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Most of the trade in goods between the EC and EFTA trade, border checks remain to assure compliance with is in industrial products, which account for more than national rules on indirect taxation and to enforce quota 90 percent of EFT A exports. Although fish products agreements with third countries. They also protect account fo r only a small percentage of total EFTA against terrorism, drugs, the entry of unwanted goods exports, they are the main source of export revenue and individuals, and the enforcement of national and for one EFTA member, Iceland. Since the EC and Community policies in such areas as agriculture and EFTA are not aiming at a common agricultural policy, trade, and for various safety and health checks. the impact of the internal market on inter-bloc trade in Border controls are costly to both firms and govern agricultural products is likely to be small. ments. The direct costs are mainly administrative. For The main issues in the prospective trade in goods importers and exporters, these involve the expense of between the EC and EFTA will depend on the nature staff and computing and processing for the additional of their trading relationship. This relationship could paperwork needed for foreign trade. Governments take on a variety of fo rms, ranging from the status quo must bear the costs of this paperwork and of manning to a common market that includes all 18 countries. internal borders. Additional costs also arise from ship While a common market may have important benefits, ping delays at border checks. 28 the requirement of a common trade policy toward third The White Paper envisaged the elimination of all countries would pose major difficulties for several internal frontier controls within the EC, requiring that EFTA members. Therefore, this chapter will not policies restricting the flow of goods, services, and address issues associated with the creation of a com individuals among member states be relaxed and even mon market. tually abandoned. In addition, policies regarding the Since the FTAs already assure free trade in industrial EC's external borders needed to be unified so that any goods, the main issues from the EFTA's perspective individual or commodity entering one member state are how changes arising from the internal market may from outside the EC would be free to enter any other influence inter-bloc trade and what may be done to member state. This required harmonization of national mitigate any negative side effects. The main areas of regulations for the entry and exit of goods and individu interest-although several extend well beyond goods als as well as confidence that these regulations would trade-include the elimination of internal border con be effectively enforced.29 trols and other physical barriers, the harmonization of Ending internal border controls would affect the technical standards and regulations, the liberalization competitiveness of firmsin non-EC countries in several of public procurement policies, the administration of rules of origin and anti-dumping rules, and state aid 28An EC-financed study estimated the total cost of border policies. controls at about 0.3 percent of Community GDP, mostly admin istrative costs to firms. In addition, importers estimated the rise in intra-EC trade from eliminating internal border controls at I percent, while exporters estimated the rise at 3 percent. See (1988). Border Controls and Other Physical Barriers Ernst and Whinney 29'fhe White Paper envisaged the complete dismantling of all border controls and other physical barriers within the EC by Border controls inhibit the free movement of individ 1993. However, progress has been slower than hoped. In Decem 1989, uals and constitute a costly impediment to the free flow ber the Schengen Agreement was to be signed by Belgium, France, Germany, Luxembourg, and the Netherlands, removing of goods and services. These controls are motivated all border controls and allowing people to travel freely within the by a number of considerations, including commercial, five-country region. The agreement was delayed until June 1990 fiscal, economic, health, statistical, and security ones. because of a dispute between the Federal Republic of Germany and its partners regarding the status of East Germany. The While both the EC and EFTA have eliminated customs accord still must be approved by the parliaments of the five duties and quantitative restrictions on their internal country signatories.

©International Monetary Fund. Not for Redistribution Technical Standards and Regulations ways. Reducing shipping and administrative costs for However, the impact on EFT A consumers partly EC-based firms' intra-Community trade would bring an depends on what action, if any, is taken by EFTA firms autonomous improvement in their terms of trade vis-a and domestic authorities to offset the negative terms vis outside firms. However, non-EC firms trading of-trade effects of the relative decline in transportation within the EC would gain some benefitsin cases where costs within the EC. Improved customs procedures their goods were transshipped within the EC, or where should also reduce the administrative costs to EC and firms had previously shipped goods into the EC by EFTA governments, while the elimination of internal indirect routes to avoid costs associated with crossing border controls within the EC would result in further internal frontiers. EC firms exporting to nonmember administrative savings for EC governments. countries could also benefitfr om reductions in the cost of shipping goods across the EC. Differing trade policies toward third parties are likely Technical Standards and Regulations to force the retention of some form of border controls between the two blocs. Therefore , the competitive A producer wishing to sell a good within the EC or position of EFTA firms within the EC will partly EFTA may be subject to a different set of rules govern depend on the administrative costs of these controls ing the product in each of the 18 countries. These rules and the time involved in crossing protected borders. 30 fall into four categories: technical standards, which are Much progress has been made in cutting the adminis formally voluntary but may have quasi-legal status by trative costs of border crossings. In January 1988, the government decision or commercial practice; regula Single Administrative Document (SAD) and Common tions, which are legal requirements set by the EC gov Transit Conventions came into force, greatly simplify ernments; testing procedures; and certification that the ing the administrative procedures associated with the product conforms to the regulations or standards (Cal goods trade between the EC and EFT A. 31 In the con ingaert, 1988, pp. 25-26). In the EC and EFTA, stan ventions, the EC and EFTA agreed to replace most dards, testing, and certification procedures are nor customs documents used in EC-EFTA trade with the mally set by private groups, which may be national single document used in intra-EC trade. The agreement or multinational. The two main multinational groups, also provided that the EC and EFTA countries would CEN and Cenelec, include all members of the EC and fully computerize their customs data and customs pro EFTAY EC firms consider these rules the single most cedures by 1992, helping to minimize the relative cost important barrier to the internal market (Cecchini, disadvantage of EFT A exporters to the EC, while plac 1988, p. 28). However, ending these differences will be ing EC firms on an equal footing with EFT A firms difficult and complex because of their sheer volume. trading in EFT A. There are an estimated 100,000 differenttechnical regu The potential savings from faster border crossings lations and standards within the EC alone (EC Com may vary depending on the countries involved. The mission, 1988b, p. 43). impact of more uniform border fo rmalities at the EC's Divergent regulations and standards may distort external borders will differ from country to country firms'behavior in several ways. By raising the costs of within the EC. Additional savings may arise by shifting doing business in a larger market, firms may seek only some customs officialsfr eed from working on the intra to fill the niche created by their national regulations, EC borders to the EC's external borders. However, instead of competing more broadly. Problems associ the savings from eliminating intra-EC border crossings ated with divergent regulations and standards are espe should also yield significant benefits for EFTA coun cially severe for transport equipment and certain other tries but, in any case, they are likely to be smaller than investment goods, precision and office equipment, the savings on administrative costs. pharmaceuticals, food, and tobacco (EC Commission, Consumers in the EC and EFT A should benefit 1988b, pp. 51-53). Domestic orientation not only from lower transport costs within the EC, as well as reduces trade, but the resulting market fragmentation from reduced administrative costs in inter-bloc trade. may also hinder research and development, especially in areas with major scale economies. Additional costs may include duplication of research and development 30Some relaxation of border controls is possible. For example, from July 1991, customs checks will be randomized for goods being transported between the EC and Switzerland. However, 32CEN and Cenelec are French acronyms for Committee for the benefitsto the Nordic countries from such an initiative would European Standardization and Committee for European Electro be limited. technical Standardization, respectively. A third body, the Euro 31This was a top priority item of the High Level Contact Group pean Telecommunications Standards Institute (ETSI), sets stan working on implementing the Luxembourg Declaration. This dards in the area of telecommunications. For details on the design agreement was the first EC-EFfA accord to come out of the of technical regulations and standards in the main European Luxembourg Declaration. standardization organizations, see Nicolas (1988).

©International Monetary Fund. Not for Redistribution V • TRADE IN GOODS

and higher inventory and distribution costs. Public the standard-setting bodies. However, while industry expenditures may also rise as a result of the duplication bodies will be charged with setting EC standards, the of testing and certification of products, while consum Commission has insisted that the interests of all sectors ers must bear the direct costs passed on by firms and affected by the standards-including both sides of governments and the indirect costs of reduced com industry, commerce, and consumers-be taken into petition and less rationalization of production and account. The Commission may also withdraw a man marketing. date from any body that is not effectively and fairly The cost of technical barriers is believed to be high. fulfilling its task. The EFTA has worked closely with However, they are difficult to quantify because they the EC both in helping to set the EC standards and in tend to be industry-specific and are often intertwined setting work priorities. with other barriers, including content requirements and Much progress has also been made in the area of restrictive government procurement practices. 33 mutual recognition of technical regulations and stan The White Paper proposed to reduce and eventually dards within the EC. In the Cassis de Dijon decision of eliminate divergent regulations and standards using a 1979, the European Court of Justice held that products three-part strategy of selective harmonization, mutual lawfully produced and marketed in one member state information, and mutual recognition. Selective harmo must, in principle, be admitted into every other mem nization requires legislation on the essential product ber state. Mutual recognition is to be accepted when characteristics. However, the passage of binding legis harmonization is not essential or has not yet been intro lation is difficult, requiring Council unanimity. 34 Thus, duced. Barriers are to be permitted "only when they it will only be required when national regulations differ are necessaryto satisfy mandatory requirements, serve in essential characteristics in terms of health, safety, a purpose in the general interest and are essential for or consumer or environmental protection. In these the purpose to be attained" (EC Commission, 1989b, cases, the EC standard-expressed in fairly general pp. 39-40). terms-will first be defined. These requirements are To help prevent the erection of new barriers in the sufficient to allow the product to circulate freely within interim, member states must give the Commission the EC. When no major disparity exists, mandated advance notice of all draft regulations and standards groups, mainly CEN/Cenelec, will be charged with involving technical specifications. Implementation establishing the detailed technical specifications of the must then be delayed for up to one year to allow the European or EC standard. Once the standard is set, Commission and other member states to determine if these groups will also set the final specifications that any elements are likely to create trade barriers and, would conform to the standard. 35 EFT A members are if so, to take remedial action. Similar legislation was in a special position in this regard, since they not only passed by the EFTA in 1987. Members of the EC and participate in setting EC standards, they are also sub EFTA also have agreed to provide CEN/Cenelec drafts ject to the standards once they are passed.36 of all new regulations and standards as soon as possible To ease replacement of national standards by EC to allow other members to comment and request standards, the Commission is working to strengthen changes. Efforts are under way to use mutual recognition to 33The Cecchini Report estimates the costs of the EC' s internal avoid duplication of testing and certification proce barriers for seven industries, accounting for 43 percent of EC industrial output. The estimated savings from the removal of dures. However, countries have more faith in their own barriers from technical regulations, import restrictions, and certifying systems than in foreign ones. To overcome restrictive government procurement policies is equivalent to this bias, the EC Commission and most EFTA mem about 0.3 percent of EC GDP. Half are in telecommunications equipment and result from the ending of restrictive government bers favor centering efforts in CEN/Cenelec. A major procurement practices. Cecchini (1988), pp. 25-27 and 50-68. step was taken in June 1988, when EFTA and EC 340n the other hand, passage of technical standards by CEN/ members signed a framework on the mutual recognition Cenelec requires only a qualified majority. 35While the EC standards are not mandatory, goods meeting of test results and certification. While presupposing the standards are assumed to fulfill the essential requirements common guidelines for testing procedures, it was seen test. A manufacturer not meeting the EC standard must be able as a necessary first step toward EC-EFTA negotiations to prove that the products meet the essential requirement. 36Voting in CEN/Cenelec requires a two-thirds majority, but on framework and sectoral agreements ("Joint efforts are made to achieve unanimity. EC country institutions' Conclusions ...," 1988). However, this agreement is voting weights are based on the EC treaties, while EFfA mem yet to be finalized. bers' weights are negotiated. EC institutions have special rights in the implementation of new documents. If a document does Fears have been voiced that EC standards may be not receive a qualified majority, a count is made of only the EC draftedto discriminate against nonmembers, but EFTA institutions. If a qualified majority of this group is in favor, members discount this. Unifying regulations for 12 EC EC institutions must implement the decision along with EFfA institutions voting for it. EFf A institutions voting against the countries-IS including the EFT A-are sufficiently document are theoretically not required to implement it. complex to discourage such efforts. Discrimination

©International Monetary Fund. Not for Redistribution Procurement Policy would also be against the interests of distributors and for roughly 15 percent of Community gross domestic consumers in the EC and contrary to the Commission's product (GDP) in 1986.38 While much of this involved mandate. In addition, gains from discriminatory stan purchases that were noncompetitive, nontradable, or dards would be short-lived, since outsiders would mod in quantities too small to be covered by EC rules on ify production methods to meet the standard. contractual procedures, contractual purchases by the As members of CEN/Cenelec, EFTA countries gen public sector-public procurement-were equivalent erally are obliged to accept EC standards as they are to 7-10 percent of Community GDP. Public sector pur enacted. However, closer EC-EFT A cooperation chases in the EFTA countries are estimated at about should bring increased efforts to remove technical bar 10 percent of GDP, implying public procurement in the riers between the blocs, including efforts by EFT A range of 4.5-6.5 percent of GDP (Pintado and others, members to incorporate virtually all EC standards as 1988, p. 27). they are passed. One potential issue is whether EFTA Public procurement has remained largely closed, members will be allowed to retain or enact tougher despite legislation that was to open up public works standards than those in the EC, notably regarding the contracts in excess of ECU 1 million (1971) and public environment. This could cause problems, since it could supply contracts of over ECU 200,000(19 77). In 1986, result in situations where goods produced by the EFTA about 20 percent of the tenders covered by the direc member meet the EC standard, but goods meeting the tives were published, while 2 percent went to bidders EC standard do not meet the domestic standard of from other member states. This was caused mainly by the EFTA country. No matter what the rationale, this two factors. First, energy, transport, telecommunica could be seen as discriminatory. tions, and water supply were exempt from the rules. While eliminating technical barriers to trade will Second, EC legislation has been bypassed and ignored, involve a major effort for the EC and EFTA alike, the showing "that the Community legislator has proved no EFTA is well positioned to move in step with the EC. match for national and local purchasing bureaucracies'' The outlook is good for several reasons. First, as mem (Cecchini, 1988, p. 18). bers of CEN/Cenelec, EFT A members already partici The costs of nationalistic procurement policies are pate in the decision-making process in these organiza high.39 The savings may be divided into three catego tions. Second, most EFT A countries already use EC ries; the static trade effe ct of buying from the cheapest standards whenever possible. In cases where there is EC supplier; the competitive effect of opening closed no standard, the only requirement fo r sale in the EC is sectors; and the restructuring effect of fo rcing small that the product meet the standards of some member firmsin protected sectors to grow to take better advan state; if it does not meet the standards in the country tage of scale economies. The savings would be even in which it is sold, the product must be shipped through greater if procurement were fully open to non-EC bid a member state where it does meet the standardsY ders. In addition, the savings to private buyers from Third, increased EC-EFTA cooperation is likely to less restrictive trade practices and the dynamic effects result in an agreement to eliminate technical barriers of greater competition, innovation, investment, and between the two blocs, which will probably follow growth may also be large. along the lines of the measures being taken in the EC. The White Paper laid out a three-part strategy for In May 1990, the EC and EFTA also agreed to create opening public procurement. First, legislative loop an institution called the European Organization for holes would be closed and efforts made to increase the Testing and Certification(EOTC). The EOTC will work transparency of public tenders to encourage greater to harmonize testing and certification throughout participation by other member states. Second, losing Europe, including eliminating the need to retest goods bidders would be given improved legal redress and the when they cross national frontiers. The EOTC will Commission would be given greater powers to police have a standing on par with CEN/Cenelec and will be and enforce compliance. Third, procurement rules formed in three stages, the last taking effect on Janu would be extended to energy, transport, telecommuni ary 1, 1993. cations, and water supply, and later to the services sector.

Procurement Policy 38For a summary of the costs of restrictive procurement poli cies, see Cecchini (1988), pp. 16-23,or EC Commission (1988b), Public sector purchases of goods and services by pp. 54-59. This discussion is largely based on these two reports. all 39Atkins (1988) studied Belgium, France, Germany, Italy, and levels of government and public enterprises accounted the United Kingdom, using some 40 product categories and 1984 data. The estimates, extrapolated to the EC-12, showed a poten 37Presumably, EFTA states will be required to give reciprocal tial saving of about :Y. of I percent of EC GDP, about one fifth rights to EC member states and probably to other EFTA mem from defense. About half the savings were in telecommunica bers as well. tions, power turbines, and data processing.

©International Monetary Fund. Not for Redistribution V·TRADE IN GOODS

Efforts to implement these plans have begun, but throughout the two blocs. However, while the accord progress has been slow. A program of action was set by grants EFTA members greater input in the EC's own the Commission in mid-1986. In 1988, three directives discussions on this topic, joint progress is likely to be were tabled before the Council of Ministers: one open slow until the EC completes its own work in this area. ing the energy, telecommunications, and water supply sectors to international tender, and two others designed to ensure compliance with existing public procurement Rules of Origin and Anti-Dumping Rules directives. In April 1989, a revised report on opening protected sectors was presented to the European Par The EC has two sets of origin rules.42 Preferential liament fo r supply contracts worth over ECU 750,000 rules are used to determine if a product originates in a and works contracts over ECU 5 million (Committee particular country and is eligible for preference under on Economic and Monetary Affairs ..., 1989). In Feb special agreements, including the FTAs and the Gener ruary 1990, after some delays, the directive was alized System of Preferences. These normally require passed.40 One change-which caused the delays-was that the product undergo sufficient processing to a "buy European" clause that gave bidders from mem change the product's tariff heading. Other tests may ber states a 3 percent margin of preference relative to also be used, such as the fo rm of processing or the bidders outside the EC, unless the outside bids con percent of value added. Nonpreferential rules relate to tained at least 50 percent "European content." The commercial policy measures and rules, including anti ministers also stated that the content requirement dumping measures. They are based on the "last sub would be waived if a worldwide agreement to drop stantial operation" rule, which may be based on either such requirements could be made under the General a technical test on change in product properties, an Agreement on Tariffs and Trade (GATT). Discussions assessment of the importance of the last operation in on public procurement of services are next on the the totality of the manufacturing process, or a value agenda. added criterion.43 The Luxembourg Declaration listed public procure Until 1989, a major concern for EFTA members was ment as a primary area where EC-EFTA cooperation the cumulation rules in their FTAs with the EC. These was desirable, but advanced no proposals. Discussions rules were originally bilateral between each individual began in 1986. Efforts have focused on gradually open EFTA member and the EC, so that a good produced ing up public works contracts at all levels of govern by one EFTA member would only qualify for duty-free ment. EFTA ministers have also agreed to provide status under its FT A if the proportion of the final price copies of tender requests in accordance with the GATT added by its own inputs plus those added by EC mem agreement for publication in the EC's officialpaper and bers exceeded the minimum requirement. Thus, the inclusions in data banks regarding public procurement. contribution of other EFTA members was not counted. Plans have also been discussed to revise EFT A rules on However, in January 1989, this rule was changed so surveillance and enforcement (EFTA, 1989, pp. 2-3). that all materials and inputs originating in EFT A and These rules, which must be enacted at the national EC countries now count against the minimum. level, are equivalent to those in the EC. Under EC procedures, the definition of dumping is While the level of concern about opening public pro based on the price in the exporter's home market. curement varies among EFT A members, progress is However, if this is not considered representative of possible in this area.41 As noted, agreement at the EC costs, prices in third countries may also be used (Kelly EFTA meeting in December 1989 was based on the and others, 1988, pp. 95-96). If dumping is detected, principle of free movement of goods and services and GATT provisions permit the imposition of a counter that, with limited exceptions, EFT A members would vailing duty if injury is fo und and if the dumping is fo llow actions taken by the EC. This implies that joint attributable to state subsidies. Anti-dumping regula agreements may eventually have to be reached on tions are not applied to intra-Community trade, since opening procurement policies on equal terms to bidders the maintenance of price differentials is, in principle, not possible within a free market. 40ln December 1989, the Ministers also reached agreement on recourse rules for firmsthat were unjustly excluded from public works or supply contracts. It is scheduled to take effect in Janu 42ln October 1989, the EC Commission adopted a directive on ary 1993 for all member states except Greece, Portugal, and rules of origin stating that the EC would apply these rules in a Spain. way that would not affect trade or investment. See European 41For example, Finland, which sees its policies as open, argues Community (1989), pp. 1-3. that competition should be as free as possible; see Council of 43As set out in the EC Council's Regulation No. 802/68, State, Report to Parliament ...(19 89), p. 34. A Swedish bill on June 27, 1968, and incorporated in the 1973 Kyoto Convention, the internal market did not list procurement as a major policy which laid out the general principles of an international system goal; see Swedish Ministry of Foreign Affairs (1990), p. 24. of rules of origin.

EFTA members have sought exemption from the Iceland, fisheries and fish processing account for one EC's anti-dumping regulations, arguing that they dis sixth of GDP and about three fo urths of merchandise criminate against EFTA-based firms since large price exports, half of which go to the EC. While the FT As differentials exist within the EC. EFTA members also did not cover fish, Iceland was given favorable terms fear that, after the start of the internal market, price on its sales of fish and fish products to the EC, with cuts will be necessary to maintain market share within about 50 percent of its fish exports enjoying special the EC, making EFTA-based firms vulnerable to anti preferences (Gislason, 1987).45 dumping actions. The Commission has stated that the The current version of the EC's Common Fisheries EC would be prepared to drop anti-dumping rules with Policy (CFP) will remain in effect until l991. This policy regard to the EFT A, if they were replaced by uniform uses catch quotas to help conserve fish stocks, while competition rules. The negotiations fo llowing up the seeking to modernize the fishing industry to increase Oslo-Brussels process could lay the groundwork for competitiveness. To assure a sufficient supply of fish progress in this area. within the EC, fishing rights are bought from third countries or negotiated in exchange for access to mar kets. To protect the fishing and fish processing indus State Aid try, tariff barriers and quotas are imposed on fi sh imports. While fishing within EC waters has been lim The White Paper states that a strong-competition ited to conserve the fish stocks and because of pollu policy requires that "discipline on state aid be rigor tion, fish catches outside EC waters have also ously enforced" (White Paper, para. 158). EFTA mem decreased. Falling catches, however, have meant that bers stress the need for this discipline to the EC and the EC's fish processing industry has had to import report lapses they detect (Council of State, Report to more fish from outside sources. Parliament ..., 1989, pp. 32-33). These protests are In 1988, 5 percent of EC imports of unprocessed fish usually based on the FT As, which state that "any pub came from Iceland. While Iceland's fish exports to the lic aid which distorts or threatens to distort competition EC have gradually risen, EC policy on processed fish by favoring certain undertakings or the production of has caused problems for Iceland, particularly for its certain goods" is incompatible with the fu nctioning of trade in salted fish. The principal customers for salted the FTAs (EFTA, l987a, p. lOO). The EFTA conven fish are Greece, Italy, Portugal , and Spain. When the tion has a similar prohibition covering trade between FTAs were signed, Greece, Portugal, and Spain were EFTA members. While disputes may be brought before not members of the EC. Their accession to the EC has the GATT, EFTA and EC members generally seek to made their imports of salted fish subject to the same avoid settling their differences in this way. restrictions under the CFP as the other imports of EC Talks on state aid have begun. The first goal is to member states. As a result, the share of Icelandic fish develop a system for reporting all state aid in EC and eries exports that enjoy preferential treatment in the EFTA countries and a consultation procedure for prob Community fe ll by about 15 percent (Olafsson, 1989). lem cases. Preliminary proposals in both areas were Icelandic exporters have been fo rced to make price advanced in November 1988 and are under study. One concessions to maintain market shares. Partly to offset problem is that the EFTA countries do not have a the fa ll in revenue from salted fish, more unprocessed monitoring and enforcement mechanism enjoying the fresh fish is exported. Recently, the Icelandic Govern same legal status as the EC's. Work has also begun ment imposed temporary export restrictions on fresh within the EFTA to strengthen its internal procedures; fish to protect employment in the fishprocessing indus progress is thought to be a precondition for successful try . Further measures may be taken if the trend contin inter-bloc discussions. It is hoped that an enforcement ues. Icelandic firms may have to move their processing mechanism may be developed as part of the institu operations to the EC to evade trade barriers and to tional changes associated with the Oslo-Brussels furnish traditional southern European markets. process. In its negotiations with Iceland, the EC Commission insisted on access to Icelandic fishing grounds as the price fo r freer access to the EC. Because of its heavy Fisheries and Trade in Fish dependence on fisheries and the fact that Iceland's fishing zones are already fully used, such an agreement Within the EFT A, only Iceland views the discussions regarding fisheries and trade in fish as important.44 In 45Aithough the Free Trade Agreements were reached in 1972, the dismantling of EC duties on certain fish products came into 44Norway and Sweden both share their fishing rights with the fo rce only in 1976, when the "cod war" between Iceland and the EC in exchange for preferential treatment for their fish exports. United Kingdom was settled.

©International Monetary Fund. Not for Redistribution V • TRADE IN GOODS is not considered a fe asible option for Iceland. There key precedent for inter-bloc negotiations. However, it is also a political consensus in Iceland in support of is still not clear whether negotiating through the EFT A this position. will give sufficient weight to Iceland's interests. If an The question then becomes what is the most appro extension of the free trade arrangements to processed priate strategy fo r negotiating with the EC. At present, fish cannot be achieved, Iceland may have to look the EFTA is being given a central role in the talks. This elsewhere for markets if it remains unwilling to increase became possible when intra-EFTA trade in fish was its fresh fish exports. Neither the Luxembourg Decla freed in March 1989. While this agreement had little ration nor the Oslo-Brussels accords indicate the economic significance fo r the EFTA, it was seen as a course these negotiations are likely to take.