The EEA Agreement and market access in a changing Europe

Minister of EEA and EU Affairs Frank Bakke-Jensen's address at Norwegian  Seafood Federation's annual conference in Tromsø.

Ladies and gentlemen,

Thank you for the invitation to speak here today. I am very pleased to have the opportunity to speak to people who are involved in managing and promoting some of Norway's most important and healthiest exports. But seafood is more than that. It is closely linked to the Norwegian culture at both local and national level. No other industry in Norway combines the cultural and economic pillars of sustainability in quite the same way. And no other industry demonstrates quite so clearly that national interests do not need to stand in the way of open borders and international cooperation.

A changing Norway

Norway has an open economy. We depend on our political and economic ties with other countries, and on buying and selling goods and services across our borders. This is also something we are good at – not least in the seafood industry – and that has laid the basis for the prosperity we enjoy today.

As you know, Norway's economic situation has changed a great deal recently. Oil prices have dropped by half, and growth will need to be driven by other sectors. Competitiveness and the ability to adapt to change will be crucial. Seafood will be a key sector. This is an area where Norway has major competitive advantages: we have extensive, resource-rich sea areas, a long coastline, and sustainably managed ecosystems. And we have leading expertise in marine research and development. You could almost call Norway a 'major power' when it comes to seafood.

To illustrate the changes that have taken place, I would like to mention that three years ago, the market value of the ten largest oil-related companies on the Norwegian Stock Exchange totalled NOK 280 billion. The ten largest seafood-related companies were worth about NOK 50 billion. One year ago, the two sectors changed places, and the seafood companies have been worth more than the oil-related companies ever since. This demonstrates that Norway has more strings to its bow than oil and gas.

The Norwegian Government is continuing to take steps to make the seafood industry more competitive. These include adjusting our taxation policy, investing in efficient infrastructure, simplifying legislation and a historic investment in research and innovation. We are also focusing on trade policy, and are seeking to improve market access for Norwegian products – especially to the EU, which is our most important market.

A sound regulatory framework is essential, both in Europe and globally. We depend on a system of global trade rules. Common rules make the situation predictable for everyone. At a time when there is growing protectionism and growth in world trade is weak, it is of crucial importance to safeguard existing institutions, particularly the World Trade Organization. The multilateral trading system has served Norway well. We must seek to ensure that it continues to do so.

Unfortunately, there is growing opposition to trade agreements worldwide. As I said, protectionism is gaining ground, and there is every reason to keep a close watch on the signals from Washington and elsewhere.

The EEA Agreement

We also need to follow developments relating to international agreements to which Norway is a party, and show that we support these agreements. Here, I would like to highlight the importance of the EEA Agreement. This is the most important and most extensive international agreement, and it gives Norwegian citizens and companies in Europe predictability and market access.

Eighty per cent of all Norwegian exports go to the EU, and 60 % of our imports come from there. And 80 % of our legislation is based on EU law.

There is a widespread impression that seafood is not included in the EEA Agreement, but this is only a partial truth. Trade in seafood is not part of the internal market, but Norway has implemented all of the EU food and veterinary legislation, which in fact makes up the largest share of the EEA Agreement measured by the number of legal acts. This legislation regulates important areas such as fish health, feed and hygiene, which I am sure many of you are familiar with.

A number of the general provisions of the EEA Agreement on matters such as freedom of establishment and free movement of capital are important too, as people in the seafood industry know. So is another of the four freedoms, free movement of persons. Since the eastward enlargement of the EU – and hence the EEA – in 2004, Norway has been one of the countries in the EEA that has received most labour immigrants from Central Europe in relation to its population. As a result, 105.000 Poles are now resident in Norway, and there are also 50.000 Lithuanians – out of a total population of barely three million.

The European Economic Area has a total population of 500 million, and they all have equal rights to live and work in any of the 31 countries. This benefits Norwegian business and industry generally. It benefits the Norwegian fisheries sector, perhaps the fish processing industry in particular. What is more, I have been told that in addition to ensuring that the population of a number of coastal municipalities is growing, labour immigration from the rest of Europe is reducing the deficit of women in the population in these areas. This all gives a clear picture of how important the EEA Agreement is for Norway. People come to Norway because of the job opportunities on offer here. Tomorrow, it could be Norwegians who need – or wish – to look for work in other countries.

The free movement of persons allows individuals, rather than people like me who are part of the Government, to decide where they work and live. This is how it should be, based on the basic principle of equal treatment set out in the EEA Agreement.

Many individuals and companies would be affected if we suddenly no longer had the agreement:

  • Young Norwegians would lose their right to study in the EU,
  • Norwegians would lose their right to treatment if they become ill while in an EU country,
  • The right to claim social security benefits in another country would be lost,
  • Norwegian companies would lose their statutory right to deliver tenders for public contracts in the EU,
  • The veterinary legislation would no longer apply, and it would be necessary to reintroduce border controls for 170 trailers carrying seafood every day. This could result in an impossible situation for sales of fresh fish. To quote something my colleague Vidar Helgesen said when he was Minister of EEA and EU Affairs: Nobody is in such a rush to get to a dinner table as a dead salmon.

And we could add to the list. There are so many examples because the EEA cooperation is so extensive and has given us so many opportunities and rights that we now take for granted. This is why I am a self-appointed champion of the EEA Agreement. We must make people more aware of it. It deserves more publicity.

Improved market access

But as we know, the general rules of the EEA Agreement do not apply to seafood, which is therefore subject to import duties and meets other barriers to trade. It is regulated under Protocol 9 of the Agreement on trade in fish and other marine products, and by a series of bilateral agreements.

It is against this backdrop that Norway has been working systematically to improve market access for seafood ever since the EEA Agreement entered into force in 1994. Although we have achieved improvements over the years, market access for Norwegian seafood in the EU is still not good enough.

The Government's long-term goal is clear. We are working towards full free trade in fish, on the same lines as for trade in manufactured goods. But we must be realistic. This will take time. As things stand at present, only EU membership can resolve the problem of full market access, and Norway has chosen another solution. But I can assure you that the Government will continue its efforts to improve market access. We made progress in 1995, in 2004, in 2007, in 2009, in 2013, and most recently in 2015.

As you know, the most recent results were achieved when we completed the negotiations with the EU on the new funding period for the EEA and Norway Grants and tariff-free quotas for fish in 2015. The negotiations were protracted and difficult, and it took more than a year longer than originally planned to reach a result.

I am very pleased that we achieved further improvements in market access for important fish species, and that vital tariff-free quotas for important species such as herring, mackerel and shrimps have been retained. The current agreement is better adapted to the needs of the industry and to demand in the EU than was previously the case. Close contact with the industry before and during the negotiations was vital to this progress.

The agreement includes new tariff-free quotas for filleted products of mackerel and herring, and the quota for spiced and/or vinegar-cured herring has been increased by 50 %. This allows for more value creation and processing to be carried out in Norway.

We have also agreed with the EU that we will review the tariff-free quotas towards the end of the period covered by the agreement, which ends on 30 April 2021. This will give us a new opportunity to improve market access further.

Previous agreements applied for a period of five years. The new agreement is for seven years. This gives more stable and predictable conditions for the industry, even though the agreement was not concluded until some way into the agreement period. An agreement with a longer duration makes it easier and to trade with the EU and boosts confidence.

Despite the new agreement, Norway still has to pay duty on fish products it exports to the EU, especially on highly processed products. We tried to reduce these barriers to trade during the negotiations, but the EU has a substantial fish processing industry that strongly opposes this. The Government will therefore continue its unremitting efforts to expand the scope of free trade with the EU.

Our relations with the EU as regards fish and fish products are naturally shaped by the fact that Norway has large fish stocks and is dependent on exporting fish and fish products, whereas the EU has a shortage of resources and is dependent on imports. We therefore have differing interests, but I would like to point out that we are also dependent on each other, as buyers and purchasers often are. Trade in fish and fish products benefits Norway, but it also benefits our European friends. Norway contributes to employment, production and value creation in the rest of Europe, and gives European consumers the choice of healthy seafood meals every day of the year.

As I have said, the essence of the matter is that we are dependent on each other – both in this area and in many others. This has become even clearer now that one of the most important EU countries has made the decision to leave the Union. This has major implications for the EU and also for Norway.

Brexit

I would now like to turn to brexit, which of course was officially started when the formal letter from Prime Minister May was delivered. We are all in uncharted territory now that a country is leaving the EU for the first time. And one of the major EU members – the UK is the second-largest economy in the EU. But as yet, none of us know how the 'divorce' proceedings will develop or what form the agreement between the EU and the UK will take.

Norway is not a party to the exit negotiations, but we are directly affected through the EEA cooperation that currently regulates our trade ties with the UK. This is why it is important for Norway to make it clear that we want information and that we want our voice to be heard. We emphasised this when Chief Negotiator Michel Barniers visited Oslo earlier this year. He was able to confirm that Norway is in a special position, and is not an ordinary third country. We are part of the internal market. This means that a close dialogue is necessary. We must not forget that smoothly functioning EEA cooperation is in the EU's interest as well.

In our informal contact with the UK on brexit, we have emphasised that we must not end up in a situation where nobody is sure which rules to apply. There may be transitional rules for relations between the EU and the UK to take into account, and there is the possibility of a free trade agreement between the UK and Norway. The UK agrees with us on this, but they are also aware that they cannot conclude or even negotiate bilateral trade agreements until they have left the EU.

The EU common fisheries policy is not part of the EEA Agreement. However, we cooperate closely with the EU on fisheries management in the North-East Atlantic. It is quite clear that brexit will have implications for fisheries management. The UK will once again become a major independent coastal state in the North-East Atlantic. Key issues that will have to be dealt with include stock sharing between Norway, the EU and the UK, reciprocal fishing rights in each other's zones and a new system for exchanging Barents Sea cod quotas for quotas of other species in EU waters. We have been in contact with the EU and have had informal contact with the UK on the issues that need to be addressed. I am confident that we will be able to find good solutions.

Ladies and gentlemen,

In uncertain times, we need to safeguard what we already have. And just now, it is more important than ever to safeguard our international institutions, international cooperation and international agreements, both globally and at European level. And as I said at the beginning – no other industry in Norway shows quite so clearly that national interests do not need to stand in the way of open borders and international cooperation. The seafood industry is helping to prepare Norway for the future. The whole of the Government appreciates your efforts. We will stand behind you and do our best to support you.

Thank you.