Historic free trade agreement with the UK
Published under: Solberg's Government
Publisher The Office of the Prime Minister
Press release | No: 73/21 | Date: 04/06/2021 | Ministry of Agriculture and Food, Ministry of Trade, Industry and Fisheries
Norway has negotiated a free trade agreement with the UK in record time. With the exception of the EEA Agreement, this is the most comprehensive free trade agreement Norway has ever negotiated.
‘This agreement secures Norwegian jobs and facilitates economic growth, and it marks an important step forward in our relationship with the UK after Brexit. This is a long-term agreement, which will also help to accelerate growth in the Norwegian economy,’ said Prime Minister Erna Solberg.
‘I am very pleased that we have negotiated such an ambitious free trade agreement with the UK. The agreement is important for Norwegian and UK industry, as well as for the Norwegian economy and job creation in Norway,’ said Prime Minister Erna Solberg.
‘I am very glad that we have concluded the negotiations on a free trade agreement. It is crucial that Norwegian businesses are able to maintain and compete for market shares in one of our most important markets. The agreement provides predictability for Norwegian industry. It provides opportunities for businesses, freedom for individuals and promotes the continuation of trade, value chains and competitiveness,’ said Minister of Trade and Industry Iselin Nybø.
The UK is Norway’s second most important market, after the EU. In 2020 alone, Norwegian businesses exported goods for nearly NOK 135 billion to the UK, including petroleum exports, while imports from the UK amounted to roughly NOK 42 billion.
‘One of our main priorities has been to ensure that Norwegian businesses have access to the UK market on an equal footing with businesses in the EU. I am happy to say that we have achieved this,’ said Ms Nybø.
The free trade agreement between the EFTA countries Norway, Iceland and Liechtenstein on the one side and the UK on the other is more comprehensive than other free trade agreements under EFTA. It contains a chapter on small and medium-sized enterprises, recognition of professional qualifications, and a chapter on digital trade.
The free trade agreement establishes an important framework for supporting and further developing economic cooperation on trade valued at over NOK 500 billion. Trade, investments and the close business cooperation between Norway and the UK will promote value creation, employment and innovation in Norway.
Free trade agreement not comparable with the EEA Agreement
While the agreement ensures a predictable framework for Norwegian investors, exporters and services suppliers, it is not as comprehensive as the EEA Agreement. Prior to the UK’s withdrawal from the EU, the EEA Agreement provided for free movement of goods, services, capital and people between Norway and the UK. No free trade agreement will provide the same access to the UK market. Nor will it dismantle all the trade barriers that have been removed under the EEA Agreement. The free trade agreement does not set out a common set of rules and principles of mutual recognition that facilitate free movement, which is a cornerstone of the EEA Agreement.
‘The agreement establishes an important framework for supporting and developing economic cooperation between Norway and the UK, but it does not replace the comprehensive arrangements we enjoyed under the EEA Agreement,’ said Minister of Foreign Affairs Ine Eriksen Søreide.
Competing on equal terms with EU companies
Norwegian industrial companies will continue to have full duty-free access to the UK, as has been the case for more than 60 years. The agreement ensures that Norwegian companies exporting to the UK will not face more burdensome customs procedures than EU competitors. The free trade agreement contains more liberal rules of origin than the interim agreement, making it easier for Norwegian exporters to obtain duty-free access to the UK.
Norway has also secured agreement for the continuation of preferential duty rates for seafood, and market access for certain important seafood products will be improved compared to before Brexit.
‘For the seafood industry, this means increased predictability for trade to one of our most important export markets. The continuation of preferential duty rates and duty-free quotas, combined with improvements in tariff-free market access and effective border control, will provide a good framework for seafood exports to the UK,’ said Minister of Fisheries and Seafood Odd Emil Ingebrigtsen.
Norway's agricultural interests will be protected.
‘The free trade agreement ensures continued tariff reductions for Norwegian agricultural goods along the same lines as under the EEA Agreement. Sensitive agricultural products that are crucial to the Norwegian agricultural sector will be protected,’ said Minister of Agriculture and Food Olaug Bollestad.
The free trade agreement also increases predictability for Norwegian investors and service suppliers. It includes commitments to uphold existing market access as well as future liberalisation in a number of sectors.
The agreement enables Norwegian companies to provide services to the UK under a predictable framework, and allows UK companies to maintain their business operations in Norway.
Climate and environmental commitments
Furthermore, there are a number of commitments relating to climate change, the environment and labour rights, as well as general commitments supporting the green transition. The goal is to enhance awareness and increase acceptance of the need to ensure that trade contributes to sustainable development.
The UK is the largest market for offshore wind in Europe, offering a wide range of opportunities for Norwegian businesses. Norwegian industry has a key role to play in developing subsea cables, providing transport and accommodation for service personnel, and transporting massive wind turbines. Other green technology areas where collaboration with the UK will continue to be important include carbon capture and storage, batteries and hydrogen.
About trade with the UK
- Norway exports more to the UK than to any other country. In 2020 Norwegian companies exported goods for over NOK 135 billion to the UK, which accounted for 22 % of all Norwegian exports. Imports of goods from the UK amounted to nearly NOK 42 billion.
- Oil and gas, metals and seafood exports make up the majority of Norwegian exports to the UK.
- In addition, Norway exports services to the UK for NOK 40 billion a year. The UK is one of the biggest and most important markets for Norwegian shipping, engineering and financial services.
- The UK is also one of the largest markets for Norwegian direct investments.
- According to data from 2018, Norway imported NOK 85 billion in goods and services from the UK. Industrial machines, cars and pharmaceuticals constitute a large share of imports.
About the negotiations
- The negotiations started in August 2020 and ended in June 2021 and were carried out on digital platforms.
- The free trade agreement will be presented to the Storting (Norwegian parliament) on 4 June. The aim is to sign the agreement at the beginning of July.
- The agreement will be ratified once it has been signed and the UK and Norway have completed their national approval procedures.