(Photo: Hjalti Þ. Hreinsson) Chinese and Icelandic flags The Free Trade Agreement between China and Iceland was signed last month. It happened for the first time in history that China has agreed an FTA with an European country.

First negotiations started in late 2006 but were put on hold during the world´s economic crisis. Chinese and Icelandic officials resumed talks and agreed on final terms in January 2014.

Early this week, both countries decided for the agreement to come into force on July 1st 2014.

The FTA will serve the mutual for Iceland and China benefits in trade and investment. The tariffs on most goods will be removed what means that China´s export to Iceland will be tax free.

Both nations will exclude certain products from tariff preferences, with Iceland excluding dairy and meat products, for example, and China excluding some paper products.

The FTA could be an important factor of China's upcoming natural resources exploration mission in the Arctic. It will also go some way to showing how the Asian nation can develop trade links with other European countries.

Click here to access Free Trade Agreement between China and Iceland and other supporting documents.