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Too Close for Comfort – Norwegian Experiences with the European Economic Area (EEA)
Since Norway rejected EU membership in a 1994 referendum, eurosceptic sentiment has been kept strong with a majority against joining for more than fifteen years. There is a growing concern about Norway’s subordinate relationship with the EU through the European Economic Area (EEA). Trade unionists are critical due to the liberalised market and free movement of underpaid labour, and there is a strong case to take control on the export of electricity.
Morten Harper (b. 1973) is research manager of No to the EU (Nei til EU), Norway’s main organisation working against membership of the European Union
Norwegians have twice rejected joining the European Union, in the 1972 and 1994 referendums. Eurosceptic sentiment has been kept strong, so much so that for more than fifteen years every single poll has found a majority opposed to joining. A polling in November 2021 found 61,3 % of Norwegians opposed to joining the EU (undecided 12 % excluded, source: Sentio).
Norway has in many ways thrived as an independent European nation, and is on matters such as environment, security and foreign aid a global player contributing far beyond the country’s modest size. The Norwegian economy has enjoyed many years of growth stronger than the economies of EU Member States. There are of course a lot of challenges and matters to improve also in Norwegian society, but the international rankings are high on a wide range of issues including gender equality, social welfare, even on happiness.
Polls indicate a majority in the electorate against EU membership across the political parties, from left to right. Some years ago, also the right wing Progress Party (Fremskrittspartiet) took a stand against EU membership, and the only two parties in parliament clearly in favour of joining the EU are the Conservatives (Høyre) and the Liberals (Venstre). However, the gravitational force opposed to the EU is mainly centre-left as it was in the referendums. This is still evident in the ongoing campaigns and statements of the organisation No to the EU (Nei til EU).
Growing concern about subordinate relationship
Two years prior to the EU referendum in 1994, Norway and other EFTA countries negotiated the EEA agreement (European Economic Area), making the EFTA countries part of the EU single market from January 1st 1994. This agreement was never put to a referendum in Norway, which it was in Switzerland, where it was rejected. The EFTA pilar of the EEA is Norway, Iceland and Liechtenstein.
There is a growing concern about Norway’s subordinate relationship with the EU. A poll conducted by Sentio, commissioned by No to EU, in January indicates that the populations is divided in three quite equally large groups. One I favour of the EEA, another prefers a new trade agreement instead and the las group is undecided on the matter. Poll on the EEA in January 2022. The question posed: “Do You prefer a trade agreement with the EU instead of the EEA?“ Answers: Trade Agreement: 33,2 %; EEA: 32,6 %; Undecided: 34,1 %
The troubles of the EEA
Even the EEA is too much of the European Union for No to EU. The EEA is one-sided, in that all new legislation is coming from Brussels. The surveillance authority ESA and the EFTA Court are challenging national sovereignty, enforcing Norway’s EEA obligations on areas covered by the free movement of goods, capital, services and persons.
The EEA, which was established on the 1st of January 1994, has proved to have a far broader scope and more serious consequences than described by the government when the agreement was approved by the national assembly. EEA is founded on the same market principles as the EU: The free movement of goods, services, investments and labour. EU legislation applies to all areas covered by the agreement, including competition and public funding. Legally, regulations implemented according to the EEA override Norwegian legislation. The EEA also includes some less controversial issues, including research, education, environment, culture and tourism.
The EEA is controversial with trade unions because of the liberalised market and free movement of underpaid labour. Norwegian labour laws, collective agreements and ILO conventions (of the International Labour Organization) are subordinate to EEA rules. In a broader sense there is a never-ending tide of new EU market acts, some 13,000 EU directives and regulations have to this day been implemented. Also, the scrutiny on national policies by the EFTA Surveillance Authority (ESA) in Brussels causes heated discussions. The EEA is affecting labour regulations and workers’ rights, regional policies, public aid programmes, transport of both goods and passengers, ownership restrictions in the financial sector, the energy markets, climate policies and other issues, including sectors that were supposed be outside the EEA, such as fisheries and agriculture.
The lack of democracy
With the EEA Norway get a formalized influence in the EU development of new legislation and we are more quickly and easily involved when the EU launches new programmes for culture, education and research. We do, of course, have to pay for our participation. We were also involved in similar programmes prior to the entry into force of the EEA and would most probably be more than welcome to participate in these programmes in the future, even without the EEA.
The main headache of the EEA, however, is the lack of democracy. Even our then prime minister Erna Solberg made warnings about this before the UK referendum in 2016, stating that “you’ll hate it” (http://www.politico.eu/article/eu-referendum-look-before-you-leap-norways-pm-tells-brexiteers/). She elaborated: “That type of connection is going to be difficult for Britain, because then Brussels will decide without the Brits being able to participate in the decision-making.” At home, Solberg is still making a case for the same EEA agreement, though. A double standard, if you ever saw one.
The EEA legislation and its enactment supervised by the ever-eager Surveillance Authority in Brussels is interfering with and limiting the policies of national, regional and local authorities. We see three major democratic deficits of the agreement:
• The EEA’s so called dynamic system, which means that the substance of the agreement is constantly expanding.
• The EEA is very one-sided. It is changed through decisions and legislation in the EU, while similar new decisions in Norway or any other EEA-EFTA-state do not affect the agreement.
• The EFTA Court does apparently not value in any significant way the considerations and premises of the EEA-EFTA-parties. In an important Norwegian case on reversion of the rights to waterfalls, ensuring national longterm ownership, both Norway and Iceland had the same understanding that this issue was outside the scope of the agreement. This did not impress the Court, which decided in favour of surveillance authority ESA's complaint. This case, and many others, shows that the EEA has transferred political power from national authorities to ESA and the Court.
Heat on energy and public railways
Norway and EFTA partners Iceland and Liechtenstein have the legal right to reject new EU legislation before it is written into the EEA agreement. A key issue now is if Norway should implement EU’s fourth energy package (“Clean energy”) and also negotiate with EU on removing the third energy package from the EEA and withdraw Norway from the EU energy regulator ACER, because the transfer of sovereignty is too far reaching.
Norway is a major producer of energy. The European Commission wants to link Norway as closely as possible to the EU Energy Union. Hardly anything matters more to the backbone of Norwegian industry than long-term access to electric power at competitive prices. New and planned cables for exporting electricity to the continent and the UK is resulting in Norway importing higher electricity prices the other way. This is perceived as a threat to industry providing jobs across the country. The renewable hydro electricity is needed in Norway to transform and reduce emissions from industry, and to phase out fossil fuels in the transport sector.
Another major EEA issue is EU’s fourth railway package, which makes tenders on what is today public transport compulsory, in addition to transferring authority concerning access and safety on Norwegian railway tracks to the EU Railway Agency (ERA). The compulsory liberalisation will make it more difficult to improve and expand railway transport. EU’s fourth railway package was implemented by the previous Conservative government, and the current Labour/Centre Party government has in its manifesto that it will negotiate with EU on taking back national control. So far this has not yet happened, the government took office in October 2021.
Partners in trade
For decades, Norway has enjoyed easy access to the EU market. Since the 1970s through a free trade agreement negotiated with the EU, ensuring toll free trade for all goods except agricultural and fishery products. In addition, since 1994, through the EEA agreement, ¬ making Norway part of the Single Market.
Norway is also participating in EU programmes on research and education, giving universities and students access equal to EU countries. Norway does not contribute financially to the EU budget, but has established the EEA Grants together with Iceland and Liechtenstein, aiming to reduce social and economic disparities in the EU. Norway is covering most of the bill. Every year Norway is contributing approximately 1 billion euros to EEA Grants, EU programmes and the EEA institutions.
Norway has historically, culturally and economically close ties to United Kingdom. When UK left the European Union, a major part of Norwegian export to the EU also left the single market. In 2018 77 % of all Norwegian exports of goods went to the EU. In 2020, post Brexit, the percentage dropped to 58.6. UK is a major market for sea food and energy from Norway, as well as offshore services. Also, the UK-EU trade agreement is an interesting example of free trade without transfer of sovereignty to Brussels, and Norway (along with Iceland and Liechtenstein) has already negotiated a similar agreement with the UK.
Still, prime minister Jonas Gahr Støre is embracing the same old tune: that Norway must have the EEA agreement to sell goods to the EU. This argument has always been misleading. Norwegian industry had duty free access on exports to the EU before the EEA – and this free trade agreement would still apply if the EEA agreement was terminated.
A trade agreement is the better deal
The Labour/Centre Party government has made it clear in its manifesto that it will not send any EU membership application to Brussels. Also, the manifesto says that Norway will not leave the EEA within the next four years. There will be an official research project on experiences on the EEA agreement and also experiences on EU trade and cooperation from other closely related countries (Norsk offentlig utredning, NOU).
No to EU wants Norway to leave the EEA, and instead negotiate a renewed trade agreement with the EU. Norway and the EU have mutual interests in fair trade relations, Norway being the fifth largest trading partner of the EU. Norway has more than 70 bilateral agreements with the EU on different areas, such as the association to Europol. These agreements are separate from the EEA.
For this purpose, No to EU joined forces with several other organisations to produce a report on various alternatives to the EEA, which is also translated to English (https://neitileu.no/aktuelt/alternatives-to-eea). A renewed trade agreement would be without any supranational surveillance institution or court. The WTO Agreements would of course also be a foundation for trade relations, independent from the results of future Norway-EU negotiations.
Helle Hagenau, The EEA: A Warning from Norway, 2017, The Red Cell, London, https://neitileu.no/aktuelt/the-eea-a-warning-from-norway
Alternatives To The Current EEA Agreement, 2012, Oslo, https://neitileu.no/aktuelt/alternatives-to-eea
The policy of the nine parties in parliament on Norwegian EU membership and whether to resign from the EEA agreement:
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