Norway and EEA enlargement – two new financial arrangements see the light of day

On 1 May 2004 10 new countries will become members of the European Union 1Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovenia and Slovakia.. These 10 new members will at the same time become parties to the EEA Agreement that makes the EFTA EEA countries, Iceland, Liechtenstein and Norway, part of the EU internal market.

In the negotiations on extending the EEA Agreement, it was decided that two new financial arrangements should be established. One is the EEA financial mechanism, and the other is a separate Norwegian bilateral financial instrument. These arrangements will mean that Norway’s contribution to economic and social cohesion in the enlarged EEA will be 10 times larger than it was before.

The EEA financial mechanism applies to the new member countries and Greece, Portugal and Spain. The main priority areas are the environment, promotion of sustainable development, securing the European cultural heritage, education, health and child care. The budget for this mechanism is EUR 120 million (about NOK 996 million) a year.

The Norwegian financial instrument applies only to the new member countries. Its purpose is to enable these countries to participate fully in the internal market and to reduce the social and economic disparities within the EU after enlargement. Priority areas include projects to assist the 10 new members to adapt to the Schengen co-operation, justice and home affairs, environmental measures, regional policy, regional policy and cross-border activities and technical assistance relating to implementation the of EU legislation. The total budget is EUR 113.4 million (about NOK 941 million) a year.

A joint secretariat for the two arrangements will most likely be established in Brussels when the arrangements enter into force. The recipient countries will themselves be responsible for proposing, developing and implementing the projects. A continual dialogue will be maintained with the recipient countries on the use of the funds. Recipients will have to pay a share (15-40 per cent) of the project costs. Project support will be allocated in accordance with EEA rules relating to public procurement, state aid and competition.

The two new financial arrangements will enter into force on 1 May 2004.