Agreement on Trade

The Agreement on Trade between the EU and the Faroe Islands, which covers trade in goods, first came into effect in 1991 and was later updated in 1997. The Agreement was supplemented in 2001 with a Protocol on Veterinary Matters. The Joint Committee established by the Agreement is responsible for ensuring the proper implementation of the Agreement and meets regularly to consider proposals for amendments and other relevant issues.

The Agreement provides for tariff free trade in all industrial goods between the Faroe Islands and the EU, with some significant exceptions for seafood exports from the Faroe Islands. The Annexes to Protocol 1 of the Agreement form, in effect, a “positive” list of the fisheries and aquaculture products which can be exported tariff free from the Faroe Islands to the EU, or which are subject to tariff-free quotas. Any products not contained on the list are subject to EU applicable import tariffs.

Most unprocessed or semi-processed fresh, chilled and frozen seafood produced today in the Faroe Islands is included in the Annexes to Protocol 1 with tariff-free access to the EU market. However, very few processed, value-added seafood products are included on this list. Under the present terms of the Agreement, the addition of any new product lines to these Annexes must be negotiated on a case-by-case basis, which can be a very lengthy process.

As the Protocol on Veterinary Matters only applies to Faroese seafood production, agricultural products from the Faroe Islands (meat and dairy) are not exported to the EU.

In comparison, the EU has tariff free access to the Faroese market for all its goods, including all food products. The only exceptions are sheep meat, to which a small tariff-free quota applies, and fresh dairy products. These few restrictions are outlined in Protocol 4 of the Agreement.

The current asymmetry in the Trade Agreement with the EU results in a balance of trade that is considerably in favor of the EU.  The Faroe Islands are therefore seeking improved market access for value-added seafood products and full liberalisation of trade in all seafood products.  Such access would be consistent with provisions agreed by the EU in its new generation of Free Trade Agreements with third countries outside Europe.

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