 Welcome to the 11th meeting of the Culture, Tourism, Europe and External Relations Committee in session 5. I remind members of the public and the public to turn off mobile phones and any members using electronic devices to access committee papers should make sure that they are switched to silent during the meeting. No apologies have been received. Our first item of business today is evidence on the implications of the EU referendum for Scotland, focusing on the European free trade area and the European economic area. I would like to welcome our first panel of witnesses today who will give evidence on Norway's relationship with the EU and its trading relationships more generally. I would like to welcome Dr Ulf Svedrop, director of the Norwegian Institute of Economic Affairs, Tor Meyer, director and Ann Louise Arton Bayer, assistant director of the Confederation of Norwegian Enterprise, who is joining us by video conference from Oslo. I hope that you can hear us all right. I would like to start by inviting the witnesses to make some short opening remarks before moving to questions. Dr Svedrop. Thank you so much, chair and member of parliament. Thanks for this invitation. It's a great honour to be here. I hope that I can contribute to your on-going reflection on Brexit. I will just say that I will be talking in private capacity here, not as a representative of the Norwegian Government, just to make that clear. Thank you for the opportunity to say a few words in the introduction. I limit myself to three short remarks, one on the general issues and then some specific features of the Norwegian model association to the EU, and finally something about our experiences with dealing with the EU. So the first point then is that the good news is that it's possible to prosper as a non-member of the EU. So Norway is not a member of the EU as you know, but Norway is very much a European country, or geography, or history, or identity as a European one. So Norway has decided to cooperate and integrate itself with the European Union, but not as a EU member. Norway has done so because it's in its economic and political interest to do so, and it has been very beneficial for the Norwegian society, and our review of Norway's agreements with the EU demonstrated that extensively. In addition, for a small state like Norway, a rule, a Europe governed by rules is much to prefer than a Europe governed by great power politics. So Norway is part of European integration, but in a slightly odd fashion. We are in some sense in the same gravity field, but we are orbiting with a bit of a longer distance. So that's the starting point, that's the way you should think about Norway. The second point relates to some key features of the model. Now Norway is deeply integrated with the European Union. The agreements with the EU cover all policy sectors, all policy areas, affecting all ministries in Norway, even municipalities. And our agreements with the EU are the most important international agreements we have. They regulate the relationship to the EU, they regulate the relationship to all EU member states, to the other Eftas states. In addition, and people tend to forget that, it also regulates relations within Norway, in which they come. So they are extremely important. And of those agreements, the EU agreement, European Economic Area, is the most important agreement, is provide membership in the single market, not access to the single market, but it's a member of the single market. But Norway also have many other agreements with the EU, injustice and home affairs, in defence and security cooperation, and we also cooperate extensively in areas not covered by any agreements. For instance, Norway subscribes to EU sanctions, etc. So I say this because I sense that a lot of people tend to put a lot of emphasis on the EA agreement, but that's only part, it's the most important, but it's only part of it. So if you look at Norway, you have to have a view of the totality. In our review, we assessed and estimated in two different matters and concluded that the best estimate is to say that Norway's agreements with EU in total covers around three quarters of all EU rules and regulations. But having that said, it covers 100% of the single market. And this is more than many member states, UK among them. Now, so what are then the key features of this model? I think that you have to focus a bit on the principles regulating the EA agreement. I think there are four or five of them. The first is that there's the principle that you should be level playing field, homogeneous rules. And that means that exceptions is supposed to be exceptions, not the rule. The second is that you have to have a mechanism for ensuring legal certainty that is protecting Norwegian interests in Europe, but also protecting the interests of the EU and the businesses in Norway. In order to do so, we have after surveillance authority and after court. In addition to that, there's a loyalty obligations put on Norwegian national courts and of course national administrations. Finally, there's a mechanism for ensuring updating of rules and regulations. As soon as rules and regulations evolve in the EU, they also somehow are reflected, are supposed to be reflected in Norway. And I think that these three principles, the principle of homogeneity, principle of legal certainty and principle of dynamic development, is critical for the EU and is also critical for the functioning of the EA. Now finally, you cannot think about the Norwegian model as it is a nice and tailor fit model, a tailor fit solution. It's not like the off the shelf thing. It is much more of a patchwork. Different patches stitched together in a messy and complicated fashion. And it has evolved over time to become like this. And it has required a lot of technical and complex adjustments. And it was designed as a transitional arrangement prior to 1994, but it has become permanent. And the final point is that it has served as a platform for a domestic political compromise in Norway, where the public opinion has been split on its relationship with the European Union. So it is in no sense optimal. It has huge costs in terms of representation and efficiency, but it is seen as an acceptable solution. And if you allow me to, I can just say a few words about our experiences with dealing with the EU. The first is that it has worked well. It has been beneficial to the Norwegian economy and the society. And it has contributed to modernized Norway. And the goodness of fit, so to say, between Norway and the EU has actually improved over time. As the EU has changed its governance procedures and also Norway has become less strange somehow in a European setting. From the EU side, I think it's fair to say that it's the EA and these agreements are seen as the best functioning of all its agreements with third countries. The only problem is that there is no problem we hear from the EU. So, and we have experienced that the EU has been a fellow constructive partner and it has tried to accommodate Norwegian interests and concerns. However, we also learned that the EU can be a fairly tough negotiator. It can be more unified in relation to third countries than many tend to think. The EU might be fighting internally, but often quite unified vis a vis, for instance, Norway. However, we have learned that it's possible to find solutions, but you cannot expect the EU to invent those solutions. You have to innovate and come up with the solutions yourselves. Finally, this means that when approaching the negotiations with the EU, you have to be very clear and open on what you want to achieve. At the same time, you cannot expect to have it all. Thank you so much. Thank you very much. Can I now invite our other witnesses? Did you want to make a say a few words before we move to questions? Very well. As an employer association, but also as a business lobby. Of course, our association to the European Union is extremely important to us as a confederation and to Norwegian business in general. I think I can agree to everything that Dr Stadlöf just said. Just like to underline that the EU agreement is really vital to Norwegian economy. When we got the agreement in the early 90s, the main focus for us was to take part in the internal market. That has been the main focus ever since. It sort of became a national compromise in Norway. As you know, we had two referendas. There were quite polarized discussions, rather similar to the discussion in the UK and some of the same issues regarding sovereignty and self-determination. The EA agreement became a national compromise in the sense that we as business got our main interest in taking part in the internal market, while those who were sceptical of the European Union got their part of keeping formal sovereignty. By that, I mean that it's kind of a paradox that I think would also be important for your discussion. That is that we are obliged to take on all new legislation regarding the single market. That is sort of the premise for the EA to function because we need level playing field. At the same time, it's not totally automatic because it has to be taken first into the EA agreement and then it has to be transposed into Norwegian legislation. So there is a formal possibility of rejecting new pieces of legislation. Now, I think important is that we have never used it. We have never rejected any new pieces of legislation because the real situation is that if we do that, we risk compromising the agreement as such. And there are indeed also some clauses in the agreement saying that well, if we would not take in new legislation, the EU side can suspend that part of the agreement. And that is so serious for us, so we have never challenged the EU in this respect. And I think this is also the reason, as Dr Sweadrub said, that the agreement has worked so well. It's because we basically do our job in integrating new legislation. And I have to say for business that has been tremendously important because we are so integrated in Europe with 80% of our export going to the EU and 60% of our imports come from the EU. Investments are huge and so we have all interest in preserving the agreement. And of course, when we now have witnessed the Brexit, we are of course worried that this could also affect the discussion on EEA here in Norway because for us as business, the main priority is to maintain the EEA agreement and not have that weekend or renegotiated in any way that could make it less smileable. So I think that I will stop there as there's just some introductory remarks and I look forward to the questions. Thank you. Thank you very much. I start by asking the EEA agreement dates from 1994 in Norway. And as Dr Sweadrub said, it gives you full membership or access, full access to the single market as opposed to partial access. What difference has having that full access to the single market made to you? What was it like before 1994? Are you asking us and others, Dr Sweadrub? Well, if Dr Sweadrub would like to answer first and then yourself. I can just quickly say that before we got the agreement, we had a free trade agreement with the European Union. That was a rather old-fashioned, so-called first-generation agreement covering goods. The single market and the EEA agreement is something totally different, qualitatively very different. The old-fashioned agreement would definitely not preserve our interest in today's integrated world. Both that EEA agreement covers all four freedoms and not to mention services. That has, of course, become much more important than it was before. So, I think there are some voices who argue that we should change the agreement with a free trade agreement. And we are very much opposed to that. That would be a tremendous setback for our participation in the internal market. Thank you. Instead of the EEA to be the same as membership of the single market? In a way it is, but it is a membership without voting rights. So, this is, of course, as Dr Sweadrub also mentioned, this is the main challenge that we cannot take part in the decision making. Now, I think the history shows that we in general are pretty happy with the regulations coming out of Brussels. They make sense and that is why we have a fairly good experience with the agreement. Of course, there are issues from time to time where we don't agree and we would like different rules and regulations and no way being an energy producer and exporter, especially in the energy field, we of course sometimes have different interests as you are very much also aware of in Scotland. But in general it has been worked well and I could mention there is also a formal right in the agreement of taking part in the decision shaping process, meaning that our bureaucrats are taking part in hundreds of the different committees in Brussels where they prepare new legislation. So, when the commission is preparing new proposals, no way can actually take part in that process. But of course when it comes to the Parliament and the Council, we are totally out. Dr Sweadrub. Yeah, to your question, I think it's important not to make this into a history lesson somehow, but I think we have to keep in mind that at the time of the establishment of the internal market prior to that, the EU was not very dynamic and it didn't cover that much. So, it was with the launch of the internal market that really moved things ahead. Now, the EFTA countries at that time, seven countries, they were very fearful that they could be excluded from engaging in that internal market. And you also have to keep in mind that at that time the EFTA was the biggest trading partner with the EU or the European communities as it were. So, it was important for them to find some kind of arrangement. So, the EA was seen as a mechanism to prevent exclusion, but at the same time not bring them into the EU at the time where the EU was making critical adjustments. So, you have to keep that in mind. On the voting right, it was designed as a two pillar structure where the EU was supposed to be one and the EFTA side was supposed to be the other. Now, over time things have changed because the EU has moved from at that time 12 countries to 27, whereas the EFTA side has been shrinking. So, it's not two pillars anymore, it's like one pillar in a two-speak. Thank you very much, very well put. I have a supplementary question from Richard Lockhead. Well, it wasn't as much a supplementary, but to stay in the same theme, and thank you for giving evidence today, just to ask, given that Norway often tops international league tables for the best standard of living in the world, to what extent is that linked with the EE agreement? Has the economy particularly performed well since you joined the EEA? You know, we wrote several chapters of this in our Europe review. I must say that it's extremely difficult to assess the implications, economic implications of different agreements as an academic and can say that. Different methods, but it's really hard to come up with a counterfactual to control for different factors. And in addition, you have to take into account what I said, it's not only about the EEA agreement, it's not only about cross-border issues. It's also about developments within the Norwegian economy. So now, the thing is that the Norwegian economy has been performing very well. Some would probably say that that's due to high commodity prices, high production of oil and gas. In addition, I think there's other elements in the society related to trust, adaptability, et cetera. So a lot of the Scandinavian countries, or the Nordic countries in general, are fairly competitive and they are kind of scoring, performing pretty well in global markets. But at the same time, these Nordic countries have different ties to the EU. Some of them are members of the euro, like Finland. Some are members of NATO. Some are EEA members. So it's very difficult to isolate the effect. But if you look into the specific sectors, and we did that as well, we see that, for instance, in almost all sectors, the Norwegian economy has benefited hugely from the specific regulations as well. We concluded in our report that we didn't want to engage in, or it was impossible to end up with, let's say, two or three or four percent increase in GDP as a result of these agreements. We basically couldn't on a sound method-based basis say that. Can I just look at the economic impacts of the EEA in terms of the absence of a customs union? Clearly, that's not part of the EEA. The big debate that we're having in Scotland and the UK is the potential options for Scotland to remain in the single markets, and the potential for hard borders if we're not in customs unions or any particular aspect. How does that work in Norway in terms of the absence of a customs union, but being a member of a single market? That works pretty well, to my understanding. With not being a part of the custom union, you have rules of origin. You have to be concerned about rules of origin. That increases a bit of transaction costs, but they are carried by businesses and probably ultimately by consumers. In an economy that is more value chain-based economy, that might become more difficult, but the huge part of Norwegian economy is not so value chain-based economy. That's not that big issue. Finally, I think that with digital trade for end consumers, et cetera, not being part of the custom union might be a factor of making it a bit more difficult, if you understand my point. I'm not an expert on this, so maybe all friends in Oslo could say more about the customs union. Well, to come in on that. Did you hear that? We lost the sound for a small moment, so we didn't get the complete picture. But I think that's right that the customs not being part of the customs union has not been tremendously difficult. It's now a lot of practical procedures in place with the automatic and digitalisation of all the customs declarations, so we avoid the long queues on the border. But it is a practical hurdle for companies, and we know that many companies have actually set up storages or branches in Sweden or in other European countries to get around the challenge with not being part of the customs union. But I think business adapts, so they have now learned to live with this situation, and the reason why we are not in the customs union is that agriculture is outside the EU agreement and Norway wanted to maintain the high tariffs to protect agriculture. That was the reason why trade policy in customs union is not part of the EU agreement. Tavish Scott, did you want to come in on that point? A different one, but something related to the evidence. Thank you. Can I just ask Dr Myrie in the context of the Confederation of Norwegian Enterprise when you describe the regulations that Brussels are introducing being accepted in Norway and therefore, in your case, being accepted by business, do you take any role in trying to influence those? You don't obviously have a formal decision-making role over them, but does Norwegian business, either through the government or through your organisation, seek to lobby in Brussels in relation to the impact that those regulations would have on your businesses? Absolutely. This is actually one of the most important tasks that we have, and as you always say, we are fully members of business Europe, which is our sister organisation. We're also a CBI as a member that represents business in general in Europe. That is, in a way, our main channel to lobby the institutions in Brussels. In addition, of course, we work on national level and on more domestic issues towards Brussels. We have an office in Brussels, not very big. In terms of being a forceful lobbyist, we are far away from that. That would require much more resources. I think the main challenge is that when Norway is not a member, when our politicians are not present in the decision-making bodies in Brussels, they do not have the attention that we would like to the legislative processes. That means that the Norwegian political system, although we are heavily affected by legislation for Brussels, we are not geared towards trying to make an impact. We do from time to time, and we also, as the business, try to influence our government in protecting our interests. As I said, we also work with government in their participation in all these different committees and working groups under the commission. Of course, it is in an early stage of the process that you can actually have a chance of influencing. We have some examples where, when we have had good cases, good people with good examples, that they can actually make a difference in Brussels. In terms of the membership of the EEA, the UK is there at the moment as one of the 28 EU member states, but looking ahead, if the UK were to become a member of the EEA as a separate independent country, how would you anticipate the dynamic of the EEA to then change? If the UK prefers to enter the EFTA, you are right in saying that all EU members are supposed to or shall be members of the EEA. In that sense, all EU members and EFTA members excluding Switzerland are members of the EEA today. The question is what will happen if a EU country, for instance the UK, prefers to leave the EU. We are now entering uncharted territories. It never happened before. But it seems that leaving the EU also means leaving the EEA. And then the question is about re-entering the EEA or remaining in the EEA by switching sides into EFTA. In order to do so, the UK then has to join the EFTA, join EFTA. Probably also have to join the Court and Surveillance Agreement in the EEA. And probably also have to agree with the EU on some kind of financial mechanism like we have. So those are the three things that the UK has to do. And the first one on joining the EFTA will require unanimity among all member states. So that's Lichtenstein, Iceland, Norway and Switzerland. The others will require joining the Court Agreement. Probably require the agreement between Norway, Iceland and Lichtenstein and the financial agreement. It requires agreement with the EU and the EU member states. I think EFTA countries have never been in the business of recruiting countries. Never done that apart from they brought in Lichtenstein. But so they are not in the business I think of recruiting the UK. But if it is something that the UK prefers and if it's something that the EU would like to see happen. I don't, I think the EFTA countries will not oppose that as an option. Will it change the dynamics within the EFTA or the EEA for sure? And I think the most important aspect here is that when the EU makes a rule and this is supposed to be transferred over to the EFTA side in that mechanism, the EFTA countries in the EEA are supposed to talk with just one voice, unanimity. And that is, that I think that's the biggest issue and the optics of it because the EFTA EEA countries have used the EEA agreement in order to promote their integration with the EU. But if the UK enters EFTA EEA in order to disintegrate with the EU, the optics will be very different. Ross Greer, I know that you've got to pop out, so I'll bring you in next. Thanks very much. I was wondering if you could talk a little bit about Norway's role when the European Union is negotiating new trade deals such as TTIP, the Transatlantic Trade and Investment Partnership. Those deals are obviously in some quarters at least politically infamous for the lack of transparency and accessibility for EU member states to be able to influence them. So I'd be interested to hear what Norway's experience is of being affected by such deals and the relationship that you have when they're being negotiated. So Norway is, as you know, free to engage in all kinds of free trade agreements by ourselves. But we have typically done free trade agreements together with our EFTA countries. This also includes Switzerland because it's a bit easier to go out in the world and say, here we are a European free trade agreement although we are small countries. So most of those free trade agreements are signed after the EU has completed their agreements. But during the last eight or ten years, there's been a few instances where EFTA countries have completed negotiations before the EU and discovered that that could be a bit beneficial. Now when it comes to TTIP, you're right, Norway or EFTA is not part of the negotiations. It's not for sure either what kind of relationship it's possible for the EFTA countries or the EA countries to have to TTIP. I'm not fully agree with what you said, Greer, on the transparency because typically most free trade agreements negotiations are not very transparent and I think TTIP is a bit more transparent than many others. But the issue is then how will TTIP, if there will be a TTIP, affect Norway's relationship with the EU? And I think the basic idea is that that's not the big problem because that things might come through the EA into Norway. So the big issue is what kind of agreement could we have with the US? But it is a bit of a concern. It seems so and so the Norwegian government have been exploring options and being in conversations with both the EU and the US on this, but there's no modalities that's been fixed and it's not so easy access to it. That being said, it's obvious that it's a huge benefit for Norway if the US economy and the European economy is growing because it creates trade spillovers to us. Thanks very much and my apologies to Dr Sferdo for missing the first part of your presentation. I was very interested in some of the discussion we've already had around the relationship between the single market and the customs union and I would like to understand that a little better in terms of how it works practically both for businesses and for citizens. My understanding of what you've described is that Norway of course has freedom of movement within the single market but also is a member of the Schengen agreement and therefore there is no restriction on movement of people between for example Norway and Sweden or Norway and the UK. On the other hand because of the fact that Norway is out with the customs union there are clearly restrictions or some requirements in relation to the movement of goods between Norway and EU member countries. I wonder if you could explain how that works in practice because that sounds as if on the one hand people can move freely across borders, on the other hand goods cannot and therefore the issue for business I suppose is how do you manage that discrepancy and then for citizens are there in practice some restrictions in the movement of citizens because citizens may be moving with goods and for example a motor vehicle. So as a end consumer you don't notice this that much right but businesses if they import the container of goods from the EU they have to electronically or through other instruments make some kind of custom declaration right and then the goods are in the shops but then another problem is of course for businesses who are engaged in some kind of value chain economics where a part of what they put together originate from another country. So then you have to have this rules of origin where you can document that the product that you sell put on the market originate in your country so that's the rules of origin issue and then as I said the final issue arise when consumers want to make purchases themselves and that is increasing with digital trade where people kind of want to buy something from amazon com or something right and they are they have to do a custom declaration themselves. So the issue is that it introduces transaction costs and those costs have to be carried by either the businesses or the consumers. If we could bring in our friends in Oslo Mr Meyer. Yes thank you. No I think it's correct as Dr Svalladr says in practice there is a total free movement of goods even if we are outside the customs union and I think this is mainly taking care of through the customs procedures and much of this has been been digitalized now so it's going fairly automatic and the middleman and the expedition companies are also helping with facilitating this and then also the there are clear rules of origin and how to declare the origin of a product going into the value chain so it seems that this is working pretty well in practical terms. Can I just add one thing there's also since we have customs on something and for instance fish is not part of it's partly in the part outside of the year so it's also worth noting that for instance the EU have not so high customs on unprocessed fish whereas processed fish products have a higher custom so it means that Norway today for instance it's salmon it's mostly exported to Poland and Denmark and then being and then you have the smoked salmon the smoking and the slicing all the things happening in Denmark and Poland so that has some kind of create some kind of employment effects in the Norwegian economy and in terms of the citizen crossing the border whether flying from Oslo to Scotland or whether driving from Norway to Sweden are there any consequences for the citizen traveling of being out with the customs union? Yeah there are some government regulations on how much you can import and take home etc and then in addition some consumers can enjoy tax-free spiritus and tobacco etc but so those are the issues and of course in the EU you have all kinds of possibilities for instance to buy a car in one country and bring it over and those things are not so easy in Norway you have to declare customs etc. So very like the UK before the creation of the single market. Jackson Carlaw. Good morning. It's probably worth saying we've not said all already yet but we were over in Brussels and we did have the opportunity to meet your ambassador to the European Union. You'll be there for somewhat relieved to hear that there's a conformity in the responses that you've been giving us. I'm kind of interested in the process that Stuart McMillan touched upon. There has been no suggestion because we're looking at both opportunities for the United Kingdom and for Scotland. I don't know how enthusiastic the UK government have been about EFTA as an opportunity but at the moment Norway of course is the largest and most influential of the existing EFTA members and although Dr Sferdrup sort of said he could see no opposition to the idea of the United Kingdom being a member of EFTA it clearly would change the dynamic and I'm interested in this respect in two things firstly to what extent have you looked to the United Kingdom as a member state of the European Union to take a line that you sometimes find you agree with and are concerned may no longer be represented in the European Union and to what extent do you think there would be no obstacle to the United Kingdom being a member of EFTA given the hugely disproportionate influence and size it would bring to that organisation. In terms of interest you know I think we love in Norway we love Brits we love Scots so we have a very strong cultural and identity linkage somehow with the people on these islands but at the same time you're right in the sense that in terms of interests they are often very different in general the perception in Norway is that Brussels is too much of a liberal free trade regime but if you go to the Tory party they see there's a socialist construction so that says it's all somehow that we have but if you break these things apart I think Norway has supported the UK very much in its general push for making European economies competitive, transparent and open etc so so in particularly in a field of energy for instance and also on the climate policy so these things are are are important element where Norway has supported the UK. Now I agree with you I didn't say that there's no opposition to UK joining EFTA but I think there are many concerns related to size, to geography, history, mentality and also the different optics that I alluded to but at the same time I think that that that the issue my I said that I don't think that the Norwegian government or the EFTA governments will oppose it if it is served at a plate in front of them not that they will embrace it or encourage it but they will not oppose it. Dr Maya? Yes thank you I think those are very relevant questions and and indeed one of our concerns now that the UK is leaving the EU is that we lose one of our maybe best allies within the European Union because especially in the oil and gas sector petroleum issues we have relied on the UK to in a way defend our interests we saw that when when the EU or the commission wanted to introduce this the new offshore safety directives or the new new regulations there where they took a totally different approach to what we have been been used to and the experience we have developed together in the North Sea over the last decades and and it was very good for us to have the UK inside the EU to in a way protect these interests also when it comes to having an open and liberal European Union focusing on trade where the UK has been the most important voice we think now the the the dynamic might change in favour of the of the more self-european countries not being that open to a liberalised economy and that worries us when it comes to EFTA I think and what what what we have tried also to to say back here in the discussion is that we should make a distinction between the EA as a solution for the UK and EFTA as such of course if you want to EA as as it is now you would have to become a member of the EFTA first but you could also have a Swiss solution where you chose to join EFTA in order to take part in our free trade agreements with non EU countries that would make it easier for for you to not start on scratch when negotiating free trade agreements with countries like like India or or Singapore Turkey or whatever and it would also for us it would in a way be good because you would then be party to an EFTA convention which regulates the trade between Norway Switzerland Iceland and it would also regulate the trade with the UK because if you don't do that and if you leave the as as well then we would have to enter into some sort of bilateral negotiations to sort out our bilateral relationship and that is one of our worries that we would be left or in a in the worst case in a transit transitory period without any agreements between Norway and and the United Kingdom when when the moment you leave the EU in union. Okay just one further question. Presuming the EFTA element we then would have 30 EEA member states who would require to agree to the United Kingdom entering. Now taking evidence from you this week is very helpful because the Scottish Government has also been floating its own operational alternative which would be Scotland and the United Kingdom leaving the European Union Scotland remaining a part of the United Kingdom but at the same time joining EFTA and the EEA. Presumably that hybrid arrangement would require not only the approval of the 30 states in EEA but the approval of the United Kingdom Government too. It does seem quite a complicated arrangement are you aware of the suggestion which I think previously the Scottish Government rejected in 2013 but are now reviving and I just wonder if you're aware of it and what complications you think might arise from it. To my understanding it creates some challenges for EFTA countries to to to integrate a country that's not seen as a sovereign country but some others later today might say a few more words about this. We have some experience with the Faroe Islands kind of pointing to that issue so and this of course probably this is very interesting in some sense but at the same time it raises these issues partly on sovereignty but also how to how this might affect the relationship with the UK in general as well so and at the same time so so I'm not ready to say any more specific on that issue but it would certainly be interesting development challenging one. Just when you said it would in terms of your relationship with the UK if such an arrangement was to be proposed and the UK supported it I guess that that would make a critical difference to how it was received by the EFTA countries if it was supported by the UK government. That would probably help a lot. Emma Harper. Thank you. Good morning everybody. I'm interested in trade arrangements to do with agriculture and fishing although I'm not a fishing expert I think Richard might be interested in exploring that. I've gained a better understanding recently of the complexities of trade and I know that Norway can negotiate and make free trade arrangements by themselves but there are several important constraints and complexities in negotiation and relation to tariffs in agriculture like beef tariffs have been just suggested at 12 per cent and 42 per cent on dairy. I wonder if you would be able to comment around some of these trade arrangements and agriculture. Agriculture is not part of the EA agreement so that is or most of it is not part of it right so there are some general ideas that you should have moving direction of trade liberalisation in both agriculture products and process products etc that's covered by the EA agreement but apart from that Norway has some kind of discretion to to adjust its tariffs and quote us on the trade on agriculture products and the Norwegian government just recently decided to increase tariffs and also I think reduce quotas on some elements in order to protect Norwegian farmers that has not been seen as very constructive from the european side for Norwegian consumers this has meant higher prices on agriculture products and poorer product quality or poorer product selection of products in in the shelves of the stories so but so that's a policy choice so in agriculture Norway has the discretion to subsidise its agriculture and it has continued to do that and have been willing to pay those the costs for that Mr Mayan wants to come in on that yes that is completely right the agriculture agriculture policy and the tariffs that protects Norwegian agriculture because of our climate and harsh conditions is outside the EA agreement this was part of kind of a national compromise when we negotiated the EA that fisheries and agriculture would be outside now it's interesting so that means we can have we have our own customs policy on on that it's interesting that in the years that have gone after all the legislation going to standards and veterinary products are part of the EA agreement so we take on board and that is actually the biggest part of the number of of regulations that we take in that are related to the standards food safety standards and then so that we can sell our products freely and we also have seen that having fisheries and seafood outside that was mainly the concern of the fishermen they were afraid of EU fishermen coming in and taking Norwegian fish and quote us and that was the reason for that being outside but the consequence is that when we also now then develop the seafarming fish farming industry that is also outside so that means we don't have free trade with the seafood and fish to the European Union which is a tremendous hurdle for us there means there's a number of coattas and tariffs depending on the on the source of fish species and also as Dr Svelod mentioned the more processed it is the higher tariffs get so in retrospect it was a bad choice of Norway having seafood outside the agreement but that's that's how it is and farmers and fishermen happy with the arrangement I think they had very different in the sense that farmers they're very happy as I see it being outside of the EU politic their political party also the center party is the most prominent kind of anti EU membership party they benefit from the subsidies at the same time they benefit from having the same high level of food security through EU rules and also a lot of migration coming from Eastern Europe are migrants are actually working on farms etc so they have the benefit from the from the markets but at the same time can keep the subsidies so it's good for them now the fish industry is very different because there you can separate between the part of the industry that is catching wild fish they have historically supporting the no no not joining the EU whereas the fish farming industry they are not so concerned about fishing quotas or ownership in in shipping vessels etc so they are concerned about market access so they will probably prefer closer membership in the EU if that's the only issue at that stake right okay interesting thank you okay bring in Rachel Hamilton hello it was a supplementary on Tavish's point actually so you have the ability to lobby on behalf of business through the cbi and the members of business Europe Norway can decide to make free trade agreements however it does have constraints to this freedom you've mentioned that rules of origin are an issue but can you outline any further restraints on regulations that might occur within business trading or two businesses to them or doctors for job okay when just a supplement on the after free trade agreements because you might be interested to learn that after free trade agreements they have often a part that is as a common agreement and then there's a bilateral agreement to it as well so it's not so easy for new countries to just enter into all of those agreements now I think the after free trade agreements they are negotiated on a platform of the WTO and of course we also have to take into account the EU a key regulating standards etc so you're not starting from scratch when you negotiate your free trade agreements I don't know how much that's a response to your question yes it was more about you know that you said that the rules of origin were an issue I'm just wondering how easy it is to make free trade deals for your businesses oh I think okay so I don't think the rules of origin issue is the key issue in making it difficult to find agreements because rules of origin is a standard thing in international trade but I think the biggest challenge probably for entering free trade agreements is that since there are such a small economies the benefits of having them is not necessarily so evident so so Norway and Switzerland we don't have a free trade agreement with the US we don't have it Brazil we don't have it Russia we don't have it China we don't have it Japan we don't have it India so we don't have a free trade agreements with the biggest economies and in addition having free trade agreements with some of these countries would probably require the after countries to also open their agricultural sector so you cannot expect to have free trade or fish well at the same time not having free trade with meat for instance if you're going to negotiate with Brazil so or there will be some issue linkages and those linkages are up until now at least been difficult to to make more of domestic concerns than me some of your partners I know that you have to you have to get a flight at five past so we've only got you for another five minutes one issue that we haven't covered is the issue of migration and you talked about in your paper for the institute of economic affairs you made the comparison that during our referendum campaign here the Norwegian example was often held up by the leave campaign as a as an alternative for the UK and you talked about how Norwegian's status and after the EIA agreement is in a sense a compromise political compromise for people in your country who voted against joining the EU where does migration fit into that compromise because we're told now that migration is a key issue in terms of you case future relationship with the EU is migration the fact that there is free movement of people in Norway clearly that's part of the compromise that people are happy to live with that okay on the migration lots of things to be said about that norway as you say the EIA agreement said you have free movement of persons within the EU and then in addition we have also part of agreements with the EU regulating migration outside of the EU the Schengen and Dublin and let's keep that apart on migration up until 1994 Norway did not have in 2004 did not have much migration that is one of the problems for Norway was to attract high skid labour now after the enlargement of the EU to the east and central Europe Norway has a rapid increase over migrants coming to Norway per capita the number of migrants are more or less at the same level as the UK 60% of the migrants that came to the Nordic countries came to Norway now this has been how what have been the experiences of this this has been beneficial to the Norwegian economy reduce incentives for businesses to outsource their activities but at the same time had increased a bit of let's say a downward pressure on salaries so there's a bit of concern on that and some of those concerns relates to for instance export of welfare benefits in tight rides to access to welfare benefits etc but I must say that compared to the UK debate and the discussion in France a few years ago about Polish plumber issue it's it's basically not comparable comparable Norwegians are not protesting it's not active opposition to that if there is concern about migration it's my this is my interpretation more concerns about migration from other third countries outside of the EU rather than migration from within the EU since the financial crisis in 2008 also see that the migrants from the EU have shifted a bit so not only east people from eastern central Europe are typically a bit low skilled are coming but also more high skilled labour coming from France Spain Portugal Italy etc and that has also been good for the economy so so so that's the situation I'm not but the thing is that we have been experiencing a period of very strong economic growth during the last one and a half year things are not looking that good so it remains to see whether this kind of support of for migrants will kind of uphold also the period of economic downturn thank you very much I've got a supplementary I know that you have to leave now and we can continue just for another few minutes with mr mayer but I would like to thank all for coming all the way from Norway to speak to us it's been very very helpful to our committee's inquiry so thank you very much thank you so much can I just make one final remark if if you allow me to because you said also that referred to the UK debate and I said you referred also to the compromise thing I think that what is extremely important for the UK also for the scots now is to think in terms of finding compromises you have to find a compromise along a political dimension we have to respect the outcome of the referendum but also take care and protect the rights of the minorities and other concerns at the same time you have to look into kind of another sphere the market and the economy so you have to find solutions that are acceptable in terms of the market economy and finally you have to find solutions that are practically and legally and constitutionally feasible so within those three circles the political administrative and market you have to find some kind of overlapping solution and so I think that you're not in the process of optimizing or maximizing your interest you're in you're in search for finding acceptable solutions satisfactory solutions and I suspect that any solution would be a massive one and and often a good compromise is somebody nobody really prefers and nobody really loves and that's the true Norwegian experience thank you very much thank you did you want to direct your question yes I thank thank you very much and thanks to Dr Ferdop can I ask Mr Murdo in relation to I think to what Murdo said earlier that one of his great concerns was what would happen with economic relations between Norway and the United Kingdom in the event that the United Kingdom does indeed leave the single market and and you mentioned after as as one possible staging post what what else in your view is possible if the United Kingdom chooses not to be a member of the single market what else is possible in terms of maintaining the relationships that Norway currently enjoys with all parts of the UK in economic terms I'm thinking for example of the fact that Switzerland has a very complex arrangement with the European Union and with the EEA and and just to understand your view from an Norwegian perspective of what other possibilities might exist for for Britain as a whole right yes thank you well we we would prefer a solution where Britain maintained the closest possible links to both the European Union and to the single market and thus Norway so a sort of EEA agreement would probably be the best solution now I'm not sure if the current setup of the EEA would be the preferable one for or us and for you because you obviously want a tailor-made agreement so and our fear would be that if you just entered the current setup with the broad variety of interests and sectors that the UK has you would probably at some point challenge the principle of taking on board all pieces of legislation without any changes and and that could then trigger this response from the EU side to suspend parts of the EEA agreement so as I mentioned we have never used this right and that's why the EEA agreement is functioning I think if the UK joined maybe you would challenge it and that could and the consequences when the EU suspense parts of agreement would be for all the FTA members so not only UK but Norway would also suffer from from that but I could envisage maybe a tailor-made agreement that would be close to the EEA agreement where you would maintain most of your participation in the single market and of course you have issues on the sovereignty with the with the court system surveillance system and of course that is extremely important if an Norwegian company wants to invest in the UK and if they know that well it would be in in the event of a conflict or dispute it would be a UK court who would have the last saying which would maybe not be neutral if the conflict is with a UK company then the investor loses that predictability that we currently have with having a surveillance and court system so finding solutions to this would be very important if the UK choose not to have any EEA kind of solution and more kind of free trade agreement whether it's the canadian or any other option then Norway would be in the situation where we would have to make negotiations with UK and that could either be done then UK would be a regular third country like we do with now we are negotiating through EFTA with India and we would have to see should those negotiations be on EFTA on our side with the UK on the other side or if should it be a bilateral negotiation between Norway and UK as such in any of those events we would like that agreement to be as comprehensive as possible so that the difference from the current system to a new system would not be too big and our worry is that it will take long time to negotiate these agreements both with the UK and the EU and also to then negotiate with us so that we could be left with that period transition period with no agreements and that we would really fear and hope to avoid thank you very much so I think what you what I would draw from that that's very interesting run through your perspective in terms of decisions made by the UK going forward in the immediate future a parallel to the EEA in other words a different a separate but very similar agreement which maintained British access to the single market would actually be something that the existing European economic area members would would welcome rather than worry about because it would free you from some of the consequences of some of the issues that might arise between the UK and the EU going forward is that fair? Absolutely I think to maintain the closest possible relations and predictability and the institutional setup would be would be preferable but you said that that can come through a free trade agreement? It could also come through a free trade agreement a free trade agreement is of course something very different from the EEA agreement I think a very important issue that I see in our domestic discussion and also in the brexit discussion leading up to brexit is that to understand the difference between a free trade agreement that basically is about customs and the tariffs on the one hand and some rules and the EEA and the single market on the other hand which is about harmonisation of the rules which is of course a whole different ballgame and I think people don't really see the difference so in the retro republic rhetoric we hear that well we can take part in or have access to the internal market single market but it is something completely different to also have take on all the rules and regulations for example now we have a discussion in Norway because one of the directives that we all the regulations we have not taken on board in the agreement is about ecological food because we had some problem on the agricultural side but this now prevents Norwegian fish producers to export ecological seafood because it's not part of the EEA agreement yet so this is a big problem for us and of course that is not about the tariffs that is about all the rules on well what is an ecological product and they have rules about everything from from from the contents to the how it has been produced and if they have used poisons or what what have you and these are the rules part of the internal market that is important. Right okay thank you very much I'm afraid we have to finish it there to go on to our next panel of witnesses but I'd like to thank you very much for joining us both of you and I will have a brief suspension. I would now like to welcome our second panel of witnesses today Dag Werner-Holter, Deputy Secretary General and Marius Valle, Head of EEA Policy Coordination with the European Free Trade Association and they've travelled from Brussels today so I would like to thank you for that and welcome you to the meeting. Would you like to make some opening remarks? Thank you very much and thank you for inviting us we are very pleased to be able to be here it's a pleasure. In terms of very briefly sort of introducing ourselves I would like to underline that as you just mentioned we represent the Eftar secretariat although both of us are Norwegian nationals like the two previous speakers myself also having background from the Norwegian foreign service. In our present capacity we speak on behalf of the Eftar secretariat and definitely not on behalf of any of the member states of Eftar. I will say a few words afterwards also about the role of the Eftar secretary just sort of to situate where we come from and what we represent here. Now in this brief introductory remarks I would like to just say very few words about the European Free Trade Association and the EEA agreement although you may be very well aware of most of it but we find it useful to sort of situate both the Eftar and the agreement in a broader historical and political context. As you of course know very well Eftar was established in 1960 with a focus on free trade and based on traditional intergovernmental corporation model. The UK was sort of the founding member of Eftar at the time together with six other European countries the three Scandinavian countries Norway, Sweden, Denmark, Austria, Switzerland and Portugal. Now the founding of Eftar was a kind of response to the development of the European communities, the six continental European countries that had been going on for some years but again based on a different model of cooperation. Today or throughout the history of Eftar we have had sort of shift in membership. Finland was part of Eftar from the beginning but only as an associated member to start with. Iceland came in 1970, Liechtenstein somewhat later and then members of Eftar left to join the European communities as you know and today the membership consists of Iceland, Liechtenstein, Norway and Switzerland. Now the EAA agreement on the European economic area was a result of an initiative taken by the EU side in 1989 on the background of the new and increased focus on integration on the realization of the internal market of the European communities and at the time as also Dr Sferdrup mentioned in his remarks, Eftar of course was the most important trading partner of the European communities, seven member states at the time and that was of course the very important background for the negotiations that took place between the two groups of countries. Now Switzerland rejected this agreement in the referendum in 1992 and then the agreement entered into force in 1994 and three other Eftar states that were part of the EAA agreement on the Eftar side at the beginning left Eftar to join the European Union in 1995 that was Austria, Finland and Sweden which left us then on the Eftar side with only three relatively small countries Norway, Iceland and the very small state of Liechtenstein. Now two words also or two sentences, a few sentences about the basic objective and principles of the EAA agreement I think that is also important although it has been touched upon very thoroughly already. The basic objective obviously was to extend the single market to the participating Eftar states and by doing so applying the four freedoms to these countries. The previous speaker said that this was more than access, it was full membership. Personally I would like to nuance that somewhat because full membership of the single market would normally imply also being part of the customs union but as you have been discussing already the EAA Eftar states are not part of the customs union but we have access to the single market. The basic principle and there are also other exceptions as has been mentioned. The agriculture sector is not part of the EAA which also represents a limit to the free movement of goods within the single market as far as the EAA Eftar states are concerned. The basic principle of this extension of the single market to the participating Eftar states is the homogeneity of legislation. All legislation relevant for the single market or for the areas covered by the agreement was incorporated into that agreement when it was concluded in 1992 and 1994 and the agreement itself has set up a system for further incorporation of new relevant legislation into the agreement along with adoption of such legislation on the EU side. And my colleague, Maria Sval, will speak a little bit about that in his introductory remarks afterwards. But the main principle here, the homogeneity of legislation is also based on and the institutional setup is based on this two pillar system which is also quite a sort of innovative and creative setup whereby one has tried to bring together two systems of co-operation among states which are based on different legal principles. You have on the EU side of course as you are very much familiar with the supranationality principles and the whole structure of decision making etc. And on the Eftar side we have a more traditional intergovernmental co-operation based on the traditional consensus principle. And now how do you bring these two systems together? Well, we have this system which my colleague will sort of give you the main features of. But we also had to, when concluding this agreement, we had to also find a solution to meet the requirement of the EU side to have a system for surveillance and judicial settlement of disagreements or disputes. The Eftar side being as I said a traditional intergovernmental co-operation could not accept being sort of submitted to the EU jurisdiction, the EU system of surveillance. So we had to establish a separate set of institutions for this purpose. So that was why we established our own Eftar surveillance authority which is an independent authority that surveys the functioning of the agreement or the respect of or the implementation of regulations on the Eftar side. And we have a separate Eftar court which has the last word in interpretation of the agreement and regulations on the Eftar side. So these institutions mirror the EU institution of the commission with its responsibility for surveillance and the European Court of Justice, of course. The Eftar secretariat, just to complete my remarks on that, the Eftar secretariat is, as the word says, a secretariat and it's not an independent institution as the commission is. The Eftar secretariat services the member states. We have different roles in the sense that we, of course, also serve the four member states including Switzerland and the member states work on free trade agreements with third parties. And then we have a part of the secretariat that mainly which is based in Brussels and where both of us are based, which mainly then services the member states with regard to the management of the EEA agreement. But the headquarters of Eftar is still in Geneva. Although the secretariat in Geneva is today the smaller part of the Eftar secretariat, the larger part is the one in Brussels with responsibilities for servicing member states on the management of the EEA agreement. And then my colleague, Marius Vald, would like to say a few words about the decision-making principles and procedures, if you allow. Thank you very much and thank you for inviting us. Just say a little bit about what the day-to-day management of the EEA agreement actually entails. I mean, our key role is to make the formal decisions in the EEA whereby new EU single market legislation becomes part of the EEA agreement. So that is really a main task of drafting and preparing those decisions. And we have approximately a bit more than 400 legal acts every year that are taken into the agreement. So it's quite a large task. Alongside this, of course, we will follow monitoring EU developments and ensure the participation and involvement from our side in these processes to the extent that this is provided for by the EEA agreement. And all of these tasks are carried out by quite a large number of bodies, various councils, committees, subcommittees, expert group, working groups, et cetera. And I'm trying to add it up and we organise more than, they meet more than 100 meetings every year. So it's quite a large machine that is doing this. And finally, I could also mention these, our financial mechanisms, which I assume I will get maybe some questions about, which are these financial contributions to reduce social and economic disparities in Europe, which is also managed by EFTI. It's a separate office. It's in also in Brussels, but they are the ones who are managing this on behalf of our member states. But I think I will just leave it there and then we can maybe start with the questions. Right, okay. Thank you very much for your contributions. The UK Government has suggested that they are looking at what they call a bespoke deal with the European Union, meaning an individually tailored deal, especially for the UK that's not EFTI, not EEA. How feasible do you think that that is? Well, I think maybe the EFTI Secretary is not the best-placed institution to answer that kind of questions. I think you have to ask that question to the representatives of the European Union rather than to us. But what I could say is, of course, that if you look at EFTI today, we have, among the EFTI states, we have different frameworks for our relations with the European Union. We have the EIA agreement for the three EIA EFTI states. And we have Switzerland as an EFTI state, which has its own set of bilateral agreements with the European Union, covering almost as much as the EIA agreement, but not precisely, not totally as much as the EIA agreement. And this whole set of bilateral agreements has been negotiated over a number of years. They are regularly updated. And of course, Switzerland would be the one to answer questions relating to how that deal works. But what we could say is that this deal or this framework relationship between Switzerland and the European Union presently is under some kind of pressure, I would say. Precisely, I think, because it lacks the sort of the institutional setup to deal with surveillance of implementation and settlement of disputes. And I think these are elements that will be quite central now in discussions between Switzerland and the European Union in time ahead. Now, will that be the case if the UK is to negotiate a separate framework with the European Union? Well, that is not for me to answer, obviously. But given the example of Switzerland, I would be surprised if I may say so. I might just add quite a thing, which might appear a bit obvious. But this has been going on for a very long time now, the EIA and EFTOM. It is very clear from our side that the EFTOM states are very happy with EFTOM. It is kind of obvious, and the EIA EFTOM states are very happy with the EIA, as is the European Union. This is an agreement that functions very well. Most people did not, as we have heard previously, imagine this as a permanent solution, but it still works very well, which is quite remarkable if you think about all of these major transformations that Europe has gone through over the last 25 years that we are still managing to make this work. All of these kind of, at the time, very novel institutional innovations have actually been established, and they do function very well. So our member states are very happy, and from their perspective what is happening here now in the UK. Their key interest is, of course, to maintain and safeguard these agreements in the arrangements that are already in place, because they are happy with them. They function well, but, as our last witnesses said, they are a patchwork, if you like, of compromises that have been struck over the years, which do function well, but they are compromises. I was just interested. We had a discussion about the customs union in the previous panel, which we will have heard. We heard that being out with the customs union was very much the choice of Norway to protect our agriculture and fisheries, but we also know that there are countries such as Turkey that are out with the single market, but are in the customs union. Is there an opportunity for compromise there? What I am asking is to be more precise, is being outside the customs union absolutely part of being EFTA? I think that the reason for the EAA agreement for not setting up a customs union is that it was not only because of Norway, I believe, but it was rather the agreement that was struck among those that negotiated this agreement to exclude certain areas, not include everything. I think that it was not only Norway, but also Iceland and Switzerland, probably also that were opposed to including agriculture, for instance, when the agreement was negotiated. Turkey's relationship with the European Union as a customs union is very different. I'm not really in a position to comment on the details of the differences there. I don't know whether my colleague has anything to add to that. Well, we know when it comes to the customs union between the EU and Turkey that neither side are very, very happy with how it is functioning, which is why they're now in the middle of we're going to start negotiations. I'm not precisely sure where they are on to seeing how they can modernize the customs union agreement and make it work better. If I might add also, you mentioned that the relationship being a patchwork, and I think that was definitely the expression that Dr Sferdrup used, but the EAA agreement as such is part of this patchwork, but it is definitely the most important part. Although it represents a compromise, it is very comprehensive. It covers practically all of the single market with the exceptions that we have mentioned, and the functioning of the EAA agreement with this constant incorporation of new legislation into the agreement, making sure that we continue to have a homogeneous legal area regulating the exchanges and the economic activities is a well-functioning institutional setup. When we speak about a compromise in an Norwegian context at least, I would say that this is a compromise between the economic interests of being part of the single market on the one hand and the opposition against full membership for a number of reasons on the part of the majority of the Norwegian population, which has been expressed on two occasions in referenda, partly because of the interests of the agricultural sector, partly linked to interests of the fishing sector, fishery sector, but mainly the management of the fishery sector and not so much the processing industry or the fish farming industry, which have different interests, and also to some extent for historical, political reasons preserving Norwegian sovereignty and so on. This is a key issue with regard to the functioning of the EAA agreement, because it has been criticised for not offering the EAA member state sufficient participation in the decision-making processes, and as was mentioned here, the EAA countries in practice are more or less obliged to take over EU regulations, EU legislation, as it is developed on the EU side. But on the other hand, formally speaking, we take the decisions based on consensus on our side, on the EFTA side, and the political agreement behind this means that this arrangement, this compromise is accepted. In that sense, of course, it is a compromise, but it is a well-functioning agreement. Thank you very much. I am going to move to Jackson Carlaw and then Stuart McMillan and could ask people to keep their questions and answers as brief as possible so that we can make progress. Thank you. It is a supplementary, as it turns out, to the very point that you just made. Interestingly, I was asking the previous panel about the influence of Norway in the EFTA, and you have both come out as Norwegians this morning, so it underscores the point. However, the disadvantage, as I understand it, is that being a member of EFTA, you are not at the table where the decisions are taken and you do not have a vote on the decisions that are taken within the European Union. What has been said to me is that you therefore seek to influence as best you can the interests of EFTA members in the formation of those outcomes. What nobody has really been able to give me is a candid assessment of how successful you think you are at doing that. What the actual processes are—I mean, it is very easy to know whether there are discussions here or discussions there—but what is the actual process that you would go by to try to influence the outcome? As an EFTA member, not within the EU, can you give me a candid assessment of the success that you think you actually have in securing any adjustments that you would wish to see? Well, I think that it is very difficult to give that kind of assessment. Since I am not speaking now on behalf of Norway but rather on behalf of the EFTA secretariat, I should rather say a few words on how we try to make this work, also seen from the secretary's point of view, because we are part also as a secretariat of these processes. The main possibility which has been set up in the agreement itself for participating in the decision-shaping of new regulations and new legislation relevant for the internal market is this possibility for the EFTA states to participate in preparatory stages in expert groups, the work of expert groups and working groups under the commission when legislation is prepared. Now, this is something where the EFTA secretariat also is involved. We take part in the management of this. We are helping the member states as they wish etc. Now, the importance of this participation could of course be discussed in particular in the present situation because what we have seen over the years since the conclusion of this agreement is that the decision-making processes on the EU side have evolved quite a lot and in particular the European Parliament has been given far stronger powers and far stronger participation rights in these decision-making processes, which means that sort of the process from a proposal is being prepared under the commission until a decision is reached by the EU council after sometimes very long and complicated negotiations between the council, the commission and the European Parliament. Now, the outcome may be very different from what was discussed at the outset in the working groups or the expert groups under the commission. Now, in this whole process, the EFTA states do not have any formal access to the discussions. Now, it is up to each of the member states on the EFTA side to see whether they could try to influence the process by maintaining contacts at political level or at the officials level with relevant EU member states with members of the European Parliament with the commission services and this is being done but this is not something that the EFTA secretary is involved in. This is done by member states at individual, mostly I would say at individual level bilaterally and now is it successful? I think it is very difficult for us to assess that and I would not there to really give you any general comment on that but I do believe that there are examples where a country like Norway with particular interests and particular expertise also I would say, particular competence in fields of importance also for the European Union may have been able to influence some regulations but it is hard to assess it, I'm sorry. I'm Stuart McMillan. Good morning, gentlemen. In terms of the EFTA and the UK, if the UK were to apply to join EFTA, how do you foresee or how would you imagine the balance of EFTA changing? It would definitely be a very different situation it would bring us back closer to the original situation of the EFTA, of the association where we were seven member states where the UK played a primordial role of course not only in the founding of the organisation but also in the running of the organisation in the first twelve years of its history. It would change the dynamics that's obvious but I think it's difficult to say very much more than that. We have very strong, as has been pointed out earlier today, all the three, all the four EFTA states I would say, have very strong economic ties to the United Kingdom. It is a core interest of the four EFTA states to maintain as much as possible these strong economic ties with the United Kingdom regardless of the relationship that the United Kingdom would like to establish with the European Union and based on whatever may come out of this process the EFTA states have underlined very clearly at political level that this is our core interest. We want to maintain our strong economic and of course also political ties with the United Kingdom which are very important to all of the four EFTA states not least to Norway obviously but also I would say Iceland for Iceland which is a small economy obviously but the United Kingdom is actually their largest trading partner. For Norway it is also among the largest most important trading partners and Switzerland also has very strong economic ties to the UK so for all the EFTA states this is important and if the UK should join EFTA well then of course our economic ties would be regulated by the EFTA convention as the framework and most of these economic interests would be secured in that case. That's very helpful. It takes me on to the next question that's up to now within EFTA. Are EFTA member states allowed to have opt-outs from any decision making that takes place? Opt-outs in what sense are they? If there's a particular policy area that an EFTA member state wasn't too content with would they be allowed to opt-out from implementing that? Well I don't think there is any examples of opting out of the provisions of the EFTA convention which provides for free trade between the EFTA states and also provides for free movement of persons among the EFTA states but maybe you would add something Marius. Well first on your point about how things would change with a new member states in EFTA of course it would change it because you would go from four to five member states so you would have to take it and it's an organization that makes decisions by consensus so you would have to have the interest of the fifth member state have to be taken into account whether that new member states is small or big or large I mean that doesn't really matter you have you move from four to five people around the table who have to make agree on every decision that is made so it would of course influence it. On the kind of variable geometry of EFTA of course the main one is that you can be a member of EFTA without being part of the EA like Switzerland is so that is but when it comes to the EFTA convention either there are no kind of no real opt outs in that sense you don't have any differentiation like that but then when it comes to the EA agreement of course there are some permanent derogations that were agreed when this when the agreement was concluded 25 years ago but after that there there will be no kind of derogations or exemptions that have been accepted or agreed. I may add also that with regard to relations with third countries I don't know whether you should call that an opt out or not but but there is a possibility for EFTA states to conclude directly by bilateral agreements with third countries. As a general rule we try at four to negotiate agreements together but there are examples where this has turned out not to be possible and where individual EFTA states have concluded agreements on their own bilaterally so that is also a kind there is some kind of flexibility there as well. I have very quick supplementaries from Rachel Hamilton and Rose Cleary on Stuart's question which is article 128 of the EA agreement refers to the process by which a European state can become a member but would this rule Scotland seeking membership of EFTA and the EA out of that process? Well the EFTA convention says that any state can apply for membership in EFTA now as to how this is to be interpreted that is definitely not for the secretariat to judge and if you take one step further and look at the EA agreement it is quite clear from the agreement itself that you cannot access the agreement or be party to that agreement without being either a member of the European Union or a member of EFTA this is this is sort of inherent in the very structure of the agreement so I think if Scotland would like to join the EA through this along that path the first question would of course be to reach an agreement on your relations with the UK and secondly it would have to be settled with the EFTA and the question of statehood would then be sort of the crucial question and again it's not for the EFTA secretariat definitely not to have any opinion on that and then once possibly a member of EFTA would have to apply to accede to the EA agreement. The previous speakers spoke about the ferry islands was there some other discussions happening there? Well I think what he referred to was that there is an interest expressed on the part of the ferry islands to set up a closer relationship with EFTA possibly in the way of a membership of EFTA now this is also a question where several issues have to be clarified first of all the ferry islands their relationship with Denmark or their status within the kingdom of Denmark as you know they are not an independent state they are part of the kingdom of Denmark but with a certain autonomy so first of all this must be clarified with with Denmark and then secondly again the question of statehood has to be assessed by the EFTA member states and so far there is no concrete or direct discussions either between the EFTA states or between EFTA and the ferry islands on this in any substantial way there is there is clearly expressed there is a clearly expressed interest on the part of the ferry islands but the EFTA as such has not yet has not yet responded very formally okay Ross did you have a supplementary yeah just briefly in answer to Stuart McMillan's question you outlined a little bit how EFTA concludes either as a whole or the individual members trade deals with third parties with other countries if the UK were to be such a third party if we were to pursue a what's been deemed the hard brexit option would that kind of negotiation only be able to take place once the article 50 process had been completed and how long do those kind of processes tend to take those kind of negotiations would you like to comment on that yes i could try i mean this is a question of the treaty on the european union it's not really a question for us whether or not the united kingdom would be able to negotiate anything before it is actually while still being a member of the european union and it to me it seems i mean looking at the treaty it seems that the answer is no as to how long it takes EFTA to negotiate free trade agreements and it varies a lot it can take one year or it can take a decade so i don't know it's a very good answer but i mean i'll look i mean if you're very interested you can actually go through what we have on our website lots of the overview precisely how long it's taken with all of the 27 agreements we have concluded so far but it's some of the quickest have taken about a year but we have also examples where it's taken more than more than 10 years so it depends it's very much also when politics kind of interferes in these processes yeah absolutely i'm i'm somewhat concerned by if the UK is pursuing a hardware exit what the immediate aftermath would be for us so even the answer that it's uncertain isn't itself useful yeah okay we've got was a supplementary Richard so Richard lockhead supplementary in terms of your comments about the feral elves is it fair to say then that it's not impossible that the current EFTA members could agree to permit membership for a country that's not a fully fleshed independent state well um so far so far the um there has been no consensus within EFTA with regard to the possible admission of of the ferry islands precisely on reasons formal legal reasons related to the question of statehood i i don't think i could go go any further than that thank you i'm sorry okay loose mcdonald thank you very much you will have heard in the previous session you have heard mr mirro talk about the possibility that the united kingdom could negotiate something parallel with the european economic agreement but separate from it and the advantage of that in his words from a Norwegian business perspective would be that if there was any debate between the UK and the EU about the application of particular decisions under EU law and consequences for the for those areas of agreement they wouldn't impact on norways norway island and lechtenstein because they would be a separate agreement does that seem to you from a point of view of the after secretary given that switzerland likewise has a a distinct relationship with both with with the european union does it seem to you feasible to go down for the united kingdom to go down the route that mr mirro felt was was potentially useful and to have a parallel comprehensive agreement with the european union once it is no longer a member of the european union well i i i i i don't see why it should not be be feasible but of course the interest of the the interest of the after states would be in that case to make sure that their economic relations economic ties with the UK were preserved in the best possible way and since our relations with with the UK or the relations of our member states with the UK today are regulated by two different frameworks on the one side the the swiss bilateral agreements with EU on the other side the agreement we would have to to seek some kind of agreement with with the UK based on on our on the interests of the member state in those cases now should that be done by the after countries together or should it be done individually or by the EU countries on one side and switzerland on the other well that is absolutely impossible for us to say anything about today and the present situation but there are different i think there are many different many different ways of of doing this and proceeding with this and i think but but seen from the seen from the EA after secretariat perspective it would also be quite important to to make sure that that that any transitional arrangements would work satisfactorily also seen from an EA point of view and EA after point of view and and that is also why it has been expressed very clearly from the EA after side that it is important for our member states to be to be fully informed of the negotiations between the UK and and the EU once they get going and securing the securing the interests of after member states vis-à-vis the UK in those circumstances would be more easily done if the UK applied for membership of after would that be a fair a fair proposition well i think there are different ways of securing this but but it is obvious that if the UK were to become a member of the after again our economic relations would be taken care of by by the provisions of the after convention and that would be obviously that would be a very simple solution obviously but compatible with the UK EU agreement a parallel to the european economic agreement well i i would say so given that another after states already has a separate framework for its relations with the EU yes that's very helpful the other point i just wanted to follow up a little was another reference that was made in the earlier evidence session relating to oil and gas and the offshore safety directive that the european commission proposed a number of years ago and i think it was said by either Mr Meir or Dr Sferdrup that the the UK as a member state in the european union was able to secure norwish interests in the outcome of that which i think is is is correct and the bilateral relationship between norway and the united kingdom is there for very important in securing the offshore sector in both countries against an unwelcome innovation from Brussels what we've talked a little and you answered questions earlier about influence and i recognize the the limits to how much you can pass judgment on that but in if a similar circumstance was to arise again for example in the offshore energy sector and with the united kingdom no longer a member of the european union what kind of influence would after countries be able to bring to bear in those circumstances and how would they seek to do that well i think it would be along the lines that we have already touched upon it would have to be we the after states would have to exploit the possibilities that are there for participation in preparatory stages of decision making or shaping the decisions in the discussions both formally within the framework or working groups etc which is provided for in the agreement but also informally through political contacts at all levels between our member states and and the europe and the EU side with regard to the offshore safety directive it is true that there have been close contacts and so on but that i should perhaps mention just to avoid enemies understanding that that issue is not yet settled because the EU because as as you may know norway has objected to incorporating this directive into the ea agreement because it claims that this is not relevant this is not covered by the ea agreement and therefore should not be part of it whereas the EU side continues to maintain that this is uh ea relevant and should be incorporated so this disagreement persists between the two sides so so it's perhaps a very good example of a vital interest a vital national interest of an after member state and the challenge that is posed by being subject to ea ea rules without having a say in ea rules is is is that fair and and is the potential consequence of that that the ea ceases to apply in that sector well so far we haven't seen any any indications on the EU side that they would take any action under this article 102 of the agreement which could ultimately lead to a suspension of the part the affected part of the agreement so we are still in the process of discussing among the two sides whether what to do about this directive and the after side maintains that this should not be incorporated because norway is strongly opposed to it whereas the EU side stands on their reasoning and their arguments and and so far we are not beyond that stage although this has been going on for quite some time and the UK position within the EU presumably is is a weight in favour of not taking on due enforcement action in relation to the agreement. I don't I'm sorry I I don't know what the UK position is but what is clear is that even if the UK might share norways view on this that has no bearing on the position of the EU because the position of the EU is one position Can I just go back in as a way of supplementary to Mr McDonald's earlier question I'm not sure that Mr Mayer that would be a my interpretation of what Mr Mayer was saying through the video link that he would be happy with some kind of separate arrangement for the UK. If I could just read out what Professor Svedrup said in his article about compliance, a separate after surveillance authority and after court have the task of monitoring and ensuring compliance in norway much like the European Commission and the European Court of Justice for the member states in the case of Switzerland there's no such third party independent court system and the EU is insisting on the need to establish one and I think that gets to the core of you know why you have these arrangements you've got the after arrangement there's the EU arrangement both need compliance and then if you're trying to negotiate some kind of third system and you don't have a court such as you have or the EU has to ensure compliance how is how does that work I mean it's clearly not working for Switzerland well the arrangements the agreements between Switzerland and the EU obviously do have some kind of mechanism for dispute settlement if there is disagreement between the two parties on implementation of the agreement or implementation of rules etc but this dispute settlement is not an independent institutional mechanism it is a traditional intergovernmental mechanism in the sense that the agreement provides for the two sides to sit down in the framework of a joint committee or or something like that and discuss and agree and if they don't agree well there is no further there's no further mechanism other than other than suspending the agreement or or or what is it withdrawing from the agreement whereas the EA agreement has this institutional setup whereby we have an independent surveillance and an independent court now of course we are we are not sitting at a table when Switzerland and the EU are discussing the further development of their relations so I would hesitate to comment on that but as I said I think earlier our impression is that the lack of an independent of independent mechanisms for surveillance and settlement of disputes is part of sort of the concern on the EU side and it's probably not a very hard guess to to say that or to think that in the discussion if there are to be discussions between the EU and the UK on an agreement in its own in its own making or in its own model this element or these aspects would be part of that those negotiations but again this is not for for us to have an opinion on obviously. Mr Valovic anything Todd? No I mean I think it's a very important point when you're talking about whether this if you have parallel agreements or part of the agreement I mean the really doesn't the substance of what is eventually agreed is what is going to be key and what are the links between these agreements you cannot a priori say that one would be better than the other because you need to actually see what they are and as of right now we do not know so it becomes too hypothetical for anybody to actually have an opinion on it I think. Yes okay do any other members wish to come in? Well I think at that we can thank our witnesses for attending and we'll now move into private session. Thank you.