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The 2024 Norwegian EEA Review: Norway as an ever deeper integrated outsider

In May 2022, 30 years after the signing of the EEA Agreement in Porto in 1992, the Norwegian government appointed an independent committee to review Norway’s experience as a member of the European Economic Area in the 10 years that had then lapsed since the previous such undertaking – the 2012 report of the Norwegian EEA Review Committee of 2010-2012. In the spring of 2024, as the EEA Agreement celebrates its 30th year in force, the EEA Review Committee of 2022-2024 handed its report over to the government.     
The report in its entirety is available in Norwegian only, but the summary chapter has been translated into English by the Ministry of Foreign Affairs (see here). It runs to 25 pages and presents all of the Committee’s main findings, assessments and recommendations. The purpose of this blogpost is not to write a summary of the summary, but rather to provide some context, highlight certain findings that might arguably be considered to provide new insights, recommend a number of external reports commissioned by the Committee and comment briefly on the reception of the Committee’s report.    

Author: Halvard Haukeland Fredriksen, professor at the University of Bergen and member of the 2022-2024 EEA Review Committee


Background

An independent review of Norway’s experience as a member of the European Economic Area ten years after the first such undertaking requires no particular justification. Given the Agreement’s  scope and impact, it is simply appropriate to review Norway’s experiences with it at least every tenth year. Nevertheless, the EEA Review Committee of 2022-2024 would not have come about if it were not for growing dissatisfaction with the EEA within parts of the labour movement, the high hopes in Eurosceptic quarters initially brought about by the UK’s decision to leave the EU and, ultimately, the election of a coalition government in 2021, comprised of the Labour Party and the Eurosceptic Centre Party. This background is reflected in the Commission’s mandate, against which its final report has to be read.


The Labour Party has traditionally been committed to European integration in general and the EEA Agreement in particular, but within parts of the labour movement there has long been growing concern over the impact of EEA free movement rights on pay and working conditions in certain sectors of the labour market. In 2019, in the face of an EEA revolt from within, the largest trade union in the private sector (the United Federation of Trade Unions) called for an independent review of the EEA Agreement, with particular emphasis on the need to map the true (as opposed to the merely alleged) EEA law limitations on the government’s and the unions’ ability to restrict free movement rights in order to protect the Norwegian labour market model.


The Centre Party (formerly the Farmer’s Party) is strongly opposed to Norway’s current affiliation to the EU and has long advocated for an independent study into a new bilateral EU-Norway Free Trade Agreement as an alternative. With the UK’s decision to leave the EU, an alternative to the EEA suddenly appeared, prompting expectations for a favourable assessment in Europsceptic quarters.


During the negotiations after the parliamentary elections in 2021, it became clear that a new EEA Review would be part of the platform for a Labour-Centre government. For a coalition of parties with very different views on Norway’s affiliation to the EU, the establishment of a committee with a fairly relaxed deadline (2 years) had the additional advantage of acting as a shield against ‘the EU question’ – as the 2010-2012 Review did for the Labour-Centre-Socialist coalition of 2009-2013. However, for the Labour Party, an assessment of a bespoke bilateral EU-Norway Free Trade Agreement was considered to potentially undermine the EEA Agreement, thus limiting the Committee’s mandate to review, on the one hand, Norway’s experiences with the EEA and, on the other, the experiences of Switzerland, the UK and Canada(!) with their bilateral agreements with the EU. Conversely, for the Centre Party, it was unacceptable to include an assessment of EU membership as an alternative to the EEA, which ruled out a review of e.g. Denmark’s and Sweden’s experiences with their arrangements with the EU.


The different views of the Labour Party and the Centre Party on the pros and cons of Norway’s current affiliation to the EU is also apparent in the Committee’s rather long and not entirely coherent mandate. On the one hand, the review was to be limited to the EEA Agreement as such, excluding the many other important multi- and bilateral agreements that Norway has with the EU (such as the Schengen Agreement, the Dublin Agreement, the Arrest Warrant Agreement, the agreements relating to Europol and Eurojust and many more). On the other hand, the Committee was asked to include the cooperation with the EU to combat cross-border crime as well as foreign policy cooperation with the EU, particularly in light of developments in EU cooperation following Russia’s war against Ukraine, although both fields primarily fall outside the scope of the EEA Agreement. Furthermore, several parts of the mandate focused on the limitations on the ‘scope of action’ of Norwegian authorities brought about by EEA law, in a rather detailed manner (such as cabotage in the transport industry, geographically differentiated social security contributions and Norwegian forest policy), whereas the role of the Agreement in the regulation of e.g. BigTech, with its ever increasing importance to the everyday life of us all and the (very) limited possibility for states to regulate individually, was omitted. Another striking absence was research and education, given the importance of the EEA Agreement both for researchers (Horizon Europa) and students (Erasmus+). True enough, the mandate allowed the Committee to identify and assess other issues than those listed, but given the length of the mandate, it was hardly surprising that this could not be done.


Be that as it may, numerous important (and politically sensitive) issues were listed in the mandate, which in general comes across as fairly balanced.         


Main finding: Norway as an ever deeper integrated outsider

The main finding of the Committee is that Norway-EU cooperation, and thus the Europeanisation of Norway, has become both broader and deeper over the past decade, with the EEA Agreement as the keystone in an arch that now comprises almost 100 agreements. As the regulation of the single market has deepened, because of societal developments, technological changes and the political priorities agreed upon by EU governments and the European Parliament, so has the regulation of the EEA. Although the EEA-EFTA States have generally been reluctant to extend the EEA Agreement to new fields, opting instead for separate bi- or multilateral agreements with the EU, the number of EU legal acts incorporated into the EEA Agreement has continued to grow. The Committee talks of a ‘tsunami’ of EU regulation, with which Norwegian authorities struggle to cope.     


As for all the other Norway-EU agreements, which strictly speaking fell outside the mandate, the Commttee briefly notes that they form part of the context in which the EEA Agreement operates. Even though these other agreements are not formally linked to the EEA Agreement, both EU-UK and EU-Swiss relations demonstrate that the EU takes a holistic approach to the various agreements the Union has with any given non-member. As noted by the Committee, there is no reason to believe that this will not apply also to Norway. The suggestion sometimes made in the Norwegian debate that a withdrawal from the EEA Agreement is possible without any consequences for e.g. the Dublin Agreement and the Schengen Agreement, appear detached from reality.


When the broadening and deepening of Norway-EU relations are taken together, the result is a comprehensive association of Norway with the EU that affects virtually all areas of society. Norway’s affiliation with the EU is now of such breadth and depth that the societal consequences of a hypothetical ‘Norexit’ from the EEA would be much more profound than those of a (equally) hypothetical accession to the Union.


Economic impact

A key question in any assessment of the EEA concerns the overall economic effect of membership of the internal market. The 2012 Review based its answer to this question on a 2003 estimate by the European Commission, which found that the single market had increased the Member States’ GDP by an average of 1.8 per cent cumulatively from 1992 to 2002, although the Commission itself considered that estimate to be conservative. The 2024 Review dug deeper into this question, supported by more recent research, e.g. into the effects of Brexit on the UK economy, and concluded that the cumulative effect of the single market on Member States’ GDP is probably ‘considerably higher than 1.8 per cent’ (Chapter 10). This is particularly true for small countries with an open and competitive economy.


Democratic deficit

The democratic deficit inherent in the EEA set-up is well known. The 2024 Review subscribes to the 2012 Review’s view of the EEA Agreement as a political compromise that has yielded a surplus in benefits, but a deficit in co-determination. Importantly, the 2024 Review adds that it considers the lack of political influence to be a growing problem (Chapter 7). The explanation lies in the above-mentioned broadening and deepening of European integration in the last decade: as EU member states decide to tackle new issues through EU regulation (financial instability, climate change, migration, energy security, pandemics, AI etc.), the consequence for the Norwegian parliament is a considerable limitation on its scope of action. Thus, even though the democratic deficit of the EEA hasn’t changed much qualitatively over the last decade, it has grown considerably quantitatively. As stated in clear terms by the Committee: Norwegian citizens lack the political rights to participate or be represented in the collective European decision-making process that adopts the legislation by which they are bound.


The Committee’s recommendations (I): Taking care of the EEA Agreement as is

As the Committee was not trusted to assess alternatives to the EEA, most of its recommendations to the government centre on how to make the most of the existing agreement. If one is to summarize this category of recommendations in one sentence, it is about taking care of the EEA Agreement as is. Thus, no recommendations are made to explore an extension of the agreement to include new fields of cooperation and/or an improvement of the institutional set-up (such as, e.g., access to relevant meetings of the EU Council, as granted by the Schengen Association Agreements between the EU and the EFTA States). Indeed, the question of whether the Main Part of the EEA Agreement ought to be updated to reflect EEA-relevant changes made to EU primary law since 1992 (EU citizenship, Charter of Fundamental Rights etc.) is not discussed. The fact that this question was not mentioned in the mandate suggests that the government is reluctant to reopen the Main Part of the EEA Agreement, trusting instead in the continued ability of the courts to ‘bridge the gap’ through creative interpretation of the existing texts to secure homogeneity between EU and EEA internal market law. As to new fields of cooperation with the EU, the preferred vehicle appears to be new bi- or multilateral agreements, outside the EEA framework. The Committee took no issue with this, tacitly leaving the question of a possible ‘EEA 2.0’ aside.   


Although the Committee shied away from suggesting major changes to the institutional set-up of the EEA, it did briefly comment on the problems related to judicial review in the EFTA-pillar in cases where the EU has vested independent EU agencies with the competence to take binding decisions. The Committee recommends that the institutional challenges to the EEA brought about by EU agencies are dealt with in accordance with the two-pillar structure of the EEA, implying that decisions addressed to individuals and/or public authorities in the EFTA-pillar are to be taken by the EFTA Surveillance Authority. However, it is wholly impractical to staff the EFTA Surveillance Authority to match the expertise of all the different EU agencies, thus forcing the acceptance of pragmatic solutions where drafts are prepared within the EU-pillar (as has been done, e.g., in the fields of financial services and energy). A remaining problem with this solution, however, is the lack of access to the independent EU boards of appeal often affiliated to the agencies as well as to the EU courts, leaving the EFTA Court and the national courts of the EFTA States with the difficult task of reviewing decisions of the EFTA Surveillance Authority that have de facto been taken by EU agencies. The Committee notes this problem but offers no more than a call on the government to try to secure individuals and public authorities alike access to the remedies available in the EU-pillar, i.e. without any suggestions as to how this might be achieved.


As for the other of the Committee’s recommendations on how to make the EEA Agreement work better, the following merit particular attention:

  • More must be done to maintain and further develop knowledge of EEA law in the central government, directorates, county authorities and municipalities alike.

  • The government should facilitate greater involvement of relevant stakeholders at an early stage of its EEA-related work.

  • Norway should enhance its knowledge of how other countries implement EU/EEA rules and consider introducing a system of systematic neighbour checks similar to that of Denmark.

  • The government must take responsibility for reducing the considerable backlog of EU legal acts that await incorporation into the EEA Agreement.

  • EEA legal acts with content that would have been adopted by parliament if they were of national origin should be implemented in the form of legislation, so that they are subject to ordinary parliamentary consideration.

  • The need for changes to the constitutional procedures for parliament’s consent to EEA rules that entail a transfer of supervisory authority to ESA or independent EU agencies, should be considered.

  • The government should participate in proceedings before the EFTA Court as well as the EU courts in all cases that are important to Norwegian interests.

  • The EFTA Surveillance Authority has to be allocated the resources necessary in the face of new tasks and growing caseload.

  • The EFTA Court has to be strengthened to deal with the increasing complexity of EEA law.

  • In cases where Norwegian authorities adopt an interpretation of the EEA Agreement that is acknowledged to be uncertain, they should be open about this and contribute to the clarification of the issue in the courts.

  • The EU and Norway’s affiliation to it should form a much larger part of the curriculum in lower and upper secondary schools.


The Committee’s recommendations (II): Enhanced cooperation with the EU

For most of the policy fields that the Committee was asked to assess, the general recommendation is that Norway should be a constructive partner to the EU in the face of common challenges that a small state cannot solve on its own (climate change, energy security, industrial policy, crisis management and preparedness, foreign, security and defence policy etc.). For fields covered by the EEA Agreement, such cooperation should continue within the EEA framework, whereas cooperation on e.g. foreign, security and defence policy should be based on separate, bilateral agreements.


The fact that cross-sectoral EU initiatives make it increasingly hard to decide which EU initiatives belong in the EEA Agreement and which fall to be covered by other agreements (existing or future), is highlighted in several chapters, but the Committee essentially confined itself to call on the government to pay particular attention to this challenge, in close cooperation with the EU and all relevant stakeholders. A case in point is the 2019 EU Foreign Direct Investment Screening Regulation, which is not deemed to be EEA-relevant, but which essentially compelled Norway to introduce a similar mechanism to prevent circumvention of the EU mechanism through the EFTA-pillar of the EEA. The Committee took note of this and stated that Norway should seek close cooperation with the EU on investment screening.  


A recommendation to pay attention is admittedly not very concrete, but as long as a grand new ‘EEA 2.0’ is not a realistic option, there is simply no alternative to a case-by-case assessment of the EEA relevance of cross-sectoral EU initiatives, combined with a pragmatic approach towards minimising the frictions caused by EU legislation not covered by the EEA Agreement, but which may nevertheless have a major impact on the functioning of the single market.  


The Committee’s assessment of the experiences of Switzerland, the UK and Canada with their bilateral agreements with the EU

Assessing other countries’ agreements with the EU is difficult and the Committee took care to emphasise that caution is warranted. The agreements between the EU and Switzerland, the UK and Canada, respectively, are all influenced by the specific political, geographical and economic contexts of these countries, both when the agreements were negotiated and during the periods in which they have been in effect.


As for ‘the Swiss model’, however, the Committee’s assessment was eased rather a lot by the fact that neither Switzerland nor the EU are happy with the status quo, as demonstrated by the ongoing negotiation on a new framework agreement. As the results of these negotiations remain to be seen, the Committee confined itself to note that the existing Swiss-EU agreements are more limited than the EEA Agreement, do not work as smooth as the EEA Agreement and, in any event, that the EU do not appear to view them as a viable solution for the future. This might perhaps be seen as an easy way out for the Committee, but an assessment of a yet to be agreed new Swiss-EU framework agreement would have been rather speculative.  


As for the UK, the Committee’s task was eased considerably by the research done on the economic implications of Brexit on the UK economy. The Committee essentially noted that economic research, as of Q1 2024, shows that the UK economy as a whole has been adversely affected by Brexit and added that a rather clear majority of UK voters now think that Britain was wrong to leave the EU.


As for Canada, the Committee noted that the Cananda-EU Comprehensive Economic and Trade Agreement (CETA) is a modern free trade agreement and that both Canada’s and the EU’s experiences with it are largely positive. However, CETA does not remove non-tariff barriers to trade and cannot really be compared to the EEA. Both Canada’s geographical location and the fact that mutual trade between Canada and the EU is relatively moderate suggest that the need for closer integration into the single market is considerably less than for Norway.


Although strictly speaking outside its mandate, the Committee took the liberty to conclude the assessment of the experiences of Switzerland, the UK and Canada with their bilateral agreements with the EU by holding that in its opinion, the EEA provides a broader, deeper and more predictable cooperation that, overall, safeguards more of Norway’s interests and needs.


The Reception of the Committee’s report   

The reception of the Committee’s report was undoubtedly influenced by external developments during the Committee’s work. The high hopes in Eurosceptic quarters brought about by Brexit were shelved long before the Committee delivered its report in April of this year, leaving the Committee’s assessment of Brexit as a foregone conclusion. The shortcomings of the current EU-Switzerland agreements were also well known to those who looked to ‘the Swiss model’ for an alternative to the EEA, and it could hardly be surprising that the Committee refrained from assessing a yet to be concluded new EU-Switzerland framework agreement.


Furthermore, the dissatisfaction with the EEA Agreement within parts of the labour movement also appears to have lessened somewhat. The EU has established its social pillar, the EU legislator has enacted a number of legal acts that allow for greater protection of workers’ rights and the EU Court of Justice has, at least to a certain extent, adjusted the course from the Viking and Laval judgments of 2007 that sent shockwaves through the trade unions. In addition, the Norwegian currency has lost almost 20 percent of its value against the Euro over the last decade, resulting in Norway being less attractive for workers from other parts of the EEA than in the first decade after the 2004 enlargement of the EU and the EEA. Indeed, in recent years much of the attention has shifted to how Norway, with its aging population, can remain an attractive destination for workers from other EEA countries, in particular in the health care sector, industry and agriculture. Further still, the current Labour-Centre government has demonstrated that it is very much possible to ensure an organised working life and combat work-related crime and social dumping within the EEA framework. Even though the politically very sensitive prohibition on hiring in temporary workers for construction work currently pending before the EFTA Court could reignite tensions if decided against the government, the general impression is that the overall assessment of the EEA within the labour movement is less negative than it was a decade ago.     

     

Further still, the last decade has seen a marked relaxation of the EU/EEA state aid rules, partially as a result of the Commission and the EFTA Surveillance Authority focusing on bigger cases with a clear cross-border effect and partially as a response to the many challenges that have hit the business sector (the financial crisis, the pandemic, the green transition, heavily subsidised competitors from China and the US etc.). Opinions differ as to whether this is an advantage or disadvantage for Norway, with its open economy, but also with a government with deep pockets. Still, for those critical of EEA restraints on state aid, this development has obviously been welcome.


For all of these reasons, as well as the geopolitical uncertainty of our time, the expectations for the Committee’s report among those who saw to its establishment were not great. Still, within the EU- and EEA-friendly quarters of the government, and the political establishment more generally, there appears to have persisted a fear that the Committee would be much more critical towards the EEA Agreement than it turned out to be. This is the only explanation why a report that doesn’t really bring that much new to the table was received with something close to enthusiasm by the minister of foreign affairs.


External reports

As part of its work, the Committee commissioned a number of external reports from renowned experts, which were then published as annexes to the Committee’s final report. Some of these external reports are in the Norwegian language, but the following are in English:

 

Author

 

How to cite

Fredriksen, Halvard Haukeland (2024): The 2024 Norwegian EEA Review: Norway as an ever deeper integrated outsider. Blog. EFTA-Studies.org.

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