NORWAY: OUTSIDE YET INSIDE

Norway is closely integrated with the EU through the EEA Agreement and has also signed further agreements with the Union such as Schengen.

• The EEA Agreement brings together all the 28 Member States and the three EEA Member States: Iceland, Norway and Liechtenstein integrating the 31 countries into a common economic area. It aims to allow for economic integration with the EU without becoming a member.
• The Agreement provides the EEA countries such as Norway access to the single market through the inclusion in national law of EU legislation covering goods, services and capital, as well as the movement of people. In practice the EEA Agreement gives equal rights and obligations within the single market for citizens and economic operators in the EEA, which means rules cannot favour operators in an EU Member State.
• The implementation of rules is dynamic, with new rules automatically being integrated into an increasingly larger annex to the EEA Agreement.
• Today the Agreement covers most areas of the economy including energy, financial services, state aid, competition rules, public procurement, transport, telecoms, company law, professional qualifications, free movement of labour and capital and health and safety. The Agreement also covers cooperation in other areas such as research and development, education, social policy, the environment, consumer protection, tourism and culture.
•  Norway has integrated with the EU beyond the EEA Agreement and signed 74 agreements in total with the EU.
• EEA members pay contributions to the EU through the EEA, and Norway pays additional ‘Norway grants’. In addition it pays directly for participation in EU programmes and in 2013 the Norwegian total bill amounted to € 600 million. This makes Norway about the tenth highest contributor to the EU despite not being a member.

 Governance of the Norwegian Model

• All decisions by the EEA EFTA states are taken by consensus before laws are implemented, meaning that any country can hold up policy development.
• Members cannot accept direct decisions by European Commission or European Court of Justice, but are instead governed by separate EEA-institutions which mirror the EU’s institutions such as the EFTA Court and the European Surveillance Authority, which monitors the implementation and enforcement of the Agreement. Any complex trade agreement needs institutions to police it.
• EEA countries have a right of reservation, which means they can choose to reject a particular piece of EU legislation (Article 102 in the EEA Treaty), even if it is relevant and falls within their membership agreement, referred to as the ‘reservation right’. The consequence of exercising this right is that the EU can choose to suspend any associated rights of the EEA EFTA states to linked benefits, such as market access. When using the reservation right the EFTA states are obliged to enter into negotiations to find a suitable solution for all parties, including investigating all other possibilities, for the agreement to be satisfactory. The investigation will last for no longer than six months after the reservation right has been used.
• EEA countries have no formal say in the EU’s decision making process. But the EEA Agreement contains provisions for input from the EEA EFTA at various stages before new legislation is adopted. For instance they have observer status in most Commission committees and expert groups in the policy-shaping phase.

 Benefits of the Norwegian model

 For Norway and Norwegian businesses the EEA Agreement has given access to the single market while retaining flexibility to pursue their own agenda on fisheries, agriculture and trade.

• Norway is closely connected to the EU through the EEA Agreement. The Agreement makes Norway a full member of the EU’s single market on the same level as any other Member States, which means Norwegian companies in theory can operate in the EU the same way as other companies from EU Member States.
• Access to the single market has benefited the Norwegian economy and businesses. More than two thirds of Norwegian exports and imports go to the EU. Most Norwegian investments abroad are in the EU. EU-owned businesses account for 24% of the country’s GDP and employ close to 20% of the workforce.
• Being outside the EU and its trade policy leaves Norway with a degree of flexibility to conclude trade deals with third countries bilaterally and through the EFTA. It is currently negotiating a comprehensive economic partnership agreement with Indonesia.
• Norway is not part of the Common Agricultural and Fisheries Policy, which gives Norway the opportunity to protect its primary industries in agriculture and fisheries policy by adjusting policies to meet national priorities on fish stock preservation and regional policy.
• Norwegian businesses are dependent on having full market access to the EU.

 Challenges

 Practical barriers and realities reduce the economic benefit of market access.

• Although the EEA Agreement has secured market access and provided flexibility in certain economic areas, there are several economic challenges of being the outsider.
• Norway has equal access through the single market, but since it is not part of the customs union, Norwegian exporters and foreign companies exporting to Norway have to go through custom procedures such as import/export declarations, including rules of origin for all goods exports, and payments of VAT.
• Although a member of the single market in theory, the lack of knowledge about the EEA across the EU means that trade barriers exist in practice e.g. difficulties with custom officials at border crossings across Europe causing severe delays and lost profits.
• Rules are implemented later in Norway than in the EU because the rules have to be agreed within the EEA structure after they have been approved at EU level. The EEA is supposed to implement rules simultaneously with the EU (within a period of six months) but this is rarely the case. This creates a competitive disadvantage for Norwegian firms because they operate in a more uncertain regulatory framework than their European competitors. It can also harm inward investment in some circumstances, for instance where long term targets or rules on subsidies and state aid are set much earlier in the EU.
• Most negotiations concluded by EFTA follow in the EU’s footsteps and major countries have been unwilling to negotiate with EFTA before they get an agreement with the EU, reducing the real benefit of Norway’s trade flexibility.
• Similarly, although the primary industries in agriculture and fisheries policy have benefited from the exemptions in the EEA Agreement, it has stunted growth in related industries. For instance, most of Norway’s fish processing industry has relocated within the EU, often to Scotland.
• The main challenge for Norway is the lack of any formal sway over decisions made in Brussels. Norway has no Commissioners, no members in the European Parliament, no votes in the Council and has no vote in most expert groups and agencies widely used to prepare legislation.
• Because the Norwegian government is not formally represented at EU level, it is often left out of the information loop, and therefore risks missing out on early stage discussions while EU Member States are consulted by the Commission. While Norway might be involved by the Commission in discussions on sectors it considers of crucial national significance, it is more often excluded.
• Norway’s limited relationship with the EU limits the country’s ability to influence at EU level. Businesses see the Norwegian delegation to the EU in Brussels of minor importance in their work on EU issues in terms of getting intelligence and support. Being outside the EU with no formal channels for influence is particularly harmful to SMEs who unlike the larger companies cannot afford to lobby and are therefore left unrepresented.
• The lack of formal involvement leads to an absence of knowledge and prioritisation of EU issues among Norwegian politicians and civil servants in Norway. The absence of a need to prepare for regular meetings in Brussels means Norwegian politicians do not focus on EU issues. Similarly, because the civil service is not required to brief ministers leading up to EU interactions, working on EU issues is not considered a useful career route leading to lack of competence on the EU among civil servants.
• Norway has recently tried to challenge the automatic adoption of EU rules by using its right to reservation for the first time over the EU postal directive. It is still uncertain what the consequence of this reservation will be as the EU is yet to take formal action, but it is expected that there will be a suspension of linked benefits, such as access to the single market in that area. But as this is the first time Norway has tested this legal right, there is no precedent for how the European Commission will react.

Norwegian Offices in Brussels

Norwegian organisations in Brussels

1. Actis, Norwegian Policy Network on Alcohol and Drugs (Eurocare)
2. Bellona Europe
3. Energy Norway
4. Industri Energy Norway
5. The Norwegian Refugee Council (NRC Europe)
6. The Norwegian Association of Local and Regional Authorities (KS)
7. The Norwegian Confederation of Trade Unions (LO)
8. Norwegian Shipowners’ Association
9. The Norwegian Truck Owners Association (Nordic Logistics Association)
10. The Research Council of Norway
11. Confederation of Norwegian Enterprises (NHO)

 Norwegian Regional Offices

1. Mid-Norway European Office
2. North Norway European Office
3. The Oslo Region European Office
4. The Stavanger Region European Office
5. South Norway European Office
6. The West Norway Office in Brussels

EU Offices of Norwegian companies

1. Agder Energi
2. Hydro Corporate EU Office
3. Orkla Foods
4. Statkraft Treasury Centre S.A.
5. Statnett
6. Statoil EU Affairs Office
7. Telenor Representative Office

 Norwegian consulting and law firms in Brussels

1. Advokatfirmaet Schjodt
2. Brusselkontoret AS
3. One Market
4. Kreab
5. 1-Tech
6. Fipra Norway/First House

Norwegian Correspondents in Brussels

1. Aftenposten
2. NRK
3. NTB
4. TV2, Morgenbladet, Dagbladet

Other Norwegian Incumbents in Brussels

1. The Norwegian Parliaments’ Brussels office
2. Tolldirektoratet (Norwegian Customs)