Iceland is part of the European Single Market.
The European Single Market , Internal Market or Common Market is a single market that seeks to guarantee the free movement of goods , capital , services , and labour -- the `` four freedoms '' -- within the European Union ( EU ) . Iceland . It has a population of and an area of 103000 km2 , making it the most sparsely populated country in Europe . In 1994 , it became a part of the European Economic Area , which further diversified the economy into sectors such as finance , biotechnology , and manufacturing .