Norway's relationship with the EU in light of Brexit

Your Excellencies, distinguished guests, ladies and gentlemen,

Thank you very much for the invitation to meet you here at the Institute of International and European Affairs.

You have asked me to talk about Norway's relationship with the EU in light of Brexit. Let me be clear from the start: Brexit does not change Norway's relationship with the EU.

We may have rejected membership in the EU twice. However, we have not rejected to take part in European cooperation. Norway cooperates closely with the EU and its member states, because we share a common set of values and because we need joint solutions to shared challenges. We cooperate because it is in our own national interest to do so. The British decision to leave the EU does not change this.

Brexit has, however, put our relationship with the EU squarely in the spotlight. The so-called "Norwegian model" makes headlines on a regular basis, but not always with great accuracy. That is why, today, I would like to outline how our cooperation with the EU is organised and how it works before moving on to Norwegian interests in the brexit process.

Let me start by sharing some general thoughts on Norway's European policy.

Our cooperation with the EU is a fundamental part of my government's foreign policy. Historically, Norway has always been negatively affected by conflicts on the European continent and so it is in our own fundamental self-interest to contribute to a strong, prosperous, peaceful and united Europe. No country, empire or alliance has ever made a better job of this than the European Union. A strong EU is in Norway's interest.

From our standpoint, it is crucial that European governments work closely together to meet common challenges, such as climate change, migration, unemployment, and violent extremism. Issues such as these affect all of us and yet none of us can solve them on our own. On the contrary, at least part of the solution to all these challenges is European, and Norway is playing its part and will continue to do so.

Some facts about the EEA

So how, then, is Norway's European cooperation organised?

The EEA Agreement – or the Agreement on the European Economic Area, to give it its full name – forms the cornerstone of our relationship with the EU. In addition, there are more than 70 other agreements that help regulate the different aspects of our wide-ranging relations, including our association agreement with Schengen.

Interest in the EEA has increased markedly since Britain's vote to leave the EU, and the EEA has become an important point of reference in the debate about Britain's future relationship with the EU. Still, we often see that there are misconceptions about how it works, and the rights and obligations it entails. I am not here to give you a detailed technical lecture on the agreement, but let me just underline a few basic points.

1. Why the EEA?

The basic idea of a European Economic Area was launched in January 1989 by the former President of the European Commission Jacques Delors to extend the emerging single market to the then seven Efta countries. The Efta countries swiftly responded – favourably. The EEA was signed in 1992 and entered into force on 1 January 1994. Later that same year, three of the new EEA countries – Austria, Sweden and Finland – decided to join the EU, whereas Norway, Iceland and Liechtenstein chose to remain in the EEA and therefore also in the single market, but not to join the Union. Switzerland narrowly rejected the EEA in a referendum in December 1992.

2. Basic principle: common rules across the EU/EEA

The first article of the EEA Agreement states that the aim of the agreement is to create a homogenous European Economic Area. The key word here is, of course, homogenous. Which means that to be in the single market you need common rules on the free movement of goods, services, capital and persons, as well as competition and state aid.

EU rules do not have direct effect in Norway since we are not EU members, but must be incorporated into the EEA Agreement by way of separate decisions in the joint EEA Committee consisting of the EU and the EEA/Efta countries. Importantly, this EEA "two-pillar structure" has a separate enforcement and dispute resolution mechanism for the EEA/Efta countries; the Efta Surveillance Authority and the Efta Court. Their role is to ensure that EU rules, once they are incorporated into the EEA Agreement, are applied in the same way in Norway, Iceland and Liechtenstein as in the EU. This is crucial to ensure a level playing field across the EEA and legal certainty for economic operators and individual citizens.

It also means that the EEA Agreement is dynamic. It is continuously updated with new regulations precisely in order to ensure that the rules of the single market are the same across the whole of the EEA. This makes it fundamentally different from traditional free trade agreements, which focus on tariffs and improved access to each other's markets. The EEA Agreement instead gives all the 31 participating countries a 31 country home market.

3. Scope

The EEA Agreement does not include the Common Agricultural Policy or the Common Fisheries Policy. Importantly, though, the EEA does include EU food safety, veterinary and phyto-sanitary rules and standards, and this allows for very smooth import and export of both fish and agricultural products. This is important to us. No one is in more of a hurry than a dead fish, and it is therefore critical that our exports of fresh fish are able to reach EU shops without being unduly held up at the border.

The EEA does not comprise the customs union, but there is total tariff-free trade with the EU except for fish and agricultural products. Being outside the customs union means that we are free to negotiate trade agreements with countries outside the EU/EEA ourselves. We usually do this together with the other Efta countries, including Switzerland which is not part of the EEA.

Norway is also part of Schengen through an association agreement which implies passport free travel within Schengen and common control of external borders. For Norway it was imperative to join Schengen in order to avoid re-instating passport control on the border with Sweden and Finland, which was abolished in 1952 as part of an agreement between all the Nordic countries. Our border with Sweden and Finland is therefore, in other words, a customs union border, but not an external Schengen border. The other Efta states have similar association agreements, but Efta as such plays no part in Schengen.

In addition, Norway also participates in different EU programmes such as Erasmus, Horizon 2020 and Galileo. Here, our financial contribution is calculated in the same way as for EU member states.

Last, but by no means least, Norway also contributes financially to the economic and social cohesion in Europe through the EEA and Norway Grants – not through the EU budget. For the period 2014-2021, this contribution totals EUR 2.8 billion. The money is spent on a wide range of projects in the fifteen poorest EU member states with the aim of reducing social and economic inequality in Europe and to strengthen contact and cooperation.

On Brexit

Ladies and gentlemen,

Moving on to Brexit, let me just reiterate one important point: Norway's relationship with the EU is not in itself directly affected by the British vote to leave. The EEA Agreement provides a stable and predictable framework for Norway's economic relations with the EU member states, to the benefit of businesses, consumers and citizens in general, and that will continue to be the case even though there will be one country less on the EU side.

The United Kingdom and Norway enjoy longstanding and wide-ranging cooperation. I am confident that the UK will remain one of Norway's closest partners and allies. Our relationship with the UK is to a very considerable extent regulated through the EEA Agreement and our many other agreements with the EU. Once Britain leaves the EU, we too will need a new set of agreements to regulate our relationship with the UK. Our objective will be to maintain as close and extensive cooperation as possible between our two countries after Britain's withdrawal from the Union.

Norway also shares the priority of preserving the integrity of the single market, to the benefit of citizens and businesses in the 30 states (EU27 + Efta3) remaining in the European Economic Area after the UK's withdrawal. In that context, Norway and the other EEA/Efta states (Iceland and Liechtenstein) are not ordinary third states in the UK withdrawal process.

If the EU and the UK agree on withdrawal terms relevant to the single market, for instance regarding the acquired rights of citizens, we need to find ways to extend these provisions to all EEA states and citizens. Likewise, any transitional arrangement that extends the application of single market rules in the UK for a time-limited period after withdrawal should include all EEA states. Otherwise, we may risk ending up with a fragmented solution within the framework of the single market.

Consequently, to preserve the integrity of the single market, the EU27, the UK and the Efta3 should agree on legal arrangements, which can enter into force at the same time as the withdrawal agreement between the EU and the UK.

I made this point in a meeting with Michel Barnier last week. His response was that a well-functioning European Economic Area post-Brexit was also important to the EU, and that there should be a close dialogue with the EEA/Efta countries to ensure this.

On the future of the EEA

After the British referendum, there are those in Norway who want to follow the British example and replace the EEA with a closer free-trade agreement with the EU. Their reasoning is that it should be possible to maintain access to the EU market whilst taking back control over matters which are currently decided within the framework of the EEA. It is true that it would be possible to retain access to the single market without the EEA Agreement, if the product you want to sell there complies with single market rules and standards. But what the EEA Agreement does is to give us participation of the internal market, and that is something quite different. It means we share the same regulatory framework so that the entire single market of half a billion people is actually our own home market, not just for goods, but also for services. No free-trade agreement can equal that.

But it does not end there. The EEA Agreement is not only about establishing a large home market for business. It is also about opportunities and rights for ordinary citizens. An entire generation of Norwegians have grown up with the opportunity to study, work, and live in all 31 countries in the European Economic Area. Our qualifications are recognised and we also have the right to healthcare and social security benefits across the area.

These are rights that Norwegians today often take for granted, but without the EEA they would not have had them. If we want to maintain a high level of consensus in favour of the EEA, we need to emphasize the benefits, not only to business, but also to people in general - especially to the young generation who have opportunities that their parents could only dream of.

Conclusion

Ladies and gentlemen,

The EEA Agreement is the most comprehensive and wide-reaching international agreement that Norway has ever entered into. It is not perfect, but it makes us part of the single market and guarantees important rights to each and every one of us.

Brexit has given the EEA Agreement more front page coverage than it's had since we voted not to join the EU back in 1994. All this attention provides us with an opportunity to explain – both at home and abroad – how we organise our participation in European integration. It is ironic, therefore, that Britain's departure from the EU – which we strongly regret – has highlighted our own close integration with the Union. The way I see it, this is probably the only advantage of Brexit; that our businesses and citizens become more aware of the importance of our participation in the single market. It is a unique construction that is fundamental to our economy and welfare. It is a construction that must be protected and preserved, both now and after UK withdrawal from the single market.

Thank you for your attention.