EEA at 30

This report is in Norwegian only.

During 30 years, Norway has participated in the EU internal market via the EEA (European Economic Area) agreement. According to available research, this has led to a strong increase in trade and a real income gain of about 2-6%. On top of this, there are other gains, for example administrative cost savings due to common rules in the EEA, and welfare gains due to common environmental standards in Europa. The EEA agreement is unique by having an extensive set of common rules that are continuously updated. Thousands of EEA rules are part of national laws and practice that people and firms meet every day without necessarily knowing that they are due to the EEA. The eastern enlargement from 2004 extended the EEA into an integrated and growing market with more than 500 million inhabitants and has led to economic and social convergence in Europe since the new members have trebled their incomes. Migrants from the new member Norway have high work participation rates and currently represent about ¼ of immigrants in Norway.

The EU is still clearly Norway’s largest partner with about 60% for trade as well as investment. Within the EEA, trade with and between the new member states has grown fastest. For trade in goods, the EEA has led to a seamless common market for the sectors that are included. Also for services, the EEA has led to stronger integration but differences between national regulations still impede trade. Completion of the internal market for services is important for small and medium-sized enterprises, and important to create efficient value chains in Norway and Europe. During the EEA period, Norway had a sizeable terms-of-trade gain due to stronger price growth for exports than for imports. Trade within as well as beyond the EEA contributed to this. During recent years, the EU has modified the rulebook on state aid, partly motivated by the green transition and subsidies in China and the USA. This leads to a new industrial policy, with new forms of cooperation where EFTA may participate, however with some challenges.

Digitalisation has created new global challenges where the EU plays a leading role as regulator, with impact also for the EEA. In particular, common regulations in telecommunication have led to considerable gains and contributed to competitive digital services. In the new trade policy climate, the borderline between what is inside and outside the EEA becomes more blurred. An example is climate policy, where Norway through the EEA participates in the EU emission quota trading system but it is not yet clear whether Norway should introduce EUs carbon tax on imports from third countries (CBAM). Cooperation with the EU increasingly affects trade policy viz. third countries, where EFTA traditionally had autonomy. The new geopolitics also create trade policy challenges not covered by the EEA, where the EU introduces new measures while EFTA does not have a clear response. In some areas, for example export restrictions and sanctions, Norway has an ever-closer cooperation with the EU.