RESTRICTED
WORLD TRADE WT/TPR/G/15
9May1996
ORGANIZATION(96-1825)
Original: English
TRADE POLICY REVIEW
NORWAY
Report bytheGovernment
Pursuant totheAgreement Establishing theTrade Policy Review Mechanism (Annex 3ofthe
Marrakesh Agreement Establishing theWorld Trade Organization), thepolicy statement bythe
Government ofNorway isattached.
Note:Thisreport issubject torestricted circulation andpress embargo untiltheendofthemeeting
oftheTrade Policy Review Body onNorway.Norway WT/TPR/G/15
Page iii
TABLE OFCONTENTS
Page
I. MAIN TRADE POLICY OBJECTIVES 1
II. ECONOMIC AND TRADE ENVIRONMENT 2
III. TRADE POLICY DEVELOPMENTS (1991-1995) 3
1. TheWorld Trade Organization 4
2. TheEuropean Economic Area (EEA) 5
3. Free Trade Agreements 6Norway WT/TPR/G/15
Page 1
I. MAIN TRADE POLICY OBJECTIVES
1. TheNorwegianGovernment'spolicyisdesignedtopromoteandsustaineconomicgrowthwithin
thelimitssetbytheenvironment.Norway’sopeneconomyunderpinnedbyaliberaltradepolicyprovides
themeansforeconomicgrowthandadaptabilitytoanincreasinglyglobalizedeconomy.Itistheobjective
oftheGovernment thatthebeneficial effects ofeconomic growth andtradebetranslated intoincreased
welfare, fullemployment, anequitable distribution ofincome andimproved social standards.
2. TheNorwegian Government attaches great importance topursuing apolicy ofsustainable
development athome aswellasglobally. Trade policy andenvironmental policy must bemutually
supportive.
3. Trade isnotonlyessential toachieving economic growth domestically, butalsoameans for
promotingeconomicgrowthandpoliticalstabilityinothercountries.Tradeisthereforealsoanimportant
partofNorway ’sforeign policy.
4. Inorder tobenefit fromcomparative advantages andeconomies ofscale, Norwegian companies
needtoparticipate inmarkets extending beyond thedomestic one.Thus, animportant policy aimis
tostrengthen theinternational competitiveness ofNorwegian trade andindustry. Continuous efforts
arebeing made tosecure andimprove access toforeign markets forNorwegian enterprises.
Consequently,Norwayhasstronginterestsintradepolicynegotiations.Extensiveinvolvementinforeign
trade alsomakes Norwegian companies vulnerable totrade actions, boththose directly aimed at
Norwegian economic operators andmore indirectly through international tradedisputes. Thebestway
toaddress these challenges isthrough arules-based multilateral trading system.
5. TheWorld Trade Organization provides aglobal means ofensuring thatnomember country
pursues national policies tothedetriment ofother members ’trade interests, andthatglobal trade is
conducted according toanopen, multilateral trading system based onrules. Since 1947, Norway has
played asupportive andactive roleinthedevelopment oftheGATT. Active Norwegian participation
tostrengthen andfurther develop themultilateral traderuleswillcontinue intheWTO inorder toensure
thestability, security andpredictability needed byNorway, asanopen, outward-oriented country.
6. Norwegian tradepolicy towards developing countries playsanincreasing roleintheformulation
ofNorwegian development cooperation policy. Norway willcontinue topromote improvements to
themultilateral trading system (MTS) andencourage greater integration ofthedeveloping countries,
especially thepoorest developing countries, intoitbymeans oftransitional arrangements, technical
support andother measures. Tothisend,Norway proposed theestablishment ofaFund inWTO for
financing technical assistance toLeast Developed Countries inparticular andhascontributed
US$2.5million totheFund.
7. Norway willalsotarget andstrengthen efforts topromote trade with developing countries,
forinstance bychannelling aidtomeasures intheproductive sector andthedevelopment oftrade
expertise, andbyimplementing improvements totheGeneralized System ofPreferences (GSP), in
particular foragricultural products andtextiles.
8. Theprocess ofmaking trade policies andenvironmental policies mutually supportive isone
towhich Norway attaches particular importance. Norway therefore participates actively intheongoing
tradeandenvironmentdiscussionsintheWTO,i.e.theworktoensurecompatibilitybetweenmultilateral
trade rules andinternational environmental agreements.WT/TPR/G/15 Trade Policy Review
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9. Norway actively supports international compliance withfundamental rights asestablished in
coreILOconventions. Norway therefore advocates athorough analysis anddiscussion inrelevant
multilateral foraofpossible linksbetween tradeandsocial standards andofmeans toenforce coreILO
conventions.
10. Given theincreasing globalization oftheworld economy, itisalsonecessary todevise rules
thatencompass areas oftrade thathave notbeen partoftraditional trade policy. Thisisclearly
demonstrated bythegrowing significance oftrade inservices andbythenegotiations oftheGeneral
Agreement onTrade inServices (GATS). Investment policy related toservices isalready covered
bytheGATS,buttherearenoglobalrulesforinternationalinvestmentthataffecttrade.Theproliferation
ofbilateral investment agreements underlines theneedforglobal rules. Norway therefore supports
theefforts toinitiate discussions onthisissue intheWTO.
11. Trade andcompetition isalsoanareathatmerits greater attention intheWTO. Norway has
followed acautious lineconcerning theuseofrestrictive trade policy measures. NoNorwegian anti-
dumping orcountervailing duties havebeenimposed during thepasttenyears. Norway would bein
favour ofWTO efforts todesign multilateral rules forcompetition.
12. ItistheNorwegian experience thatthedynamics ofregionalism arecomplementary tothe
multilateral system andcontribute toincreased global trade, provided thatregional agreements are
consistent withmultilateral traderules. Norway ’sregional agreements accommodate theneedfordeeper
economic integration withnearmarkets andhavebeeninstrumental inpaving thewayforliberalization
ofNorwegian tradepolicies attheglobal level. Consequently, Norway willcontinue topursue regional
andbilateral agreements inorder toexpand trade andeconomic cooperation withother European
countries andtosafeguard Norwegian business opportunities within theglobal framework oftheWTO.
13. Norwegian trade policy hasbroad support inthepublic atlarge. Itisdrawn upbased on
extensive consultations onthenational levelwithvarious sources, including representatives oftrade
andindustry, labour, consumer andother interested organizations, aswellaswiththeStorting (the
Norwegian parliament).
II. THE ECONOMIC AND TRADE ENVIRONMENT
14. Economic growth inNorway hasbeenstrong since thefirsttrade policy review ofNorway
intheGATT in1991. ThetotalGDP, fuelled byincreased petroleum production, grew onaverage
by3¾percentperyearfrom1991to1995. Therecovery ofmainland activities (excluding theoffshore
sector) started in1992 andgathered momentum during thesecond halfof1993. Themain stimulus
came frombuoyancy inhousehold spending, which wastriggered byasignificant easing ofmonetary
conditions andapickup intraditional exports.
15. TheNorwegian krone hasremained relatively stable sinceDecember 1992. Theimplementation
ofmonetary policy willcontinue tobedirected towards maintaining astable exchange rateforthekrone
againstotherEuropeancurrencies.NorwegianinterestrateshavefallensubstantiallysincethelastTPRM.
Theeffective 3-month nominal interest rate,averaging 10½percentin1991, was5percentatthe
beginning of1996. TheNorwegian effective 10-year interest rateis6¾percentcompared to10per
centin1991.
16. Thepolicy oftheGovernment istocooperate withthetradeunions andemployer organizations
inorder tostrengthen costcompetitiveness andthereby secure thebasis forfullemployment. LowNorway WT/TPR/G/15
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nominal wage growth hasbeenanimportant factor behind thestronger Norwegian economy thelast
fewyears. Employment hasimproved during thepasttwoyears.Unemployment peaked at6percent
in1993, buthasfallen gradually toalevelof4.9percentfor1995and4.3percent(seasonally adjusted)
forthelastquarter of1995. Inflation remains subdued. Therateofconsumer priceinflation was1.4per
centin1994 and2.4percentin1995 andisestimated atabout 1percentfor1996.
17. General government finances aresound. Thegeneral government balance showed asurplus
(netlending) of0.3percentofGDP in1994 andisexpected toshow asurplus of1.8and2.4per
centofGDP in1995 and1996, respectively. Apetroleum fundhasbeenestablished tocontribute to
abudgetary process thatsafeguards long-term considerations indecisions regarding theextent towhich
thegovernment ’spetroleum revenues aretobeusedintheFiscal Budget. Thegeneral government
gross debtrepresented 39percentofGDP attheendof1995.
18. Inrecent years anumber ofimportant structural reforms havebeenimplemented toimprove
thewaytheNorwegian economy functions andtoachieve higher growth. Suchmeasures include the
taxreform, thereform oftheelectricity market, theelimination offinancial support toNorwegian
fisheries andtheentryintoforceofthenewCompetition Act.Norwegian agricultural policy haschanged
overthepastyears. Important goals arethereduction ofassistance totheagricultural sector, the
lowering ofconsumer prices onagricultural commodities inorder toachieve domestic consumer prices
more inlinewithprices inneighbouring markets, andthereduction ofcostsandoverproduction. The
aimistoencourage thedevelopment ofamore competitive agricultural sector bothinterms ofprimary
production levelandinterms ofprocessing. Labour-intensive production inruralregions isbeing given
priority, asareenvironmental measures andmeasures topreserve theagricultural landscape andpromote
diversified employment opportunities.
19. Important Norwegian export sectors arethepetroleum sector (crude oilandgas), which
contributes withover30percentofNorway ’stotalexport revenue, andfishandfishproducts,
contributing with8percent. Thisclearly illustrates Norway ’sdependency onnatural resources.
Traditional goods assuchrepresent approximately 40percentofNorway ’stotalexport revenue, while
theservicessectorrepresentedabout25percentin1995,halfofwhichcamefrominternationalshipping.
20. Trade relations withtheEuropean Union havebecome more important duetotheaccession
totheEUoftheformer EFTA member countries Austria, Finland andSweden asof1January 1995.
Withtheaccession ofthesecountries, theEUreceived about 75percentofallNorwegian merchandise
exports andprovided about 70percentofallmerchandise imports in1995. Comparative figures for
theCentral andEastern European countries are2and3percent, forNorth America 8and10per
cent,while thefigures fordeveloping countries asawhole areapproximately 9percentforbothexports
andimports, largely comprising trade withAsian countries.
III. TRADE POLICY DEVELOPMENTS (1991-1995)
21. Since the1991 TPRM, themajor trade policy developments forNorway have been the
negotiations oftheUruguay Round andimplementation oftheWTO Agreements andtheAgreement
ontheEuropean Economic Area (EEA). Economic cooperation withCentral andEastern European
countries (CEEC) andcountries thataremembers oftheCommonwealth ofIndependent States (CIS)
hasalsoimproved significantly, inpartduetothesigning ofaseries ofregional andbilateral trade
agreements.WT/TPR/G/15 Trade Policy Review
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1. TheWorld Trade Organization
22. TheUruguayRoundofnegotiationswasofmajorimportanceforNorway.Thestronger,broader
andclearer legal framework resulting from thenegotiations haslaidthefoundation formore equal
terms ofcompetition between small andlarge trading nations, thusreducing theriskoftheutilization
ofunilateral trade measures. Furthermore, interaction between lowered trade barriers anddomestic
structural reform enhances efficiency asstronger competitive pressures frominternational markets make
iteasier toimplement national structural policies. More efficient andcompetitive domestic markets
willprovide anincentive toconclude agreements onthefurther lowering oftrade barriers.
23. Itwasimportant tostrengthen andclarify therulesonsubsidies inorder toreduce thelikelihood
ofdiffering, national interpretations. Thechanges tothedispute settlement system, which ensure that
panel decisions cannolonger bevetoed, werevitaltothecredibility andeffective functioning ofthe
WTO. Though theUruguay Round succeeded inmeeting many ofNorway 'sconcerns regarding rules,
thereisstillroomforimprovementinfuturerule-making,forexampleonanti-dumping.Norwaybecame
involved inadispute inthisarea during theTPRM-period, following theimposition bytheUnited
States ofcountervailing andantidumping duties onNorwegian fresh salmon. These duties virtually
excluded exports ofNorwegian fresh salmon from theUnited States market.
24. Theconclusion ofaTRIPs agreement represents asignificant steptowards safeguarding patents
andother intellectual property rights. Afundamental advance towards trade liberalisation wasmade
withtheGATS Agreement, which outlines theframework fortrade inservices. However, itwasa
setback thatbinding market access andnational treatment commitments werenotincluded withrespect
tomaritime transport. Maritime transport represents about 90percentofinternational transport of
goods.Thus,liberalizationshouldbenefitallcountries.Asinternationalshippingisaserviceofparticular
importance toNorway, wehavetaken active partinthecontinued negotiations inthisfield.
25. Themarket access negotiations oftheUruguay Round resulted ingreater export opportunities
foranumber ofindustrial products. However, theresults were limited fortrade infishandfishery
products, andfuture negotiations should provide increased market access.
26. TheActtoimplement theWTO anditsagreements wasadopted bytheStorting inNovember
1994. Supplementary actswere passed inDecember 1995.
27. TheNorwegian import régime foragricultural products changed fundamentally following the
implementation oftheWTO Agreement onAgriculture. Allnon-tariff import measures havebeen
replaced bycustoms tariffs. Internal support measures have beenadapted andreduced inaccordance
with theWTO Agreement. Export subsidies have alsobeen reduced incompliance with WTO
commitments. Theaverage reduction inimport duties was36percentforagricultural products
(unweighted average). Thereduction ofdutyratesrelated toagricultural products hasbeenaccelerated
inrelation totheWTO commitments sothattheGATT-bound tariff levels foragricultural products
setfortheyear2000 were implemented asof1July1995.
28. Forallotherproducts,theaveragereductioninimportdutieswas44percent(weightedaverage).
Thereductions resulted inaweighted average tariff rateof2percentformanufactured goods. The
reduction onmanufactured goods willbeimplemented within aperiod offiveyears.
29. Asconcerns bilateral textile quotas, Norway isconsidering theelimination oftheexisting
quantitative restrictions overafiveyearperiod.Norway WT/TPR/G/15
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30. Norway hasseized theopportunity created bythetransition totariff-based protection toimprove
market access foragricultural products fromdeveloping countries, especially fromtheleastdeveloped
countries. Atemporary arrangement wasimplemented from 1January 1995. Thisarrangement was
revised, andtherange ofgoods wasextended asof1July1995. Intherevised scheme, allagricultural
goods fromtheleastdeveloped countries areeligible forpreferential treatment, withzerodutyonall
products except forgrain, mealandfeeding stuffs, which qualify fora30percentcutinduties within
certain quantitative ceilings. Forotherdeveloping countries, allproducts except milkanddairyproducts,
liveanimals andcertain processed agricultural products, areincluded inthescheme. Thepreferences
forthese countries range from 100percentto10percentcuts.
2. TheEuropean Economic Area (EEA)
31. TheAgreement ontheEuropean Economic Areawassigned bythemember countries ofthe
European Community andtheEuropean FreeTrade Association on2May1992. TheAgreement came
intoeffect fortheEUandfiveoftheEFTA countries on1January 1994, withLiechtenstein joining
on1May1995. TheAgreement wasjointly notified totheGATT bytheECandtheEFTA member
states on17July1992 (seeGATT document L/7048).
32. TheAgreement ontheEuropean Economic Area substantially widens anddeepens thefree
trade relations established through theFreeTrade Agreement concluded in1973between theECand
Norway. TheEEA Agreement -comprising 49Protocols and22Annexes -aimsatestablishing a
dynamic andhomogeneous European Economic Areainwhich there willbefreemovement ofgoods,
persons, capital andservices (the“fourfreedoms ”)under equal conditions ofcompetition. TheEEA
objectives willbeachieved through EEArules, which correspond toEUrulesandtheirinterpretation
bytherulings oftheEUCourt ofJustice (the“EUacquis ”),ifdonebefore 2May1992, inallareas
concerned. Thisincludes competition policy andstateaid,andthehorizontal policies which arerelated
tothefourfreedoms, e.g.company law,statistics, andrelevant partsofsocial andenvironmental policy.
TheEEA Agreement alsoprovides forstrengthened cooperation inareas outside thefourfreedoms,
suchasR&D, training, small andmedium-sized enterprises, consumer protection, audiovisual matters,
culture andelements ofenvironmental andsocial policy. Moreover, theAgreement contains provisions
onanEFTA financial mechanism aimed atthereduction ofeconomic andsocial regional disparities.
33. TheEEAisnotacustoms union: itdoesnotprovide foracommon external tarifforacommon
trade policy. Norway remains autonomous initsthirdcountry relations andretains itstreaty-making
power.
34. Secondary Community legislation isbrought intotheEEA bymeans ofdirect references in
theAgreement totherelevant Community acts.Accordingly, the22Annexes andsome oftheProtocols
totheAgreement currently make references tosome 2,000 directives, regulations, decisions andother
acts,which inaccordance withtheAgreement apply throughout theEEA. Around 750ofthese acts
apply totechnical regulations andtheremoval oftechnical barriers totrade.
35. TheAgreement provides fordecision-making procedures fortheintegration ofnew,secondary
Community legislation intotheEEA. TheEEA Joint Committee hasadded more than600new
Community actsintotheAgreement since itsentry intoforce.WT/TPR/G/15 Trade Policy Review
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3. FreeTrade Agreements
36. Starting in1992, EFTA countries haveconcluded freetradeagreements withPoland, Hungary,
theSlovakRepublic,theCzechRepublic,Bulgaria,Romania,Slovenia,IsraelandTurkey.Theagreement
withSlovenia wassigned 13June1995andhasbeenapplied onaprovisional basis. TheEFTA countries
alsosigned freetradeagreements withLatvia, Lithuania andEstonia on7December 1995. Until these
agreementsenterintoforce,Norway’sbilateralfreetradeagreementswiththethreeBalticStatescontinue
toapply.
37. EFTA 'sfreetradeagreements cover freetradeinindustrial products, fishandmarine products
andprocessed agricultural products. Inaddition, eachEFTA country hasconcluded bilateral agricultural
protocols witheachofthethirdcountry partners. Thebilateral agricultural protocols areanintegral
partofEFTA 'smultilateral agreements. Thefreetradeagreements incorporate provisions onanumber
ofnewtrade issues, including rules ofcompetition, stateaid,public procurement andprotection of
intellectual property. Theagreements alsocontain evolutionary provisions forservices andinvestments,
astheparties recognise thegrowing importance ofthese areas andwillco-operate withtheaimof
achieving thegradual liberalisation andmutual opening ofmarkets forinvestments andtradeinservices,
taking intoaccount developments inEuropean integration andtheWTO.
38. Since thedissolution oftheformer Soviet Union, Norway hasdeveloped anewsetoftrade
andeconomic agreements withRussia andtheother member countries oftheCommonwealth of
Independent States (CIS). Norway signed abilateral agreement ontrade andeconomic cooperation
withRussia inMarch 1996. Anagreement hasalsobeenconcluded withCroatia. Theagreement with
Russia isbased ontheprinciples oftheWTO forgoods, services andTRIPs. Itstates thatNorway
andRussia shallgiveeachotherMFN-treatment, withexceptions specified, andstipulates thatpayments
shallbemade inconvertible currency unless otherwise agreed. Countertrade transactions aretobe
regarded asexceptional, andaccess topublic procurement markets shallbegiven onamutual basis.
Consultations shallbecarried outincaseoftrade distortions.