time when the industry is no longer expanding, but gradually declining, and we will need growth in other industries. businesses must drive structural change and innovation, but the authorities can provide favourable operating conditions to promote an innovative and sustainable business sector. norway ranks high on the ease of doing business index4, supported by solid institutions, a high degree of confidence and a solid welfare system. history has shown that norwegian business and industry have a strong capacity to adapt. many of today ’ s oil service operators had a long history in other industries before moving into the oil sector. a prime example is the shipbuilding industry, which faced a sharp drop in demand for ships in the 1970s. the industry had resources and skills that could be reoriented to production of platforms and other inputs in the oil industry. in hindsight, this was a fortunate stroke of serendipity. companies in other industries have also seen the opportunities afforded by new technology or changes in operating conditions. one example is borregaard. the company has existed through several industrial revolutions. an abundant supply of timber and hydropower from the sarpsfossen waterfall was a good starting point. through the years, new technology was adopted – from water - driven sawmills in the 1600s to waterfall power at the end of the 1800s, and to today ’ s fully automated activities. timber has steadily found new applications in borregaard ’ s products, such as building materials, biofuels and medicine – with timber always as the main raw material. 5 norway ’ s industry structure is in flux. in the past decades, the manufacturing industry has continued to decline ( chart 8 ), reflecting increased automation and relocation abroad. increased prosperity has generated more demand for both private and public services. employment has shifted towards the service sector. 3 blomgren, a. et al ( 2015 ) “ industribyggerne 2015 ” [ industry builders 2015 ]. iris report 2015 / 031 ( norwegian only ). 4 world bank “ ease of doing business index ”. https : / / data. worldbank. org / indicator / ic. bus. ease. xq. 5 throughout its history, borregaard has had various owners and names. see eg bergh, t. and e. lange foredlet virke – historien om borregaard 1889 – 1989 [ processed timber – the story of borregaard ]. ad notam forlag as, oslo ( norwegian only ), and www. borregaard.

history has shown that the trend towards a more open and liberal world order can reverse, as seen in the interwar period. this may now be happening again. brexit, the uk ’ s exit from the eu, may take place a few weeks from now, and is the first major setback for european integration in several decades. the scaling back of tariffs has stopped, and new tariff barriers are being erected. recent barriers include new measures to prevent foreign investment in national infrastructure. at the same time, the wto ’ s position has weakened, making it more difficult both to resolve disagreements and carry out needed regulatory reforms. last year was marked by trade tensions between the united states and china. the united states raised tariffs on a range of imports, and china retaliated in kind. the immediate effects of increased tariffs are higher selling prices on goods liable to tariffs, adversely affecting consumers and producers who rely on imported input goods. we have also seen that growing uncertainty is dampening business ’ investment appetite. the tariff increases have already had an impact on chinese and us gdp. norges bank economic perspectives 14 february 2019 the negative effects of the measures taken so far are fairly moderate ( chart 3 ). the danger is that trade tensions deepen, and that retaliatory measures lead to a negative spiral. more countries could be drawn into the conflict, with an even broader rise in tariff rates. in that case, not only the united states and china would be affected, but also europe and the rest of the world. chart 3 trade tensions curb world gdp. estimated effect on gdp after three years. 1 ) percent 0. 2 approved measures discussed measures 0. 2 gradual global tariff increases – 0. 2 – 0. 2 – 0. 4 – 0. 4 – 0. 6 – 0. 6 – 0. 8 – 0. 8 – 1 – 1 – 1. 2 – 1. 2 – 1. 4 – 1. 4 us china euro area globally 1 ) the effects are based on model estimates from the imf and norges bank. approved measures are described in the box “ trade conflicts create uncertainty ” in monetary policy report 3 / 18. discussed measures include a 25 percent tariff on all us imports from china and a 25 percent tariff on us imports of cars and car parts, in addition to retaliatory measures by countries affected. gradual global tariff increases imply a 1 percentage point annual increase in tariffs on all imported goods in all countries over the coming years.