WTO Trade Policy Review of Norway

Statement by Ambassador Linnet F. Deily
Deputy U.S. Trade Representative

October 11, 2004

Thank you, Madame chair. The United States welcomes the representatives from Norway’s foreign, trade, agriculture, and finance ministries, led by Director General Neple. I am also pleased to see my good friend Eirik Glenne. We have a good basis on which to work today – the Secretariat and Government Reports were very well done, and my delegation appreciates the perspectives of our discussant, Dr. Gross, on Norway’s trade regime.

It is clear that the Norwegian people put a high premium on international cooperation. They are usually among the first to respond to humanitarian crises, a tradition that began after World War I, when a prominent Norwegian organized the resettlement of hundreds of thousands of refugees. Throughout this past century, Norway and Norwegians have been leaders in building the modern international community. A founding member of the United Nations and NATO, Norway has always been a leader for peace, with many diplomats, including one Secretary General of the United Nations, assisting in the settlement of prominent international disputes.

Also a founding member of the GATT, Norway has since 1947 played an active role in the development of the GATT and the WTO in order to ensure the stability, security, transparency, and predictability necessary for an open, export-oriented global trading system. Norway has been tireless in its efforts to promote trade-related technical assistance and cooperation, not only as an important contributor to the global trust fund, but also as an advocate for greater dialogue with the NGO community.

In looking through the Secretariat Report, a few developments caught our eye. First is Norway’s reduction of average non-agricultural tariffs from 2.3 to 0.9 percent since its last review. This is commendable – now, more than 90 percent of all non-agricultural tariff lines are duty free. Additionally, since the last review, the Norwegian government has made market-opening changes in areas such as government procurement, gas transport, financial services, mergers and acquisitions, competition, and telecommunications. It also has improved its investment environment by eliminating some reporting requirements, abolishing a tax on the purchases of business assets, and by privatizing or partially privatizing some state-owned entities. We look forward to learning more about these steps in the course of this review.

There remain areas, however, where the United States has concerns about Norway’s trade policies. First, there is a glaring disparity between Norway’s openness to trade in industrial products and its high level of protection for agriculture. We raised this issue at Norway’s last review – in 2000 – and we raise it again here. The Secretariat does a good job of outlining for us the barriers protecting Norway’s farmers. One need only compare average tariff rates – 38 percent for agriculture, less than one percent for non-agricultural products – to see that this one sector of Norway’s economy, representing less than one percent of its GDP, is sheltered from global competition. Taking into account tariff peaks, escalation, dispersion, and seasonal tariffs, the situation becomes even more complex. It isn’t surprising that food is much more expensive in Norway than it is in neighboring countries, or that competitive agricultural exporters have trouble exporting to Norway’s market.

We frequently hear our Norwegian colleagues rely on non-trade justifications to explain these high levels of agricultural support and protection. And I want to be clear – we understand Norway’s interest in these objectives. In fact, we share many of them, including a desire to promote food security, protect the environment, and preserve a rich farming heritage. Our concern, however, is that governments, when they do take action in the name of non-trade concerns, do so in ways that do not distort trade. All too often, US agricultural exporters run into barriers in foreign markets that make us wonder whether these stated objectives, noble as they are, are really expedient excuses for old-fashioned protectionism.

In our questions, we sought explanations for some of the barriers American exporters face in Norway. These barriers are complex, and they take different forms. For instance, some of our exporters tell us that there is a variable tax on wheat imports, the proceeds of which are distributed among Norwegian bakers to help them compete with imported bakery products. In addition, we asked why American wheat must pay twice the health control fee assessed to exporters from other countries. US exporters face difficulties with the auctioning of tariff rate quotas exclusively in Norwegian and the apparent lack of a system to reallocate unused import quotas. Policies that, without scientific basis, ban or effectively ban imports of certain meat, poultry, grapes, and products of modern biotechnology should be a concern to all agricultural exporters.

The United States also posed some questions about the state’s role in Norway’s economy. One statistic that jumps out of the Secretariat Report is on page 58 – that the Norwegian state controls more than 40 percent of the assets on the Oslo Stock Exchange, up from 17 percent in 1999. We are concerned about the example this sets for other nations, particularly those struggling to cope with unprofitable state enterprises. At the same time, we recognize that Norway is making progress in reforming its state sector, both in privatizing some state enterprises and in trying to put more distance between state managers and regulators. We look forward to seeing how these policy changes improve the transparency and operations of Norway’s state enterprises, as well as the attractiveness of foreign investment in Norway.

In closing, the United States and Norway have important common interests, including our longstanding shared support for the WTO system – particularly our desire to integrate developing countries into the international system and to see developing countries reap more of the dynamic gains that come from trade liberalization. We also welcome the positive example set by Norway with its predominantly open market for industrial products. There is room for significant improvement on agriculture, and our hope is that such improvements can be achieved in the DDA negotiations.

Madame chair, the United States appreciates the opportunity to participate in this review of Norway’s trade policy. Again, we welcome our Norwegian colleagues, and we look forward to further discussions with them.