Summary

Summary

1.1 Introduction

The Storting has requested the Government to submit a report every year on its work in connection with the EEA. As this is the first such report to be submitted to the Storting since the EEA Agreement entered into force on 1 January 1994, it provides a general account of this period, from 1994 to 2001.

Chapter 1 outlines the historical background of the EEA Agreement and describes its scope and application, and the central institutions responsible for administering the Agreement.

Chapter 2 provides an overview and assessment of the effects of the Agreement on various sectors of Norwegian society. It begins by examining the effects of the comprehensive EU legislation Norway has incorporated through the EEA Agreement. These effects are assessed first in relation to considerations relating to the environment, health, security and consumer protection. It then assesses the effects of the Agreement on the Norwegian business sector and economy, and on the districts. Finally, the chapter provides an account of a number of important matters and areas that illustrate the advantages and disadvantages and the opportunities and limitations of the Agreement. The cooperation under the EEA Agreement is so comprehensive that it is not possible to deal with all the important matters in a report such as this.

Chapter 3 gives a step-by-step account of the work done by the public administration in connection with the EEA Agreement, from the preparation of new legislation at expert level in the European Commission, to the implementation and follow-up of the EU acquis in Norwegian law. This process has been described in detail in response to the Storting’s explicit request for a report on the work done in connection with the EEA.

Chapter 4 describes the activity of the EFTA Surveillance Authority (ESA) and the EFTA Court. It also describes some of the matters dealt with by these bodies that have been particularly important for Norway.

Chapter 5 provides an updated overview of the challenges for the EEA cooperation and for Norway arising from developments in specific areas in the EU. These include challenges in relation to the EEA Agreement posed by amendments to the treaties on which EU cooperation is based, the new division of competence and new forms of governance in the EU, the Lisbon Strategy and the enlargement of the EU and the EEA. In order to give an overall up-to-date picture of the situation, the chapter includes a discussion of the significance for Norway of some of the EU processes that are not covered by the EEA Agreement. Examples of such processes are the implementation of Economic and Monetary Union (EMU), the development of a regional dimension in the EU, the EU’s expanded cooperation in the field of justice and home affairs, and the progress of the foreign and security policy cooperation in the EU. In several of these areas Norway has established close cooperation with the EU as a supplement to the EEA Agreement.

1.2 General assessment

Eight years’ experience has shown that the EEA Agreement has in the main fulfilled the aims set out in Article 1, Objectives and principles. The Agreement has contributed to a continuous and balanced strengthening of trade and economic relations between the Contracting Parties, with equal conditions of competition and respect for the same rules. The free movement of goods, services, persons and capital has been attained, with certain exceptions (trade in fish and agricultural products), and is practised in a satisfactory way. A system that ensures that competition is not distorted and that the rules in this regard are equally applied has been established and functions satisfactorily. Closer cooperation in other fields, such as research and development, the environment, education and social policy, has been established and is yielding good results. In general it may be said that the EEA Agreement has proved to be robust and functional, and that it has demonstrated its strength by securing Norwegian industry equal access to the EU internal market and by creating a basis for a broad, mutually beneficial cooperation between the EU countries and the EFTA countries that take part in the EEA cooperation.

One of the weaknesses of the Agreement is that it gives Norway limited influence on the development of common legislation.

In its further administration of the EEA Agreement, Norway will encounter certain important problems arising from developments in the EU. However, the challenges Norway is facing in its relations with the EU are largely in areas that are not covered by the EEA Agreement, and that were not intended to be.

1.3 Effects on the business sector

Norway’s major objective was to ensure access to its closest, most important markets through participation in the EU internal market. This objective has been achieved. Norwegian companies have approximately the same conditions of competition in the sectors covered by the Agreement. Equal conditions of competition and common rules for state aid ensure that companies are given the same treatment and eliminate the danger of anti-dumping measures and countervailing duties. This means among other things that it has become more secure to invest in jobs in Norwegian industry.

The EEA Agreement does not cover the Common Fisheries Policy. National control of the management of fisheries resources has been retained. There is also a derogation from the rules on free movement of capital that makes it possible to prevent foreign investment in fishing vessels and access to Norwegian fishing quotas.

The Agreement has led to certain improvements in market access. A number of fish species, such as cod, haddock, saithe and halibut have duty-free access to the EU market. No tariff reductions have been granted for products such as salmon, mackerel, herring, shrimps, scallops and Norway lobster. As regards fresh and frozen salmon, special conditions set out in the so-called salmon agreement also apply. For all other products, the tariff has been reduced to approximately 30 per cent of the original rate. The other tariff rates vary more or less in accordance with the degree of processing

Customs duties on total fish exports to the EU of close to NOK 17 billion in 2001 averaged between 2 and 3 per cent. Even though duty-free access or low tariffs apply to a number of fish products that are exported to the EU, the rates for a number of other products are higher. Some products are subject to tariff rates that may make it unprofitable to process the fish in Norway before it is sold in the EU. Other products are subject to tariff exemptions or to moderate tariff rates. Thus, there are a variety of reasons why the processing is not done in Norway. This also has to do with such considerations as ownership in the industry, wages and other costs in the processing country, and proximity to markets.

As illustrated by the "salmon case", the fishery industry is not protected from the imposition of antidumping measures and countervailing duties either. This involves a degree of uncertainty for the economic operators, and constitutes limitations for the industry in the EU market.

After the forthcoming EU enlargement, the new member countries with which Norway currently has free trade agreements for fish products will be subject to the EEA Agreement and the rules that apply to fish exports to the EU market. The Government will therefore in due course negotiate with the EU on compensatory arrangements in order to find the best possible solution to this problem.

Norway has, with the support of Iceland, taken the initiative vis-à-vis the EU to seek to obtain better and more secure market access for fish and fish products. However, so far it has not been possible to achieve any appreciable improvements in the framework conditions for exporting fish to the EU.

Agricultural products fall outside the scope of the EEA Agreement, with the exception of processed goods, for which a price equalization system for raw materials has been established. The purpose of this is to allow competition for the industrial processed component of the product, while duties may be imposed on the raw material component. Fluctuations in the price level of agricultural products in Norway and the EU can affect the competitiveness of processed goods utilizing agricultural raw materials.

1.4 Effects on the municipalities and districts

Given that most of Norway’s export industries are located in the districts, the EEA Agreement has helped to safeguard the economic base and maintain settlement patterns in these parts of the country. The extensive harmonization of legislation resulting from the EEA Agreement may have caused some adaptation problems for a number of companies and industries. It has however been fully possible for Norway to continue to implement the main features of its regional policy. Although regional cooperation is not covered by the EEA Agreement, Norwegian municipalities and regions have been able to participate in several interesting Interreg projects.

The municipal sector has had to adapt to new legislation in a number of fields, including public procurement. The information provided to those affected has not always been adequate, and the process has been a demanding one. However, it has also yielded positive results, among other things by cutting costs. The Government will give special priority to improving the exchange of information and cooperation with regional and local authorities.

1.5 Free movement of persons

The free movement of persons was initially viewed with a certain scepticism in some quarters. However, the experience of the past eight years has shown that there was no reason to fear any massive and damaging labour migration from the EEA area. The cooperation has helped Norway to alleviate acute labour shortages in a number of important sectors. The free movement of persons, with the accompanying cooperation in the fields of social security and mutual recognition of professional qualifications, has also given many Norwegians an opportunity to study or obtain valuable work experience in other EEA countries.

1.6 The effects of EEA legislation on public health and safety, the environment and consumer protection

The free movement of goods, services, capital and persons requires the extensive harmonization of legislation in order to ensure that different countries do not have different requirements, which would impede free movement. The effect of this harmonization on important factors such as public health and safety, the environment and consumer protection has been debated. A closer examination shows, however, that Norwegian standards have in general been enhanced as a consequence of the EEA Agreement. In areas where Norway had higher standards than the EU when the Agreement was concluded, Norway was allowed to maintain these standards until EU standards had been brought up to the same level. This has now been done in most cases. In many other areas, Norway has had to raise its standards for the protection of the environment, public health and safety and consumer protection in order to comply with EEA legislation. New legislation has also been developed in areas such as consumer protection and workers’ rights, which have become more comprehensive than they were before. In general it may be said that the legislation throughout the EEA area has been extensively upgraded in recent years. This process is continuing in step with the growing priority being given to health, the environment and consumer interests in Europe.

1.7 Programme cooperation

Norway has benefited greatly from participating in the EU programme cooperation that falls within the scope of the EEA Agreement. This cooperation was originally intended to promote the aims of achieving a more effective internal market and enhancing competitiveness in the world economy, particularly by means of systematic efforts in the field of research and development. Research and development still account for by far the greatest share of the EU’s programme activities, and the scope of research cooperation has been extended to cover almost all aspects of EU activity. Programme cooperation has grown considerably in other areas as well, and now includes areas such as the environment, education, youth affairs, social policy, health, working life, gender equality, culture and consumer policy.

Through the EEA Agreement, Norway has been able to take part in most of these programmes, and in general the results have been very favourable. This cooperation gives Norwegian institutions an opportunity to participate in the development of knowledge and methodology taking place within the EU programmes, and to compare themselves with other players and present themselves as cooperation partners in the EEA area. The research cooperation under the EEA Agreement is also very important for the business sector. Generally speaking Norwegian participants have shown themselves fully capable of taking advantage of the opportunities provided by the programme cooperation, and their applications and project proposals have often had a better than average rate of success. Norway’s experience of participation in the management and administration of the programmes has also been generally positive. A growing practical problem is, however, that the EU programmes are adopted in the EU just before they are to enter into force. In view of the amount of time required to implement the necessary procedures in the EEA Agreement, Norway and the other EEA EFTA countries may not able to participate right from the beginning given that no final decision has been taken in the EEA Joint Committee. This may entail problems for Norwegian participation, particularly if the country becomes involved too late to take part in the first round of considering project applications.

The EU has, especially in recent years, established a number of agencies, i.e. specialized institutions that are to serve as competence centres, carry out technical/scientific analyses and provide advice in their respective fields. Several such agencies are currently being established, some of them in areas of great interest to Norway such as food safety, maritime safety and aviation safety. Norway participates in several of the existing agencies. The experience of participating in the European Environmental Agency (EEA) in Copenhagen and the European Agency for the Evaluation of Medicinal Products (EMEA) in London has been particularly favourable. It has also been agreed in principle that the EEA EFTA countries may take part in the new agencies for food, aviation and maritime safety.

1.8 Expansion of EEA cooperation to include new areas

The fact that the EEA EFTA countries are able to take part in new areas in the steadily growing programme cooperation and in new specialized institutions shows that the EEA Agreement is not merely being kept up to date. It is also being extended to cover new areas of cooperation that were not originally included. Another important example of this is the legislation on food safety and veterinary controls, which was incorporated into the Agreement in 1999. Through this cooperation, Norway has adopted EU food safety legislation that covers the entire production chain. This expanded cooperation is also advantageous for Norwegian exports of food products, especially fish. It took a long time and considerable effort to arrive at the necessary adaptations and practical solutions to allow incorporation of these new cooperation areas into the EEA Agreement. In the Government’s view, the solutions that have been arrived at generally safeguard Norwegian interests in an adequate manner.

1.9 The public administration’s work in connection with the EEA Agreement

Administering the EEA Agreement involves considerable challenges for the Norwegian public administration. In many areas very extensive efforts have been required to incorporate the comprehensive EEA rules into Norwegian legislation, and this work has largely been carried out within the framework of existing resources. In general it may be said that the public administration has managed this task satisfactorily. Considering the broad range of areas covered by the EEA Agreement, there have been relatively few problems due to delays or errors in implementing EEA legislation in Norwegian law.

The most important consideration here is that the legislation must at all times be as uniform as possible throughout the entire EEA area. This requires that both the procedures for incorporating new legislation into the EEA Agreement and the subsequent national implementation are carried out as rapidly and effectively as possible. In this respect there is still considerable room for improvement. The time needed to carry out the EEA procedures varies from two or three months to several years. EU acts that are politically controversial or that are complex and may require extensive adaptations naturally take the longest time. There are, however, many examples of uncomplicated, unproblematic EU acts taking a disproportionately long time, usually because of problems connected with administrative capacity. The EFTA EEA countries give priority to reducing the backlog of new EU acts to be incorporated into the EEA Agreement and ensuring that new legal acts can be incorporated on a regular basis without unnecessary delays.

The EEA Agreement affects the various branches of the public administration to different degrees. In some areas, such as the environmental field, most of the new legislation derives from the EEA Agreement. Thus most of the work in this field is related to the EEA. Other institutions are less affected by EEA legislation. For this reason it has not been considered expedient to develop a common organizational model for the work in connection with the EEA Agreement carried out by the various administrative branches. However, a joint management system and regular routines for dealing with EEA matters have been established in Norway. These guidelines have recently been updated and improved.

There is still considerable room for improving the work of the public administration related to EEA matters. Firstly, this applies to participation in the preparatory stage, including the public administration’s ability to enter into a dialogue at an early stage with those who will be primarily affected by new or amended legislation. Secondly, all the parties involved must seek to ensure that no unnecessary time is wasted during the stage at which the EU legislation is being considered by the EFTA pillar, so that there are no subsequent problems with regard to simultaneous implementation. If the respective authorities take advantage of the opportunities for keeping up to date on the preparatory stage and for informing others who will be affected, the subsequent stages will also go more quickly. Thirdly, the efforts to implement legal acts in Norwegian law without undue delay must be further intensified in order to ensure uniform rules and equal treatment.

Providing information to the Norwegian public about developments in connection with the EEA Agreement is a particularly important task. Several measures have already been taken to increase the amount and improve the quality of information to the public on EEA and EU issues. The Government gives priority to further improving this information and has therefore taken the initiative to develop a general communication and information strategy for dealing with EEA issues.

Further efforts to improve the administration of the EEA Agreement will be based on the Government’s European Policy Platform of 21 February 2002.

1.10 Cooperation with the EU, especially the European Commission

The EEA Agreement also offers the EEA EFTA countries some opportunity to participate in the shaping of new EU legislation that is relevant for the EEA. This applies primarily to the early preparatory stage, during which the European Commission shall consult experts from the EFTA countries on the same basis as experts from EU countries. Moreover, representatives from the EFTA countries may participate in most of the committees that are set up to assist the Commission in administering legislation that is already in force, and in assessing the need for amendments. Norway takes considerable advantage of this opportunity.

The EEA Agreement also entitles the EEA EFTA countries to take up questions relating to new legislation and to present their views during the stage when the legislation is being considered by the EU’s political bodies, to which they do not have access. Such dialogues can take place in the EEA Joint Committee, where the EU is represented by the Commission, and it is then up to the Commission to convey the EFTA countries’ views to the Council and, if necessary, to the European Parliament. In particularly important matters, draft legislation that is being considered in the EU may also be taken up in the EEA Council, where the foreign ministers of the EFTA countries have an opportunity to meet with the Council of the European Union twice a year. The regular consultation process has not been as extensive as was foreseen, for one thing because of the EU’s increasingly heavy agenda.

It must, however, be said that the EU, as represented by the Commission, has shown less ability and willingness to devote time and resources to informing the EEA EFTA countries on a regular basis, and to finding solutions for accommodating the special needs that sometimes arise. It has also shown less understanding for any delays on the part of the EEA EFTA countries in adopting new EEA-relevant legislation. This is due to the fact that the Commission in general – both vis-à-vis the member states and vis-à-vis all the countries of the EEA – is increasingly engaged in ensuring the simultaneous implementation of common rules and reducing the considerable delays in implementation that have occurred in certain countries. The forthcoming enlargement also seems to be accompanied by a more restrictive attitude to requests for national adaptations. Moreover, the EU is extremely cautious about setting precedents. For example, the EU is very reluctant to allow EFTA participation in forums that are not yet open to the candidate countries, despite the fact that the latter, unlike the EEA EFTA countries, are not yet fully integrated into the internal market.

Even though the EEA EFTA countries’ influence on the shaping of EEA legislation in most areas is limited, these countries rarely have any serious problems in accepting the results of the process, which usually involve qualitative improvements in the legislation. This is due among other things to the fact that the EU countries generally have the same considerations and interests to take into account as the Norwegian authorities, and some of them share Norway’s views and priorities to a very great degree. On the positive side, the EU process is very thorough, and all the various aspects of a matter are examined and considered. On the other hand, rules that are to suit 18 countries do not always suit all of them equally, but this is a necessary consequence of participation in a large, homogeneous market. The fact that EEA legislation is generally more detailed and complicated than is usually the case with Nordic and Norwegian legislation has also posed a number of problems for the Norwegian public administration. However, the disadvantages such comprehensive rules entail for the economic operators are often more than compensated for by the advantages of having the same rules in the domestic market as in the export markets.

In a few areas, Norway’s situation differs so much from that of all the EU countries that none of the countries that participate fully in the entire process can be expected to safeguard Norwegian interests by safeguarding their own. In such cases it is particularly important to make use of the rights accorded by the EEA Agreement to be heard throughout the entire process. These rights have been exercised in such cases, not least in the energy field, through active participation in the early preparatory stage, written submissions during the stage of political consideration in the EU, statements in the EEA Joint Committee and the EEA Council, and in informal meetings and contacts with both the Commission and the member states. This report gives examples of cases where Norway has been able to influence decisions through its active participation. Experience has shown that Norway has most opportunity to influence decisions in areas where it has special expertise or plays a particularly important role.

Full participation in the EU’s internal decision-making process must, of course, be reserved for countries that are members of the European Union. This also applies to matters that will at a later stage be dealt with in the EEA bodies with a view to incorporation into EEA legislation. In addition to ensuring that Norway participates fully in the EEA and EFTA institutions, the Government will make active use of the opportunities provided by the EEA Agreement for Norwegian experts and Norwegian authorities to take part in and exert influence on the EU processes.

Since the EEA Agreement entered into force, there have on occasion been conflicts of interests between the EEA EFTA countries and one or more EU countries. In such cases EU solidarity generally means that the other EU states support the demands of their own members, even if they themselves have no significant interest in the matter. In such cases the imbalance between the two pillars in terms of economic and political weight can affect the outcome. The clearest example of this has been Spain’s demand that the original Financial Mechanism provided for in the EEA Agreement should be followed up by a new contribution from the EFTA countries in order to promote economic and social cohesion in Europe when the mechanism expired in 1998. Spain was supported by the other EU countries, and after it had also taken action by blocking the incorporation of important new programmes into the EEA Agreement, the EFTA countries accepted a new mechanism.

1.11 The activities of the ESA and the EFTA Court

When the remaining EEA EFTA countries were in the process of reorganizing and consolidating the institutions in the EFTA pillar of the EEA in 1994, one of their most important tasks was to ensure that the EFTA Surveillance Authority (ESA) and the EFTA Court could continue to function as independent institutions that have full credibility and sufficient capacity to carry out their tasks in accordance with the Agreement. This objective has been achieved. The ESA has functioned independently as a supervisory body responsible for ensuring that the EFTA countries implement and comply with the provisions of the EEA Agreement, and has raised matters and taken decisions that the authorities of the EFTA countries have not always agreed with. However, in a system such as the one provided for by the EEA Agreement, it is normal that those responsible for supervision and those who are supervised have divergent views, and that in some cases the matter must be brought before the Court so that a solution can be found. A recent overview of unresolved cases between the Commission and the EU member states on the one hand and between the ESA and the EEA EFTA countries on the other shows that the number of unresolved cases in the EFTA pillar is much smaller than the average in the EU pillar. Norway, which has the largest number of unresolved cases in the EFTA pillar, is at the same level as the Nordic EU countries, which are among those countries that have the fewest unresolved cases in the EU. Experience so far does not seem to support the view that the ESA is stricter in its surveillance of the way EEA legislation is applied than the Commission is in relation to the EU countries.

1.12 Challenges facing Norway and EEA cooperation in the light of developments in the EU

EU cooperation has changed considerably since the EEA Agreement was signed in 1992, and it is becoming broader and deeper. In many new areas of EU cooperation, the EEA Agreement gives the EEA EFTA countries limited opportunities for direct participation. In certain areas, such as monetary union, this is natural. The areas where the EEA EFTA countries have limited opportunities for direct participation include the Lisbon Strategy, the forthcoming EU enlargement, the debate on further institutional reform in the EU, security and defence policy, and cooperation on justice and home affairs. Nonetheless this trend will have consequences for the EEA Agreement and for Norway. For example, the forthcoming enlargement of the EU will entail a considerable enlargement of the geographical scope of the EEA Agreement, a development the Government views as being generally favourable. At the same time, closer and broader EU cooperation may change some of the basic parameters for the EEA Agreement. This is why Norway has established close cooperation with the EU in a number of areas where this is of mutual benefit.

As regards the areas covered by the EEA Agreement or in adjacent areas, the Agreement has so far proved to be sufficiently robust and flexible to include a number of elements that are necessary for the internal market to continue to function as intended, and for the EEA EFTA countries to continue to participate in the completion of the internal market.

The amendments that have been made to the EU’s treaty base and that affect the internal market are generally formulated as statements of aims or enabling clauses that integrate broad objectives, such as sustainable development, into the EU’s activity. Insofar as these provisions lead to new EEA-relevant legislation, the procedures set out in the EEA Agreement are followed.

It has also been possible to expand cooperation to cover new areas that were not, strictly speaking, necessary to ensure that the Agreement as it was originally negotiated could continue to function as intended. Cooperation in the veterinary field and most of the programme cooperation are examples of this.

At the same time, EU cooperation is evolving in important areas that have consequences for how the internal market functions, e.g. for conditions of competition within this market, but that are not covered by the EEA Agreement. Examples of this are economic and monetary cooperation, certain aspects of justice and home affairs cooperation, and the recent decision in the European Council in Barcelona to introduce minimum environmental taxes on energy carriers.

A technical updating of the EEA Agreement to take account of changes in EU policy and the EU treaty base has been considered in connection with the enlargement of the EU and the EEA. However, the EU has indicated that such an update would not be an option until after enlargement. Any amendment to the EEA Agreement involves a comprehensive process, among other things because it requires the consent of all the national parliaments in the EEA area. Therefore, both the EU and the EEA EFTA countries must carefully consider whether the advantages of updating the Agreement would be commensurate with the effort required.

EU cooperation on the Lisbon Strategy for the purpose of promoting the EU countries’ economic competitiveness on a sustainable and socially cohesive basis is to a considerable degree government-to-government cooperation. This aspect of the cooperation is not covered by the EEA Agreement, despite the fact that it lays the groundwork for EEA-relevant EU initiatives. Insofar as the Lisbon process results in new legislation for the internal market or new EEA-relevant programme cooperation, however, the EEA EFTA countries will be involved in the process as prescribed in the EEA Agreement. The EEA EFTA countries are following the Lisbon process closely and have the opportunity to provide input to the government-to-government part of the EU’s work on the strategy. The EEA EFTA countries are free to implement changes in their own policy on the basis of the systematic comparison of statistics and "best practices" that is a central part of the Lisbon Strategy. However, they have little opportunity to participate in the government-to-government cooperation in connection with the Lisbon process.

The forthcoming EU enlargement, probably by 10 countries to begin with, will also involve the enlargement of the EEA, and the EEA EFTA side and the EU side fully agree that this enlargement should take place at the same time. The EFTA countries have been informed on a regular basis about the main lines of the enlargement negotiations. In this connection, only one serious problem for Norway has been identified, i.e. the risk of poorer market access for fish.

The other major processes in the EU, such as the cooperation on EMU, justice and home affairs and foreign and security policy, fall clearly outside the scope of the EEA Agreement, and solutions to the challenges this poses for Norway must be found outside the Agreement. However, the EEA cooperation includes certain forums and opportunities for contact that can also be used to discuss matters of common interest that are outside the scope of the EEA Agreement. The Government will make the fullest possible use of these opportunities in order to meet Norway’s needs for contact and cooperation with the EU on all the steadily increasing number of areas covered by EU cooperation.