Outside and inside Norways agreements with the European Union Karen - - PowerPoint PPT Presentation

Outside and inside

Norway’s agreements with the European Union

Karen Helene Ulltveit-moe Professor, University of Oslo Member of the EEA review committee

Background

• On 7 January 2010, the Norwegian Government appointed a

broadbased independent committee to undertake a thorough, research-based review of the EEA Agreement.

• The mandate of the Committee called for a comprehensive

and thorough review of the political, legal, administrative, economic and other social consequences of the EEA Agreement.

The report

• The report has four main parts and 28 chapters (900 pages!).
• Part I: Main Features – gives a brief introduction to the agreements

governing Norway’s relations with the EU and an account of the historical development of Norway’s association with the EU.

• Part II: The Development and Functioning of Norway’s Agreements with

the EU

• Part III: The Significance of the EU Agreements for Important Areas of

Society

• Part IV: Conclusion

Main message

• Norway’s relations with the EU are governed by a number of

agreements;the most important being the EEA agreement

• Norway has seen "extensive Europeanisation" in the past 20 years despite

being outside the EU – implications for domestic and foreign policy and most sectors

• EU law has been incorporated into around 170 (of 600) Norwegian statues

and approx 1000 Norwegian regulations

• ¾ member: Norway has incorporated approx three-quarters of all EU

legislative acts into Norwegian legislation.

• The past 20 years: Norwegian authorities neither can nor wish to isolate

Norway from ever closer and binding integration processes in the EU

• Norway is far more closely associated with the EU than most people realise.
• Unusual form of association: association without membership.
• Norway’s association with the EU has not been the model for others

Main message cont’d

• Norway is neither completely outside nor fully inside

 inherent structural tensions and problems, but has worked much better than many expected.

• Large economic benefits, but great democratic deficit since Norway has to adopt

EU policies "without voting rights".

• A kind of national compromise since Norway decided it did not want to join the

EU.

• The EEA has ensured a stable and relatively predictable framework for relations

with the EU, Norway’s most important economic partner.

• The EEA is an expensive/ reasonable/cheap agreement

– Norway’s net conribution: 0.11 % of GDP – Sweden’s net contribution: 0.35% of GDP – Germany’s net contributio: 0.37% of GDP

Implications of the EEA for the Norwegian economy and business sector

• An account of Norway’s participation in the internal market and

economic development in Norway since the EEA Agreement entered into force.

• Describes and analyses the economic relations between Norway

and the EU during the period of the EEA Agreement:

– economic integration and interdependence – internal market and the four freedoms

• Economic development 1994–2011

– GDP for mainland Norway increased by 60 % – employment rose by around 25 % – unemployment fell from nearly 6 % in 1993 to 2.4 % in 2011 – Norwegians’ purchasing power increased substantially – the welfare state was further developed

Implications of the EEA for the Norwegian economy and business sector

• Many reasons for the positive development

– Norway’s oil and gas activities – the Norwegian/Nordic model – the EEA

• Measuring the impact of the EEA difficult from a

methodological point of view

– only one of many factors and difficult to measure in isolation – but the majority of the committee find that EEA contributed significantly to the positive economic development.

Economic development 1994–2011 The stylized facts on Norway

Figure 14.1 Unemployment in Norway and selected countries (percent)

2 4 6 8 10 12 1980 1994 2009

Figure 14.2 Annual growth in GDP (Yearly average based on constant 2000 USD)

0.0 % 2.0 % 4.0 % 6.0 % 8.0 % 10.0 % 12.0 % 1980-1990 1990-2000 2000-2010

Figure 14.3 GDP per capita relative to EU 27

80 90 100 110 120 130 140 150 160 170 180 190 200 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 EU 15 Sweden Norway Switzerland Greece Germany United Kingdom

Figure 14.4 Current account (% of GDP) for Norway and selected countries

• 6
• 4
• 2

2 4 6 8 10 12 14 16 Percent 1980 1994 2010

A significant and asymmetric economic relationship between EU and Norway

• Norway is a small open economy, heavily dependent on international relations.
• The EU and the EU member states are our most important partners trading partners and

account for most of the foreign investment in Norway.

• The majority of Norwegian imports come from the EU (64%) and the majority of Norwegian

exports (81%) go to the EU.

• Approximately two-thirds of Norwegian private sector investments are in the EU, while

around two-third of the stock of foreign direct investments into Norway originate from EU investors

• The Government Pension Fund Global has invested half its capital in the EU (bonds , stocks

and real estate).

• Since the enlargement of the EU – and thereby of the EEA – in 2004, Norway has

been one of the countries in the EU/EEA that has received most labour migrants from Eastern Europe per capita – In 2009, 87 % of all labour migration to Norway came from the EU.

Figure 14.5 Norway and the EU (2009): asymmetric interdependence

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 Norway EU Share of immigration Share of import Share of export Share of inward FDI Share of outward FDI

Figure 14.6 Internal EEA trade (export +import): EEA countries’ trade with other EEA countries as share of total trade (2010)

0.0 % 10.0 % 20.0 % 30.0 % 40.0 % 50.0 % 60.0 % 70.0 % 80.0 % 90.0 %

Figure 14.12 Trade development: Norway – EU vs. Internal EU trade (1999=100)

50 100 150 200 250 300 350 400 450 1995 1997 1999 2001 2003 2005 2007 2009 Import from the EU Intra-trade EU Export excl oil and gas to the EU Export to the EU

Figure 14.7 Foreign direct investments in and out of Norway (2009) in billion NOK

100 200 300 400 500 600 700 800 900 Inward FDI to Norway Outward FDI from Norway Other countries EU

Figure 14.9 Government Pension Fund Global – investmentshare in Europe in 2010

0 % 10 % 20 % 30 % 40 % 50 % 60 % 70 % Equities Fixed income securities

Figure14.15 Inward and Outward Foreign direct investment (Stock based on 1989-2008, in million USD)

10000 20000 30000 40000 50000 60000 70000 80000 90000 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 Million USD Inward FDI to Norway from the EU Outward FDI from Norway to the EU

Figure 14.16 FDI to and from Norway : the role of the EU

40 % 45 % 50 % 55 % 60 % 65 % 70 % 75 % 80 % 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Norwegian outward FDI to the EU (as % of total outward FDI) EU inward FDI to Norway (as % of total Inward FDI to Norway)

Figure 14.17 FDI between Norway and the EU versus intra-EU FDI (1999=100)

50 100 150 200 250 300 350 400 450 500 1998 1999 2000 2001 2002 2003 2004 2005 2006 Outward FDI: Norway to the EU Intra EU FDI Inward Inward FDI: the EU to Norway

Figur 14.21 Growth in immigration from EU15-countries (1998=100)

50 100 150 200 250 300 350 Immigration to Germany Immigration to Sweden Immigration to Norway Immigration to Switzerland

Figur 14.22 Growth in immigration from new EU members (1998=100)

500 1000 1500 2000 2500 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Immigration to Germany immigration to Norway immigration to Sweden Immigration to Switzerland

Figure 14.23 Share in employment of employees according to background and industry (incl registered and non registered immigrants)

5 10 15 20 25 30 35 40 45 Public administration, defense and social insurance ICT, financial and insurance services Wholesale and Retail Education Health- and social services Personal services Transport and storage Primary industries All industries Engineering services and real estate Business services Mining and quarrying Manufacturing Restaurants and hotels Construction and utilities Employment activities Other Nordic countries Western-European EU countries Eastern European EU countries

Figure 14.26 Structural change driven by migration from EU Employment growth and migration

(total employment growth in persons on right axis)

• 50000

50000 100000 150000 200000 250000 300000 350000 20000 40000 60000 80000 100000 120000 140000 160000 180000 200000 All industries Other private services Public services Construction and utilities Manufacturing and mining Retal, wholesales, restaurants and hotels Transport and storage Other Nordic countries Western-European EU members Eastern European EU members Employment growth 1996-2007

Impact of the EEA on Norwegian business and economy

• EEA – A stable and predictable framework for Norwegian business
• Intra-EEA trade, FDI and migration has triggered and allowed for increased

specialisation and structural change and thereby more efficient resource allocation and economic gains.

• In relative terms: trade with EEA approx the same as in 1994, but since

then , Norwegian export has increased by 40 percent

– Intra-EEA trade has increased even in times where the emerging markets have been on the rise – But: forgone trade opportunities? Recent research find a significantly bigger positive effect on trade from EU membership than from EEA association

Impact of the EEA on Norwegian business and economy

• Trade creation within the EEA has led to structural change and adjustment

costs, but probably been less costly than expected.

– Smooth and slow changes as compared to those triggered by the opening of WTO to the East – Trading with similar countries gives more modest gains but also less pain and lesser problems of redistribution

• EEA migration has provided labour force necessary to sustain economic

activity in the private and public sector

• Lack of knowledge about the EEA agreement and uncertainty

about how stable relative to EU membership has probably had a negative impact on business development and FDI

Impact of the EEA on Norwegian business policy

• Examines how the EEA Agreement affects the Norwegian Government’s business policy
• An account of the EU/EEA rules on state aid, public procurement and competition
• Key questions raised are:

– To what degree does EU/EEA law limit the Norwegian authorities’ freedom of action? – How much freedom of action do they still have? And how can it best be utilised?

• Key answers are:

– EU and EEA legislation has a major influence on Norwegian business policy – BUT: EU and EEA legislation (i.e. state aid and competition) aimed at fostering competition and productivity is in line with business policy reforms that pre-dates the EEA agreement – EEA business policy relies on pan-European understanding that the industrial policy of the 70s and early 80s did not work – Significant degrees of freedom – The EEA agreement allows the government to tie itself to the mast

Impact of the EEA on the Norwegian labour market

• Deals with the consequences of the EU/EEA for the labour market and working conditions
• in Norway.
• Examines the development of workers’ rights in Norway under the EEA, and the impact of

the EU/EEA on the system of collective agreements and the degree of organisation.

• Focuses particularly on the scale and consequences of the dramatic increase in labour

migration within the EU/EEA since 2004.

• Discusses the measures taken to adapt the Norwegian model to this situation and how it has

led to new constellations of interests and new dividing lines.

• The consequences of the EU/EEA for the social partners and the balance of power in the

labour market are also analysed, and Norway’s participation in the EU social dimension

• is described.
• Bottom line:

– If anything more positive than expected – The norwegian model has survived – Challenges ahead due to a generous welfare system

Thank you!