Norway — optimising EU non membership to maximise mutual European added value

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Several countries outside the European Union have cooperation agreements with the EU that integrate them more or less into European projects of their choice. One of the ‘third’ countries most integrated into EU activities and EU regulations is Norway. What motivates the Norwegians — whose country would easily qualify for EU membership in all respects — to opt for very far-reaching cooperation, while choosing not to have a full say in all the rules and regulations that such cooperation involves? Pernille Rieker is Research Professor at the Norwegian Institute of International Affairs, specialised in European integration and European foreign and security policy. Below she explains how the search for European added value brings Norway very close to EU membership, and why the country chooses to go no further.

By Research Professor Pernille Rieker, Norwegian Institute of International Affairs (NUPI)

To be or not to be…an EU Member State

As a closely associated member of the EU, Norway complies with and implements almost all EU rules and many of its policies. As Norway fulfils all the Copenhagen criteria, Norway could easily become a full EU Member State, if it wanted to, and gain a seat at the table and full voting rights. Norway also contributes substantially to European cohesion through the financial mechanisms of the European Economic Area (EEA). On average, it has contributed €391 million annually since 2014. But it also contributes to various EU programmes such as Horizon 2020, etc. For an overview of its main financial contributions see Box 1.

So far however, the majority of the Norwegian people still do not want to join the EU, and full EU membership has been turned down in two referenda. According to an opinion poll undertaken by Sentio in November 2019, 60% of the Norwegian population continues to oppose full EU membership. But what is more interesting is that 61% is in favour of the current arrangement with the EEA agreement as the core. So, what motivates Norway to be in this in-between position — of being a part of European cooperation, but not fully participating?

Norway — a second-class EU Member State?

The Norway-EU relationship is much more extensive than most people are aware of. The EEA agreement has been (and still is) the agreement that is at the core of this relationship and has regulated the main part of the Norway-EU relations for the last 25 years. Nevertheless, today Norway has a set of additional agreements with the EU. In 2012, an independent Review Committee presented a 911 page report covering all the agreements Norway has with the EU, which cover most policy areas.

Still, the EEA agreement is the agreement that most directly challenges Norwegian national sovereignty. While Norwegian politicians have little or no (formal) influence over the legislation decided at EU level, the Norwegian government must still implement and follow EU legislation in exchange for full participation in the internal market. According to the Review Committee ‘Norway has adopted roughly three quarters of EU legislation compared to those Member States that participate in everything, and it has implemented this legislation more effectively than many.’ In short, the EEA agreement is exactly what the British government refuses to accept in its negotiations with the EU following the UK’s withdrawal.

In Norway, the EEA agreement must be understood as a national political compromise. It is a general agreement that, in spite its problematic sides and undemocratic features, has functioned well for over 25 years, providing the country with full access to the internal market. According to the Review Committee ‘it has generally functioned as intended, and better than many thought it would. The experience so far is that the principal issues are much greater than the practical ones. The model of association is practical and flexible, and this is how it has been practised by all parties.’

But Norway is not only a full member of the EU Internal Market. In addition to the EEA agreement, it is part of Schengen and has cooperation agreements both in the area of Justice and Home Affairs (Europol and Eurojust), including Civil Protection (CPM), as well as in the area of Common Foreign and Security policy (CSDP), including in the area of defence (e.g. the European Defence Agency). It is also participating fully in the European research programme, making Norwegian researchers an integrated part of the European Research Area. In practice, this means that, except for the lack of decision-making power, Norway is as close as it gets to being a full EU Member and could perhaps be considered as a second-class EU Member State. How did Norway get into this position?

A national compromise

As a leader of the Norwegian social-democratic youth league (AUF) in the early 1970s, Bjørn Tore Godal fought against Norwegian membership in the European Communities. However, as Minister of Commerce, when Norway applied for EU membership a second time, he had changed his mind. But he also believed that the EEA could be a lasting alternative to EU membership. And 25 years later, he thinks that the current arrangement has worked and still works well.

This is probably the main reason for its continued support. It started out as a national compromise or a second-best solution and has developed into an agreement that functions well and most now support, also the younger generation. It is also important to bear in mind that while the referendum in 1994 resulted in a majority against membership (52.2%), there was still a rather large minority who favoured membership (47.8%). For them the EEA agreement was the second best solution. And in the end this second-best solution was also less controversial for the Eurosceptics than EU membership.

The EEA is an interesting construction. Unlike most international agreements it is dynamic: over the last 25 years it has developed far beyond the preconditions established in 1992. But as this is an integral part of its construction, and the Norwegian Parliament agreed to this dynamic development willingly and consciously, this has been rather uncontroversial. Since 1994 all governmental coalitions have been built on this national compromise, which explains why there has been no political initiative for a new debate about EU membership.

From the outset, one of the key arguments for Norwegian EU membership in the early 1990s was market access. It was therefore keenly supported by Norwegian businesses selling products in the EU’s Internal Market. But it was opposed by farmers, fisheries and the Norwegian food industry, that feared European competition. For both the supporting and opposing groups the EEA agreement was therefore seen as a second-best option. While a few are opposed to the EEA agreement (20%), there continues to be massive support for this agreement (61%), and only a minority wants to replace the agreement with full EU membership (28%).(1)

Benefits outweighing the costs, on several accounts

While the current arrangements place obvious limits on Norwegian national sovereignty, there is a general agreement that it has served Norway well both economically and politically. This explains why most directives are incorporated into Norwegian law without much debate. There are only a few examples of controversial directives, but they have so far not led to Norway making use of its reservation right — often referred to as the power of ‘veto’ — or to a real debate about the agreement as such. Overall, it is still seen as being in Norwegian interests to be an integrated part of the single market and other EU policies.

But it is not only economic considerations that explain why Norway accepts this asymmetrical and self-chosen, undemocratic relationship with the EU. From a Norwegian perspective, European added value goes beyond direct financial benefits relating to avoiding tariffs or participating in measures against climate change. It is the totality of these agreements that provides Norway with more predictability and anchors it in a smoothly functioning multilateral framework that covers most policy areas, also those beyond the internal market — such as justice and home affairs, foreign and security policy. As a small country, Norway is dependent on stable, predictable international relationships. Strong multilateralism is crucial. It has always been a goal for Norwegian governments to be part of (or have a close relationship with) functional multilateral institutions that promote stability and predictability.

In a time when the whole multilateral system and the liberal order is under pressure, and there are uncertainties around the future of the transatlantic alliance, strengthening Norway’s relationship with the EU is perceived as more important than ever. Interestingly, Norway unilaterally signed up to most of the EU foreign policy declarations and participates in EU sanctions. In general, the Norwegian approach to international politics is very much in line with the EU — and even more so since the election of Donald Trump to the White House. This is an important change, but as the opinion polls from 2019 indicate, this has not (as of yet) led to a shift in Norwegian opinion in favour of EU membership.

Having Norway as a constructive non-member that implements EU rules without much debate, follows EU foreign policy declarations and contributes financially, is of course also an added value for the EU. And perhaps particularly so in a period when Euroscepticism is on the rise in many countries. It underlines the attraction of the EU model even for a country that has chosen to remain a non-member. During the many rounds of difficult negotiations between the EU and the UK since 2016, EU-Norway relations have often been referred to by the EU side as a model.

Possible challenges to the Norwegian-EU win/win situation

So far the current arrangements between Norway and the EU have functioned well, and the critical voices have so far been few. But they still exist. If the Norwegian economy continues healthy with low unemployment rates, such voices will most likely remain marginal. With a higher unemployment rate, however, a focus on the negative aspects of the Internal Market such as social dumping — as a result of free movement of persons that allows competition from less expensive foreign labour in certain sectors — might also become a concern in Norway. The outcome of Brexit and the Union’s handling of the Covid-19 crisis will also most likely influence support for/opposition to the current arrangements. An economically successful UK outside the EU could lead to more support for those who prefer a looser relationship with the EU. However, a failing and costly Brexit could have the opposite effect. Similarly, while unsuccessful handling of the Covid-19 pandemic could lead to more scepticism towards the EU, the opposite will lead to more support. Another variable will be the outcome of the upcoming negotiations with the EU concerning Norwegian financial contributions to the EU budget beyond 2021.

As I mentioned earlier, Norway contributes financially rather substantially to European cohesion through the EEA financial mechanisms. In the current situation, it is to be assumed that the EU will ask Norway to increase its financial contribution, also in view of the new Multiannual Financial Framework. While there is probably political willingness to accept a certain rise, there will most likely also be a limit to what the Norwegian public is willing to accept. This poses the risk that the next round of negotiations may challenge the national compromise around the EEA agreement and the additional agreements that has served Norway and the EU well for the last 25 years. And given the opinion polls and the continued low support for EU membership, there may be no alternative to the current arrangement, other than a very unfortunate ‘Norwexit.’

For the moment, however, such an option is not on the table and the current arrangements should remain sustainable beyond 2020. They have proven to be flexible and pragmatic, enabling adaptation to new situations during the past 25 years. On both sides a lot of effort has been made to make them work. Not least because any possible alternatives simply seem to be more problematical for the parties involved. But also because the current arrangements provide added value to both Norway and the EU, serving their individual and common interests.

(1) Data based on the outcome of an opinion poll undertaken by Sentio for NUPI in 2018. See more.

This article was first published on the 3/2020 issue of the ECA Journal. The contents of the interviews and the articles are the sole responsibility of the interviewees and authors and do not necessarily reflect the opinion of the European Court of Auditors.

Articles from the European Court of Auditors, #EU's external auditor & independent guardian of the EU's finances.

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