Editing Foreign relations of Iceland (section)

== European Union application ==
{{main|Iceland–European Union relations|Enlargement of the European Union}}
[[File:Iceland Reykjavík Port Whaling Ships.jpg|thumb|Iceland's reluctance to join the EU's [[Common Fisheries Policy]] is a major stumbling bloc to accession]]

Iceland has had a close relationship with the [[European Union]] (EU) throughout its development, but has remained outside (instead, joining the [[European Free Trade Area]] or EFTA). In 1972, the two sides signed a [[free trade agreement]] and in 1994 Iceland joined the [[European Economic Area]] which let itself and other non-EU states have access to the [[Internal Market (European Union)|EU's internal market]] in exchange for Iceland contributing funds and applying EU law in relevant areas. The EU is Iceland's most important trading partner with a strong trade surplus in 2008/9 in terms of goods, services and [[foreign direct investment]]. Iceland also participates in the [[Schengen Area]] (as well as relevant police and judicial cooperation) and has non-voting representation in some EU agencies.<ref name="Trade relations">[http://ec.europa.eu/trade/creating-opportunities/bilateral-relations/countries/iceland/ Iceland], European Commission</ref><ref name="EEAS Iceland">[http://www.eeas.europa.eu/iceland/index_en.htm Iceland], EEAS</ref>

However, after Iceland's financial crash in 2008, it has sought membership of the EU and the [[euro]]. Iceland applied on 16 July 2009 and negotiations formally began 17 June 2011.<ref name="timeline">[http://europe.mfa.is/phase1/timeline/ Timeline of events – Iceland's application for membership of the EU] {{Webarchive|url=https://web.archive.org/web/20110903164421/http://europe.mfa.is/phase1/timeline/ |date=3 September 2011 }}, Icelandic Ministry for Foreign Affairs</ref> After an agreement is concluded, the accession treaty must be ratified by every EU state and be subject to a national referendum in Iceland.<ref name="Nat Ref">[http://europe.mfa.is/phase-3---ratification-process/ratification-process/ National Referendum – Iceland's application for membership of the EU] {{Webarchive|url=https://web.archive.org/web/20110904035335/http://europe.mfa.is/phase-3---ratification-process/ratification-process/ |date=4 September 2011 }}, Icelandic Ministry for Foreign Affairs</ref> Since the application was submitted, popular support has declined and contentious issues around Icelandic fisheries may derail negotiations. However the Icelandic government is confident an agreement can be reached based on the flexibility shown by the EU in its previous negotiations with Norway.<ref name="Superpowers">{{cite web|url=http://euobserver.com/9/32555|title=Iceland: EU membership depends on fishery 'superpowers'|date=27 June 2011 |access-date=20 February 2015}}</ref>

In 2014, Iceland froze their application to join the European Union.<ref>{{cite news|url=https://www.theguardian.com/world/2015/mar/12/iceland-drops-european-union-membership-bid|title=Iceland drops EU membership bid: 'interests better served outside' union|agency=AFP|date=12 March 2015|newspaper=The Guardian}}</ref>