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Norwegian Model: ‘Run by Europe’

in | by Hugo Dixon

Norway is not part of the EU but it has access to the single market. It gets this by virtue of its membership of the European Economic Area (EEA). Isn’t this just what we should be looking for? Sadly not.

The Scandinavian country gains only one significant benefit from being in the EEA but not the EU: it is not part of the Common Agricultural Policy. Even that comes with stings in the tail. For a start, it subsidises its own farmers generously. Meanwhile, Norwegian agricultural exports to the EU are subject to tariffs and EU health rules. What’s more, in 2005, the EU imposed punitive tariffs on imported Norwegian salmon on the grounds that it was being dumped in the single market.

Norway hasn’t managed to avoid many other burdens. As a price of access to the single market, it has to follow the EU’s social and product rules, including bugbears such as the Working Time Directive—although this didn’t actually create extra costs for Norwegian business as the country already had even tougher rules. Norway doesn’t get to vote on what the rules are. In the old days before the internet, whenever the EU agreed new legislation, it was just faxed over to Oslo for it to copy. Nowadays, a report for the Norwegian government says, it “downloads” policy and legislation from Brussels”.

“If you want to run Europe, you must be in Europe. If you want to be run by Europe, feel free to join Norway in the European Economic Area,” Nikolai Astrup, a Norwegian Conservative MP, told the UK’s Confederation of British Industry in 2013.

What’s more, Norway still pays for this arrangement. It will contribute an estimated £96/head net in 2016, according to an analysis by InFacts. That’s about the same as what Britain pays.

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Norway isn’t part of the EU’s customs union. That creates two further problems. First, Norway lacks clout in its trade negotiations with the rest of the world. Second, its exports to the EU have to go through customs controls to check that goods from outside the EEA aren’t entering the EU through the back door. It could not, for example, just import a car from China and then export it to Germany without facing a tariff.

But what if a Norwegian-based company took some components from China, assembled them in Oslo and then exported the finished product to the EU? What’s allowed and what isn’t is set out in a set of regulations called “rules of origin”. The cost of such customs controls are about 2% of transaction values, according to the UK Treasury.

For those who want to stop EU immigration – and I’m not one of those – the Norwegian model isn’t any good either. Oslo is committed to allow free movement of people between it and the EU.

The Norwegian model offers access to the single market without a vote on its rules. This would not be a good deal for the UK. The risk is not just that rules would be written without taking our interests into account; it is even possible that, if we are not around the table, legislation could be adopted that undermined our interests. There’s an old saying: “If you’re not at the table, you are on the menu.”

This is an excerpt from “The In/Out Question: Why Britain should stay in the EU and fight to make it better” by Hugo Dixon. 

Factchecking by Sam Ashworth-Hayes

This piece has been updated to use the net figure for Norway’s EU contribution rather than the gross one.