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) 12 10 8 6 1980 1994 4 2009 2 0
Figure 14.2 Annual growth in GDP (Yearly average based on constant 2000 USD) 12.0 % 10.0 % 8.0 % 6.0 % 1980-1990 1990-2000 4.0 % 2000-2010 2.0 % 0.0 %
Figure 14.3 GDP per capita relative to EU 27 200 190 180 170 EU 15 160 Sweden 150 Norway 140 Switzerland 130 Greece 120 Germany 110 United Kingdom 100 90 80 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Figure 14.4 Current account (% of GDP) for Norway and selected countries 16 14 12 10 1980 8 Percent 1994 6 2010 4 2 0 -2 -4 -6
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 90.0 80.0 70.0 60.0 Share of immigration 50.0 Share of import Share of export 40.0 Share of inward FDI 30.0 Share of outward FDI 20.0 10.0 0.0 Norway EU
Figure 14.6 Internal EEA trade (export +import): EEA countries’ trade with other EEA countries as share of total trade (2010) 90.0 % 80.0 % 70.0 % 60.0 % 50.0 % 40.0 % 30.0 % 20.0 % 10.0 % 0.0 %
Figure 14.12 Trade development: Norway – EU vs. Internal EU trade (1999=100) 450 400 350 300 Import from the EU 250 Intra-trade EU 200 150 Export excl oil and gas to the EU 100 Export to the EU 50 0 1995 1997 1999 2001 2003 2005 2007 2009
Figure 14.7 Foreign direct investments in and out of Norway (2009) in billion NOK 900 800 Other countries 700 EU 600 500 400 300 200 100 0 Inward FDI to Norway Outward FDI from Norway
Figure 14.9 Government Pension Fund Global – investmentshare in Europe in 2010 70 % 60 % 50 % 40 % 30 % 20 % 10 % 0 % Equities Fixed income securities
Figure14.15 Inward and Outward Foreign direct investment (Stock based on 1989-2008, in million USD) 90000 80000 70000 60000 Million USD Inward FDI to Norway 50000 from the EU 40000 Outward FDI from 30000 Norway to the EU 20000 10000 0 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007
Figure 14.16 FDI to and from Norway : the role of the EU 80 % Norwegian outward FDI to the EU (as % of total outward FDI) 75 % EU inward FDI to Norway (as % of total Inward FDI to Norway) 70 % 65 % 60 % 55 % 50 % 45 % 40 % 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Figure 14.17 FDI between Norway and the EU versus intra-EU FDI (1999=100) 500 Outward FDI: Norway to the EU 450 Intra EU FDI Inward 400 Inward FDI: the EU to Norway 350 300 250 200 150 100 50 0 1998 1999 2000 2001 2002 2003 2004 2005 2006
Figur 14.21 Growth in immigration from EU15-countries (1998=100) 350 300 Immigration to 250 Germany 200 Immigration to Sweden 150 Immigration to Norway 100 Immigration to 50 Switzerland 0
Figur 14.22 Growth in immigration from new EU members (1998=100) 2500 2000 Immigration to Germany 1500 immigration to Norway 1000 immigration to Sweden 500 Immigration to Switzerland 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Figure 14.23 Share in employment of employees according to background and industry (incl registered and non registered immigrants) Employment activities Construction and utilities Restaurants and hotels Manufacturing Mining and quarrying Business services Engineering services and real estate All industries Primary industries Transport and storage Personal services Health- and social services Education Wholesale and Retail ICT, financial and insurance services Public administration, defense and social insurance 0 5 10 15 20 25 30 35 40 45 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) 200000 350000 180000 300000 160000 250000 140000 200000 120000 100000 150000 80000 100000 60000 50000 40000 0 20000 0 -50000 All industries Other private Public services Construction and Manufacturing Retal, Transport and services utilities and mining wholesales, storage restaurants and hotels Other Nordic countries Western-European EU members Eastern European EU members Employment growth 1996-2007
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