Tuesday, 16 February 2021 12:34

Brexit offers more opportunities than challenges

EM1 21 N BrexitChanges to the UK Norway relationship are inevitable but hardly insurmountable

This article was featured in EUROFISH Magazine 1 / 2021.

The solid ties between Norway and the UK will provide a healthy foundation for the two countries’ relationship from January 2021.

Newspapers are full of the ongoing negotiations between the EU and the UK regarding Brexit. How- ever, other countries will also be affected by the provisions of the deal between the two partners. Innovation Norway organised a recent seminar on how Brexit is likely to impact the relationship between Norway and the UK and how companies can prepare for these new circumstances. The UK is among Norway’s closest allies in Europe and one of Norway’s major trading partners, absorbing exports worth NOK184bn and the source of NOK38bn worth of imports in 2019. Renate Larsen, managing director of the Norwegian Seafood Council calls the UK one of Norway’s most important seafood markets. Although the UK left the EU on 31 January 2020, the transition period for Brexit which expired on 31 December 2020 ensured that relations between the UK and Norway remained largely the same as they were while Britain was part of the bloc.

A free trade agreement cannot match the EEA agreement

Norway is party to the European Economic Area (EEA) agreement (the UK as an EU Member State was too), which subjects a signatory to the rights and obligations of the European single market including the four freedoms of the internal market (free movement of goods, people, services and capital) and is more comprehensive than a free trade agreement (FTA). An FTA between the UK and Norway, said Wegger Chr. Strømmen, Norway’s ambassador to the UK, will not offer the same degree of coverage as the EEA agreement. While it can be hoped that many elements of the EEA agreement will be included in the deal Norway and the UK agree on, Norwegians must prepare for change come 1 January 2021 irrespective of the agreement the UK signs with the EU.

The outcome of the EU-UK negotiations will influence our agreement with the UK, said Mr Strømmen, and as they are drawing out, the Norway-UK FTA cannot be decided let alone implemented by 1 January 2021. Norway-UK negotiations are progressing despite some areas where more time would be needed to reach agreement. On 8 December the two countries therefore signed a trade continuity agreement that covers the trade in goods. This is an interim deal signed by the UK with Norway and Iceland that will allow trade to continue duty-free until an FTA is signed in 2021. Under the terms of the interim agreement 95% of the trade in goods with Norway will remain tariff-free from 2021 despite the lack of an FTA between the two countries. The fact that both countries will be outside the customs union means that changes will by and large be less intrusive for Norwegian companies than for EU companies. Ms Larsen calls this agreement “very positive” and says the Norwegian government is well underway in its work towards a new agreement between Norway and the UK.

Opportunities on the UK market should outweigh the introduction of changes

Customs procedures will remain largely the same, said Caspar Fabini from Innovation Norway, with freight companies carrying goods from Norway supplying a customs declaration to a UK customs office. These procedures are incorporated into the interim agree- ment to allow trade to continue under the existing terms. He warned however that transport and logistics companies are already noting delays in processing customs declarations

in the UK compared to some months ago and these are likely to worsen from 1 January. Companies may thus have to get used to the idea of border controls and consider their impact on perishable products like seafood. In general, companies exporting Norwegian products from Norway directly to the UK are likely to find it smoother than companies exporting via the EU. This was confirmed by Espen Gylvik, the CEO of Cyviz, a company developing communication solutions with offices in London and Edinburgh. Mr Gylvik had already observed some uncertainty with regard to the import and export of components between the EU and the company’s UK offices. However, he felt these were short term issues that should not obscure the opportunities that existed on the UK market.

Regarding the trade in services, the Norway and the UK have agreed on several measures to ensure this trade continues as smoothly as possible. These measures allow for, among other things, a mutual recognition of qualifications, the protection of the rights of nationals of one country living in the other, and the transfer of personal data. However, there will be changes, for example, in the movement of people, and Mr Strømmen urged Norwegian companies using labour from or sending Norwegian staff to the UK to study the new rules governing this traffic. Richard Wood, Britain’s ambassador to Norway, added that the UK was introducing a points-based immigration system for stays of longer than six months and that different routes into the UK are envisaged with different kinds of visas for different kinds of talents. For example, intra-company transfers will be a route through which companies can move workers between the UK and Norway. For Norwegians desiring to study in the UK there are no quotas or admin- istrative barriers, and an easy visa application process as well as the ability to stay on for up to two years after completing their studies.

Teething problems will hopefully not last for long

The impact of Brexit on companies will be different depending on the kind of business they are engaged in, he said, but as the fundamentals of the Norway-UK relationship were very solid, companies would hopefully soon get used to the changes brought on by Brexit.

For individuals, Britain’s departure from the EU will not mean any great difference. Travel will continue to be visa-free though those planning a longer stay in the UK must carry their health insurance cards with them. Norwegian residents of the UK and British residents of Norway are encouraged to keep track of the new rules and apply for visas where necessary.

The UK is among Norway’s most important trading partners when it comes to seafood. In 2019 Norwegian seafood exports to the UK amounted to almost NOK6bn, while imports totalled over NOK1bn. This trade forms the bulk of seafood- related activities between the two countries, but the UK also has significant interests in fishing rights in Norwegian waters, from where the UK fleet landed NOK373m (GBP32m) worth of fish in 2018. To safeguard this access the two countries signed a fisheries agreement in September 2020 which provides for annual negotiations regarding fishing rights and quotas. There are technical issues, for example with regard to rules of origin, that are also addressed by the interim agreement, but which may be affected by the agreement reached between the EU and the UK, Mr Fabini said, adding that product and labelling requirements are also likely to change from 2021. This applies mainly to medicines, animal products, and food and relates also to the use of the CE mark, but there is a degree of uncertainty surrounding the issue and companies must keep abreast of developments in this area. He suggested Norwegian exporters enter into new contracts that include a Brexit clause that will protect them from changes in the rules and from making commitments they cannot fulfil. He pointed out that as UK law is based on EU law and is likely to change, prudence is called for when deciding the jurisdiction of a contract.

Several websites will provide regular updates on developments

On balance, Britain’s departure from the EU offers Norway more opportunities than challenges. In the past relations between the two countries have been very close and this is likely to continue. There are several sources of information about Brexit and how it is evolving in both Norwegian and English, said Hilde Hukkelberg from Innovation Norway, including the UK and Norwegian embassies, Innovation Norway, and the two governments’ websites, and it would be worthwhile to visit them regularly.