011, Bangladesh has 60% of all imports from GSP countries, Cambodia with around 14%, Sudan with 5% and Ethiopia around 4%. Other countries have less than 1% of all imports from GSP countries. Question 5 What has been their degree of benefit?

Answer In the years 2007- 2011 the average ratio of imports from GSP countries as a proportion of total imports is 0.1%. Secretariat Report, WT/TPR/S/273 Summary Paragraph 16 of the Secretariat Report states that "[i]n the aftermath of the global financial crisis in 2008, the banking system collapsed. Domestic banks found themselves heavily indebted to domestic and foreign depositors and lenders with little hope of repaying their liabilities. As a result, the domestic and foreign operations were separated, the banks were liquidated and new banks created to run domestic operations. The recapitalization of these institutions resulted in a significant fiscal outlay on the part of government. The economic effects were severe as the exchange rate depreciated by more than 70 per cent, an IMF-sponsored programme was implemented and capital controls introduced. Since then, the banking sector has recovered although the size of the sector has decreased considerably. However, risks remain mainly in the form of a high number of non-performing loans". Question 6 Please describe in detail the capital controls that Iceland has adopted in order to help its financial sector to recover.

Answer Stabilizing the exchange rate became the main goal of monetary policy in the immediate aftermath of the financial crisis of 2008. This goal was supported by capital account restrictions that were imposed in late 2008 in order to stem destabilizing capital outflows and prevent further depreciation of the krona. Capital controls were thus an important part of the economic programme Iceland followed during its cooperation with the IMF. The depreciation of the krona in the aftermath of the financial and economic crisis of 2008 came to a halt during the middle of 2009, initially supported by significant foreign exchange market interventions but stopped following improved enforcement of the capital controls in early winter 2009. The short-term stabilization benefits of the capital controls have been very significant. However, the negative effects on efficiency and trade accumulate with time. The safeguard measures invoked by Iceland in 2008 under Article 43 of the EEA Agreement are temporary in nature. The Icelandic authorities are aware of their EEA obligation to make a best effort to remove the controls. A strategy for lifting of controls on capital outflows was therefore announced by the authorities in March 2011. Capital inflows had been liberalized in October 2009. The speed of capital account liberalization is conditioned on the macroeconomic situation, the strength of balance of payments outlook, reserve adequacy and the need to safeguard financial stability. The strategy envisages a gradual reduction in the overhang of potentially volatile offshore krona positions and other preparations for the lifting of controls on capital outflows of residents. The legal mandate for the controls expires at the end of 2013 and the authorities are making efforts to remove the controls and normalise capital markets within that timeframe, without putting economic and financial stability too much at risk. However, it will depend on internal and external economic and financial conditions whether that will prove possible. A big impediment is the large sum of ISK-denominated assets in the form of deposits and government bonds held by non-

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residents locked in by the controls. These were originally over 600 billion ISK or over a third of GDP but are currently estimated at over 400 billion ISK, which amount to around 25% of GDP. It will depend on both external factors and further progress in strengthening confidence in the economy, government finances and financial system at what speed this position will be reduced to levels deemed sufficient to lift controls on domestic residents. The capital account liberalisation strategy presupposes that macro-prudential rules limiting risks in foreign currency denominated balance sheets of domestic financial institutions will be adopted. This includes, inter alia, restrictions on foreign currency imbalances and maturity mismatches between foreign assets and liabilities. Also under consideration are possible rules on foreign currency-denominated lending by domestic credit institutions to unhedged borrowers. II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES (1) GENERAL CONSTITUTIONAL AND LEGAL FRAMEWORK According to paragraph 27 of the Secretariat Report, "[i]n general, the main objective of Iceland's investment policy is to provide a favourable climate for investment, through Iceland's access to the EEA market, low tax rates, liberal investment policies, and a stable business environment with few restrictions on foreign ownership. The main legislation on foreign investment is Act No. 34/1991 (as amended) on Investment by Non-residents in Business Enterprises, and Act No. 99/2010 on Incentives for Initial Investment in Iceland (Chapter III(3)(iii))". Question 7 New legislation was enacted in 2010 on incentives for initial investment in Iceland. Financial aid according to business size is mentioned. What does this aid consist of and what are the tax incentives for projects outside the Reykjavik area? Do these incentives also apply to foreign investment? Answer The authorization of the Government to grant incentives in the form of regional aid are restricted by the obligations of the Government of Iceland under Articles 16–64 of the Agreement on the Economic Area. These obligation and authorisations are further detailed in the EFTA Surveillance Authority's (ESA) Decision of 6 December 2006 (No. 378/06/COL) on the maps of assisted areas and levels of aid (Iceland), published on 28 February in the EEA Supplement to the Official Journal of the European Union No. 11, p. 28, showing in which areas in Iceland regional aid may be granted in the years 2007 to 2013. An incentive in the form of regional aid pursuant to the Act No. 99/2010 will normally not exceed 15% of the defined investment cost of the investment project for which an application is made. For a medium-sized enterprise, the maximum incentive is 25% of the investment cost, and for a small enterprise the maximum incentive is 35% of the investment cost. In cases where the investment cost of an investment project exceeds EUR 50 million, the proportion of maximum permitted aid will be reduced to the levels provided in line with the total investment cost. According to the Article 8 of the Act, regional aid may take the form of a direct public cash grant for the investment project in question to the company that has been formed for the new investment and which will construct and operate the investment project. This shall constitute an initial cash grant, which accrues at the start of the project and regards the maximum incentive pursuant to the Article 7. Under Article 9, regional aid can take the form of derogations from taxes or public levies relating to the investment project in question. Regional aid under Article 10 may take the form of a sale or lease by the State or a municipality of land or a site owned by the State or a municipality for the investment project in question to the company which is formed for the purpose of the new investment and constructs and operates the investment project at a price under the normal market price. The government authorities are permitted to grant for new investments in Iceland, irrespective of the location of the investment project according to the Article 10. The authorization of the Government to grant non-regional incentives are however, restricted by the obligations of the government of Iceland under Articles 16–64 of the Agreement on the Economic Area.

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A general incentive in respect of a new investment under Article 11 may take the form of training aid to meet the incurred cost of training personnel in connection with a new investment. The maximum training cost aid is EUR 2 million for each investment project. It may also take the form of an incentive in respect of new investments in research and development (Article 14). The investment project may also take the form of an incentive to enterprises in respect of environment-related new investments which contain improvement or innovation in environmental protection, i.e. reduced use of energy or reduced emissions of greenhouse gasses (Article 15) These incentives apply to foreign investment. Paragraph 58 of the Secretariat Report states that "Icelandic private sector entities have in recent years increased their presence in developing countries and participated more actively in projects promoting progress and prosperity, e.g. in the field of renewable energy. In light of the changed circumstances in the Icelandic economy, analysis is underway within the Ministry for Foreign Affairs on possibilities for promoting private sector engagement in development cooperation". Question 8 In which developing countries have Icelandic private sector entities increased their presence?

Answer Icelandic private sector entities have in recent years increased their presence in various developing countries, including Mexico, Turkey, Viet Nam, Nicaragua, El Salvador, Chile, Ethiopia, Kenya, Djibouti, Rwanda, Uganda, Indonesia, China and Papua New Guinea. These efforts have primarily been in the field of renewable energy, but also to some extent in fisheries. Sanitary and Phytosanitary (SPS) Measures The Report mentions that Iceland has not submitted SPS notifications since 2005-2006. According to paragraph 12, "Iceland has applied EU legislation on SPS matters, with the exception of veterinary issues, which were exempt from the EEA Agreement. Since November 2011, the exemption has been limited to trade in live animals and animal germplasm while Iceland also continues restrictive import policies on fresh meat, raw eggs, and animal products not for human consumption. The strict control of imports of animals and animal products is justified on the grounds that Iceland's livestock breeds have developed in isolation for several centuries and are susceptible to transmittable diseases. Furthermore, domestic production of animals and animal products are also subject to strict controls". Paragraph 83 lists the existing legislation that is applied to SPS matters. The latest measures are "Regulation No. 448/2012 on measures to prevent the introduction of animal diseases and contaminated products. The Act bans the import of some animal and plant products on health and safety grounds and provides for conditions under which exceptions to the ban can be made […]. Regulations Nos. 1043/2011 and 1044/2011, passed in November 2011, cover trade in animal products from within and from outside the EEA". In light of the above, Colombia invites Iceland to notify the sanitary and phytosanitary measures that have been adopted over the past six years.

Answer Iceland has recently made the relevant notifications which should be circulated to all members in the course of the week.

III. TRADE POLICIES AND PRACTICES BY MEASURE (1) MEASURES DIRECTLY AFFECTING IMPORTS (i) Customs procedures According to paragraph 10 of the Secretariat Report, "compared with other OECD countries […], importing into Iceland takes longer (14 days compared with 11 in other high income OECD countries), and is more expensive (US$1,674 compared with US$1,085). The main reason for the relatively high cost of importing goods is the cost of ports and terminal handling, and of internal transport".

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Question 9 Has Iceland considered implementing any measures or procedures in order to reduce the costs associated with import operations?

Answer Our main emphasis for improvements in these matters are to make customs clearance procedures more efficient and swifter. In that regard it could be mentioned that customs clearance in Iceland is relatively fast and 99% of all customs clearances is made electronically. As stated in the report the main reason for the high cost of importing goods is the cost of ports and terminal handling, and of internal transport.

In many ways the Icelandic economy is dependent on imports. It is therefore extremely important that the import operations are facilitated to the highest degree possible. However, it is difficult to implement procedures to reduce the costs of the factors that contribute the most towards the cost of import operations. This is the fact that Iceland is one of the most sparsely populated countries in the world and is far away from main trading partners. This is difficult to overcome. (2) MEASURES DIRECTLY AFFECTING EXPORTS (i) Procedures Paragraph 48 of the Secretariat Report states that "[a]ccording to the World Bank, exporting from Iceland takes longer than in other OECD countries and other countries in the region (19 days in Iceland compared with 10 in other high income OECD countries) and is more expensive (US$1,532 in Iceland compared with US$1,032 in other high income OECD countries). The main reasons for the relatively high cost of exporting goods are the cost of ports and terminal handling and internal transport". Question 10 Has Iceland considered implementing any measures or procedures in order to reduce the costs associated with export operations?

Answer Iceland is constantly seeking ways and methods that facilitate trade and export as much as possible. Iceland is a strong supporter of the multilateral trading system and has furthermore established, through its regional co-operation, an extensive network of free trade agreements. However, it is a fact that Iceland is one of the most sparsely populated countries in the world and is far away from main trading partners with relevant transportation costs. This is difficult to overcome. (iv) Export finance, insurance and guarantees, promotion, and marketing assistance Paragraph 56 of the Secretariat Report states that "[t]he Export Credit Guarantee Department of the New Business Venture Fund (NSA) was created to provide export credit insurance and guarantees. However, the NSA operates primarily as a venture capital fund that invests directly in start-up companies as well as in other venture capital funds (see section (3)(iii)). According to the authorities, the Export Credit Guarantee Department's guidelines are based on the OECD Arrangement on Export Credits and on the regulations established by members of the Bern Union. According to the authorities, the Export Credit Guarantee scheme has been essentially dormant for the past six years, during which the State has provided only insignificant amounts in export credits". Question 11 It would appear from this text that Icelandic exporting companies maintain total liquidity. Is there a reason why the guarantee scheme has not been used? Answer The reason is that the credit guarantee scheme has not proven to be the effective instrument for the exporting firms as initially anticipated.

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(1) MEASURES DIRECTLY AFFECTING IMPORTS (v) Intellectual property rights (a) Copyrights Paragraph 95 of the Secretariat Report states that "[c]opyrights in Iceland are protected under the Act No. 73/1972 on Copyright, which is administered by the Ministry of Education, Science and Culture. The Act was amended several times as EU rules were transposed into Icelandic law (Table III.11). Under the present legislation copyright protection is afforded to literary and artistic works for the author's, producer's or creator's life plus 70 years". According to paragraph 96 of the Secretariat Report, "Iceland works with other Nordic countries to coordinate a common policy through a working group made up of copyright experts from Denmark, Norway, Finland, Sweden, and Iceland. It also participates in the EFTA working group on intellectual property and has observer status in the EU contact committees for Directive 2001/29 on the harmonization of certain aspects of copyright and related rights in the information society, and Directive 2001/84 on the resale right for the benefit of the author of an original work of art". Table III.11 National legislation on copyright, 2012 Icelandic legislation Corresponding EU legislation

Act No. 73/1972 on Copyright

Terms of Protection

Act No. 145/1996 Directive 2006/116/EC on the term of protection of copyright and certain related rights

Act No. 9/2006

Protection of semiconductor topographies, databases and computer programs

Act Nos. 78/1993 and 78/1993 Council Directive 87/54/EEC on the legal protection of topographies of semiconductor products

Act No. 60/2000 Directive 96/9/EC on the legal protection of databases

Act Nos. 57/1992, 145/1996, 60/2000 and 9/2006 Directive 2009/24/EC on the legal protection of computer programs

Resale rights

Act No. 97/2006 Directive 2001/84/EC on the resale right for the benefit of the author of an original work of art

Satellite and cable transmission

Act 145/1996 Council Directive 93/83/EEC on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission

Copyright in the information society

Act No. 9/2006 Directive 2001/29/EC on the harmonization of certain aspects of copyright and related rights in the information society

Source: European Commission (2011), Screening report Iceland, Chapter 7 - Intellectual property law, pp. 3-4. Viewed at: http://ec.europa.eu/enlargement/candidate-countries/iceland/index_en.htm [July 2012].

Question 12 Under the legislation currently in force, how does Iceland regulate copyright and related rights in digital media and Internet, as well as the liability of Internet service providers (ISPs)?

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Paragraph 97 of the Secretariat Report states that "[i]n October 2009, the authorities launched the copyright reform initiative, which foresaw a new draft Copyright Bill in 2012. However, this has been delayed till 2014 due to lack of funds. The main focus of the reform initiative is to:

• Maintain Nordic legal unity; • promote respect for copyright with regard to cultural and economic importance

for society; • promote efficient and preventive enforcement procedures; • promote legal alternatives for users; • promote balance between right holders and users; • launch information and awareness initiatives for right holders and users; and • stress the importance of international cooperation".

Question 13 Although the proposed reform initiatives have been outlined, Colombia would like to know what substantive issues are addressed by the new draft Copyright Bill. Question 14 Please provide a more detailed explanation of the information and awareness measures for right holders and users that Iceland has considered implementing.

Question 15 Exactly what efficient and preventative enforcement procedures have been included in the aforementioned reform because they are considered viable in copyright matters? Question 16 Does this bill seek to regulate the liability of ISPs in any way? Joint answer (questions 12-16) The question from the Columbian authorities, "under the legislation currently in force, how does Iceland regulate copyright and related rights in digital media and Internet, as well as the liability of Internet service providers (ISPs)?", gives rise to considerations on the relationship between copyright, regulation of media, freedom of expression and censorship, data protection and the role and liability of telecom operators (internet service providers). To answer this question fully one would have to draw on the relative provisions of the copyright act, the media act, the e-commerce act, the telecommunications act and the act on attachment and injunctions.

Under the current regime of the above listed legal acts there is no regulatory body responsible for regulating copyright and related rights in digital media and the internet. The Icelandic Media Commission has a regulatory function of monitoring audio-visual and print media in Iceland, including internet media, that are registered with the Commission. The E-commerce Act No. 30/2002, which transposes EU Directive 31/2000/EC on E-commerce, provides for the exemption from liability for telecom operators for hosting and delivering material through internet protocol networks. This has not prevented Icelandic courts from affirming injunctions sought against national operators of websites that have played a role in the distribution of pirated copyright material. A recent amendment to the Icelandic Copyright Act, Art. 59A, now provides that an injunction can be placed against a telecom operator for the provision of access to website that may be the source of infringing copyrighted material. This applies both for blocking access to national and foreign websites.

As for question 13 there is not one draft copyright bill as such, but rather a series of bills that are to be presented annually over the period of the reform initiative. The first bill became law in 2010, as amendment Act No. 93/2010. The purpose of this act was to clear the permission of libraries and museums to make their own copies of protected work for preservation purposes, for making works in such institutions available to users digitally on their premises, to widening the scope of exemption from exclusive rights granted to visually impaired people, to extend the extended collective licensing scheme for reprography and digitally equivalent methods to works of foreign authors, to introduce sanctions for contributory liability of copyright infringement, to prescribe in secondary legislation requirements for accreditation for copyright collection societies to fulfil the prerequisite conditions of directive 2006/123/EC, to introduce selected provisions from directive 2004/48/EC into the Iceland copyright act for destruction of infringing copies and equipment, calculation of damages, right to information from police and public prosecutors on the progress investigation of infringement cases, adoption of injunctions against intermediaries that may

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contribute to copyright infringement (telecom operators). The substantive provisions of the upcoming draft amendment act to the copyright act include a revised chapter I (exclusive right of authors) and revision of provisions on extended collective licensing.

The Minister of Education, Science and Culture has stressed the importance of making legal alternatives in the field of music and film on-line available to users, so that they may refrain from seeking illegal alternatives. "Legal alternatives" for users refers to a series of meetings that the Ministry held with producers, publishers and right holders to encourage them to make their digital cultural content available for internet users is such a way that they would refrain from use illegal sources to gain access to such material. This refers both to a common problem in Iceland where internet users often do not have the option of legal access to copyrighted material on the grounds that right holders have excluded the "territory of Iceland" from their distribution network, and where available that right holders adopt a pricing policy and business models that will attract internet users. In relation to this issue it has to be mentioned that neither e.g. iTunes, Spotify, NetFlix nor Amazon make their content legally available in the territory of Iceland. On the issue of information awareness the Ministry has been working on distribution of information via a special web portal that will promote those legal alternatives available, provide answers to common questions on what users may or may not do with copyrighted material. In addition the web portal contains also information for the right holders and academics in the field of intellectual property. The Ministry also takes part in an initiative conducted by the Icelandic Patent Office on training officials from the customs authorities and police. Further initiatives include promotion of copyright in the national curriculum for grammar schools.

As for introduction of efficient and preventive enforcement measures the Icelandic Authorities have amended the Icelandic copyright act in line with Directive 2004/48/EC, even though that directive will not be adopted for EEA agreement, cf. more detailed explanation above on the substantive provisions of amendment Act No. 93/2010. In this respect the most effective measure is the possibility to obtain injunction against a telecom operator for giving access to certain websites that may contribute to the illegal distribution of infringing copyrighted material.

As for reply to question No. 16 on plans to regulate the liability of internet service providers, the enforcement measures provided in Art. 59a of the Icelandic copyright act do not imply a contributory liability for giving access to such websites. A blocking against certain websites in the form of an injunction against the telecom operator is therefore not regarded as having legal implications for the telecom operator in the form of sanctions or duty to pay damages to the affected rightholders. In this respect it is worth to mention that the rightholders organizations have demanded the establishment of a public entity having the powers at administrative level to order blocking access to certain websites contributing to distribution of infringed copyrighted material. This suggestion is under consideration with the Icelandic authorities. (b) Patents Paragraph 103 of the Secretariat Report states that "[a]n amendment was also made to allow for greater cooperation between Nordic Patent Offices and enable them to act as one. Compulsory licences are also allowed for the export of pharmaceutical products to developing countries facing severe health problems". Colombia would like to know more precisely how compulsory licences for the export of pharmaceutical products to developing countries facing severe health problems are regulated. Question 17 Have any such licences been issued? If so, please send us the relevant summary information.

Answer The authority to grant compulsory licences was inserted in the Patent Act in 2005, cf. Art. 49(5) of the Act. The conditions for grant of such licence are outlined in Regulation No. 1011/2006. Compulsory licences are, subject to the fulfilment of all conditions (Art. 4), granted only by a District Court (Articles 5 and 6). The compulsory licence holder is only authorized to manufacture the pharmaceutical product specified in the licence and may only export the product to countries specified in the licence (Art. 7). Eligible countries for import of products are those who fulfil the conditions of Art. 3 of the Regulation. The compulsory licence holder is obliged to publish information on the licence on his website or a site hosted by the WTO (Art. 9). Information in this

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regard should also be sent to the IPO (Art. 9(3)), which notifies the TRIPS Council of the compulsory licence (Art. 10).

For an English translation of the Regulation, see: http://www.els.is/media/banners/Regulation%20on%20compulsory%20licenses.pdf. IV. TRADE POLICIES BY SECTOR (1) AGRICULTURE (iii) Agriculture policies Question 18 What are the ad valorem equivalents of the compound tariffs on agricultural products, in particular milk and meat products, horticultural products, plants and coffee?

Answer Due to administrative restraints the ad valorem equivalents for the relevant agricultural products have not been calculated recently. No duties are applied to most horticultural products, limited duties are applied to important plants and coffee can be imported duty free. According to paragraph 14 of the Secretariat Report, "[u]nder its Uruguay Round Schedule, Iceland reserved the right to provide export subsidies for 1,797 tonnes of sheep meat up to a limit of SDR 9.3 million, and 3.16 million litres of milk up to a limit of SDR 2.6 million. However, according to the notifications made to the Committee on Agriculture, Iceland did not provide any export subsidies between 31 August 1998 and 31 August 2008. However, under Regulation No. 535/2003 on Price Equalization for Exports of Goods made from Agricultural Raw Materials, the Ministry of Industries and Innovation may authorize the Customs Office to refund the exporter the difference between the cost of raw materials in the international and domestic markets. In 2011, ISK 2.7 million (about US$ 23,274) was budgeted for the price compensation mechanism". Question 19 What are the annual amounts that are given per product to Icelandic exporters in order to equalize the prices of imported and domestic raw materials used in their production?

Answer In 2011, a total of 2.7 million ISK (about US$ 23,274) were allocated in the state budget. However, the total utilized amount was 1.8 million ISK (about US$ 15,750) according to the Icelandic State Account. Individual breakdown cannot be provided since the application provides such a few companies and products, as this might disclose privileged trade information. (b) Domestic support Paragraph 21 of the Secretariat Report states that "[a] levy collected at the wholesale level for marketing sheep meat amounted to ISK 13 million in 2010". According to paragraph 22, "[u]nder Regulation No. 4/2011, production of tomatoes, cucumbers and sweet peppers is also supported by direct payments linked to production as well as through electricity subsidies and marketing and research programmes". Question 20 Could the Government of Iceland provide more detailed information on the objective of these production subsidies and on how they work?

Answer According to Art. 20 of the Agricultural Act (the Act on the Production, Pricing and Sale of Agricultural Products, No. 99/1993,) a levy shall be collected at the wholesale level. The collected amount shall be utilized locally for promotion activity. In 2010 this amount was 13 million ISK (about US$ 112,069). The market measures applied to vegetable production, are based on an Agreement between the Government and the Farmers' Association concerning the framework of support to horticulture. The current Agreement took effect in 2002 and has been extended throughout 2015. The measures are implemented through the Agricultural Act. The agreement was concluded as a part of the adjustment program for horticultural farmers when customs tariffs for vegetables were abolished, except for seasonal production of cabbage grown outdoors, mainly falling within HS-

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heading 0704, and 0706. The objectives of the measures prescribed by the current Agreement correspond to Article 57 of the Agricultural Act and are relevant for all policy measures applied in the sector:

a. to lower consumer prices on imported as well as domestic horticultural products;

b. to improve the efficiency and competitiveness of domestic horticulture for the benefit of both producers and consumers;

c. to improve the income base of horticultural producers; d. and to improve the production and marketing opportunities of domestic

production when it is sufficient in both quantity and quality.

No market measures are applied to vegetable production and processing, except for customs duties, tariff rate quotas, and certain limited support schemes. Under an associated arrangement to the Agreement between the Government and the Farmers' Association concerning the framework of support to horticulture, implemented through the state budget, the Icelandic government provides for support for distribution of electricity for the benefit of greenhouse farmers. The amount available in 2011 is approximately 213 million ISK. The support is administered by the Ministry of Industries and Innovation and granted through cooperation with the distribution companies linking it to individual farmers. According to the Agreement between the Government and the Farmers' Association concerning the framework of support to horticulture, support is provided for promotion, research, development and projects for educational purposes. The available amount in 2011 is approximately 31 million ISK. The amount is paid to the Agricultural Productivity Fund, and the funds are allocated to farmers based on operational instructions set by the Association of Horticultural Producers. Question 21 The Secretariat Report mentions that the most recent notification from Iceland on domestic support to the WTO Committee on Agriculture was for the calendar years 2001, 2002, and 2003. Colombia invites the Icelandic Government to update these notifications. Answer Iceland intends to present its outstanding domestic support notifications before end of February 2013. EU Secretariat Report, WT/TPR/S/273 III TRADE POLICIES AND PRACTICES BY MEASURE (1) MEASURES DIRECTLY AFFECTING IMPORTS (vi) Contingency measures Page 30, Para 38 - Anti-dumping and subsidies

In paragraph 38 it is mentioned that: "Under the Regulations, a claim concerning dumping or subsidies must be made to the Minister, who refers it to the Committee on Anti-Dumping and Countervailing Duties. The Committee may make preliminary findings to reject or uphold the claim. If the claim is upheld, the Committee may impose preliminary anti-dumping or countervailing duties for up to twelve months and must notify, in the Official Gazette, that it intends to start a full investigation. In addition, the complaining party and other interested persons (including exporters, importers, and the Government of the exporting country) must be directly informed of the investigation. During the investigation, which should not take longer than one year, the Committee may hold hearings and invite interested parties to make submissions. The final decisions of the Committee are published in the Official Gazette. If the Committee decides to impose anti-dumping or countervailing duties on imports of a product (cannot be applied simultaneously) the maximum period is five years, renewable if a complaining party can show that removal of the measure would lead to injury."

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Question 1 Could Iceland explain how the provisions described here above comply with articles 17.3 and 17.4 of the Agreement on subsidies and countervailing measures and articles 7.3 and 7.4 of the AD Agreement, according to which "provisional measures shall not be applied sooner than 60 days from the date of initiation of the investigation and the application of provisional measures shall be limited to as short a period as possible, not exceeding four months."? On the basis of the information recalled above, the provisions of the regulations that govern AD and SCM that Iceland is applying seem to be inconsistent with WTO agreements since they allow the application of measures before the initiation of an investigation, from the moment that the claim is upheld, and the duration of these preliminary measures may be up to 12 months, instead of the 4 months that WTO agreements provide.

Answer The Committee on Anti-Dumping and Countervailing Duties is authorised in the Customs Law to impose anti-dumping and countervailing duties temporarily until further information is available, if a delay is considered likely to cause damage. The committee is therefore only authorised but not obliged to do so. It is also correct that the customs law only restricts the application of preliminary anti-dumping or countervailing duties for up to 12 months but not 4 months, as the WTO agreement provides. In this regard it should be noted that The Customs Law does not prevent the Committee on Anti-Dumping and Countervailing Duties from applying preliminary measures for a shorter period, e.g. in accordance with the rules in the aforementioned Agreements. It should further be noted that according to Icelandic norms on statutory interpretation Icelandic law should be construed in accordance with Iceland's international obligation. Icelandic law thus does not prevent that Iceland can fulfil its obligations under the WTO agreements. As stated in paragraph 83 of the report, Iceland has not resorted to anti-dumping or countervailing measures. If Iceland were to impose Anti-Dumping or Countervailing Duties such application it would be applied in compliance with the relevant WTO agreements including AD and SCM. (3) MEASURES AFFECTING PRODUCTION AND TRADE (iv) Standards and other technical requirements

(b) Sanitary and phytosanitary measures

Page 44, Para 81

This section of the report describes the policy and legislation on food safety as well as animal and plant health. It is reported that Iceland, as a member of the EEA has applied EU legislation on SPS matters but that Iceland continues restrictive import policies on fresh meat, raw eggs and animal products not for human consumption.

Question 2 Could Iceland clarify whether they have undertaken a scientifically valid risk analysis to justify the severe restrictions on imports of fresh meat and meat products? In this case, could they submit more information on the risk analysis carried out? Answer A scientifically valid risk analysis has been carried out regarding the risk involved in the importation of raw meat. There it is concluded that it cannot be excluded that the importation of raw pork, broiler meat and beef could have a negative impact on the public health in Iceland. The assessment is that such importation would lead to a higher proportion of meat on the market in Iceland, in which zoonotic agents would be present. In addition it is likely that the meat would contain more virulent strains of bacteria than has previously been detected in Iceland. It is also concluded that all actions that could alter the current animal disease status in Iceland should be taken with caution and must be given thorough consideration so that accidental introductions of new transmissible agents with unforeseen catastrophic consequences do not take place. This is due to the centuries of isolation of Icelandic livestock breeds, i.e. cattle (dairy cows), horses, sheep and goats and therefore the animals are susceptible, i.e. are immunologically naïve to various transmissible agents common overseas, some of which are even considered as harmless.

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Question 3 Could Iceland clearly define the restricted products? In particular, could Iceland clarify whether there is secondary legislation that defines more in detail the restricted products listed in Table III.10? Answer The primary legislation on restricted products can be found in article 10 of the Act No. 25/1993 on animal diseases and prevention against them. The secondary legislation on this subject is the Regulation No 448/2012. Question 4 Could Iceland explain in which manner the trade restrictions could be lifted? In case a Ministerial decree will be issue, could Iceland clarify which are the criteria that will be followed for imposing such trade restrictions? Answer Art. 10 of Act No. 25/1993 on Animal Diseases and Disease Prevention stipulates a ban against import of raw meat and raw eggs. The same applies to non-disinfected raw skins and hides, farmyard manure and compost mixed with manure, import of which is not authorised. According to Article 4 of Regulation No. 448/2012 on measures to prevent the introduction of animal diseases and contaminated products into Iceland, the Minister of Industries and Innovation has the authority, following a positive recommendation from MAST, to permit the importation of products otherwise prohibited by the aforementioned Article 10 the recommendation has to be based on international risk assessment following standards laid down by OIE, CODEX and the SPS agreement, of which Iceland is a member, cf. Article 9 of Regulation No. 448/2012. The required permit from the Ministry and the certificates in order to permit importation are listed in the aforementioned Regulation. These documents have to be shown before customs clearance can take place. Question 5 Could Iceland confirm that they will commit to publish a list of tradable products and a list of risk mitigation measures that meet the appropriate level of protection?

Answer Iceland has no intention of publishing such a list. However, Iceland can confirm that all products that meet the criteria listed in Regulation No. 448/2012 will be allowed for imports. The text of the regulation is available at: http://www2.mast.is/Uploads/document/Reglugerdir/Reglugerd448_2012english.pdf.

IV. TRADE POLICIES BY SECTORS (2) FISHERIES (ii) Policies Page 67, Para 37 - Fees and taxes on exports of fish products According to the report, the main legislation for fishery is the Fisheries Management Act 1990. In August 2006, the Fisheries Management Act was consolidated to include all amendments up to that date and re-issued as Act. No. 116/2006. According to publicly available information, it seems that a provision in Act No. 116/2006 on Fisheries Management has not been applied. The provision at stake would allow for the deduction of a premium from a vessel's catch quota due to catch which is exported to an approved auction market without the final weighing and recording of the catch having taking place in Iceland. Against this background: Question 6 Could Iceland clarify whether the provision in Act 116/2006 has been, in addition to not been applied, abrogated or simply suspended?

Answer The abovementioned provision is applied in Iceland. The deduction from a vessel's catch quota is 5% if the catch is not weighed in Iceland before export, which is the general legal requirement, while exporters can be exempted from that duty provided that the exported fish is weighed in an

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auction market abroad which has been approved by the Icelandic Directorate of Fisheries. The weight recorded at such markets is generally a minimum weight while in Icelandic harbours the exact weight is recorded. Further, it has been scientifically estimated that the weight loss (drip) during export may amount to 5%. Thus, the rationale for the deduction is to secure, as far as possible, equal status of quota holders regardless of whether their catch is weighed directly after landing or in an approved auction market abroad. Thus the measure in question is a fisheries management issue rather than being a trade issue.

(4) SERVICES (i) Financial sector (a) Banking Pages 71- 75 - Ownership of companies with fishing operations and primary fish processing companies According to the report, the Government of Iceland bailed out and took control of some financial institutions. Question 7 Could Iceland clarify whether the bailed out, government controlled financial institutions control stakes (shares, loans) in fishing companies and primary processing companies? If yes, could Iceland provide information on the size of such ownership, e.g. total amounts involved, percentage of the publicly controlled ownership vis-à-vis total capitalization of the fisheries sector? Answer Iceland can only inform about the relevant legal provisions that stipulate the permitted activities of financial undertakings. The detailed information requested is however not available. Chapter IV of Act No. 161/2002 on Financial Undertakings lists authorized activities for commercial banks, savings banks and credit undertakings (Articles 20- 23). For the purpose of this question Article 22 is of the most importance.

According to Article 20 of the Act the activities of commercial banks and savings banks may include the following: 1. Acceptance of deposits and other repayable funds from the public. 2. Lending activities, including:

a. consumer credit; b. long-term mortgages; c. factoring and the purchase of debt instruments; and d. commercial credit.

3. Financial leasing. 4. Payment Services in accordance with the Act on Payment Services. 5. Issuing and administering of payment documents e.g. travellers' cheques and bankers' drafts. 6. Providing guarantees and commitments. 7. Trading for own account or for account of customers in:

a. money-market instruments (cheques, bills, other comparable instruments, etc.); b. foreign exchange; c. futures and swaps (options); d. exchange and interest-rate instruments; and e. transferable securities.

8. Participation in placing securities, services related to such placing and admission of securities to trading in a regulated market. 9. Providing advice to undertakings on capital structure, strategy and related issues, and advice as well as services related to mergers and acquisitions. 10. Money broking. 11. Portfolio management and advice. 12. Safekeeping and administration of securities. 13. Credit reference (credit rating) services. 14. Safe custody services.

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According to Article 21 of the Act, commercial banks, savings banks and credit undertakings may pursue other activities naturally linked to their authorized activities listed in Article 20.

In addition to services as provided for in Article 20, commercial banks, savings banks and credit undertakings may pursue ancillary activities, provided this is a normal extension of the undertaking's financial services. The provisions of the first sentence of this paragraph shall also apply when a financial undertaking has a holding in or participates in other business activity. Notification must be sent to the Financial Supervisory Authority of any intention to pursue the activities provided for in this article. Such notification must be accompanied by information on the proposed activity deemed to be satisfactory by the Financial Supervisory Authority. If the Financial Supervisory Authority raises no objection to the proposed activity within one month of receiving satisfactory notification, this shall be interpreted as authorisation for commencing the activity. The Financial Supervisory Authority may require that a separate company pursue this activity, in which case it must notify the party concerned of its decision within the time limit specified above. Failure to send a notification in accordance with this paragraph may result in prohibition of the activity by the Financial Supervisory Authority or its demand that the activity be pursued by a separate company.

Commercial banks, savings banks and credit undertakings may, pursuant to special agreement upon receiving the authorisation of the Financial Supervisory Authority, undertake to provide postal service on behalf of a party authorized to provide such service. They are furthermore permitted to provide services on behalf of other entities, such as insurance companies, pension funds and other financial undertakings, provided that such activities are not deemed by the Financial Supervisory Authority to prejudice their ability to provide services in accordance with their operating licenses or prejudice its own ability to regulate the activities. The Financial Supervisory Authority shall be notified in advance of the intentions of the entity in question so that its assessment is available before provision of the service commences.

According to Article 22 of the Act, commercial banks, savings banks and credit undertakings may only pursue activities other than those listed above on a temporary basis and for the purpose of concluding transactions or reorganizing the activities of customers. A reasoned notification to this effect shall be sent to the Financial Supervisory Authority. If a commercial bank, savings bank or credit undertaking, or their subsidiary, has needed to take action pursuant to the first sentence and taken over at least a 40% holding in its client, the provisions of Chapter VII and VIII of Act No. 108/2007 on securities transactions shall apply to the client, as applicable. The Financial Supervisory Authority is permitted to grant an exemption from the provisions of the third sentence, provided that financial reorganisation is completed within six months from the time that the commercial bank, savings bank or credit undertaking, or their subsidiary, commenced the operation. The Financial Supervisory Authority shall assess whether the financial conditions in the first sentence are met, and reorganisation shall be completed before twelve months have passed from the time that operations pursuant to the first sentence began. The Financial Supervisory Authority may extend the deadline pursuant to the fifth sentence, and an application shall contain reasoning regarding the circumstances that prevent the sale.

Commercial banks, savings banks and credit undertakings may take over assets to secure payment of claims. Such assets must be sold as soon as this is feasible. (5) TOURISM Page 82, paragraphs 106-107 The Report mentions that Iceland has identified tourism as a focus sector and that the Parliament in 2011 has approved a new public strategy for tourism. Furthermore, according to the report, the authorities are trying to promote Iceland as a year round destination by marketing unique natural phenomena such as northern lights and winter festivals. Against this background, the EU would like to understand how this relates to Iceland's limitations in its GATS schedule for tourist guides. Question 8 Taking into account Iceland's limitation in Mode 3 and 4 (licensing, deposits or liability insurance, residency for authorized tourist guides) could Iceland inform whether the GATS limitations reflects

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the current autonomous level of liberalizations and whether it considers those limitations as barriers for the services providers? Answer The national legislation provides for more generous market access for tourist guide services then the limitations under Iceland's Schedule of Commitment indicate. The national legislation does not entail residency requirements or other limitations referred to in the question.

Government Report, WT/TPR/G/273

II. ECONOMIC ENVIRONMENT (2) FOREIGN TRADE (ii) Various Page 9, Para 28 According to the Government's Report, around 90% of imported fuel is used by the fishing fleet and for general transportation (around 600 million tons in 2011). […]" Question 9 Could Iceland specify whether fuel used by fishing vessels is subject to taxes, and if yes, which ones?

Answer The fuel used by the fishing vessels is not subject to the general excise taxes on fossil fuel for motor vehicles. However all fossil fuels imported to Iceland are subject to a Carbon tax on fossil fuels, including fuels for fishing vessels. The amount of the tax is based on the price of emission allowances in the EU ETS. The fishing vessels mostly use crude oil for their operation. Currently the tax is 7.10 ISK (0,04 Euro) per litre of crude oil. If calculated to the price of the emission allowances in the EU ETS the tax on crude oil amounts to 14 Euros per tonne emitted of carbon dioxide. In addition to this all fuels, including fuel for the fishing vessels, are subject to 25.5% VAT. JAPAN Report by Secretariat(WT/TPR/G/273) III. TRADE POLICIES AND PRACTICES BY MEASURE (3) MEASURES AFFECTING PRODUCTION AND TRADE (vii) Competition policy Page 54, Paragraph 130 Report by Iceland(WT/TPR/S/273) II. ECONOMIC ENVIRONMENT (3 STRUCTUAL REFORMS (iv) Competition Policy Page 11, Paragraph 41

Question 1 According to the reports, the 2011 amendment to the Competition Law gives the Competition Authority the power to respond to any market situation or action by any enterprise that would restrict competition even if there is no breach of any specific part of the law. Japan would like to know how the authority ensures transparency. Are there any guidelines or criteria to judge whether competition is restricted? Answer According to the abovementioned amendment to the Competition Act, the ICA has the authority to respond to circumstances or conduct which prevents, limits or affects competition to the detriment

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of the public interest. Circumstances means among other things, factors connected to the attributes of the market concerned, including the organisation or development of companies that operate in it. Conduct means all forms of behaviour, including failure to act, that are in some way detrimental to market competition without being in violation of the Act's ban provisions. When applying this provision, which has not yet been done, the ICA will have to define the relevant market and clearly establish the circumstances or conduct which prevents, limits or affects competition. It is clear that this provision will only be used exceptionally and the remedies shall be proportionate to the circumstances or conduct concerned. The ICA will implement thorough provisions to the ICA's Rules of Procedure in order to ensure transparency regarding the procedure of this market test, although it is not possible to give complete guidelines on the assessment on whether competition is restricted. KOREA PART I: Questions Regarding the Secretariat Report I. ECONOMIC ENVIRONMENT Page 5 (Para 12) Fiscal consolidation is continuing, albeit at a slower pace than envisaged. There have been expenditure overruns at the central government level. However, on the revenue front, legislation that will increase the fishing levy has recently been passed and is expected to raise US$110-120 million. Question 1 Despite Iceland's notable efforts, given the continued euro zone fiscal crisis, it seems that it has not been easy to implement the fiscal consolidation measures as planned. Could Iceland provide the detailed fiscal consolidation roadmap? Answer The current fiscal consolidation plan presented with the 2012 budget proposal, aims for a surplus of ISK 17 bn in the total balance in 2014. The budget for 2013 assumes a slight deficit on the total balance which amounts to ISK 2.8 bn, or 0.1% of GDP. In 2014 the total balance is expected to become positive by ISK 17.8 bn, or 0.9% of GDP, according to the revised fiscal plan. The prospects for reaching a surplus on the total balance in 2014 are good, resting on three main factors; continued economic growth, increased revenue from natural resources and fiscal restraint measures. Good prospects also remain for a positive primary balance on the Treasury in 2012, as the budget proposal assumes a positive primary balance of just over ISK 60 bn in 2013. Restraint measures are taken with the aim of safeguarding welfare services, the education system, and law enforcement and focus more on expenditure cutting in general administrative operations. This has been in line with the government's objective to shield the welfare system. In the 2013 proposal, expenditure measures of 1.75% in the turnover of general public services will come into force, as well as 1.2% in benefit systems and health insurance, 1% in education and 0.5% in public order and safety. No restraint measures will take place in operational costs of hospitals, health care clinics, medical institutions and nursing homes. New revenue measures include carbon and energy taxes, as well as an increase in the levy for fisheries‘ utilisation of natural resources. Further revenue is to be expected from asset sales. As of 2011, the debt-to-GDP ratio for the central government was about 84% and 11% for the local governments. As of this year, however, general government debt is on a downward trend. The Treasury should be able to reduce debt in the coming years by running a disciplined fiscal policy along with increasing economic growth.

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II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES Page14 (Para 14) Although a number of notifications have been submitted to the WTO, particularly on agriculture and regional trade agreements (Table II.1), as of end-July 2012 a considerable number of regular notifications remained outstanding (Table II.2). Question 2 Could Iceland state when these outstanding notifications will be made? Answer Iceland is working actively on notifications that are outstanding towards the WTO. Iceland has already submitted several outstanding notifications prior to the TPR meeting, and intends to submit outstanding notifications in the coming months.

IV. TRADE POLICIES BY SECTOR Page 70 (Para 51) The legislation covering the energy sector in Iceland is set out in Act No. 57/1998 on Survey and Utilization of Ground Resources, and Act No. 65/2003 on Electricity. Both Acts are administered by the National Energy Authority. Under these laws, investment and/or ownership of energy exploitation rights and the production and distribution of energy are limited to EEA and EFTA residents. Question 3 Does Iceland have a plan to open the energy sector to non-EEA countries for attracting further investment? Answer Currently, there are no plans to open the energy sector to investors from non-EEA countries. However, the Government has initiated a committee with the aim to review Act No. 34/1991 on Investment by Non-residents in Business Enterprises, including the energy sector. PART II: Questions Regarding the Government Report II. ECONOMIC ENVIRONMENT Page 10 (Para 35) Following the financial crisis in the autumn of 2008 and the restructuring of the banking system, the Icelandic government set out a State ownership policy in financial companies. The centrepiece of the policy was the creation of a new agency, the Icelandic State Financial Investments, to manage the State's holdings in financial undertakings. Question 4 Could Iceland elaborate on the State ownership policy in financial companies? Is there any possibility to change this policy through, for example, divestment of the State's holdings, if circumstances dictate such a need? Answer It is important to distinguish between the state ownership policy of financial undertakings and the current government policy regarding any divestment of state holdings. The state's ownership policy is intended to define the objectives of the state as the owner of financial undertakings. The policy covers four main areas: 1. The state's objectives in its ownership of financial undertakings 2. The organization of the ownership function within the state, i.e. the responsibilities of each entity and how they relate to each other. 3. The principles laid down by the state as owner.

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4. Requirements and criteria in the management of financial undertakings which the state owns a stake in. The current government policy, not stated in the ownership policy, is to sell shares in two of the largest banks in Iceland and in the Icelandic Saving banks. This is stated in a bill that is currently being discussed in the Parliament. The divestment of these shares would mean that the state would only have about 70% in one of the largest banks in Iceland (Landsbanki). This would most likely result in changes being made to certain objectives in the state ownership policy. However, the principles laid down, requirements and criteria for management would most likely stay the same in the policy. MEXICO Summary Page viii, paragraph 11 Question 1 Paragraph 11 on page viii refers to legislation on investment incentives which provides for aid as high as 35 per cent for small enterprises, 25 per cent for medium-sized enterprises and 15 per cent for large enterprises. What do these incentives consist of? How do the investment agreements mentioned in this same paragraph work? How are foreign investors treated under this legislation? Answer Act No. 99/2010 is a framework legislation regarding incentives for initial investments in Iceland. The legislation is applicable to all foreign investment in Iceland, regardless of origin, taking into account specific restrictions in other legislation. Incentives are offered to companies that are investing in commercial operations in Iceland. The investment projects need to meet requirements, such as being beneficial for the Icelandic economy and society, in terms of job creation, rural development, export and tax revenues and knowledge. Approved investment projects will receive benefits in return, including derogations from taxes and charges. In addition, authorization to fix the rate of income tax, in line with the current rate of income tax, for 10 years can be granted, as well as exemption from customs and excise duties on importation or domestic purchase of construction materials, machinery and equipment for the building and operation of the investment project. The authorization of the Government to grant incentives in the form of regional aid are restricted by the obligations of the Government of Iceland under the EEA Agreement. An incentive in the form of regional aid pursuant to the Act No. 99/2010 will normally not exceed 15% of the defined investment cost of the investment project for which an application is made. For a medium-sized enterprise, the maximum incentive is 25% of the investment cost, and for a small enterprise the maximum incentive is 35% of the investment cost. In cases where the investment cost of an investment project exceeds EUR 50 million, the proportion of maximum permitted aid will be reduced to the levels provided in line with the total investment cost. According to the Article 8 of the Act, regional aid may take the form of a direct public cash grant for the investment project in question to the company that has been formed for the new investment and which will construct and operate the investment project. This shall constitute an initial cash grant, which accrues at the start of the project and regards the maximum incentive pursuant to the Article 7. Under Article 9, regional aid can take the form of derogations from taxes or public levies relating to the investment project in question. Regional aid under Article 10 may take the form of a sale or lease by the State or a municipality of land or a site owned by the State or a municipality for the investment project in question to the company which is formed for the purpose of the new investment and constructs and operates the investment project at a price under the normal market price. The government authorities are permitted to grant for new investments in Iceland, irrespective of the location of the investment project according to the Article 10. The authorization of the

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Government to grant non-regional incentives are however, restricted by the obligations of the government of Iceland under Articles 16–64 of the Agreement on the European Economic Area. A general incentive in respect of a new investment under Article 11 may take the form of training aid to meet the incurred cost of training personnel in connection with a new investment. The maximum training cost aid is EUR 2 million for each investment project. It may also take the form of an incentive in respect of new investments in research and development (Article 14). The investment project may also take the form of an incentive to enterprises in respect of environment-related new investments which contain improvement or innovation in environmental protection, i.e. reduced use of energy or reduced emissions of greenhouse gasses (Article 15). II. ECONOMIC ENVIRONMENT (3) DEVELOPMENTS IN TRADE AND FOREIGN DIRECT INVESTMENT (i) Composition of trade Paragraph 19, page 8 Question 2 Paragraph 19 on page 8 mentions that imports of automotive products declined sharply. What were the reasons for this? Answer The financial crisis and the collapse of the banking system resulted inter alia in more than 70% depreciation of the Icelandic krona. Consequently, the prices of imports of automotive products increased significantly, which resulted in sharp decrease in imports. III. TRADE POLICY REGIME (1) GENERAL CONSTITUTIONAL AND LEGAL FRAMEWORK Question 3 Paragraph 2 on page 11 states that on 20 October 2012 a national referendum was to be held on amendments to the Constitution. Did this referendum take place? What do the amendments entail? If the referendum has taken place, what was the outcome?

Answer The advisory referendum was held on 20 October 2012 on the proposals by the Constitutional Council for a draft Constitutional Act and particular points relating to the proposals. Election turnout was 49%. The following questions were put to the electorate in the referendum:

1. Do you wish the Constitution Council's proposals to form the basis of a new draft Constitution? Yes, said 66.9% of those who voted. 2. In the new Constitution, do you want natural resources that are not privately owned to be declared national property? Yes, said 82.9% of those who voted. 3. Would you like to see provisions in the new Constitution on an established (national) church in Iceland? Yes, said 57.1% of those who voted. 4. Would you like to see a provision in the new Constitution authorizing the election of particular individuals to the Althingi more than is the case at present? Yes, said 78.4% of those who voted. 5. Would you like to see a provision in the new Constitution giving equal weight to votes cast in all parts of the country? Yes, said 66.5% of those who voted. 6. Would you like to see a provision in the new Constitution stating that a certain proportion of the electorate is able to demand that issues are put to a referendum? Yes, said 73.3% of those who voted.

The matter will now be further processed by the Parliament, based on the proposals by the Constitutional Council and the outcome of the advisory referendum.

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(2) TRADE POLICY DEVELOPMENT AND OBJECTIVES (i) Agencies involved in trade policy implementation Question 4 According to paragraph 9 on page 12, the private sector's views are taken into account in formulating trade policy through regular consultations. Is the private sector's view taken into account in all areas of trade policy? How often are the consultations held?

Answer It's always the goal of the government to include and respond to observations and to adhere to the needs of the private sector and businesses. That is the case whether the government is conducting a new comprehensive approach, formulating a policy, writing a bill of law or negotiating an international or bilateral instrument. The consultations are held on an "ad hoc" basis whenever the views of the industries are considered to have relevance. (3) TRADE AGREEMENTS AND ARRANGEMENTS (i) World Trade Organization, paragraph 12, page 13 Question 5 Do the free trade agreements recently concluded by Iceland include provisions on regulatory cooperation in their chapters on technical barriers to trade? If so, please describe these provisions.

Answer Iceland, as a committed member of the WTO, includes a reference in all new FTAs to the WTO Agreement on Technical Barriers on Trade.

Furthermore, Iceland has a more comprehensive description of TBT rules in the EFTA (Vaduz) Convention as a member of EFTA, in the EEA Agreement, as a member of the European Economic Area, and also in the Hoyvik FTA between Iceland and the Faroe Islands, Iceland's most comprehensive FTA. (4) FOREIGN INVESTMENT REGIME Question 6 Paragraph 28 states that restrictions on foreign ownership have not been changed since the last Review of Iceland. With exceptions, foreigners must obtain a permit from the Ministry of the Interior to own real estate in Iceland. These exceptions include foreigners resident in Iceland, citizens of other EFTA or EU countries, and enterprises resident in or with their headquarters or main operations in other EFTA or EU countries. Please provide further details concerning the exceptions mentioned for obtaining a permit from the Ministry of the Interior to own real estate. We would also like Iceland to provide more information on existing restrictions on foreign investment in the case of activities reserved for the State. Answer According to the Act on the Right of Ownership and Use of Real Property No. 19/1966, general restrictions on acquiring the right to own or use real property in Iceland are as follows: In case of an individual:

- he/she shall be an Icelandic citizen or have domicile in Iceland.

In case of companies: -if several individuals are involved in a company and each bears unlimited liability for the depts of the company, they shall all be Icelandic citizens or shall have been domiciled in Iceland for at least five continious years. -in the case of a company in which some members bear unlimited liability, and others only limited liability, for the company's debts, all those who bear unlimited liability shall be Icelandic citizens or shall have been domiciled in Iceland for at least five continious years. -in the case of a company in wich none of the members bears unlimited liability for the company's debts, or an institution, the company or institution shall have its domicile and venue in Iceland and all its directors shall be Icelandic citizens or shall have been domiciled in Iceland for at least five continuous years.

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-in case of joint-stock companies, 4/5 of the share capital shall be owned by Icelandic citizens and Icealandic citizens shall exercise the majority of the votes at shareholder's meetings.

If a foreign individual or a company does not fulfill these general restrictions they can apply for the Minister's exemption, followed by necessary documents.

The permisson of the Minister is not required when the party involved enjoys rights in Iceland under the rules of the Agreement on the European Economic Area, of the Convention establishing the European Free Trade Association, and the Hoyvík Agreement concerning the Faroe Islands.

The abovementioned incidents fall under Regulation No. 702/2002 on these rights of foreigners who fall under the EEA Agreement or the EFTA Convention, which stipulates the conditions of such rights.

Regarding existing restrictions on foreign investment in the case of activities reserved for the State, Article 4 of the Act No. 34/1991 on Investment by Non-residents in Business Enterprises stipulates that only Icelandic citizens and other Icelandic persons are permitted to own energy exploitation rights as regards waterfalls and geothermal energy for other than domestic use. The same applies to enterprises which produce or distribute energy. Individuals domiciled in another member state of the European Economic Area and legal persons which are domiciled in another EEA member state shall have the same right. Electricity distribution companies must be under the majority ownership of public parties according to the Electricity Act. All six distribution companies operating in Iceland are entirely owned by either local municipalities or the State.

IV. TRADE POLICIES AND PRACTICES BY MEASURE (1) MEASURES DIRECTLY AFFECTING IMPORTS (i) Customs procedures Paragraph 4, page 20 Question 7 Paragraph 4 on page 20 describes the requirements that must be met to ensure the clearance and free circulation of goods in Iceland. On average, how long do these procedures take from when the applicant submits its entry form with all the relevant documents? Answer If all the documents are in order and correctly submitted, customs clearance takes less than 15 minutes. Question 8 Paragraph 6 on page 20 states that all documents submitted to Customs can be inspected electronically but that the Customs Directorate has the right to inspect the originals and to ask for additional information and documentation. It is also stated that a breach of the Customs Law may result in the confiscation of goods, fines or imprisonment of up to six years. In what circumstances may the Customs Directorate ask for additional information and documentation? What legislation provides for these cases? What are the penalties for failing to provide this additional information and documentation? Answer In article 30 of the Customs Act it is stated that an importer must submit or provide access to his accounts and accounting records, letters, contracts and other data concerning the importation of goods or a consignment, when considered necessary to verify if the price or other items in an import declaration, invoices or corroborative documentation is or has been correctly stated. Furthermore it is stated that the Director of Customs shall have access to the aforementioned data and access to the premises of parties liable for duty and stores for supplies and is authorized to take statements from any person expected to be able to provide relevant information. In general terms there could be quite a few reasons for the Customs to require additional information or documentation. For example there might be discrepancies between the value of the goods compared to the volume and tariff classification, also there might be a suspicion that the imported product is wrongly classified.

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If there is a suspicion that a product is wrongly classified the importer might be asked for additional information about the product. That information might include brochures or any information from the manufacturer of the product in question. When there is a suspicion that the value of the product is wrongly stated the Customs may ask for the original invoice or a confirmation that a payment has taken place. The Director of Customs is authorized to suspend customs clearance of all goods relating to an importer who does not submit information to the Director of Customs that has been requested under Article 30 of the Customs Act. (iv) Other charges affecting trade (VAT and excise duties) (a) Value added tax Paragraph 29, page 27 Question 9 Paragraph 29 on page 27 states that the standard rate for VAT in Iceland was increased from 24.5 per cent to 25.5 per cent on 1 January 2010 with a reduced rate of 7 per cent. What does the report mean by "a reduced rate of 7 per cent"? What are the technical requirements for vehicles using hydrogen as fuel? When will this exemption be replaced by an exemption for electric, hybrid, and hydrogen-fuelled vehicles? Answer The following categories of products and services are subject to the lower VAT tax rate. 1. The rental of hotel and guestrooms and other guest services. 2. Radio license charges. 3. Sales of magazines, newspapers and countryside- and district newspapers. 4. Sales of books, whether translations or not, including musical notes as well as audio

recordings of such books. 5. Sales of hot water, electricity and oil for space heating and swimming pool water. 6. Sales of foodstuffs and other goods for human consumption as defined in an Addendum to

the Act, excluding the sales of alcohol. 7. Admission tolls to land transportation projects. 8. CD disks, records, magnetic tapes and other similar means of music recordings, other than

visual records. From June 2005 until June 2012, VAT vas reduced to 0% on vehicles that use hydrogen instead of fossil fuels. It was required that the vehicle in question was registered as a vehicle that uses hydrogen. The registration is based on the EU Certificate of Conformity, which needs to state that the vehicle uses hydrogen so the vehicle can be registered has a hydrogen vehicle. From June 2012 until December 2013 there is a permission, for the purposes of calculating value added tax, to lower customs value of electric- or hybrid vehicle up to 6,000,000 ISK (37,000 euros) and of plug-in hybrid vehicle up to 4,000,000 ISK (24,500 euros). Therefore electric- or hybrid vehicles that cost less than 37,000 euros and plug-in hybrid vehicles that cost less than 24,500 euros are not subject to VAT. Full 25.5% VAT is paid of customs value higher than those amounts. The conditions of the exemption are that the vehicle has a certificate of conformity and falls under one of the following vehicle categories: L6e, L7e, M1, N1 and M1g. Also, the registered carbon dioxide emission of a plug- in hybrid has to be 50 grams or less per kilometre driven. (b) Excise duties Paragraph 32 Question 10 Paragraph 32 on page 28 states that the basis for assessment of excise duties on vehicles was changed at the start of 2011 from engine size to carbon dioxide emissions. Mexico would like further information on the parameters and formulas used to assess these duties.

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Answer The excise duty on passenger cars has from 1 January 2011 been based on carbon dioxide emissions declared by the car manufacturer for combination of city and road driving. Where emissions data are not available, the tax rate will be based on the weight of the vehicle. From the weight of the vehicle estimated emissions are calculated and then the tax is calculated from the estimated emissions. From 1 January 2013, when the amendments will fully take effect, the registration tax will be at minimum 10% ad valorem (max. 65 per cent) of the taxable value. There are special provisions for vehicles that drive on methane gas. They will get a discount of 1,250,000 ISK from the levied excise duty. Vehicles that are registered to car rentals get an exemption from the main category and fall under an exemption category. Article 3 of the Act on Excise Duties No. 97/1987 reads as follows: "On passenger vehicles and other motor vehicles, which are not specifically mentioned in Articles 4 and 5, excise duty shall be levied under the Main Category in the following table based on the vehicles registered emissions of carbon dioxide (CO2), measured in grams per kilometre driven:

Price Band Registered emissions Main category Exception category A CO2 According to Article 5 B 0–80 0 0 C 81–100 10 0 D 101–120 15 0 E 121–140 20 0 F 141–160 25 5 G 161–180 35 10 H 181–200 45 15 I 201–225 55 20 J 226–250 60 25

For vehicles manufactured and registered with methane as its primary energy source, the vehicle excise tax shall be 1,250,000 ISK lower than the calculations in paragraph 1 indicates. Reduction in the excise duty according to the exemption category cannot exceed 1,250,000 ISK" For further clarification an example can be taken of a large passenger vehicle that emits 180 grams of carbon dioxide per kilometre driven (according to information in the vehicles certificate of conformity). The vehicles' customs value is 37,000 euros. According to the table above the vehicle is subject to 35% excise duty on passenger vehicles. Therefore the duty on this vehicle is 12,950 euros. The whole amount, 49,950 euros (37,000 +12,950) is then subject to value added tax. (v) Import prohibitions, restrictions, and licensing Paragraph 35, pages 29 and 30 Question 11 Paragraph 35 on pages 29 and 30 states that SPS and TBT-related measures include the need for a licence from the Ministry of Welfare to import narcotics and psychotropic substances. What sort of narcotics and psychotropic substances can be imported? What are the requirements for obtaining a licence in this regard? We also note that according to Table III.6 on page 34, the export of narcotics is prohibited under the Narcotics Act No. 65/1974. Answer The drugs and psychotropic substances in question are substances that are defined as narcotics or psychotropic substances in either the Single Convention on Narcotic Drugs or the Convention on Psychotropic Substances. On the basis of a license granted by the Icelandic Medicines Agency the substances may be imported. The requirements range from single kinds of substances being ingredients in a medicinal product that has been marketed in Iceland on the basis of a marketing authorization to special import licenses being awarded for medical or pharmaceutical research.

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(2) MEASURES DIRECTLY AFFECTING EXPORTS (i) Procedures Paragraph 48, page 34 Question 12 Paragraph 48 on page 34 states that exporting from Iceland takes longer and is more expensive than in other high-income OECD countries. What measures has the Icelandic Government taken or does it plan to take to reduce both the time and the cost of the export process? Answer Iceland is constantly seeking ways and methods that facilitate trade and export as much as possible. Iceland is a strong supporter of the multilateral trading system and has furthermore established, through its regional co-operation, an extensive network of free trade agreements. However, it is a fact that Iceland is one of the most sparsely populated countries in the world and is far away from main trading partners with relevant transportation costs. This is difficult to overcome. (3) Measures affecting production and trade (iii) Incentives and other government assistance Paragraphs 67 to 72 Question 13 Please specify which legal regime is applicable to foreigners who wish to obtain incentives and government assistance for their investments, in accordance with Act No. 99/2010, Regulation No. 800/2008 and other provisions, and depending on whether they are nationals of any State party to EFTA, the European Economic Area (EEA) or other treaties. Answer Act No. 99/2010 is a framework legislation regarding incentives for initial investments in Iceland. The legislation is applicable to all foreign investment in Iceland, regardless of origin, taking into account specific restrictions in other legislation. Incentives are offered to companies that are investing in commercial operations in Iceland. The investment projects need to meet requirements, such as being beneficial for the Icelandic economy and society, in terms of job creation,rural development, export and tax revenues and knowledge. Approved investment projects will receive benefits in return, including derogations from taxes and charges. In addition, authorization to fix the rate of income tax, in line with the current rate of income tax, for 10 years can be granted, as well as exemption from customs and excise duties on importation or domestic purchase of construction materials, machinery and equipment for the building and operation of the investment project. The authorization of the Government to grant incentives in the form of regional aid are restricted by the obligations of the Government of Iceland under the EEA Agreement. An incentive in the form of regional aid will normally not exceed 15% of the defined investment cost of the investment project for which an application is made. For a medium-sized enterprise, the maximum incentive is 25% of the investment cost, and for a small enterprise the maximum incentive is 35% of the investment cost. In cases where the investment cost of an investment project exceeds EUR 50 million, the proportion of maximum permitted aid will be reduced to the levels provided in line with the total investment cost. According to the Article 8 of the Act, regional aid may take the form of a direct public cash grant for the investment project in question to the company that has been formed for the new investment and which will construct and operate the investment project. This shall constitute an initial cash grant, which accrues at the start of the project and regards the maximum incentive pursuant to the Article 7. Under Article 9, regional aid can take the form of derogations from taxes or public levies relating to the investment project in question. Regional aid under Article 10 may take the form of a sale or lease by the State or a municipality of land or a site owned by the State or a municipality for the investment project in question to the

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company which is formed for the purpose of the new investment and constructs and operates the investment project at a price under the normal market price. The government authorities are permitted to grant for new investments in Iceland, irrespective of the location of the investment project according to the Article 10. The authorization of the Government to grant non-regional incentives are however, restricted by the obligations of the government of Iceland under Articles 16–64 of the Agreement on the European Economic Area. A general incentive in respect of a new investment under Article 11 may take the form of training aid to meet the incurred cost of training personnel in connection with a new investment. The maximum training cost aid is EUR 2 million for each investment project. It may also take the form of an incentive in respect of new investments in research and development (Article 14). The investment project may also take the form of an incentive to enterprises in respect of environment-related new investments which contain improvement or innovation in environmental protection, i.e. reduced use of energy or reduced emissions of greenhouse gasses (Article 15). (iv) Standards and other technical requirements (a) Technical barriers to trade Paragraphs 73 to 80, pages 41 to 43 Question 14 With regard to paragraph 73 (page 41), which legal instrument establishes the responsibilities of the various agencies and Ministries in respect of standards and technical regulations? Answer Iceland is a member of the EEA Agreement and therefore all relevant EU legislation has been transposed into Icelandic legislation. A general overview of these rules and which authorities and ministries are responsible can be seen in NMSP 2012 (National Market Sureveillance Plan of Iceland), which can be found at this webpage of the Consumer Agency: http://www.neytendastofa.is/lisalib/getfile.aspx?itemid=2816 Therefore there is not in fact any one legal instrument that applies regarding the responsibilities of various ministries and agencies. In Article 13 of Act No. 24/2006 on Accreditation it is stated that „ministers in the applicable area of the legislation" are responsible for the notification of „notified bodies" to the Commission of the EU and EFTA Surveillance Authority (ESA). Regulation No. 957/2006 implements EU Decision 93/465/EU on the applicable modules for conformity assessments according to technical regulations. Question 15 What differences are there between the responsibilities of the Consumer Agency and those of the Medicines Authority and the Environment Agency? (page 42). Answer The Consumer Agency is the competent authority of market surveillance of general product safety and also several sector specific EU Directives, e.g. toys, PPE for consumers, measurement instruments and pyrotechnical articles (as of 2013). The Consumer Agency is therefore responsible for all products that are not specifically subject to the market surveillance of any other authority according to the legislation. The Medicines Control Agency is the responsible authority for market surveillance of medicines and medical devices according to a special legislation. Therefore, the Consumer Agency does not cover these products since a special authority is entrusted this according to Icelandic law. Question 16 With regard to paragraph 74 (page 42), apart from notifying the TBT Committee, what other role does the Consumer Agency play in the preparation of technical regulations? Answer The Consumer Agency is the "clearing house" and „national contact point" for the notification of regulations that may involve TBT. This task is derived from the Act No. 57/2000 on the

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Information Exchange of TBT rules and Regulation No. 733/2000. According to the aforementioned rules the Ministry for Foreign Affairs, according to a service agreement with the Consumer Agency, has given this role as "national contact point" to the Consumer Agency. The Consumer Agency is the office to which representatives in ministries take contact and seek advice and assistance in case they are planning for submission of notification that is mandatory to make according to Act No. 57/2000 that implements these duties that are derived from the EEA Agreement and WTO obligations of Iceland. If the relevant ministry then takes a decision to notify a draft Act or Regulation, the Consumer Agency subsequently receives this information and fowards it to the international notifications system. Question 17 As regards paragraph 76 (page 42), to which sectors do most of the notifications made by Iceland to the EFTA Surveillance Authority refer? Answer In the Annual Report of the Consumer Agency for 2011 an overview of notifications sent by Iceland can be found on page 21 of the Report. According to the information given in year 2011 there were 7 notifications sent and these were related to the GMOs in food and other food regulations. Question 18 In relation to paragraph 77 (page 43), does the public enquiry process for draft European standards consist only of the submission of comments by interested parties? Answer As a general rule, all intrested parties can give their views. Question 19 As regards paragraph 80 (page 43), is the Icelandic Board for Technical Accreditation the only accreditation body in Iceland? Answer Yes. (b) Sanitary and phytosanitary measures Paragraphs 81 to 91, pages 44 to 46 Paragraph 82, page 44 Question 20 The Government of Iceland mentions a notification made to the SPS Committee in October 2005 on a measure to ban imports of live poultry and poultry products from some countries. Is this sanitary measure still in effect? Answer Yes, MAST approval is not given for imports from countries that have reported outbreaks within the last 6 months of diseases previously classified by the OIE under "List A" until the country in question has notified the OIE to be free from the the disease in question. Paragraph 83, page 44 Question 21 With regard to food safety, the government of Iceland states that it continues to apply restrictive import policies to fresh meat, raw eggs and animal products not for human consumption. Why are restrictive policies applied to these products? Answer A scientifically valid risk analysis has been carried out regarding the risk involved in the importation of raw meat. There it is concluded that it cannot be excluded that the importation of raw pork, broiler meat and beef could have a negative impact on the public health in Iceland. The assessment is that such importation would lead to a higher proportion of meat on the market in Iceland, in which zoonotic agents would be present. In addition it is likely that the meat would

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contain more virulent strains of bacteria than has previously been detected in Iceland. It is also concluded that all actions that could alter the current animal disease status in Iceland should be taken with caution and must be given thorough consideration so that accidental introductions of new transmissible agents with unforeseen catastrophic consequences do not take place. This is due to the centuries of isolation of Icelandic livestock breeds, i.e. cattle (dairy cows), horses, sheep and goats and therefore the animals are susceptible, i.e. are immunologically naïve to various transmissible agents common overseas, some of which are even considered as harmless. Paragraph 83, page 44 Question 22 The government of Iceland applies restrictive import policies to products such as fresh meat, raw eggs and animal products not for human consumption. Are animal products for human consumption exempt from these restrictive import policies? Answer Art. 10 of Act No. 25/1993 on Animal Diseases and Disease Prevention stipulates a ban against import of raw meat and raw eggs. The same applies to non-disinfected raw skins and hides, farmyard manure and compost mixed with manure, import of which is not authorised. According to Article 4 of Regulation No. 448/2012 on measures to prevent the introduction of animal diseases and contaminated products into Iceland, the Minister of Industries and Innovation has the authority, following a positive recommendation from MAST, to permit the importation of products otherwise prohibited by the aforementioned Article 10 the recommendation has to be based on international risk assessment following standards laid down by OIE, CODEX and the SPS agreement, of which Iceland is a member, cf. Article 9 of Regulation No. 448/2012. The required permit from the Ministry and the certificates in order to permit importation are listed in the aforementioned Regulation. These documents have to be shown before customs clearance can take place. Paragraph 84, page 45 Question 23 With regard to Table III.10 "Provisionally prohibited imports", has the WTO SPS Committee been notified of these prohibitions? If so, in which notifications? Answer Iceland has recently made the relevant notifications which should be circulated to all members in the course of the week. Question 24 Table III.10 on page 45 is entitled "Provisionally prohibited imports, 2012". When did these prohibitions take effect? When are they to be lifted? Answer The ban on imports of live animals is long-standing and the current legislation is Act No. 54/1990 on Import of Animals. There is no plan for lifting the prohibition. The current policy is to keep up the strict legislation to preserve the very good animal health status of the country. Paragraph 85, page 45 Question 25 The government of Iceland states that a recommendation from the Chief Veterinary Office may authorize the importation of pets. What is the procedure for obtaining an import permit? Answer According to Article 2 of Act No. 54/1990 on import of animals all import of live animals is forbidden. The Chief Veterinary Officer (CVO) is permitted to deviate from this ban regarding pets, cf. Article 4a of the Act. Such a permit is based on the condition that the importer commits to comply in every respect with all conditions of Regulation No. 935/2004 on the importation of pets (companion animals) and dog semen into Iceland. The CVO is working within the Icelandic Food and Veterinary Authority (MAST) which is the institution performing the task of monitoring the

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import of pets to Iceland. All information and necessary forms can be obtained on the www.mast.is. Question 26 Paragraph 85 on page 45 of the Secretariat's report states that notwithstanding the prohibition on imports of live animals, the Minister for Fisheries and Agriculture may, based on a recommendation from the Chief Veterinary Office, allow imports to take place. What are the criteria for issuing a favourable opinion? Answer According to Art. 2 of Act No. 54/1990 all import of live animals is forbidden. The Minister of Industries and Innovation has the right to give derogation to this rule upon recommendation from the Chief Veterinary Officer (CVO). Import is only recommended if no disease on the former A-list of the World Organisation of Animal Health (OIE) has occurred within the last 6 months, according to the latest list of the disease situation in the respective country. In order to verify this, the website of the OIE is checked together with the annual report regarding the animal diseases for the country of origin. All the most recent Rapid-Alert notifications from the OIE are furthermore consulted. The fundamental rule is that each animal species is evaluated separately; no A-disease may have occurred in that animal species or others in the country under valuation which might have been transmitted to the animal species undergoing evaluation. Risk assessment in connection with other diseases can be complicated. This is performed by MAST on a case by case basis. If the result of the risk assessment is negative, permission for importation is not recommended. Paragraph 87, page 46 Question 27 Which importers are registered to import animal feed? Paragraph 90 states that imports of certain types of trees and vegetables, soil, cut tree bark, and manure are prohibited. What is the scientific basis for this prohibition? Answer Icelandic rules are fully harmonized with EU legislation regarding feeding stuff and conditions for importation. Regarding the scientific basis for prohibition, the main reason is that Iceland is free of many organisms that are considered potentially harmful on those plant species but are common in countries with whom Iceland has commercial relations but are not always subject to phytosanitary surveillance and control in those countries. Soil, cut tree bark and manure are considered as high risk pathway for harmful organisms. The main reason for the absence of certain organisms is the geographical isolation of the country and relatively young cultivation of nonindigenous forest tree species. Due to the lack of natural enemies, it is of concern that organisms that are not defined as considerable harmful on their host plants in other countries may be more harmful in Iceland. Question 28 Paragraph 91 mentions that in the event of an outbreak of disease, certain animal species must be culled immediately, while the culling of others is optional. For which species is culling optional? Answer Under Act No. 25/1993, immediate culling is required in the event of an outbreak of many diseases and is an option for others. Immediate culling is compulsory if the disease is serious but optional if it is less serious. The difference lies in severity of diseases, but not in different animal species. . (v) Intellectual property rights (a) Copyright, paragraph 95, page 47 Question 29 In Iceland, is the transfer of copyright free and/or permanent? Does the regime vary depending on whether the author is alive or dead?

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Question 30 After the author's death, are both moral rights (e.g. the right to modify the work) and economic rights (e.g. the right to transfer the authority to use the work, and the collection of royalties) protected for 70 years? Or are both of these categories of rights treated differently? Joint answers Article 27 of the Icelandic Copyright Act provides that transfer of copyright can be partial or to a full extent, within the restrictions imposed by Article 4 of the Act. Special rules apply for transfer of copyright if the author is married. Copyright is exempt from legal debt collecting by the author's creditors. Following the death of an author the transfer of the author's right is governed by the Inheritance Act. Article 28(1) of the Copyright Act stipulates that transfer of copyright does not give the transferee a right to modify the work, unless expressly so agreed by the author. The moral rights of an author are inherited in the same manner as the economic rights and have the same duration of protection. However, moral rights are awarded cultural protection, enforceable by the Minister of Culture, cf. Article 53, regardless of the duration of the economic rights. So, in theory it is possible to enjoy protection of moral rights for art and literature after the 70 years period of post mortem authorization. (b) Patents Paragraph 101, page 49 Question 31 Paragraph 101 on page 49 states that in 2011, the Patent Office acknowledged 778 European patents and approved 65 patents out of 71 applications directed to the Icelandic Patent Office, and that at the end of 2011, 2,632 patents were in force. Could Iceland please clarify how many non-European patents were acknowledged in 2011? How many of the 65 patent applications submitted to the Patent Office were not European? How many of the 2,632 patents in force are not European? Question 32 Paragraph 103 on page 49 refers to compulsory licences for the export of pharmaceutical products to developing countries facing severe health problems. Please explain how these compulsory patents work. Question 33 Paragraph 107 on page 49 mentions a patents case concerning a licence agreement between the parties that was considered irrevocable by the Icelandic Supreme Court. In what circumstances is a licence agreement considered irrevocable? Joint Answers The IPO would like to rectify the misunderstanding that 65 out of 71 applications filed in 2011 were granted. The handling of patent applications takes time and the patents granted in 2011 were applications that were filed before the year 2011. The applications filed in 2011 are still under examination. A total of 778 European patents were validated in Iceland in 2011, so that is the correct number for total European Patents granted that year. The 71 patent applications filed in 2011 were national filings, either from Icelandic or foreign applicants. These applications were either filed based on priority or via the PCT route as national phase applications. None of the applications was a European application. Out of the total number of patents in force in 2011, 1929 were European patents validated in Iceland. The authority to grant compulsory licences was inserted in the Patent Act in 2005, cf. Art. 49(5) of the Act. The conditions for grant of such licence are outlined in Regulation No. 1011/2006. Compulsory licences are, subject to the fulfilment of all conditions (Art. 4), granted only by a District Court (Articles 5 and 6). The compulsory licence holder is only authorized to manufacture the pharmaceutical product specified in the licence and may only export the product to countries

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specified in the licence (Art. 7). Eligible countries for import of products are those who fulfil the conditions of Art. 3 of the Regulation. The compulsory licence holder is obliged to publish information on the licence on his website or a site hosted by the WTO (Art. 9). Information in this regard should also be sent to the IPO (Art. 9(3)), which notifies the TRIPS Council of the compulsory licence (Art. 10). More exact information on compulsory licences cannot be provided at this stage, as this has to the best knowledge of the IPO never been used. Concerning the Supreme Court Judgement, it depends on each case at hand and the relevant agreement between the parties whether Courts will consider a licence agreement to be irrevocable or not. According to the merits of the case mentioned it was considered that the agreement between the parties was a licence agreement which neither included time limits nor articles concerning revocation. (c) Trademarks Paragraph 110, page 50 Question 34 Paragraph 110 mentions that various changes have been made to trademark legislation. One of these changes is that the Patent Office is now authorized to invalidate a registration, a task which previously fell to the courts. What requirements must be met in order for the Patent Office to invalidate a registration? Are these requirements exactly the same as those considered by a court when invalidating a registration? Answer The Icelandic Trademark Act No. 45/1997 (Trademark Act) was amended in June 2012 by Act No. 44/2012 in order to provide the Icelandic Patent Office (IPO) with the power to invalidate trademark registrations. IPO now has the power to revoke a trademark registration if a trademark was registered contrary to the provisions of the Trademark Act. If invalidation is required because of the likelihood of confusion with an older mark, the request can only be accepted if the one setting forth the request proves that the use of the older mark has been in accordance with Article 25 of the Act (inter alia usage within five years from registration). According to the new Article 30.a, which regards governmental invalidation, anyone with a legitimate interest has the right to request that the IPO eradicates the registration of a mark although the time limit for opposition has passed. The conditions of Art. 28 of the Act have to be fulfilled (regarding cancellation of registration by a verdict of a Court), the request has to be made in writing and be accompanied with the prescribed fee. The proprietor of the registered mark shall be informed and have the right to comment within a prescribed time limit before the IPO makes its decision. If the IPO reaches the decision that a mark shall be invalidated, the decision shall be published in the IPO Gazette. Such a request cannot be made if a case regarding the same registration has been brought to Courts. If this is the case, the IPO shall postpone its handling of the invalidation request until a Court has reached its decision. The invalidation requirements in Article 30.a are the same as the requirements before a Court. Question 35 Paragraphs 114 and 115 on page 51 refer to the Design Protection Act of 2001. According to this Act, what "fair trade practices" may designs be destined for? Answer According to Article 10, paragraph 3, of the Design Protection Act No. 46/2001 design rights shall not include: 1) acts done for private purposes, 2) acts done for experimental purposes and 3) reproduction for use in citations or education provided that such acts are compatible with fair trade practices, do not unduly prejudice the normal exploitation of the design, and that mention is made of the source. The Article makes the use of designs in quotation or education/teaching possible, if done in accordance with fair trade practices. For example, publications of designs in educational magazines are allowed, given that the designer is also mentioned.

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(vi) State trading enterprises, State-owned enterprises, and privatization (b) State-owned enterprises and privatization Paragraph 123, page 52 Question 36 Paragraph 123 mentions that Icelandic local governments have holdings in companies engaged in the geothermal production of heating and electricity, and own operating companies for harbours and local electricity distributors. How many local governments in Iceland own the aforementioned companies? How many companies does each of these local governments have? How many private companies are there in these sectors in Iceland? Do local government State-owned companies provide services in areas of Iceland that are beyond their jurisdiction, in such a way that they compete with the State-owned and private companies of other Icelandic municipalities? Answer There are three companies involved in the production of electricity from geothermal sources. One of them, Landsvirkjun, is owned directly by the State, one is privately owned, HS Orka, while Reykjavík Energy is owned by three municipalities: Reykjavíkurborg (93.5%), Akraneskaupstadur (5.5%) and Borgarbyggd (0.9%). As regards the production of heat there are 22 geothermal public district heating utilities. They are the sole distributors of geothermal heat to local residents in a geographically isolated area and 20 of them are owned by municipalities within the area. The other public district heating utilities are owned by the State. Electricity transmission and distribution companies must be under the majority ownership of public parties or companies wholly owned by public parties according to the Electricity Act. All six such companies operating in Iceland are entirely owned by either local municipalities or the State. They all have licenced geographically defined distribution areas where they are the sole distributor of electricity and no company operates in the jurisdiction of another unless with the express permission of the corresponding distribution company and the National Energy Authority (Orkustofnun). There are no reservations regarding generation and sale of electricity. The generation and sale of electricity is subject to competition under the Electricity Act and therefore all companies, whether state or privately owned, compete on the national electricity market amongst each other to generate and sell electricity. There are three companies engaged in the production of electricity from geothermal resources and one of them, HS Orka,is owned by private investors. There are several small privately-held hydropower producers on the market as well, although most electricity is still produced by publicly held entities. The largest producer of electricity is the State-owned Landsvirkjun, which produces 73% of Iceland's electricity, mostly from hydropower sources. Other most important players are in municipality (15%) and private (8%) ownership. All harbours in Iceland are operated by the local municipality in which they are located, with the exception of one harbour in the South of Iceland that is used exclusively for ferry service from the mainland to the Westman Islands. There are approximately 50 harbours in Iceland, and the vast majority are small and used by the fishing fleet. The State provides support for harbour projects by undertaking and funding basic research in full, and also provides financial support for new port projects. (vii) Competition policy Question 37 Paragraph 128 states that Icelandic economic competition legislation prohibits anti-competitive practices. According to the Competition Law and its Rules of Procedure No. 880/2005, what do these anti-competitive practices entail? Answer According to the Competition Act No. 44/2005 anti-competitive agreements and practices by business are prohibited, as are abuse of a dominant position and agreements between businesses that restrict competition. The provisions of Article 10 of the Competition Act prohibit any form of anti-competitive collusion among undertakings and reads as follows:

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"Any agreement or resolution between undertakings, whether binding or guiding, and concerted practices which have as their object or effect the prevention, restriction or distortion of competition are prohibited.

This prohibition includes any agreements, resolutions and concerted practices which: a. directly or indirectly affect prices, discounts, margins or any other trading conditions;

b. limit or control production, markets, technical development, or investment; c. share markets or sources of supply;

d. apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; e. make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts."

Article 11 of the Competition Act prohibits any abuse by one or more undertakings of a dominant position and reads as follows:

"Any abuse by one or more undertakings of a dominant position is prohibited. Abuse according to Paragraph 1 may, inter alia, consist in: a. directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions; b. limiting production, markets or technical development to the prejudice of consumers; c. applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; d. making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts."

Furthermore, the Competition Authority is responsible for monitoring mergers of companies falling within the scope of Article 17 of the Competition Act, cf. Rules No. 684/2008 relating to the notification of mergers. The ICA may annul a merger or set conditions for a merger, if the ICA believes that the merger will prevent effective competition by bringing about or strengthening a dominant position, or will result in a significant distortion of competition in the market in other respects. Article 17(c) reads as follows:

"If the Competition Authority is of the opinion that a merger will obstruct effective competition by giving one or more undertakings a dominant position or by strengthening such a position, or will result in a significant distortion of competition in the market in other respects, the Authority may annul the merger. In addition, technological and economic progress shall be taken into account when assessing the lawfulness of a merger, provided that such progress is to customers' advantage and does not form an obstacle to competition. The Competition Council may also establish conditions for such a merger that must be met within a given time. When assessing the lawfulness of a merger the Competition Council shall take into account the extent to which the competitive position of the merged undertaking is affected by international competition. Moreover, when assessing the lawfulness of a merger account shall be taken of whether the market is open or whether market access is obstructed."

Lastly it should be noted that an undertaking, as it is defined in the Act, means any individual, company, public party or other party engaged in economic operation. Page 53, paragraph 125 Question 38 What is the procedure for investigating and imposing conditions or penalizing international mergers that have anti-competitive effects in Iceland? What happens when the firms affecting Icelandic markets are located outside the EEA? Answer The ICA is responsible for monitoring mergers of companies falling within the scope of the Competition Act. The ICA will investigate mergers that have anti-competitive effects in Iceland and if the undertakings in question have combined turnover amounting to ISK 2 billion or more and at least two of the undertakings involved in the merger have a minimum annual turnover of ISK 200 million respectively in Iceland.

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Should the ICA be of the opinion that there is a significant probability that a merger, which has already taken place, may substantially reduce effective competition while failing to meet aforementioned turnover conditions, the Authority may require the merging parties to submit a notification of the merger, provided that the combined annual turnover of the undertakings concerned exceeds ISK 1 billion. The ICA can investigate and impose conditions or annul agreements that have anticompetitive effects in Iceland, but only the part of the agreement that has to do with Iceland. Therefore it does not matter where the companies in question are registered, whether inside or outside the EEA. Question 39 What limits does competition legislation have as regards penalizing international cartels that affect markets in Iceland? Answer According to Article 3 of the Competition Act, the Act applies to agreements, terms and actions with effect, or intended effect, in Iceland. In the second paragraph it specifically states that the Act does not apply to agreements, terms or actions which are solely intended to have an effect outside Iceland. The Competition Authority shall on the other hand provide assistance in implementing the competition provisions of other states and international organizations in accordance with mutual obligations provided for in international conventions to which Iceland is a party. As stated in Art. 37 of the Competition Act, the Competition Authority will impose administrative fines on undertakings or groups of undertakings that violate e.g. Art. 10, 11 and 12 of the Act and also for violating a prohibition pursuant to Articles 53 or 54 of the EEA Agreement which are the two basic prohibition provision of the competition part of the EEA Agreement. According to Art. 41.a of the Competition Act any employee or director of an undertaking or association of undertakings who carries out, incites to or gives instructions on collusion which violates Articles 10 and/or 12 of the Icelandic Competition Act and relates to the issues specified in paragraphs 2 and 3 of the Article shall be subject to fines or imprisonment up to six years. According to Art. 42, violations of the Act are only subject to criminal investigation following a complaint submitted by the Competition Authority to the police. Page 53, paragraph 126 Question 40 How does the formal information request procedure between the Nordic competition authorities work? What are the obligations of the Icelandic Competition Authority (ICA) in this process? Answer Iceland is a party to an agreement between Denmark, Norway and Sweden on co-operation on competition matters. According to Article II of the agreement, the ICA is obligated to provide the other competition authorities with information concerning the situations in which it becomes aware that its enforcement measures may affect important competition Act interests that are subject to another authority's competence.

The enforcement measures concerning which it will normally be appropriate to provide information shall include measures that: (a) Are relevant to the enforcement measures of one or more competition authorities, (b) Relate to activities in restraint of competition that largely originate or take place in the territory of one or more authorities, (c) Relate to a merger, an acquisition or merger in which one or more of the participants in the transaction is an enterprise that is registered in, established under the legislation of, or resident in Denmark, Iceland, Norway or Sweden or in several of the countries, (d) Relate to behaviour in restraint of competition in which it is assumed that one of the countries concluding the Agreement has called for, promoted or approved, (e) Relate to decisions of a vital nature that will require or promote a specific behaviour in restraint of competition in the territory of another of the countries concluding the Agreement.

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According to Article V of the Agreement, information from one competition authority to another competition authority in accordance with article II of the Agreement shall be provided in writing (including fax and electronic mail). Other communications may be made orally or in writing. Question 41 What formal and informal mechanisms are available to the ICA to promote technical support cooperation with the above-mentioned authorities? Answer The ICA is an active member of the ECN-FIT working group (European Competition Network-Forensic IT). The purpose of this working group is to exchange information based on experience in the field of forensic IT. The ECN-FIT is divided into two groups, a legal group and a technical one. The ECN-FIT holds 1-2 working group meetings a year where issue relevant topics are discussed and solutions to various problems facing the NCA's are presented. Aside from these meetings the ECN-FIT also has an on-going program called EATEP-FIT (European Antitrust Training and Exchange Program in Forensic IT). The aim of this program is twofold, to provide technical training for case handlers and IT personal in the field of forensic IT, as well as to promote cooperation and information exchange by means of a personnel exchange program. The ICN has taken an active role in this cooperation platform and was for a few years part of the steering group comity for the ECN-FIT. The ICN has benefited substantially from this cooperation and views the ECN-FIT as having been a vital part in building the authority's competence in the field of forensic IT. Aside from this venue the ICA is not part of any formal or informal cooperation on technical issues. Question 42 Are there any agreements regarding information-sharing with the authorities of other countries? If so, please specify. Answer The ICA is not a party to any other agreements, obligating it to share information with competition authorities in other countries. Nevertheless, it participates in both European and International co-operations on competition matters. To begin with, the ICA participates in a co-operation organized by the European Competition Network (ECN), which consists in co-operation between Competition Authorities of EU and EFTA Member States, EFTA Surveillance Authority and the European Commission. The purpose of this co-operation is to review specific competition issues which are under discussion at any time within the competition authorities of the EU, in addition to general competition policy work. For this purpose, various groups have been established to address specific aspects of competition. Secondly, the ICA participates in a co-operation between the European competition authorities, which involves informal co-operation, reviewing the implementation of competition rules and policy- making. Separate working groups have been formed for the purpose of discussing individual competition markets or competition matters, including working groups on issues such as mergers, the energy sector, the media, amnesty etc. Thirdly, the ICA participates in the International Competition Network (ICN), which is an international association of competition authorities. Finally, the ICA participates in OECD working groups on competition matters. Question 43 How could international cooperation between the ICA and other competition agencies be improved? Answer Co-operation between ICA and other competition agencies can be improved by increased communications and more regular meetings. Question 44 What are the main actions taken by the ICA to advocate competition?

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Answer The ICA runs a comprehensive and an accessible website where all decisions of the ICA and the Competition Appeals Committee are published. In addition, all judgments by Icelandic courts on competition matters are published on the website. Furthermore, the ICA publishes articles, news reports, annual reports and other specific reports on competition matters. It also publishes reports from the Nordic competition authorities. Page 53, paragraph 127 Question 45 How is the ICA's Board of Directors formed? What elements are considered when prioritizing investigations? Answer According to Article 5 of the Competition Act the Board of Directors is composed of three members appointed by the Minister of Economic Affairs, as from 1 September 2012 the Minister of Industries and Innovation, for a term of four years at a time. Three alternates shall be appointed in the same manner. The Minister appoints the Chairman of the Board and decides the remuneration of the members of the Board. The role of the Board of Directors is to establish priorities in the work of the Competition Authority and monitor its activities and operations. Major material decisions must be submitted to the Board for approval or rejection. The Board of Directors has established its own rules of procedure, No. 759/2005, which include provisions on what constitutes major decisions. Regarding prioritization of investigations, it is clear that urgent cases under process will often delay the progress of other cases. To give an example, a decision on intervention or annulment of a merger must, by law, be taken within statutory time limits. Merger cases are therefore processed ahead of cases that are not subject to statutory limits. The ICA decides which cases are investigated based, among other things, on the priorities of the Authority at any time. In any year, the ICA will have predetermined financial resources at its disposal. The ICA's Rules of Procedure lay down requirements relating to submitted complaints and in addition the ICA will assess whether a complaint gives sufficient causes for investigation. Should the complaint not meet the conditions that are laid down in aforementioned rules, concerning form and content, it is nevertheless filed as a notification/tip which may later lead to an investigation. In assessing whether a complaint warrants an investigation, the ICA will take into account the objective viewpoints regarded as relevant in each case. The following points can be significant for the assessment of whether an investigation is warranted:

The seriousness of the alleged violation or distortion of competition. The incident in question may be serious from the point of view of the complainant, but the Competition Authority will assess the matter as a whole from the point of view of the public interest.

The question whether the barrier to competition is relevant only to the business interests of the complainant or whether it may have a wider harmful impact on competition. This includes the question of whether public interests are at stake.

Whether the undertaking which is the subject of the complaint has desisted from the conduct giving rise to the complaint. The possible meaning of a potential investigation is assessed.

The question whether interests of the complainant can be protected before the courts of justice. Not all infringements of the Competition Act need to be brought before the Competition Authority. The complainant may have possession of sufficient evidence and information to initiate proceedings before the courts.

In assessing whether a complaint warrants an investigation, the Competition Authority may seek outside comments. This means that the Competition Authority may seek information and opinions from third parties for the purpose of assessing whether a case needs to be opened.

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Page 53, paragraph 128 Question 46 Has Iceland clarified what type of evidence is needed to prove that an agreement is anti-competitive, and what type of proof a potential offender may put forward in its favour to show that it has not engaged in such a practice? Answer No, it has not been clarified in the Competition Act or other rules set by the Competition Authority or the legislator. The Competition Authority mainly uses the same views on evidence that are upheld by the European Commission and the European Court of Justice. Question 47 Has consideration been given to whether reactive methods for detecting cartels (for example, formal system of denunciation, clemency programme, assistance from informers) have been more/less effective in practice than proactive methods (for example, interinstitutional cooperation with other competition bodies, assistance from government entities, monitoring of the press and/or trade associations, competition policy dissemination programmes)? Answer No, not in a formal way. The ICA shares the same views as the European Commission and other European Competition Authorities that a good leniency program is important and makes it easier for the Competition Authority to uncover collusion between undertakings. It is also the Authority's view that a vigorous enforcement of competition policy is a key element in preventing undertakings in violating the Competition Act. Question 48 When determining whether a firm is in a dominant position, what elements are taken into account to assess market contestability? Answer The elements that the ICA takes into account when assessing market contestability can be divided into three categories. In the first place, there are any public barriers to entry. Examples of such barriers are legal barriers, public surveillance, patents, customs and import duty. Secondly, there are economic barriers relating to the market. Examples of such barriers are for example sunk cost, cost of capital, network effects, switching cost, economies of scope or size and barriers to exit. Lastly, there are any barriers on account to conducts of undertakings in the market. Such conduct is for example tying, bundling and vertical integration. Other barriers relating to undertakings in the market are reputational effects, brand loyalty and access to essential facilities. Question 49 Once a dominant position has been proved, what procedure does the ICA follow to determine that the firm investigated has abused such a position? What type of evidence is taken into account? Answer Once a dominant position has been proved, the ICA investigates whether the firm has abused such a position by gathering information or by carrying out inspections on the premises of the firm in question. According to Article 20 of the Competition Act, the ICA may, in the course of the investigation of a case, carry out the necessary inspections on the premises of an undertaking and associations of undertakings and seize documents and other evidence when there are compelling reasons to believe that this Act or the decisions of the competition authorities have been violated.

According to Article 19 of the Competition Act, the ICA may request from individual undertakings or groups or associations of undertakings any information regarded as necessary for the

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investigation of individual cases. Information may be requested in oral or written form. The ICA may, under the same condititions require the surrender of documents for inspection.

When investigating potential abuse of dominant position, the ICA generally requests meetings with third parties, such as other undertakings in the market and customers. It reviews the information that has been gathered and takes into account any tenable and verifiable evidence. Page 54, paragraph 129 Question 50 What type of evidence is taken into account in practice to prove that the benefits obtained from any economic efficiency resulting from specific economic integration actually exceed the operation's potential negative impact? Answer The ICA has never accepted efficiency defences in previous cases regarding mergers and acquisitions. The same applies to cases regarding abuse of a dominant position and cases regarding agreements or concerted practises that restrict competition. If such a case would be examined by the ICA it would use the same or similar methodology as the European Commission and the EFTA Surveillance Authority use in cases regarding concentrations. The burden of proof regarding efficiencies put forward lies on the merging entities, cf. provision 17c of the Competition Act and paragraph 29 of the foreword to the EU merger regulation (Council Regulation (EC) No. 139/2004). The ICA will take any tenable and verifiable evidence put forward by the notifying parties into account. In Iceland both the administration and courts have liberty to take any evidence put forward into account when assessing cases, cf. Article 44 of the Act regarding Civil Proceedings No. 91/1991. The notifying parties would have to proof that such efficiencies would be likely to outweigh the negative competitive effects of the concentration. Question 51 Is the merger of potentially anti-competitive operations allowed on an exceptional basis if the firm is in a crisis situation (failing firm defence)? Has this exception been applied? Answer In general, the ICA will set conditions or annul a merger that has anticompetitive effects. Such a merger has been allowed on the grounds of failing firm defence on three occasions since or during the economic collapse in the fall of 2008. Two of those mergers regarded commercial banks that acquired another commercial banks. The third decision was overturned by the Appeals Committee. Subsequently ICA annulled the merger on the grounds that the conditions of the failing firm defence had not been sufficed. Question 52 Can the ICA apply prudential measures in the context of its investigations? Answer No. Question 53 Can the ICA determine security to be deposited against the potential imposition of prudential measures in the context of its investigations? Answer No. Question 54 What are considered to be attenuating/aggravating factors when imposing administrative fines?

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Answer According to Art. 37 of the Competition Act, decisions on fines shall take regard of the nature, extent and duration of the restrictive practices. According to Icelandic case law many factors can be taken into account, both attenuating and aggravating factors. Factors that have been considered to be attenuating are e.g. the following:

If the undertaking assists the Competition Authority in solving the case (see settlement procedure in Art. 17 f of the Competition Act and Leniency rules No. 890/2005)

If the undertaking can prove that its participation in e.g. a cartel was very minimal If the undertaking can prove that its intent was not to harm competition

Factors that have been considered to be aggravating are e.g. the following:

The duration, extent and nature of the violation Repeated violations If the undertaking is the main leader in e.g. a cartel The market share of the participants in e.g. a cartel The importance of the relevant products or services involved in the case The purpose of the violation If the intent of the employees involved has been proved If the harmful effects on competition on the market has been proved

Page 54, paragraph 130 Question 55 Paragraph 130 states that "the 2011 amendment to the Competition Law gives the Competition Authority the power to respond to any market situation or actions by any enterprise that would restrict competition even if there was no breach of any specific part of the law". In exercising these powers, what treatment is given to State-owned enterprises? Answer According to the Competition Act, an undertaking means any individual, company, public party or other party engaged in economic operation. Therefore the provision applies to public enterprises as well as private ones. The power given to ICA under this amendment has so far not been made use of. Question 56 How does the ICA intervene in markets when the law has not been breached? Answer As mentioned above, the provision in question has not been applied in practice yet. However, when applying this provision, the ICA will have to define the relevant market and clearly establish the circumstances or conduct which prevents, limits or affects competition. Circumstances means among other things, factors connected to the attributes of the market concerned, including the organisation or development of companies that operate in it. Conduct means all forms of behaviour, including failure to act, that are in some way detrimental to market competition without being in violation of the Act‘s ban provisions. This provision will only be used exceptionally and the remedies shall be proportionate to the circumstances or conduct concerned. Question 57 How does the judicial review procedure work in practice? Answer The decisions of the ICA may be appealed to an independent committee, the Competition Appeals Committee. A written and reasoned appeal must be received by the Committee within four weeks from the time that the party in question was informed of the decision of the Competition Authority. According to the Competition Act, the decision of the Appeals Committee shall be made available within six weeks from the date of appeal. However, an appeal will not postpone the effect of decisions of the Competition Authority. According to the Competition Act a party, including the ICA, not willing to accept the decision of the Appeals Committee may instigate legal action for annulment before the courts of law. Such action shall be brought within six months after the party obtained knowledge of the Committee's

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decision. Such action does not suspend the entry into force of the Committee‘s decision, nor shall it preclude formal enforcement proceedings. Question 58 Paragraph 130 states that "the amendment also allows the Authority to bring rulings of the Appeals Committee to the courts". This statement appears to indicate the existence of an Appeals Committee that is separate from the Competition Authority, but does not specify its organizational attachment or legal nature. What exactly is the Appeals Committee? To which State body is it attached? Answer The Competition Appeals Committee is a committee composed of three members, with three alternates, appointed by the Minister of Industries and Innovation following nomination by the Supreme Court. The chairman and his or her alternate, who shall also serve as vice-chairman, shall meet the conditions for qualification as Supreme Court judges, but the other members shall possess professional expertise in the field of competition and business. The term of the appointment of the Competition Appeals Committee shall be the same as that of the Board of Directors of the Competition Authority. The decisions of the ICA may be appealed to the Appeals Committee. V. TRADE POLICIES BY SECTOR (1) AGRICULTURE (i) Features Paragraph 3, page 55 Question 59 Paragraph 3 on page 55 of the report states that increased productivity in Iceland is hindered by the fact that there is only one dairy breed, one sheep breed, and one horse breed, which have developed in isolation from the rest of the world and are vulnerable to transmittable diseases. Has Iceland made any attempts to introduce new species since the last review? Answer Since 2006, there have been no applications for imports of live cattle, sheep or horses. (c) Support levels Paragraph 26, page 62 Question 60 Paragraph 26 on page 62 of the report states that "despite the high level of support provided, agriculture continues to decline relative to the rest of the economy, the number of farmers continues to fall, productivity is low by international standards, and imports are rising compared with domestic production". In Iceland's view, what are the reasons for this situation? Answer After the economic crisis in 2008 the economy has been improving, especially the export sectors. It has not been decline in the agricultural output, however, numbers of farmers has continued to decrease, remaining farms have increased in size and efficiency. Iceland is not aware of any study which state that productivity is lower in Iceland compared with other countries. (2) FISHERIES (ii) Policies, paragraph 41 Question 61 Paragraph 41 on page 68 states that a vessel will lose its individual transferable quota (ITQ) if it catches less than 50 per cent of its total quota for two consecutive years and that a separate quota system is applied to boats of less than 15 gross tonnes. How does this condition to maintain the ITQ not constitute a performance requirement? How does the quota system work for boats of less than 15 gross tonnes?

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Paragraph 44 on page 69 provides a general description of foreign ownership in respect of fishing activities. Please provide further details of the regime applicable to foreign natural persons. Answer Before 2010, there was a condition that a vessel would lose its quota if it catched less than 50% of its total quota for two consecutive years. In 2010, the condition was made stricter so that vessel now has to catch at least 50% of its quota each year. These rules were introduced in order to prevent quota-owners from not making use of their quota. Under the Icelandic quota system, differentiation is made between vessels fishing within the general management regime, and boats under 15 GT that choose to operate under a special management regime for handline and longline boats (referred to as the small vessel ITQ system). Those who choose to operate within the latter mentioned system commit to only fishing with gear using handline and longline and special restrictions apply to transfers of quotas between the two systems. The same rules apply for both vessels under and above 15 gross tonnes as regards conditions for transfering quota beween vessels, including the requirement to catch at least 50% of the allocated annual quota (not for two consequtive years as stated in the question). However, quotas cannot be transferred from the general system to the small vessel system. As for foreign investment, the general rule applies that foreigners are not allowed to invest directly in the fisheries or fishprocessing sector. However a foreign individual or a company may own a share in an Icelandic company which holds a share in an fisheries company. The rules are complicated but in essence they mean that indirect foreign ownership can never exceed 49%. (3) ENERGY Paragraph 53 Question 62 Paragraph 53 states that electricity transmission and distribution need to be separated from production and sales. Which of these four activities are reserved for the public sector? Answer Electricity transmission and distribution companies must be under the majority ownership of public parties or companies wholly owned by public parties according to the Electricity Act. All six such companies operating in Iceland are entirely owned by either local municipalities or the State. They all have licenced geographically defined distribution areas where they are the sole distributor of electricity and no company operates in the jurisdiction of another unless with the express permission of the corresponding distribution company and the National Energy Authority (Orkustofnun). There are no reservations for the public sector regarding generation and sale of electricity. IV. TRADE POLICIES BY SECTOR (4) SERVICES (i) Financial sector (a) Banking Question 63 Paragraph 55 states that Iceland was one of the countries worst affected by the 2008 financial crisis; nearly the entire banking system collapsed. The Government had to intervene through emergency measures, which included, inter alia, capital controls and the establishment of three new commercial banks by the State, which took over the domestic operations of the three largest commercial banks, to prevent a complete meltdown of the system. What treatment does Iceland afford to foreign banks? Also, please provide details regarding possible incentives for establishing banks in Iceland following the crisis. Answer No foreign commercial banks were operating in Iceland before the crises. No special incentives have been put into place regarding establishment of foreign banks in Iceland after the crises.

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IV. TRADE POLICIES BY SECTOR (4) SERVICES (ii) Telecommunications (a) Structure Question 64 Paragraph 83 on page 78 of the report mentions that the Postal and Telecom Administration (PTA) operates an equalization fund which provides funding for universal service operations that are either unprofitable or run at a loss. In Iceland, what are these operations? Answer Possible compensation from the fund must correspond to a duty that the PTA has imposed on an undertaking to provide specific universal service. Currently the National Emergency Call Centre is the only undertaking that is receiving compensation from the fund, i.e. for providing answering service in the emergency number 112. Question 65 Paragraph 84 on page 78 of the report indicates that the PTA may impose fines and punish serious or repeated violations with imprisonment. What telecommunications violations may lead to a prison sentence? Answer The PTA has only competence to impose a periodic penalty payment on operators up to 500,000 ISK per day of infringement. Penalties in the form of a lump sum fee or imprisonment require prosecution by the police and a District Court procedure ending with a formal judgment. These penalties are applicable to infringements of the Telecom Act in general. The initiation of prosecution and the utilization of such penalties would depend on variables such as the subject matter of the legal provision in question, i.e. whether it constitutes a clear enough duty for a person either to act in certain way or forbidding certain acts, and additionally whether the infringement was perpetrated with intension, e.g. for profit, or by way of thoughtlessness. Question 66 Paragraph 85 states that recent amendments to the Electronic Communications Act have increased communications security and consumer protection, implemented EU regulations on roaming on public mobile telephone networks, and ensured smoother and quicker number portability. What restrictions are there on foreign enterprise participation in the telecommunications sector? What are the Icelandic Government's projections regarding the impact of the above-mentioned amendments on variables such as consumer prices and telephone penetration? Answer According to Article 4 of the Act on Telecommunications No. 81/2003, the right to operate a telecommunication company/service rests with individuals or legal persons established within the European Economic Area. Generally, there is free competition on the telecommunications market in Iceland and consumer prices are therefore not decided by the State. The objective of the EU roaming Regulation, which has been implemented in Iceland, is to ensure that prices to consumers do not exceed certain limits when they move between the EEA countries. As another general remark, the penetration in Iceland in the field of telecommunication is very high, both regarding mobile telephones and internet services.

(iii) Transport (a) Air transport Paragraphs 86 to 95 Question 67 What limits are there on foreign participation in the air transport sector in Iceland?

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Answer A distinction is made between companies established within the European Economic Area (EEA) and companies established outside the EEA. In the latter case the requirements depend on whether an Air Services Agreement has been concluded between Iceland and the relevant country or not. In short the requirements are these:

Air carriers established within the EEA have to notify to the Icelandic Civil Aviation Administration (ICAA) before they start providing flight services to and from Iceland and if they are providing more than three flights they need to send ICAA copy of the following documents:

Air operation certificate (AOC) Operation specification Insurance certificate Air carrier security programme according to Article 17 of the Regulation on Aviation

Security No. 985/2011 Air carriers established outside the EEA but within a state that has concluded an Air Service Agreement with Iceland also have to notify to the ICAA before they start providing flight service to and from Iceland and send ICAA copy of the following documents:

Air operation certificate (AOC) Operation specification Insurance certificate Air carrier security programme according to Article 17 of the Regulation on Aviation

Security No. 985/2011 Provided that the air carrier has been designated by its state to provide the air service and the Air Service Agreement authorizes the flights there will be no objection by the ICAA. Air carriers established outside the EEA and within a state that has not concluded an Air Service Agreement with Iceland have to ask for permission from the ICAA to provide flight service to and from Iceland. To get permission the following has to be provided:

Air operation certificate (AOC) Operation specification Airworthiness certificate Insurance certificate Air carrier security programme as required by Art. 17 of the Regulation on Aviation

Security No. 985/2011 Confirmation that the flight safety rules in the state of the air carrier are equal to

the EASA rules Confirmation of reciprocity providing Icelandic air carriers with equal flight (traffic)

rights as ICAA are permitting, in accordance with paragraph 2 of Art. 146 b of the Aviation Act No. 60/1998

All parties that provide services and have aviation security role in accordance with Art. 11 of Regulation on Aviation Security No. 985/2011 shall obtain an approval from ICAA for the aviation security. Parties that intend to provide ground-handling services or a self-handling users at Keflavík airport have to obtain an approval from the ICAA for the aviation security in accordance with Art. 3 and Art. 14 of Regulation No. 1186/2008.

IV. TRADE POLICIES BY SECTOR (4) SERVICES (iii) Transport (a) Air transport Question 68 Paragraph 93 states that under the provisions of Act No. 34/1991 on Foreign Investment in Companies, foreign ownership in Icelandic companies involved in airline operations may not exceed 49 per cent. This limitation does not apply to nationals of the EEA, who are treated as Icelandic nationals. Additionally, no entity may be granted an operating licence unless it is effectively controlled by EEA nationals. There are no limitations on foreign participation in auxiliary services. What steps must be followed for a foreign company to provide auxiliary services? Do any companies with foreign holdings provide these services?

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Answer Air carriers that have a permission to provide air-services to and from Icelancd, cf. answer to the question immediately above, have the right to provide themselves ground-handling services as well. Parties that intend to provide ground-handling services or a self-handling users at Keflavík airport have to obtain an approval from the ICAA for the aviation security in accordance with Art. 3 and Art. 14 of Regulation No. 1186/2008. Currently, there are no foreign companies that provide these services. (b) Maritime transport Paragraphs 96 to 103 Question 69 What limits are there on foreign participation in the maritime transport sector in Iceland? Answer The maritime transport sector in Iceland is not subject to specific restrictions on foreign participation. However, the general Act No. 34/1991 on Investment by Non-residents in Business Enterprises applies as in any other sectors. The Act is available in English here:. http://eng.idnadarraduneyti.is/laws-and-regulations/nr/1129.

The registration of ships in Iceland is, however, only open to Icelandic nationals and Icelandic legal entities, as well as nationals and legal entities of the EEA, according to Act 115/1985 on the Registration of Ships. IV. TRADE POLICIES BY SECTOR (4) SERVICES (iii) Transport (b) Maritime transport Question 70 With regard to harbour administration, Paragraph 101 states that the Iceland Maritime Administration (IMA) is responsible for coastal protection and harbour projects, research, and planning for the development of coastal protections and harbours. The State is responsible for conducting basic research pertaining to harbour projects as well as the provision of financial support for new harbour projects. Paragraph 101 mentions that most harbour projects are tendered out. What harbour projects can be awarded through procedures other than tendering? What do these award procedures entail? Answer Tendering procedures for port projects is governed by Regulation 755/2007 on the procurement procedures of entities operating in the water, energy, transport and postal services sectors, which implements Directive 2004/17/EC on this subject. The port projects concerned include enlargements of ports, repairs of port infrastructure, harbour deepening, construction and maintenance of harbour sea walls and construction of quay installations. The relevant rules lay down detailed rules on the process required in such matters. The main rules is that projects are subject to tender, but small projects (under approx. 10 million ISK) are excempt from this requirement. IV. TRADE POLICIES BY SECTOR (5) TOURISM Question 71 Paragraph 106 states that under the Government's new growth plan, the authorities have identified tourism as a focus sector. In this regard, a new public strategy for tourism was approved by Parliament in 2011. What restrictions are there on foreign enterprise investment in the hotel trade?

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Answer There are no restrictions to foreign enterprises investment in the hotel trade. However, the general Act No. 34/1991 on Investment by Non-residents in Business Enterprises applies in hotel trade as in any other sectors. The Act is available in English here:. http://eng.idnadarraduneyti.is/laws-and-regulations/nr/1129. UNITED STATES Part I: Questions on the Secretariat Report (WT/TPR/S/273) III. TRADE POLICIES AND PRACTICES BY MEASURE (1) MEASURES DIRECTLY AFFECTING IMPORTS (v) Import prohibitions, restrictions and licensing Pages 29-30, paragraph 35 Question 1 The Secretariat Report refers to changes to Iceland's import license and/or permit requirements since its 2006 TPR. It appears that Iceland has not notified any import licensing measures since 2004. In light of the WTO Agreement on Import Licensing Procedures, what are Iceland's intentions with regard to the Agreement's notification requirements? When will Iceland reply to the annual Questionnaire on Import Licensing Procedures in accordance with Article 7.3 of the Agreement? Answer Iceland recognizes that it in the past years has not submitted the annual Questionnaire on Import Licensing Procedures in accordance with Article 7.3 of the Agreement. Iceland will submit the next reply to the annual questionnaire in March 2013. II. TRADE POLICY REGIME, FRAMEWORK AND OBJECTIVES (1) GENERAL CONSTITUTIONAL AND LEGAL FRAMEWORK

Page 12, paragraph 4 Question 2 The report mentions that there are two special courts; the Court of Impeachment, which deals with cases where members of the executive are accused of criminal behavior, and the Labour Courts. Please explain the types of cases that are considered under the Labour Court. Answer The Labour Court is a specialized court stipulated in the Act No. 80/1938 on Trade Unions and Industrial Disputes. The Court consists of five persons appointed for terms of three years, one by the Confederation of Icelandic Employers, one by the Icelandic Federation of Labour, one by the Minister of Welfare and two by the Supreme Court. The Labour Court‘s role is to settle legal disputes arising between social partners, e.g. unions and federations of employers, namely in the following instances:

Arising out of complaints of violations of the law on trade unions and labour disputes and damages suffered due to unlawful stoppage of work.

Out of charges of violation of a work agreement or disagreement on the interpretation of a work agreement or its validity.

Other issues between workers and employers, who have agreed to submit it to the Court. Items relating to the proceedings of cases which are not stipulated in the Act (No 80/1938) shall be subject to the code of procedure of civil cases before the District Courts as far as may be possible. The Court may order parties to pay damages, fines and costs in accordance with customary rules. The judgements and decrees of the Labour Court are subject to execution.

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A case which may be proceeded with before the Labour Court shall not be pleaded before common Courts of Law, unless the Labour Court has refused to take it for consideration, the Labour Court's decrees and judgements are final and will not be appealed. However, a judgement or ruling of dismissal or invalidation on the grounds that the case does not fall within the jurisdiction of the Labour Court, an order on the duty to witness, the swearing of oaths and fines for breaches of court procedure and decisions on the imposition of fines on parties can be appealed to the Supreme Court. (1) TRADE POLICY DEVELOPMENT AND OBJECTIVES (ii) Trade Policy Objectives

Page 13, paragraph 11, footnote 4

Question 3 The Secretariat report indicates that in July 2009, Iceland applied for membership of the EU and that 10 chapters are fully covered by the European Economic Area (EEA). As footnote four notes, one of the chapters covered is the freedom of movement for workers. Please provide additional information regarding what is covered by the chapter on the freedom of movement for workers.

Answer The EU legislation falling under the chapter on the freedom of movement for workers provides that citizens of one Member State have the right to work in another Member State. EU migrant workers must be treated in the same way as national workers in relation to working conditions, social and tax advantages. The acquis also includes a mechanism to coordinate national social security provisions for insured persons and their family members moving to another Member State. As a party to the EEA Agreement, Iceland has participated in the European Single Market since 1994. Icelandic legislation is therefore already in line with the EU rules on freedom of movement for workers. (3) TRADE AGREEMENTS AND ARRANGEMENTS Page 14, paragraph 14 Question 4 The Secretariat report indicates that a number of notifications remain outstanding. In addition to the annual notifications listed, we note that Iceland did not provide notification of changes to its import requirements for dairy and livestock products – adopted in 2011 – to the WTO SPS Committee, which has negatively impacted U.S. exports. When will Iceland notify this requirement to the WTO? Answer Iceland has recently notified the measures in question, and the relevant notification should be circulated to all members in the course of the week. III. TRADE POLICIES AND PRACTICES BY MEASURE (1) MEASURES AFFECTING PRODUCTION AND TRADE (iv) Standards and other technical requirements Page 42, paragraphs 75-76 The Secretariat report notes that Iceland has not made any notifications to the TBT Committee (or the SPS Committee) since its last review, which was in June 2006. Question 5

- During that review, the Secretariat report stated that "[… Icelandic] authorities also indicated that Iceland does not have a system in place for notifying EEA technical regulations to WTO Members but that they are considering how to address this." What is the status of Iceland's efforts to notify technical regulations that Iceland mandates, irrespective of how the regulations were developed or whether they are notified to EEA members?

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Answer Iceland is a part of the European Economic Area and as such participates in the European Single Market. Iceland as other EEA countries applies the harmonised rules of the Single Market, which often entails incorporating EU legislation into Icelandic legal order. Iceland is fully aware of its obligations under the WTO agreements to notify certain technical regulations to the WTO. Iceland has recently reviewed its procedure in order to provide for necessary and timely notifications of relevant TBT and SPS measures to the WTO. Question 6

- Additionally, our understanding is that since the last review, Iceland established specific labelling requirements for imports of certain agricultural products made with genetically engineered crops as ingredients, such as grains and cereal products. Iceland also recently updated their regulations in November 2011 regarding measures to prevent the introduction of animal diseases and contaminated products. When will Iceland notify these requirements to the WTO?

Answer Iceland has recently notified the measures in question, and the relevant notification should be circulated to all members in the course of the week. Page 44, paragraph 83 The Secretariat report provides information regarding the EEA and the application of EU SPS measures in Iceland. Please clarify how Iceland ensures that its SPS measures are based on either international standards (OIE, IPPC, or Codex) or science when Iceland selects a higher level of protection. For example, in 2011 Iceland adopted a regulation that requires meat shipped to Iceland to be accompanied by a certificate confirming that the products have been stored at a temperature of at least -18°C for one month prior to customs clearance. Question 7

- What is the scientific justification for this requirement? Answer The requirement that meat shipped to Iceland is to be accompanied by a certificate confirming that the products have been stored at a temperature of at least -18°C for one month prior to customs clearance, has been a requirement under Icelandic law for decades. This requirement is now found in Regulation No. 448/2012 on measures to prevent the introduction of animal diseases and contaminated products. The scientific justification for this requirement is based on the need for Iceland to have a high level of protection against the introduction of foreign animal diseases, due to the almost unique status of animal health in Iceland, as can be seen from the OIE website. The provision to require that meat products shall be stored at a temperature of at least -18°C for one month prior to customs clearance, allows Icelandic Food and Veterinary Authority a time to scan information from the country of origin of the meat to find out if a contagious disease that could be transmitted with the meat was present at the time of slaughter. A good example for the need of Iceland to exercise such a precautionary principle is the case of foot and mouth disease in UK in 2001. It was later determined that the disease had been present in the country almost three weeks before it was suspected and confirmed. Question 8

- This regulation does not appear to have been notified to the WTO. What steps has Iceland take to ensure that it notifies the WTO when it adopts a SPS measure which results in a higher level of protection than achieved by an international standard?

Answer Iceland has recently notified the measures in question, and the relevant notification should be circulated to all members in the course of the week.

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(v) Intellectual property rights Page 48, paragraph 97 Question 9 As the Secretariat report notes, copyright reform and a new draft bill have been put off until 2014. Is this a date-certain or is it contingent on funding that has yet to be acquired? Please also describe more fully some of the goals of the reform initiative? For example, what is meant by "maintaining Nordic legal unity?" Does this refer to working with and/or working on copyright harmonization with other EFTA countries? Page 48, paragraph 99 Question 10 Please describe the environment in Iceland for collective management organizations (CMOs)? It is our understanding that Iceland participates in extended collective licensing and that future legislation foresees relevant provisions on accreditation of CMOs. What will accreditation involve? Joint answer The reform of the Icelandic copyright act was launched in October 2009 and has so far resulted in one amendment act (act no. 93/2010). A second draft amendment act will go to public consultation shortly. Following that a bill of law will be presented in the next spring session of parliament. This bill of law will contain a revised chapter I (exclusive rights of authors) and revised provisions on extended collective licensing. The original schedule of the reform initiative included plans for annual incremental amendments to the copyright act, followed by a final revision bill of law to be presented in 2012. Due to the economic situation it is now envisaged that the final revision bill of law will be presented in 2014 instead of 2012. The Nordic countries (Denmark, Finland, Iceland, Norway and Sweden) have a long history of co-operation in the field of copyright legislation under the auspices of the Nordic Council of Ministers. The first co-ordinated Nordic copyright legislation was enacted in all the Nordic countries, bar Iceland, in 1960. By maintaining the Nordic legal unity through an on-going co-operation for the development of the copyright legislation each country can benefit from the relevant case law and jurisprudence from other Nordic countries. Thus there is a long tradition for attending higher education and training of the legal profession in other Nordic countries. Members of the legal profession of the Nordic countries also attend symposiums and workshops on regular basis for the development of common Nordic interpretation and understanding of legal principles and policy. A working group of Nordic Ministries collaborates on maintaining the Nordic legal unity in the copyright legislation of the respective Nordic countries. The working group is comprised of copyright experts from the Danish Ministry of Culture, the Norwegian Ministry of Culture, the Finnish Ministry of Education and Culture, the Swedish Ministry of Justice and the Icelandic Ministry of Education, Science and Culture. This working group was originally formed under the auspices of the Nordic Council of Ministers but is now independent from that body. The working group is a forum for exchange of information on the national and international level, including the EU and EEA levels and co-ordinates a common Nordic copyright policy. As all of the Nordic countries participate in the European Economic Area (EEA) they have in most cases equivalent duties to transpose the same EU directives, regulations and recommendations in the field of intellectual property. It is common for the Nordic countries to harmonize the national implementation of EU legislation, within the scope prescribed in each case. The following collective management organisations have received an accreditation from the Ministry of Education, Science and Culture, for representing the respective right holders for extended collective licensing purposes, cf. the Copyright Act No. 73/1972: Innheimtumiðstod gjalda (IHM), a collecting society according to Art. 11 of the Copyright Act (private copying exemption), is a joint copyright organisation for authors, performers and producers. IHM collects remunerations for the sale of blank audio and video media and hardware, used for reproduction of material protected by copyright, and distributes to right holders. IHM represents the large majority of Icelandic right holders and through reciprocity agreements, most of the foreign right holders. IHM also represents right holders for terrestrial cable retransmission of satellite broadcasting, cf. arts. 23a and 45a of the Copyright Act.

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FJÖLÍS is an umbrella collection society representing authors and publishers for use of published works via reprography accredited by the Ministry of Education, Science and Culture pursuant to Art. 15a of the Copyright Act. FJÖLÍS has reciprocal agreements with equivalent collection societies in the EU STEF is the Performing Rights Society of Iceland, representing the interest of composers and songwriters for public performances and broadcasting, accredited by the Ministry of Education, Science and Culture pursuant art. 23 of the Copyright Act. STEF is a member of Nordisk Copyright Bureau (NCB), which deals with recording rights, both mechanical rights and more recently on-line rights. Both organisations have reciprocal agreements with other collection societies in the EU. The Icelandic Visual Arts Copyright Association (Myndhöfundasjóður Íslands, Myndstef) is accredited by the Ministry of Education, Science and Culture pursuant to Arts. 23, 25 and 25b of the Copyright Act. Myndstef represents and collects licence fees on the behalf of authors of visual art for use of their work and resale right remuneration for the resale of original works of art. Myndstef has reciprocal agreements with other collection societies in the EU. The Writer's Union of Iceland (Rithöfundasamband Íslands), is accredited by the Ministry of Education, Science and Culture pursuant to Art. 23 of the Copyright Act. SFH, the Collecting Society for Performing Artists and Phonogram Producers, is accredited by the Ministry of Education, Science and Culture pursuant to Art. 47 of the Copyright Act. The legal status of accreditation for a copyright collecting society means that collective agreements with users done on behalf of the members of the collecting society also become binding for artists and performers who are not members of the society in question. However, in system of extended collective licensing there is always an opt-out possibility for members and non-members for excluding their works or performances from the rights granted by such licenses. Directive 2006/123/EC of the European Parliament and of the Council of 2 December 2006 on services in the internal market is likely to influence the current regime of accrediting copyright collection societies. The European Commission has in a handbook on implementation of the directive construed Art. 17(11), which excludes the administration of copyright from the directive in such a way that it does not bar the application of Art. 9 of the directive which explicitly prohibits official accreditation as a regulatory prerequisite for offering services in another EEA member state. This, along with plans for a new directive for regulating collecting societies, is now commonly regarded as a going against the current accreditation scheme of copyright collecting societies. It is therefore envisaged that accreditation will in near future be abolished from the Icelandic copyright act. THAILAND III. TRADE POLICIES AND PRACTICES BY MEASURES Page 42, paragraph 75 "As of 30 June 2012, Iceland had not made any notifications to the TBT Committee since its last Review."

Question 1 Thailand would appreciate if Iceland could explain the reason why it has not made any notifications to the TBT Committee since its last trade policy review. Answer Iceland recognizes that it may have some TBT notifications outstanding. Iceland is taking active steps to remedy the situation. III. TRADE POLICIES AND PRACTICES BY MEASURES Page 30, paragraph 38 "Under the Regulations, a claim concerning dumping or subsidies must be made to the Minister, who refers it to the Committee on Anti-Dumping and Countervailing Duties. The Committee may make preliminary findings to reject or uphold the claim. If the claim is upheld, the Committee may

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impose preliminary anti-dumping or countervailing duties for up to twelve months and must notify, in the Official Gazette, that it intends to start a full investigation. In addition, the complaining party and other interested persons (including exporters, importers, and the Government of the exporting country) must be directly informed of the investigation. During the investigation, which should not take longer than one year, the Committee may hold hearings and invite interested parties to make submissions. The final decisions of the Committee are published in the Official Gazette. If the Committee decides to impose anti-dumping or countervailing duties on imports of a product (cannot be applied simultaneously) the maximum period is five years, renewable if a complaining party can show that removal of the measure would lead to injury." Question 2 Could Iceland please explain how preliminary anti-dumping and countervailing duties are calculated? What are the bases of such calculation?

Answer As stated in paragraph 83 of the TPR report, Iceland has not resorted to anti-dumping or countervailing measures. The process of applying anti-dumping or countervailing measures is described in the Customs Act and other relevant regulations that are based on Iceland's obligations under WTO agreements. In Article 135 of the Customs Act it is stated that anti-dumping duties must not exceed the dumping margin, i. e. the difference between the dumping price and the price being compared. The Article further states that countervailing duties must not exceed the payments or subsidies that are directly or indirectly granted in connection with the manufacture, processing, exportation or transportation of the goods. This would also apply to preliminary anti-dumping and countervailing duties if imposed. In Article 34 of Regulation No. 351/1994, on the execution of Anti-Dumping and Countervailing Duties, it is stated that anti-dumping and countervailing duties may be imposed temporarily until further information is available, if a delay is considered likely to cause damage. In such cases the customs clearance of the product should be authorized granted that a cash deposit has been made as a guarantee. If Iceland were to impose preliminary anti-Dumping or countervailing duties such application would be in the form of a security by a cash deposit prior to customs clearance and the deposit would not exceed the dumping margin.

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