State Secretary Kim Traavik

How does EU Policy Affect a non-member State?

Conference of Peripheral Maritime Regions
Stavanger, Friday 24 September 2004

Let me start by noting how pleased and honoured we are that 400 representatives of 150 peripheral maritime regions of Europe have chosen Stavanger and Norway as venue for this important Conference.

Before turning to the question I have been asked to discuss; ”How does EU Policy Affect a non-member State?”, let me make a few general observations about Norway’s relations with the European Union.

As you are probably all aware, Norwegian voters have twice – in 1972 and 1994 -rejected membership in the European Union, albeit by very slim majorities.

But this does not mean that we Norwegians are insular or inward-looking.

Many of you will be aware that Norway has a strong commitment and an activist approach to international cooperation, as seen in our long tradition of comprehensive development aid – currently amounting to 0.95% of our GNP – and in our involvement in peace and reconciliation processes in various parts of the world. International solidarity is not in short supply in Norway.

And it would be mistaken to consider us reluctant Europeans. On the contrary, although there are still differing views as to whether or not Norway should eventually join the Union, there is a broad consensus that as Europeans we, too, must take our share of the responsibility for ensuring peace, stability and prosperity on our continent.

Close and mutually beneficial ties to the European Union is a top priority of our foreign policy. And even a cursory examination of the record bears out the conclusion that Norway has become a close partner of the Union, perhaps closer than any other non-member.

First, we are close trading partners. Norway is heavily dependent upon European markets. In excess of 70% of our foreign trade is with the 25 members of the European Union. The EU’s exports to Norway amounts to some 4% of the total. But that is not a trifling amount either, bearing in mind the differences in the sizes and numbers of the economies involved.

Second, the European Economic Area – or EEA - Agreement makes Norway a part of the single market. This provides Norwegian businesses and enterprises with a level playing field in European markets, except when it comes to fish and agricultural products, which are not covered by the EEA Agreement;

Third, we are close to the Union in the area of Justice and Home Affairs. For example, our association agreement with the Schengen cooperation makes us a part of the external border regime of the EU and we have established links with Europol and Eurojust.

Fourth, as likeminded nations, we have established close cooperation in the areas of foreign, security and defence policy. For instance, we have pledged some 3000 personnel to the achievement of the EU’s so-called headline goal of 60 000 troops available for peace operations.

Fifth, I need not remind the present audience that Norwegian regional and local authorities are heavily involved in European regional cooperation, as partners in various INTERREG programs, and as participants in umbrella organizations such as the CPMR. There is no doubt in my mind that this is a very important and useful supplement to formal and informal contacts at the level of governments.

And, finally, we are making substantial contributions to the bridging of economic and social gaps in the enlarged EU. To that end, two new financial mechanisms became operative on 1 May. Norway’s share of the funding of the two mechanisms amounts to some 226 million Euro annually for the next five years. Furthermore, we contribute substantially to economic and social development in the Western Balkans, in the Caucasus and Central Asia, and in Northwestern Russia. In all these regions we are pursuing the same objectives as the Union.

Against this backdrop, and bearing in mind that public opinion polls over the last couple of years have fairly consistently indicated that a majority of the voters are in favour of Norwegian membership, you may wonder why we do not simply join?

The simple answer is that as of now, there is not enough support in Parliament for a reopening of the membership issue. And in any case the parties of which the present coalition government is composed have differing views on the issue.

Accordingly next year’s parliamentary elections will determine whether there will be a political basis for reopening the question of Norwegian membership some time between 2005 and 2009. If so, two factors in particular will influence whether and when the issue will be placed on the political agenda.

First, public opinion polls would have to show a clear and sustained majority in favour of membership. And second, the process of ratification of the constitutional treaty should have run its course. If the constitutional treaty were to be rejected in one or more of the planned referenda, that obviously would have an impact on public opinion in this country.

For the time being, then, the EEA Agreement remains the foundation of our relations with the Union. This confronts us with a fundamental challenge.

The Union has added and will continue to add new members, while at the same time deepening and broadening its cooperation, also in areas outside the single market and thus outside the EEA Agreement. The net result is that the Union is becoming ever more important to us, while we are becoming – at least in relative terms – less important to the Union.

Understandably, an enlarged Union with much on its mind has less time for largely unproblematic non-members and is unable to consult with us as much as we would like to, or directs its attention to issues that are of primary importance to us. The problem is not a lack of good will on the part of the EU, but rather that other, more pressing, concerns dominate the EU agenda.

Short of joining the Union, which – as I have already indicated - is not in the cards in the short term, there is no simple or easy solution to this predicament. We simply have to roll up our sleeves and work harder and more efficiently, in Brussels and in individual EU capitals. And we intend to do just that.

How does EU policies affect this particular non-member state? The short answer is of course that we have for a long time been affected by Union policies in a major way. For example, as part of our obligations under the EEA Agreement we take over and implement all the acquis pertaining to the single market.

And the impact of EU decision-making is steadily growing, with enlargement, and with the deepening and broadening of EU integration. Let me illustrate this general point by citing a few examples, drawn from policy areas that are important from the Norwegian as well as the EU point of view.

You will not be surprised that my first example is fisheries. As an important fishing nation, fish has always been a key component of our overall relations with the EU. Indeed, concerns that EU membership would negatively affect the interests of Norwegian fishermen were a decisive factor in bringing about the slim”no” majorities in 1972 and 1994.

From an overall point of view the Norway-EU fisheries relationship is a solid and constructive one, occasional problems notwithstanding. The parties have not allowed disagreements on matters of principle to disrupt the good functioning of the bilateral management regime which is based on mutual trust, transparency and co-operation, as well as regulated mutual access to fishing in each others waters.

Since we are not an EU member and the EEA agreement does not cover fisheries, Norway is not bound by the Common Fisheries Policy. This has its advantages and disadvantages. On the one hand, being outside the CFP allows us a greater degree of national control over stocks and catches.

On the other hand, it limits access for Norwegian fish products to the EU market. The EU maintains customs duties on a range of Norwegian fish products. Duties on refined processed products are particularly high.

And the EEA Agreement does not prevent the EU from imposing anti-dumping or safeguard measures against Norwegian fish products.

For example, following a complaint by a small group of Scottish and Irish fish farmers, the Commission last month imposed provisional safeguard measures in the form of quotas on farmed salmon imported into the EU market, most of which is supplied by Norwegian producers.

There is no justification for these measures under WTO rules. They are furthermore likely to have a detrimental impact on normal trade flows and adversely affect the processing industry and consumers in EU countries.

Consequently, we have used our right to request consultations on the matter in the context of the WTO. At the same time, we have entered into a dialogue with the European Commission with a view to identifying solutions conducive to long-term stability in the European salmon market, thereby obviating the temptation to resort to measures that are essentially obsolete and protectionist in character.

Environmental policy is my second example of an area where there is wide-ranging and fruitful cooperation between Norway and the EU, and where we as a non-member are heavily and directly affected by EU policy.

Since environmental issues are covered by the European Economic Area Agreement, EU rules and regulations are being incorporated into Norwegian legislation. There is no doubt in my mind that this has led to a strenghtening of Norwegian environmental standards in key areas.

The challenge of climate change is a high priority item on the Norwegian as well as the EU environmental agenda. Climate change is of course a global issue. But there are disturbing indications that the process has come particularly far in the High North.

Later this fall, the the Arctic Climate Impact Assessment – a major scientific study of climate change in the north undertaken under the auspices of the Arctic Council – will be published. Some of the findings are cause for concern.

The bottom line is that climate change in the Arctic is real and happening, and that it is likely to have serious consequences for human settlements, including indigenous peoples, as well as for the fauna and flora of the circumpolar north.

In our view there should be a strong international response to these developments, primarily but not exclusively from the seven member states of the Arctic Council. Norway will push for joint international action with a view to preventing and mitigating to the extent possible negative effects of Arctic climate change.

Norwegian and EU positions on climate have recently been converging. We have aligned ourselves with the EU emission-trading scheme, even though the scheme is not as broadly based as ideally desirable from a Norwegian point of view. A major common challenge is to convince Russia to ratify the Kyoto Protocol and to discuss commitments that go beyond 2012.

In the vital area of maritime safety, Norway’s membership earlier this year in the European Maritime Safety Agency will facilitate further development of our cooperation with the EU. We welcome and appreciate the increased emphasis of the EU on maritime safety issues in the wake of the Erika and Prestige accidents.

But we are firmly of the view that maritime safety should be addressed first and foremost at the global, and not the regional, level. New and stricter safety regulations are clearly needed, and should be negotiated and adopted in the context of the International Maritime Organisation (IMO).

My third example of areas where Norway is affected by EU policy is energy.

Norway is the world’s third largest exporter of oil and gas. Natural gas currently accounts for a quarter of our total exports, but the proportion will grow signifantly in coming years. All our gas is currently sold in Europe, and about 14% of the total European demand is met by Norwegian gas. That is not an insignificant number, but the numbers are much higher if you look at individual EU states.

For example, Norway meets approximately 40% of the demand in Belgium, 32 % in France, 30% in Germany, and 11% in Italy. Norwegian gas is also sold to the Czech Republic, Spain, Austria and Poland. The numbers are likely to rise further in the future, as additional fields come on line.

This illustrates the strong interdependence between EU as a large gas consumer and Norway as a large exporter. Our gas production is steadily increasing against the backdrop of a steadily increasing demand for gas in Europe and a steadily declining production in the large consuming countries.

Norway will remain a reliable and long-term gas supplier of energy to households and enterprises across the continent. We have a favourable geographical position close to the markets and our infrastructure for transportation of gas is well developed. And there is the added consideration of security of energy supply.

The basic problem Norway is facing in the energy field is one that we are also facing in a number of other areas: We have no or very little say in the shaping and making of EU decisions that frequently will have a heavy impact on our interests and that we will in any case have to implement.

The future development of the European gas market obviously is a matter of crucial concern to Norway. But as a non-member we obviously are not and cannot be privy to the deliberations of the EU Council on new or revised rules and regulations.

Regional policy is my fourth and final example of areas in which Norway is affected by EU decision-making.

We believe that a coherent regional policy is an important means of ensuring more equal and balanced socio-economic development inside our own country and in the EU-EEA as a whole.

The recently established EEA financial mechanisms, to which I referred a while ago, will enable us to contribute significantly to economic and social development in the new Member states. Regional policy and cross-border activities are among the priority areas.

The basic objective of Norwegian regional policy is to maintain a balanced settlement pattern in Norway. Until earlier this year, a well-functioning system of regionally differentiated social security contribution rates was a central means to contain the depopulation of sparsely populated areas in Norway. But EU guidelines disallowed the continuation of this policy in its original form. This has caused serious concerns and much debate in this country.

However, the consultation paper on the review of regional aid guidelines from DG Competition proposes a more flexible approach than before. This is a welcome development.

We appreciate the holistic approach on which the consultation paper is based. We strongly agree that cohesion policy and state aid policy should be seen as complementary parts of a broader whole. Both are intended to develop and implement effective strategies for growth and competitiveness.

Regions in Norway are very heterogeneous, more so than in most other European countries. Hence, we need flexibility to target aid more precisely to regions that suffer economic and natural disadvantages because of sparse population, difficult transport infrastructure, and long distances to markets. In order to stimulate economic growth in the weakest regions, aid intensities should be increased.

On this note, let me bring my brief review of Norway’s relations with the EU to a close. Hopefully, I have succeeded in conveying two basic points: First, although not a member of the Union, we are a close partner on which the Union can rely. And second, the extent to which EU policy affects us is considerable and growing.