The EconomistFebruary 24th 2018 Britain 492 of trust” that gives Norway more say than
many people realise and has served as a
route to fuller co-operation in many non-
economic areas.
Its diplomatic mission to the EUin Brus-
sels is by far Norway’s largest. Its site is the
closest of all to the European Commis-
sion’s Berlaymont headquarters. Norwe-
gian diplomats say they are fully involved
in the early stages of drafting regulations in
fields like energy, the environment or vet-
erinary standards (veterinary and phyto-
sanitary rules make up 40% of the single-
market rules Norwayadopts). This influ-
ence is more useful than the formal right to
vote, which seldom happens on such tech-
nical matters. The commission even em-
ploys a few Norwegian officials. And Nor-
way keeps tabs on laws passing through
the Council of Ministers and the European
Parliament, where it is not represented, by
relying in part on Nordic solidarity.
This is not to say that Norway has no
problems with the EU. Not being in the
room when single-market laws are adopt-
ed can catch it out. It was forced to modify
its rules for central-heating boilers because
it was not consulted over an EUlaw. Its ini-
tial opposition to an EU directive to liberal-
ise postal services almost led to a bust-up.
There was even an argument over Nor-
way’s public ownership of the waterfalls
that produce hydropower, but the Norwe-
gians managed to keep that tradition.
Fish, which are increasingly important
to Norway as its oil starts to run out, are an-
other big problem. Norway and Iceland
have been much better than the EUat man-
aging fish stocks. But both mustsell into the
EUmarket. Brussels has at times blocked
imports of Norwegian salmon on anti-
dumping grounds, though Norway has
then referred the dispute to the World
Trade Organisation. In another case, Nor-
wegian salmon was barred from using the
EU’s eco-labelling system, despite observ-
ing its standards, because the relevant di-
rective had not been fully incorporated
into EEAlaw. More significant for an indus-
try that today relies mainly on fish farms is
the EU’s high tariff on processed fish,
which means that much Norwegian fish is
exported raw to Poland, which gains from
the value added in processing.
Some Norwegian firms also fret be-
cause the country isnot in a customs union
with the EU. This meanstheir exports must
comply with the EU’s rules of origin. It also
requires Norway’s border with the EUto
be policed (see box on previouspage). Be-
ing outside the customsunion does, how-
ever, allow Norway and otherEEAmem-
bers to strike their own free-trade deals;
EFTAhas often proved nimbler at this than
the EU. Individual countries can do the
same. Iceland has a free-trade deal with
China, as does non-EEA Switzerland.
Then there isthe issue of paying into
the EUbudget. Norway hands over around
three-quarters of Britain’s net contribution
per person. Yet few payments go via the
general EUbudget. Some cash is tied to re-
search or educational programmes like
Horizon 2020 or Erasmus student ex-
changes. The rest goes to poorer countries
in eastern Europe as “Norway grants”, con-
trolled from Oslo, not Brussels. In a rich
and generous country, such payments are
largely uncontroversial.This bird hasn’t flown
Could Britain join the EEA? Even more im-
portant, could it seek to modify it to satisfy
some of the Brexiteers’ goals?
These questions are tackled in a forth-
coming book by two academics at Arena, a
European institute at Oslo University.**
Among Norwegian officials, however, the
notion of Britain in the EEAis not popular,
even if they would be reluctant to veto it.
Norway worries about beingpushed aside
as top dog and about the risk of Britain up-
setting the balance of the system.
A different option might be to construct
a British version of the EEA. Given Britain’s
size and the broader nature of itseconomy,
this might make sense. Any deal between
Britain and the EUis likely to have bespoke
elements of its own. And if there were a
British version ofEEA membership, it
would be easier for both sides to tweak it.
One obvious tweak would add a deep-
er system of co-operation on foreign and
security policies. As an active member of
NATOthat also has a border with Russia,
Norway works closely with the EUon such
issues as sanctions. But Britain is far more
central to European security. Mrs May was
surely right to call in her recent speech atthe Munich security conference for a com-
prehensive treaty that preserves as much
as possible of Britain’s present relationship
with the EUin foreign policy and domestic
security, and to demand institutional flexi-
bility from Brussels to allow this.
A trickier option would be to try to re-
turn to the original Delors vision by giving
Britain a more formal say in single-market
laws. It would be hard to offer this to the
British but deny it to otherEEAmembers.
But the relative weight of the British econ-
omy and its clout in such areas as financial
services would make it odd to legislate
without at least some prior consultation.
Yet in areas ranging from chemicals and
pharmaceuticals to food safety and agri-
culture, EUrules have become global ones
that most businesses will wish to follow in
any case.
Another idea might be to graft a cus-
toms union on to a British EEAdeal. This
has been called for bythe biggest British
business lobbies. It would make it easier to
avoid a hard border in Ireland. But it would
make it impossible for Britain to do free-
trade deals in goods with third countries.
The freedom to strike deals in services,
however, would remain.
The most difficult issue of all is free
movement of people. Some advocates of
the Norway option argue that Articles 112
and 113 could be used to create an emergen-
cy brake that ends free movement, citing
the example ofLiechtenstein. Yet it is fanci-
ful to expect the EUto let Britain stay in the
single market but reject the principle of
one of its four freedoms, not least because
some other countries would surely ask for
the same deal.
Britain in an EEA-type arrangement
could, however, adopt various migration
policies that others already have. These
range from a registration system forEUna-
tionals to restrictions on property sales to a
policy of expelling those who cannot find
jobs within six months. And in any event,
the number ofEUmigrants into Britain, es-
pecially from central and eastern Europe, is
already falling sharply.
A bespoke EEAdeal for Britain should
also be seen in the context of the changing
nature of the EU. As the euro-zone core pur-
sues deeper integration, even as some
countries stand aside, the entire European
project is evolving into a multi-speed,
multi-tier creation. The three EEAmem-
bers will no doubt stay in an outer tier that
suits them. Had Britain voted to leave in its
first referendum on Europe in 1975, it would
surely have followed its fellowEFTAmem-
bers into the EEA. It seems perverse now to
reject the option out of hand. 7Sunlit uplands...............................................................
* “Towards Europe: the Story of a Reluctant Norway”. By
Paal Frisvold. Peter Lang, December 2017
** “Squaring the Circle on Brexit: Could the Norway
Model Work?” By John Erik Fossum and Hans Peter
Graver. Policy Press, forthcoming