Norway and the EU

Daily Telegraph 27 Oct 05

What can we learn from Norway:Click Here

Today, Norway's king will take his leave of Britain's queen. Both are monarchs, but only one is sovereign. The word "sovereignty" is often used nowadays as a loose synonym for power, but it has an exact meaning. In Norway, the 1814 constitution vests supreme authority in the Crown. In Britain, the 1972 European Communities Act shares sovereignty with the EU, which now accounts - depending on how you measure it - for between 50 and 80 per cent of our laws.


Sovereignty evidently suits the Norwegians. They are the richest people in Europe, with a GDP per head of £31,200, as against an EU average of £12,600. According to the UN, which measures infant mortality, literacy rates and so on, they are the healthiest and happiest people in the world.

We are forever being told that Britain is too small to survive on its own: a post-imperial state, a speck of land on Europe's fringe, blah blah. This is bilge, of course: we are the world's fourth largest economy and fourth military power. But it is instructive to consider the situation of a country that really is small, and really is on Europe's fringe.

There are four-and-a-half million Norwegians, clinging to an icy strip of tundra on the uttermost edge of the continent. Yet, on every measure, they are outperforming their continental neighbours. At a time when France and Germany are struggling to comply with the Stability Pact, Norway is running an annual surplus of seven per cent. Its unemployment is less than half the EU's. Its real interest rates are comfortably below those in the euro-zone. Its inflation is low, its trade booming, its stock exchange soaring.


A people two generations away from subsistence farming have become Europe's new elite. Like blue-eyed sheiks, they buy vast houses in Chelsea which lie empty between their occasional visits to London (Norwegians, in the main, being tremendous Anglophiles).

How have they done it? Much of the answer has to do with the deal they struck with Brussels. Norway is a member, not of the EU, but of its penumbra, the European Free Trade Association (Efta). It participates fully in the so-called Four Freedoms of the European single market-free movement, that is, of goods, services, people and capital. But it is outside the Common Agricultural Policy; it controls its own territorial resources, including energy and fisheries; it decides its own human rights questions; it determines who may settle on its territory; it can negotiate free trade accords with third countries, and it makes only a token contribution to the EU budget.

At this stage, my Euro-phile friends protest that we are nothing like Norway. "Look at all the fish they have," they say. Indeed. Look at all the fish we would have, but for the Common Fisheries Policy. "Look at their oil," my friends go on. Well, Britain is the EU's only net exporter of oil. In any case, Norway's extraordinary economic statistics are unrelated to its oil wealth: for the past 14 years, Norwegians have been stashing away their oil surpluses in the "Petroleum Fund", which now contains nearly £100 billion, just in case a future government should face unexpected liabilities.

"But what about trade?" protest the Euro-sophists. "If we weren't part of the EU, we'd have no clout." In fact, Norway benefits from all the preferential trade deals that the EU has signed with third countries. The difference is that, where it feels the EU is being unduly protectionist, it can go further. It has, for example, signed a free trade accord with Singapore, and is negotiating others with South Africa, Taiwan and South Korea.

"All right, then, what about our trade with the EU?" comes the rejoinder. "Surely that depends on our membership." Brace yourself for an astonishing fact. Every Efta country exports more, proportionately, to the EU than we do. Norway sells twice as much per head to the EU from outside as does Britain from inside. The EU accounts for 73 per cent of their exports, 52 per cent of ours. Oh, and their trade is in surplus, whereas we have run a trade deficit with the EU, over 33 years of membership, of some £30 million a day.

Norwegians must meet EU standards when they sell to the EU - as exporters the world over must do. But they are spared the expense of having to apply most of these regulations to their domestic commerce. You will sometimes hear that Norway has to assimilate thousands of EU laws, but these laws are generally of a technical and trivial nature. The 3,000 EU legal acts adopted in Norway since 1992 have required only 50 statutes in the Storting. And the people who make such a fuss of these 3,000 regulations neglect to mention the 24,000 that Britain has had to incorporate over the same period.

Then comes the last-ditch argument. "Norway may be content to be a tiny country, but we could never abandon our global role." At the risk of stating the obvious, nations are generally more influential if they have a foreign policy in the first place. Norwegian diplomats are playing the key role in, among other places, Sudan, Israel, Sri Lanka and south-east Asia. Being outside the EU, Norway can use trade and aid as instruments of diplomacy. Britain contracted out the whole shebang to Brussels in 1972.

Would the EU offer Britain as favourable a deal as Norway? No: our terms would be better. This is partly because we are an existing member, with commensurate leverage, but mainly because of the trade balance. Since we joined, we have been in surplus with every continent in the world except Europe. Is it not normal, in any transaction, for the salesman to have the upper hand over the customer?

It is just conceivable, of course, that our ex-partners would so resent us that they would seek to limit this commerce, cutting off their noses to spite their faces. I don't believe this: our neighbours are, for the most part, long- standing allies of Britain whose interests in any negotiations would be the same as ours, namely to maximise prosperity. But if I am wrong, and they really are that vindictive, what on earth are we doing with them?
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 Daniel Hannan is a Conservative MEP for South East England
 

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