RESTRICTEDWORLD TRADE
ORGANIZATIONWT/TPR/G/70
24 May 2000
(00-2081)
Trade Policy Review Body Original:  English
TRADE POLICY REVIEW
NORWAY
Report by the Government
Pursuant to the Agreement Establishing the Trade Policy Review Mechanism
(Annex 3 of the Marrakesh Agreement Establishing the World Trade
Organization), the policy statement by the Government of Norway is attached.
Note: This report is subject to restricted circulation and press embargo until the end of the meeting
of the Trade Policy Review Body on Norway.Norway WT/TPR/G/70
Page 3
CONTENTS
Page
I. INTRODUCTION 4II. THE ECONOMIC ENVIRONMENT 4III. TRADE POLICY OBJECTIVES AND DEVELOPMENT 6
(1) The World Trade Organization 6
(2) The European Economic Area (EEA) 10(3) Free Trade Agreements 11WT/TPR/G/70 Trade Policy Review
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I. INTRODUCTION
1. The Norwegian Government's policy is designed to promote sustainable economic growth.
Norway's open economy, underpinned by a liberal trade policy, provides the means for economic
growth and adaptability to an increasingly globalized economy.  The Government’s objective is to
ensure that the beneficial effects of trade and economic growth are translated into increased welfare,
full employment, an equitable distribution of income, improved environmental conditions  and
improved social standards.
2. The Norwegian Government attaches great importance to pursuing a policy of sustainable
development domestically as well as globally.  Trade policy and environmental policy should be
mutually supportive.
3. Trade is not only essential to achieving economic growth domestically, but is also a means of
promoting economic growth and political stability gl obally.  Trade is therefore an integral part of
Norway's foreign policy.
4. In order to benefit from comparative advantages and economies of scale, Norwegian
companies need to participate in markets extending beyond the domestic one.  Thus, an important
policy aim is to strengthen the international competitiveness of Norwegian trade and industry.
Globalisation has led to an increased focus on ensuring competitive framework conditions for
Norwegian enterprises.
5. Norway continues to pursue its trade policy along the two main tracks of multilateral trade
liberalisation:  the WTO and closer European integration, the latter mainly through the European
Economic Area with its EFTA/EEA partners and the European Union.
6. Trade policy, in Norway as in many other countries, is increasingly becoming a topic for
political debate in the public domain.  In addition to the traditional debate on the economic merits oftrade, increasing emphasis is being put on such aspects as health, environment and food and consumer
safety.  To ensure the continued support of the general public for the open, rules-based multilateral
trading system, it must be seen to take such aspects into account.  Norwegian trade policy enjoys
broad public support, and is based on extensive consultations at the national level with various groups,
including representatives of trade and industry, labour, consumer and other interested organizations,as well as with the Storting (the Norwegian parliament).
7. Chapter II of this report gives a brief description of the Norwegian economic environment,
and in Chapter III, the Government sets out the broad lines of Norway’s trade policy, and
its development since the last Trade Policy Review in 1996.  For an account of specific
developments and a description of rules and regulations etc., reference is made to the WTOSecretariat’s well-documented Report (WT/TPR/S/70).
II. THE ECONOMIC ENVIRONMENT
8. After six years of continuous robust growth in Norway, a cyclical peak was passed towards
the end of 1998. In the period between 1993 and 1998, mainland GDP (i.e. excluding ocean transport
and the offshore petroleum sector) expanded by an average of 3.6% annually.  This is about onepercentage point higher than average growth over the last 25 years.  In 1999 the growth rate was
considerably weaker. A slump in petroleum in vestments and business fixed investments has
contributed to a slower growth in the economy, whereas private consumption still provides strong
impetus to growth.Norway WT/TPR/G/70
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9. The buoyant growth of the 1990s resulted in pressures in the Norwegian economy.  Strong
growth in employment and a considerable decline in unemployment accompanied the expansion of
the economy.  Several sectors have experienced problems in finding qualified workers.  Wage
inflation surged to more than 6% in 1998.  This was about twice the rate recorded by our trading
partners.  Together with the social partners, the Government has launched an initiative to enhance
cooperation on income policy.  As part of this strategy, a committee composed of representatives fromgovernment authorities and the social partners was appointed in January 1999.  The committee agreed
that from the year 2000 wage growth in Norway s hould be no higher than that of our main trading
partners.  The rate of consumer price inflation was 2.3% both in 1998 and in 1999.  The policy of the
Government is to cooperate with the trade unions and employer organizations in order to strengthen
cost competitiveness and thereby secure the basis for full employment.
10. Monetary policy is aimed at maintaining a stable krone exchange rate against European
currencies, based on the range of the exchange rate maintained since the krone was floated on
10 December 1992.  In the event of significant changes in the exchange rate, monetary policy
instruments will be oriented with a view over time to returning the exchange rate to its initial range.
No fluctuation margins are established, nor is there an obligation in this regard on Norges Bank (theCentral Bank of Norway) to intervene in the foreign exchange market.  Monetary policy contributes
towards stabilising the Norwegian economy by providing a nominal anchor for income settlements.
11. The three-month nominal interest rate was around 6.2% in April 2000, about 2.3 percentage
points above the corresponding euro rate.  A year ago, this rate was about 7%, nearly 4 percentage
points above the euro rate.  The rate on five-year government bonds was around 6.2% in April 2000,
about 1.4 percentage points above the corresponding German rate.
12. General government finances are sound.  The general government balance showed a surplus
(net lending) of 3.6% of GDP in 1998 and 4.2% in 1999.  In the National Budget for 2000 the surplus
for the year 2000 was expected to be 7.4% of GDP.  The purpose of the State Petroleum Fund is to
safeguard long-term considerations in the use of petroleum revenues.  The Fund receives transfers
during periods of high oil revenues to be saved for later state expenses and obligations.  The
Petroleum Fund amounted to around NOK 220 billion at the end of 1999.  The general governmentgross debt amounted to 24% of GDP at the end of 1999.
13. In recent years a number of important structural reforms have been implemented to improve
the way the Norwegian economy functions.  Such measures, many of which are described in the
Secretariat’s report, include the following:
- Greater use has been made of environmental taxes in order to reduce environmentally harmful
emissions and to improve the cost-effectiveness of environmental policy.
- The electricity market has been deregulated through the Energy Act, which entered into force
in 1991.
- The tax reform of 1992 eliminated many of the disparities that previously existed between
various forms of saving and investment.
- The new Competition Act entered into force in 1994.
- The EEA rules on public procurement and the GPA ensure non-discrimination in the
government procurement process.WT/TPR/G/70 Trade Policy Review
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- Under the Act relating to government support, new support schemes for the business sector
must be approved by the EFTA Surveillance Authority, ESA.
- The air transport sector has seen the gradual removal of regulations on market access through
the aviation agreement with the EU and subsequently the EEA Agreement.
- The telecommunications market has gradually been deregulated, and the remaining exclusive
rights for Telenor AS were removed with effect from 1 January 1998.
- The organizational structure of a number of central government agencies has been changed.
The changes have resulted in a better separation between agencies exposed to competition,
natural monopolies and administrative agencies.  Agencies exposed to competition have been
given framework conditions which are more on a par with those of private companies.
- In the 1990s, budgetary support to industries has been on the decline.  In particular, support to
state-owned companies has been sharply reduced.  Greater emphasis has been placed on the
use of industry-neutral support.  Operating aid to the fisheries was eliminated during the first
part of the 1990s. In order to avoid unnecessary capacity expansion, support to the fishing
fleet has in recent years been shifted away from investment in new vessels towards funding
for scrapping old vessels.
- Agricultural policy has during the past decade been adjusted towards reduced prices and
increased direct payments, which account fo r a large share of the total assistance.   The level
of assistance has remained high by international standards in order to promote small-scale
farming in all parts of the country and to safeguard the multifunctional character of the
agricultural sector.  A white paper on agricultural policy will be discussed in the Storting in
May 2000.
14. Important Norwegian export sectors are the petroleum sector (crude oil and gas),
which contributes more than 30% of Norway’s total export revenue, and fish and fish products,
contributing 6%.  This clearly illustrates Norway’s dependency on natural resources.  Traditional
goods as such accounted for approximately 40% of Norway’s total export revenue, while the service
sector accounted for about 24% in 1999, about half of which came from international shipping.
15. Trade relations with the EU have become more important due to the accession to the EU
in 1995 of the former EFTA member countries Austria, Finland and Sweden.  In 1999 the EU
received about 75% of all Norwegian merchandise exports and provided approximately 70% of all
merchandise imports.  Comparative figures for the Central and Eastern European countries are 2%
and 5%, for North America 14% and 10%, while the figures for developing countries as a whole are
approximately 7 and 12%, largely due to trade with Asian countries.
III. TRADE POLICY OBJECTIVES AND DEVELOPMENT
(1) THE WORLD TRADE ORGANIZATION
16. The Uruguay Round of negotiations was of major importance to Norway.  The stronger,
broader and clearer legal framework resulting from the negotiations has laid the foundation for more
equal terms of competition between large and small trading nations, thus reducing the risk ofunilateral trade measures.  The World Trade Organization is there to ensure that no Member country
pursues national policies to the detriment of other members' trade interests, and that global trade is
conducted according to an open, multilateral trading system based on common rules.Norway WT/TPR/G/70
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17. Since 1947, Norway has played an active role in the development of the GATT and the WTO
in order to ensure the stability, security, transparency, and predictability necessary to an open,
outward-oriented economy such as ours.  We see the preservation and development of a strong rules-
based system as the best guarantee against unilateralism and protectionism.
18. Norway favours further trade policy negotiations aimed both at strengthening the multilateral
trading system and the gradual opening of markets.  Norway is therefore a strong advocate for thelaunch of a broad and comprehensive round of multilateral trade negotiations.  Norway participated
actively in the preparations for the Seattle Ministerial Conference and tabled proposals for mandates
in most areas under consideration for negotiations.  Norway sees the unsuccessful talks on a mandate
for the negotiations at Seattle as a temporary setback.
19. Norway actively participates in the mandated negotiations on the built-in agenda.  However,
for these negotiations to lead to substantial improv ements in the trading envi ronment, they should be
seen as contributions to a broader, more comprehensive round of multilateral trade negotiations.  It is
in Norway’s trade policy, economic and political interest that such a broad round of negotiations
includes, in addition to the built-in agenda, inter alia  special and differential treatment for developing
countries;  market access for industrial products including fish and fish products;  transparency ingovernment procurement;  trade facilitation; trad e and investment;  trade and competition and trade
and environment.  The round should also cover issu es resulting from a review of the implementation
of the Uruguay Round agreements in such areas as anti-dumping, subsidies and countervailing
measures.
20. Norwegian trade policy towards developing countries plays an increasingly important role in
the formulation of Norwegian foreign and development cooperation policy.  Norway will continue to
promote improvements to the multilateral trading system and encourage greater integration of thedeveloping countries, especially the Least Developed Countries, by means of improved market access,
transitional arrangements, technical and financial support and other measures.  To this end, Norway
has contributed approximately US$3.3 million to the WTO’s programmes for technical assistance.
Furthermore, Norway continues to advocate that th e WTO programmes in this field be financed over
the organization’s regular budget, rather than mainly by voluntary contributions to a global trust fund.Norway has also signed the agreement to establish an independent legal advisory centre on WTO law.
21. Norway continues to target and strengthen its bilateral efforts to promote trade with
developing countries, for example by implementing improvements to the Generalised System of
Preferences (GSP).  Of particular importance is improving in a real and effective way market access
conditions for products originating in the Least Developed Countries.
22. The process of ensuring that trade and environmental policies are mutually supportive is one
to which Norway attaches particular importance.  We therefore find it important that environmental
aspects are taken into account in future trade negotiations.  In this regard sustainability reviews are a
valuable means of helping to achiev the objective of integrating environment and development
concerns into trade policies.  Norway has, for its part, initiated environmental reviews and has
encouraged others to do the same.
23. Norway also participates actively in the ongoing trade and environment discussions in the
WTO.  Analysis of the interaction between trade and environment policies is a priority.  Identifying
win-win, or even wi n-win-win situations (trade/environment/development), is of special importance,
for example in analysis of the relationship between subsidies, trade and the environment.  Norway
also finds it important to continue studying trade-related aspects of eco-labelling and MEAs.WT/TPR/G/70 Trade Policy Review
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24. In the area of services, a fundamental step towards trade liberalization was taken in the
Uruguay Round with the GATS Agreement, which ou tlines the framework for trade in services.  In
the present negotiations, Norway is looking for real trade liberalisation over a broad range of sectors,
including maritime transport and other maritime services, telecommunications, environmental
services and offshore-related services, as well as improvements of the GATS agreement itself.
25. For Norway, as one of the world’s major suppliers of maritime transport services, it is of
particular concern that binding market access and national treatment commitments have not been
entered by major trading nations for that sector.  Ships account for about 90% of international goods
transport.  Liberalization in this sector would therefore benefit all countries.  It is a paradox that
negotiations on the fairly liberalised maritime transport services sector, which is crucial to the flow of
goods, were not more successful in 1996.
26. The market access negotiations of the Uruguay Round resulted in increased export
opportunities for a number of industrial products of interest to Norway.  However, the results had a
limited effect on trade in fish and fishery products.  As of today more than 150 countries import
Norwegian seafood, establishing Norway as the worl d’s largest exporter of seafood.  Further growth
in the fishing industry is, however, limited by market access restrictions, for example due to hightariff rates on seafood exports.  We therefore attach great importance to a new broad round of
multilateral negotiations to provide the necessary  forum for achieving increased market access
through substantial reductions of bound tariffs for industrial goods, including fish and fish products.
As the fishery sector is very vulnerable to non-trade measures, we also favour that forthcoming
market access negotiations include non-tariff measures.
27. The Norwegian import regime for agricultural products changed fundamentally following the
implementation of the WTO Agreement on Agriculture.  All non-tariff import measures have beenreplaced by customs tariffs.  Domestic support measures have been adapted in accordance with the
WTO Agreement.  Export subsidies have been reduced in compliance with WTO commitments.
28. Article 20 of the WTO agricultural agreement provides for the continuation of negotiations in
the agricultural sector and refers to the "long-term objective of substantial progressive reductions in
support and protection".  It also lays down that further negotiations shall take into account inter alia
experience gained from implementing the existing agreement and non-trade concerns.
29. As regards non-trade concerns, Norway has emphasised the multifunctional and multifaceted
nature of agriculture as a supplier of public goods such as rural settlement, food security and a living
cultural landscape, cultural heritage and biodiversity.  These are key aspects of the agricultural sector
that need to be properly reflected in the continuation of the reform process.
30. The goal is to safeguard national flexibility in agricultural policy design by allowing the use
of appropriate measures to ensure viable agricultural production throughout the country.
31. The transition to tariff-based protection in agriculture in Norway facilitated market access for
agricultural products from developing countries, in particular from the least developed countries.
Under the Norwegian Generalised System of Preferences, all agricultural products from the leastdeveloped countries are eligible for preferential treatment, with zero duty on all products except for
grain, flour and feedingstuffs.  The latter qualify for a 30% cut in duties up to certain quantitative
ceilings.  In the year 2000, the special safeguard mechanism within the GSP system will be invoked if
imports of duty-free beef from the least developed countries exceed 2700 tons.  For other developingNorway WT/TPR/G/70
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countries, all products except milk and dairy products, live animals and certain processed agricultural
products are included in the scheme.  The reductions for these countries range from 100% to 10%.
32. The TRIPS Agreement represents a significant step towards safeguarding patents and other
intellectual property rights.  A well-functioning patent system is of vital importance to innovation,
trade and economic growth. Norway has experienced that the patent system has demonstrated an
ability to adapt to shifting needs for the protecti on of technology in new areas.  Without the security
of respect for their rights, owners of intellectual ri ghts would be reluctant to agree to the introduction
of products and services to new markets.  It is therefore of great importance to both exporting and
importing countries that the obligations under the TRIPS Agreement are fully implemented.
33. Given the increasing globalisation of the world economy, it is also necessary to devise rules
that encompass areas of trade not yet covered by the multilateral trading system.  In our view, newmultilateral rules within the WTO should be develope d in areas such as competition, investment, and
trade facilitation.
34. Investment policy related to services is already covered by the GATS, but there are no global
rules for international investment that affect trade.  The enormous increase in foreign direct
investments as well as the proliferation of bilateral investment agreements underline the need forglobal rules.
35. Though the Uruguay Round succeeded in allaying many of Norway's concerns regarding
trade rules, there is still need  for further improvement in future rule-making, for example on
anti-dumping.
36. Norway has noted the increasing resort to anti-dumping and other trade remedy actions, both
regarding the number of actions as well as the number of countries applying actions.  This
development is a cause for concern to Norway and poses a challenge to the multilateral tradingsystem.  Some WTO rules, for example provisions regarding anti-dumping, lack clarity.  Norway
would generally advocate clear provisions, narrowing the scope for national discretion.  In this
connection, Norway would welcome discussions regarding the limitations under the Anti-dumping
Agreement in respect of the Dispute Settlement Understanding.
37. Norway follows a cautious policy with respect to application of trade remedy instruments.
No safeguard, anti-dumping or countervailing measures or investigations have been applied or
initiated during the past ten years.
38. The Agreement on Subsidies and Countervailing Measures provides important discipline
regarding subsidies.  Norway believes that the Agreement’s structure regarding prohibited as well as
non-actionable subsidies should be maintained.
39. In Norway’s view, the Dispute Settlement Mechanism has proven its value over the first years
of its operation.  Although Norway has only participated as third party in a few cases, we have noted
with satisfaction that not only large industrialised members, but also developing country members
have taken advantage of the mechanism.
40. New technologies, including e-commerce, for distributing services and goods have introduced
new and demanding challenges for both exporters, importers, users of intellectual property rights and
governments.  Norway is in the forefront of the de velopment and use of electronic networks.  From a
Norwegian point of view the trading system must con tinue to evolve in such a way that it fosters this
development and helps reduce the potential conflicts between interested parties to an absoluteWT/TPR/G/70 Trade Policy Review
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minimum.  Only through a well-balanced and open trade regime based on the principle of
technological neutrality can this be possible.
41. For Norway, the average reduction in import duties resulting from the Uruguay Round was,
for industrial products, including fish and fishery products, 39.5% (weighted average).  The
reductions resulted in a weighted average tariff rate of 2% for manufactured goods.  The reductions
have been implemented on schedule.  In addition, Norway has, on a unilateral basis, launched anongoing process of simplification of our customs tariff, leading i.e. to the abolition of tariffs of less
than 3%.
42. Norway has faithfully implemented the Agreement on Textiles and Clothing, and has come a
long way in integrating textiles and clothing into the GATT.  Of the 54 quantitative restrictions
maintained at the start of WTO, Norway has liberalised all but three quotas for one product (fishingnets).
43. Norway recognises the primacy of the multilateral regime for trade established by the WTO.
At the same time Norway is a party to several regional trade agreements, i.e. as a member of EFTA
(the European Free Trade Association), and thereby party to several Free Agreements, as well as a
party to the EEA Agreement.  Norway sees regional trade and inter-regional arrangements asinstruments to complement the global regime and accommodate the need for deeper economic
integration.  Regional agreements promote trade and economic development at regional level, and will
in the longer run pave the way for multilateral and broad trade liberalisation.  Consequently, Norway
will continue to pursue regional and bilateral agreements, in conformity with Article  XXIV of the
GATT and Article V of the GATS, in order to expand trade and economic cooperation with our
partners in Europe, the Mediterranean area and further afield, and thus safeguard Norwegian business
opportunities.
44. The Norwegian Government holds the view that the trading regime of the individual WTO
Members should be based on basic rights, including core labour standards as defined in the ILO.
Norway participates actively in the ILO and has ratified all major conventions relating to labour
standards.  An active dialogue with the parties on the labour market is a prerequisite for facilitating a
better understanding of national principles honouring core labour standards.  The NorwegianGovernment has established integrated national labour market policy frameworks, which recognise
the links between the labour market, social development and economic performance.
(2) T
HE EUROPEAN ECONOMIC AREA (EEA)
45. The Agreement on the European Economic Area (EEA) extends the single market of the
fifteen EU Member States to the three EFTA countries Norway, Iceland and Liechtenstein.  TheAgreement on the European Economic Area substantially widens and deepens the free trade relations
through the free trade Agreement concluded in 1973 between the EC and Norway.  The EEA
Agreement unites the 15 EU Member States and the three EFTA-EEA States into one single market
governed by the same basic rules.  These rules cover free movement of goods, persons, capital and
services (the four freedoms).  Under the Agreement the EFTA-EEA States are able to contribute to theshaping of this legislation.
46. In addition to internal market legislation the Agreement includes flanking and horizontal
policies intended to strengthen the internal market.  These additional fields of cooperation include
research and development, statistics, education, social policy, the environment, consumer protection,
tourism, small- and medium-sized enterprises, culture, information services and audio-visual services.Norway WT/TPR/G/70
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The EFTA-EEA States participate in EU programmes  in these fields and have a voice in developing
and managing them through participation in their committees.
47. The Agreement on the European Economic Area does not cover the EU’s Common
Agricultural Policy or the Common Fisheries Policy, but contains provisions on various aspects of
trade in agricultural and fish products.  As the EEA Agreement is not a customs union, trade policy
towards third countries remains outside its scope.
48. One of the central features of the Agreement on the European Economic Area, and the one
which distinguishes it most from other international  agreements under public law, is that its common
rules are continuously updated by adding new EC legisl ation.  This aspect is essential given the large
output of Community legislation on the internal market.  Each month a number of EEA-relevant
pieces of legislation are incorporated into the Agreement by decision of the EEA Joint Committee.The Agreement provides for information and consultation procedures at all stages of the Community’s
decision-shaping process.  EFTA experts are cons ulted by the EU Commission in its preparation of
draft legislation.  The EFTA-EEA states can ask for consultation on matters of concern, and can
negotiate adaptations to Community legislation as it applies to the EFTA countries when special
circumstances make this necessary.  Since the entry into force of the Agreement, more than 2000 EClegal acts have been incorporated into the Agreement.  Important new legislation has for example
been incorporated into Annex I regarding veterinary and phytosanitary matters.
(3) F
REE TRADE AGREEMENTS
49. In the Ministerial Declaration from the EFTA Ministerial meeting in Bergen in June 1995,
Ministers expressed their intentions to make a dynamic and independent contribution to improving
economic conditions across Europe and beyond.  Starting in 1992, the EFTA States have concluded
free trade agreements with Poland, Hungary, the Czech Republic, the Slovak Republic, Bulgaria,Romania, Slovenia, Estonia, Latvia, Lithuania, Is rael, Turkey, Morocco and the PLO for the benefit of
the Palestinian Authorities.  Negotiations on free trade agreements with Canada, Macedonia, Tunisia,
Egypt, Jordan and Cyprus are currently under way, and technical talks have taken place with Chile
and Mexico in order to explore the basis for free trade negotiations.
50. EFTA's free trade agreements cover free trade in industrial products, fish and marine products
and processed agricultural products.  In addition, each EFTA country has concluded bilateral
agricultural protocols with each of the third country partners.  The bilateral agricultural protocols are
an integral part of EFTA's multilateral agreements.  The free trade agreements incorporate provisions
on a number of new trade issues, including rules of competition, state aid, public procurement and
protection of intellectual property.  The agreements  also contain evolutionary provisions for services
and investments, as the parties recognise the growing importance of these areas and will co-operate
with the aim of achieving the gradual liberalisation and mutual opening of markets for investments
and trade in services, taking into account developments in European integration and the WTO.
51. Most of these Agreements are of an asymmetrical nature;  while the EFTA States abolish
barriers to trade at the outset, the partner countries can, for certain sensitive products, phase them outduring a transitional period, leaving them the necessary time to adapt their economy to free trade
conditions.
52. Norway also takes part in the European cumulation of origin system, established as of
1 January 1997 between the European Union, the EFTA States and the central and eastern  European
countries.
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