THE NORWAY OPTION IN A NUTSHELL

Trade with EU and the World

Norway's economy is integrated into the Single Market through its membership of the EEA, but because Norway is not a member of the EU she keeps her independence from most of the union’s common policies. They include the EU Customs Union and trade agreements with third party countries, CAP, CFP, justice and home affairs, and foreign policy. Also Norway does not fall under the jurisdiction of the European Court of Justice.

The Spread of Standardisation and Regulation from the top

Global and International Free Trade requires countries to adopt common standards, these standards are created by the committees on global bodies such as the World Trade Organisation (WTO).  Norway status outside the EU has preserved her independence on these regulatory organisations, in contrast Britain has derogated her vote on the WTO to the EU commission.

It often appears that regulations come from the EU, when in fact they have been passed down from global organisations where Norway has a vote and Britain does not, these include technical standardisation of the vehicle standards (UNECE), common banking rules from the Basel Committee on Banking, international  food standards from Codex Alimentarius, animal diseases controls from the OIE.  On all these numerous committees Britain's defers her direct interests to the interests of the EU as a whole.

The Lateral Spread of Standardisation and Regulation (Fax Demeocray)

Opponents of "the Norway Option" will tell you that Norway has scant influence over regulations created inside the EU's "Internal Market" that are automatically adopted into the rules of the EEA's "Single Market". This lateral spread of regulatory laws without representation is known as "Fax Democracy".

Fax Democracy: the spread of  regulations from the Internal Market (Blue) into the EEA Green.

Fax Democracy is not confined to transference from the EU to the EEA, for instance similar lateral standardisation happens between the EU and North America, and vice versa.


As Industries have become more global so has the appetite for global standardisation; both businesses and their customers expect an item bought in Japan to be usable and saleable in America or Europe.  This demand has led to the formation of the ISO International Organization for Standardization which is based in Geneva, the ISO has set hundreds of standards, here is a list.

The days when the EU were at the centre of standardisation and regulations are gone, today the EU has become a link in the pipeline between international governance and the individual.  Fax Democracy does happen but the instances are diminishing because the EU now defers to many more global regulatory bodies; the question needs to be rephrased: "Who has the most influence at the top end of the pipeline where regulations are made; does Norway with its direct input or do we through derogation of our voice to the EU commission?"

(EU regulations imposed by fax on Norway)

The media and the Prime Minister have told us that Norway adopts three quarters of EU regulations. He does not mention than most of these regulations were developed on committees above the EU where Norway had a vote.  But the Prime Minister's words are more than just disingenuous, they are a lie; of all EU legislation, somewhere between 9 - 25 per cent was adopted by the EEA and enforced on Norway.  (Between 2000 and 2013, Norway adopted 4,723 directives and regulations through the EEA agreement. In the same period, the EU adopted 52,183 pieces of legislation - more information at the end of this article). 

It could be argued that Britain is more governed by fax than Norway!

Taxes

Norway are not part of the EU’s attempts to coordinate taxation, so Norway is free to set taxes and duties to finance our welfare state as they wish.

Agriculture and Fisheries

Because Norway are outside the Common Agricultural Policy she is free to maintain an agricultural policy in accordance with local needs. Outside the Common Fisheries Policy, Norway is free to find the best balance between coastal fishing and offshore fishing. That way Norway’s fisheries can benefit coastal communities and create employment.

Currency

Norway are not part of the Euro, so Norwegian monetary policy is set in Norway for Norway and do not have to participate in bailing out failing Eurozone economies  

Norwegian Payments to the EU

The EEA countries that are not part of the EU do not bear the financial burdens associated with EU membership, although they contribute financially to the European single market. After the EU/EEA enlargement of 2004, there was a tenfold increase in the financial contribution of the EEA States, in particular Norway, to social and economic cohesion in the Internal Market (€1167 million over five years). Non-EU countries do not receive any funding from EU policies and development funds.

BUT Norway pays far less than the UK:

Norwegian per head: £68 (net)

UK per head: £153 (net)

Norwegian Gross Contributions  £435m (€600m) Net £340 (€470m)

UK Gross Contributions:  £14,000m  (after rebate) Net £9,800

Border Control

Norway has control over its own borders However the EEA is based on the same "four freedoms" as the European Community: the free movement of goods, persons, services, and capital among the EEA countries. Thus, the EEA countries that are not part of the EU enjoy free trade with the European Union.

References

Paper by Dr Richard North
Article by Kathrine Kleveland
Links to Wikipedia embedded in the above article

Additional Information

Untrue Myths  about Fax Democracy

It is widely quoted, including by the UK prime minister, that Norway enacts three quarters of the EU legislation, when the true figure is somewhere between 9 - 25%.  How has this error come about?:

"The prime minister does not quote these primary sources, instead, he quotes a study from the Norwegian Parliament in 2012, which makes a mistaken claim in the introduction, repeated in Chapter 1 of the English version (the only chapter to be translated), which is not repeated in in the body of the report (available in Norwegian only).

The error made is to claim that "Norway has incorporated approximately three-quarters of all EU legislative acts into Norwegian legislation", when the detail is to be found on pages 794-5, which do not support this claim.

What we see there is a chart setting out the EU legislation in force (the same source that I have used), only for July 2008 – over seven years ago. In this overview, which comprised a total of 28,031 legislative acts, of which 1,965 were "applicable directives".

The report takes this figure for directives, and compares it with the (then) 1,369 directives adopted by the EEA, then concluding that "about 70 percent of all European Union Directives also apply to Norway through the EEA".

This is where the error lies, for the 70 percent of all directives is wrongly changed to "all EU legislative acts" in the introduction, expressed as "approximately three-quarters", the figure which has been lifted and used by the Prime Minister.

However, the report then goes on to observe that EU had 7,720 current regulations, whereas the EEA Agreement comprised 1,349 applicable regulations, approximately 17.5 percent of the EU regulations. When both were taken together (directives and regulations) – 2,718 adopted by the EEA compared with 9,685 in the EU EU acquis, amounting to about 28 percent.

Interestingly, when the comparison is made on the same basis that I have used (with 24,061 EU legislative acts), the actual percent comes to 11 percent – a far cry from the "three-quarters" claimed in the introduction."  Dr Richard North