European Commission Directorate-General for Trade

Norway

Norway's real incomes are among the highest in the world; employment is high and unemployment low. As member state of the European Economic Area (EEA) Norway fully applies the whole acquis communautaire except for agriculture and fisheries.

Bilateral trade agreements

Norway's economic and trade relations with the EU are mainly governed by the agreement on the European Economic Area (EEA) which entered into force on 1.1.1994. The Agreement extends the Single Market legislation, with the exception of Agriculture and Fisheries, to the EEA countries. It provides for a high degree of economic integration, common competition rules, rules for state aid and government procurement. Under the EEA Agreement and its procedural provisions, Norway is legally bound to implement into Norwegian law EU directives and regulations governing the free movement of goods, persons, services and capital.

Due to the last EU enlargement the European Economic Area will comprise 30 European countries.

WTO

Norway was among the founding members of the GATT (General Agreement on Tariffs and Trade) and is currently member of the so-called G10 group within WTO.

Norway has some defensive interests, however is very active to revive the DDA process and is insofar a close ally of the EU. Some differences exist (especially on capping). With the DDA back on track, Norway is playing an active role in the "alternative G6".

Norway runs a wide ranging GSP-scheme granting almost all industrial imports from the developing countries duty free entry. Most agricultural products enter either duty-free or with reduced tariffs under the scheme. As of July 2002, all products from the least developed countries can enter free of duty and without quantitative restrictions. Norway has also dismantled all quantitative restrictions on textiles and clothing and has duty-free treatment of textiles.

Norway's FTA policy

As member of the European Free Trade Association (EFTA) Norway seeks to conclude bilateral FTAs in the so-called EFTA framework. That means that Switzerland, Norway, Iceland and Liechtenstein negotiate an FTA with a respective third country via the EFTA organisation, and that after successful negotiation legally four separate agreements will then be signed between the third country and each EFTA member and are to be ratified like a bilateral international agreement.

Economic overview

With a GDP per capita of €64,600 in 2008 (2nd highest in the EEA after Luxembourg) and an estimated national budget surplus the Norwegian economy is very sound. Public finances are boosted by significant revenues from the petroleum sector. Traditional economic activities are shipping (fourth largest fleet in the world), fisheries and fish farming. The oil and gas sector constitutes around 25% of the Norwegian GDP and 52% of Norwegian exports (35 times higher than the export value of fish).

Norway is a very important exporter of metals. Norwegian companies are major producers of ferro-alloys and, in particular, of aluminium.

Norway is the main source for the EU of primary aluminium. 60% of our total imports of alloys and 15% of unwrought metal originate in Norway.

Norway is richly endowed with natural resources such as oil and gas, hydropower, fish, forests and minerals and timber. Despite intensive technological and industrial developments that have taken place in Norway, natural resources still account for the bulk of Norwegian exports. The construction and operation of the largest offshore installations on earth has led to the establishment of a substantial offshore technology industry.

Traditional economic activities are shipping (fourth largest fleet in the world) and fisheries, along with fish farming. Shipping represents also an important source of export revenues for Norway. In addition, Norway is one of the top three seafood-exporting nations worldwide. Around 95% of production is exported.

In recent decades, Norway has been in the forefront of Western countries' growth performance. Over the last decade, Norway's sustained economic expansion was underpinned by strong macro-economic policies, the commitment to low inflation and fiscal restraint, and the strategy of investing the bulk of oil revenues abroad. The adoption of inflation targeting and fiscal policy guidelines, have further strengthened the policy framework. After having experienced a cyclical downturn of its economic growth due mainly to high wages, high interest rates and a strong currency, a very tight monetary policy made Norway recover. As expected, household demand is making a considerable contribution to the cyclical upturn as well as higher petroleum investment. In the period ahead, the global upturn will also stimulate Norway's exports of traditional goods. The situation for internationally exposed industries has improved, not least thanks to what appears to be a stabilisation of the krone exchange rate and a moderate wage settlement.

Energy

Norway has become after Russia the most important non-OPEC oil exporter. Worldwide Norway is after Saudi Arabia and Russia the third largest exporter of crude oil. Norway is Western Europe's most important source of natural gas. Norwegian gas exports account for approximately 15% of EU gas consumption, with nearly 100% of Norwegian exports going to EU. Main importers: Germany (almost 30%), France (almost 20%), UK (18%) and Belgium (8%).

Energy imports from Norway amount to €45,96 billion in 2006, i.e. 58,2% of total Norwegian imports to the EU.

The total oil resources on the Norwegian continental shelf are calculated as 12.9 billion standard cubic metres of oil equivalent. 31% of these resources have been used. Of the remaining 69% almost one half is clarified for production.

At the end of 2006 the Norwegian enterprises Statoil (oil and gas company) and Norsk Hydro (offshore company and aluminium supplier) announced a future merger.

The Norwegian Petroleum Directorate has confirmed a new oil discovery by Norsk Hydro in the Barents Sea. The company has found oil 65 kilometres north of the city of Honningsvåg. The find may be larger than the Goliath oil field and could mark the beginning of a real petroleum boom for the far north of the country. The new Hydro field could contain as much as 300-350 million barrels of oil, compared to the Goliath field's 250 million. The two fields are only 45 kilometres apart.

Fisheries

The EEA Agreement does not cover the management of Norwegian Fisheries resources, which is based on bilateral agreements. Trade in fish and fish products, however, is mainly regulated through Protocol 9 to the EEA Agreement, in addition to bilateral agreements. Protocol 9 stipulates the provisions and arrangements which apply to trade in fish and other marine products. The protocol covers a number of important areas within the fisheries sector, even though Norway neither takes over the Community legislation in this field nor the Common Fisheries Policy. Trade in fish and seafood products is in many cases preferential. Through protocol 9 tariffs on some products are abolished, others are reduced, and some remain non-preferential.

The two Parties have in the last couple of years disagreed on a number of important issues, especially in relation to fisheries on pelagic stocks. This has generated tensions in the EU's relationship with Norway.

The annual bilateral agreement with Norway is the most important agreement the Community has with a Third Party in fisheries. It includes a balanced exchange of fishing possibilities, management including quotas of joint stocks in the North Sea and Skagerrak, control issues and scientific cooperation. The negotiations for 2004 were very difficult and the agreement that was finally reached gave raise to criticism both in Norway and by the EU industry. The Commission considers however that the final agreement appears to be balanced both in respect to exchange of fishing possibilities and the management of the joint stocks.

Agriculture

Also agriculture is not directly covered by the EEA Agreement. However, Protocol 3 deals with processed agricultural products and as to agriculture the Agreement foresees in its Art 19 the aim of a progressive liberalisation of agricultural trade. Both issues are subject to permanent bilateral negotiations between the EU and Norway. In 2006 a new round of negotiations was launched.