Lessons from the Norway-EU relationship

Lessons from the Norway-EU relationship

Commentary


Whichever way the British vote in June, they should not believe that a vote to leave is a vote to become another Norway in Europe.

In June, British voters will decide what the United Kingdom's future relationship to the European Union will be. The decision is critical for the UK, for the future of the EU, and for the future of the transatlantic relationship.

The alternatives to EU membership remain unclear, despite their significance for making an informed choice. Few suggest that the UK should seek an association with the EU like that of countries on the fringes of Europe, such as Turkey, Ukraine or Morocco.

Instead, references are frequently made to Norway - notably by the “Leave” campaign - as the epitome of a prosperous European country existing outside the EU. Norway is not a member of the EU, but is closely linked to it through the European Economic Area (EEA) agreement.

For its part, the EU has also referred to its relationship with Norway as an attractive model for developing future ties with its neighbours. In 2014 the Council of the European Union stated that a precondition for non-member states that want close integration with the EU is the establishment of an EEA-like common institutional framework to ensure homogeneity and legal certainty.

There are therefore good reasons to look more closely into the true nature of the Norwegian option, and its relevance for the UK. In 2012 I was involved in an extensive review of the Norwegian model. The findings of that report indicate that it is not a suitable model for the UK, and that many in the UK seem not to understand its true nature.

Here are some lessons to be learnt from the Norwegian case:

  • Our report concluded that European integration had been beneficial for the Norwegian economy and helped it to modernise and stay competitive. As such, the conclusions from the Norwegian report are very similar to the results of the extensive UK balance of competence review.
  • As a member of the EEA, Norway is integrated into the single market, meaning that it also guarantees free movement of people. However, the nature of the country’s cooperation stretches well beyond the single market, and covers free movement of goods, capital and services, environmental protection, state aid, research, and public procurement.
  • Norway’s integration with the EU began in 1994, and numerous additional agreements have since been concluded, in the areas of border, migration, police, defence, security and climate.
  • A separate EFTA Surveillance Authority and an EFTA Court have the task of monitoring and ensuring compliance in Norway, much like the European Commission and the European Court of Justice do for the member states. In the case of Switzerland, there is no such third party independent court system, and the EU is insisting on the need to establish one.
  • We estimated that Norway complies with some three-quarters of all EU laws and policies. As a result, Norwegian society has gradually become Europeanised, in a very similar way to EU member states. In short, Norway is more inside than outside the EU. In some areas, like Schengen cooperation, it is even more substantively integrated than the UK. Even in areas such as the agriculture and fishery policy, that were initially supposed to be outside of the scope of the agreements, there has been considerable integration. 
  • Some members of the UK’s “Vote Leave” campaign group frequently mention that the UK’s contribution to the EU’s coffers might be better spent on the NHS. When citing the possibility of adopting a “Norwegian model” one should be aware that Norway’s association with the EU does not come free of charge. The Norwegian net financial contribution to the EU in 2010 was to the EU was €350 million, or around €80 per capita - a figure comparable to the contributions of France or Italy. The economic contributions have steadily increased since then, and the Norwegians have learnt that the EU can be a very tough negotiator when it comes to allowing access to its market.
  • Norway can decide to make free trade agreements by themselves. However, in reality there are several important constraints to this freedom. During the negotiations Norway cannot be flexible on many of the regulations that are shaped by the EU. Norway has also come to realise that as a small market it is not as attractive a negotiating partner as others, and it is for instance not included in the TTIP negotiations. 
  • The truly unique element of the Norwegian model is that the EEA arrangement entails “integration without representation”. The agreements do not give Norway a seat at the table, a right to vote, and only grants them very limited possibilities to influence the EU agenda. Norway is left, much like any other Brussel lobbyist, trying to influence the EU from the outside. As the EU has expanded and become an important global regulator and standard setter, Norway has realised that it is increasingly difficult to lobby the EU, even in areas where Norway has considerable negotiating power, such as in oil and gas, or financial regulations.
  • Many in the UK that are concerned about the eroding role of national parliaments would be horrified to learn of the limited role of the Norwegian Parliament. EU legislation is hardly debated in the Norwegian Parliament, leaves limited room for policy choices, and is most often regarded as technical implementation of the agreement. Briefly put: Norway’s agreements with the EU have had a paralysing effect, not an invigorating one, on the domestic democratic system.
  • The reasons for this rather unattractive arrangement are circumstantial and specific to Norway. For Austria, Finland and Sweden the EEA agreement turned out to be a preparatory move for full EU membership at a later stage. By contrast, the Norwegian government lost a referendum on full membership in 1994, and were unable to progress further than the initial EEA arrangements. It should be understood as a political compromise and a second-best solution, in the sense that many would prefer either full EU membership or less integration, but politicians do not dare to restart the debate.
  • For any European country operating in a modern economy there is no real escape from integration and intense interaction with other European partners, countries and societies. You can vote to put an end to representation, but there is no escape from integration. You can vote to protect your formal sovereignty, but in a world of interdependence real sovereignty has to be pooled.
  • To be sure, the Norwegian economy has performed well as a quasi-member of the European Union, but this is primarily as a result of high commodity prices and issues unrelated to its mode of association to the EU. In fact, Norway has benefitted greatly from deep integration with the EU. The agreements with the EU have provided access to a huge market, and reduced some of the costs and regulatory uncertainties for third parties associated with non-membership. High commodity prices, especially for oil and gas, has made it easier to withstand the costs of non-membership.
  • Norway has tolerated its peculiar type of integration because there is a high degree of convergence between the EU’s and Norway’s regulatory aspirations, particularly in areas such as market law and environmental policy. In addition, as a small country Norway has no tradition of or aspiration to act like the Greater European States and take the lead in European developments.

Whichever way the British vote in June, they should not believe that a vote to leave is a vote to become another Norway in Europe. Prime Minister David Cameron has wisely warned against the “Norwegian option”. Like some local products with an acquired taste, Norway’s odd ties with the EU should be tagged as “not for export”.

 

Ulf Sverdrup is director of the Norwegian Institute of International Affairs (NUPI). He led the Secretariat of the Norwegian expert report “Outside and Inside: assessing Norway’s agreements with the EU”, issued in 2012

The European Council on Foreign Relations does not take collective positions. This commentary, like all publications of the European Council on Foreign Relations, represents only the views of its authors.

Read more on: European Power, Cohesion & Governance, Britain in Europe

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