Abstract :
An increasingly visible facet of China’s commercial diplomacy
has been its pursuit of preferential trade agreements (PTAs) with
small and medium-sized economies outside Asia. China’s PTAs, completed
or under negotiation, have indicated both a conservative approach and an
increasing comfort level with cross-regional trade negotiations. The
China–Iceland PTA negotiations since 2006 illustrate this new thinking.
Although the island state has a considerably smaller economy, China has
perceived the negotiations as being undertaken between equals as well as
an important bilateralism model. A successful deal will further demonstrate
a new stage in Chinese commercial diplomacy and its approach to bilateral
trade as well as a determination to engage the European economy even
through a “side door” approach. However, in light of Iceland’s banking crisis
and deep recession in late 2008, Beijing has also had to address the uncertainties
of negotiating with small states in a time of global economic
uncertainty.
