What Norway’s finance minister thinks about the Norway option

Siv Jensen © Getty images
Siv Jensen: regulation can’t solve every problem

There has been a lot of talk about the “Norway solution” for Britain after Brexit over the last two years, but little about what the Norwegians themselves think about the arrangement they have with the European Union.

However, a few days ago I was fortunate to attend a talk by Siv Jensen, Norway’s finance minister, on bank regulation at the think tank Policy Exchange in London. As well as being the third most powerful person in Norway, she’s also leader of the pro-market Progress Party. This means that she’s much more sceptical of the idea that regulation can solve every problem. She’s also sympathetic to the British concern that too much red tape can make things worse. I was also lucky enough to grab a few words with her after she finished.

One of the main worries about the European Economic Area (EEA) option, which comes up time and again, is that being part of the single market requires full compliance with the relevant European rules, limiting our freedom to set out our own regulation (see last week’s interview).

However, Jensen points out, both in her speech and afterwards, that an increasing amount of financial regulation is carried out at the global level. This process has intensified in the last decade with the G20, International Monetary Fund, and other global bodies developing “a set of common international standards and rules for the regulation and supervision of the financial sector”.

The principles underlying these rules have been codified in the Basel Accords. The first set of these rules was produced 30 years ago, with the latest version appearing in 2013. Most of the world’s financial centres, including both the United States and the EU, have incorporated Basel, or something similar, into their legislation. This means that it would be “in our interest” for us to follow these rules. The obvious (though unspoken) implication of this is that there is no getting away from the fact that whatever we do, we would still be a “rule-taker” to a certain degree.

In any case, while its EEA status means that Norway doesn’t have a direct vote on European policies, Jensen notes that it still has the ability to influence decisions, both before and after Brussels comes up with directives. Indeed, she and her government have found the EU to be “flexible and willing to listen” to any concerns that Norway might have. Norway is also able to informally shape regulation by its participation in several meeting places and forums designed to allow Nordic and Baltic regulators to effectively supervise institutions that operate across the region.

More generally, Jensen thinks that the EEA agreement “has served our country well” giving Norwegian companies frictionless access to its largest trading partner. While some politicians talk about Norway becoming a full member of the EU, and others want to move to a looser free-trade agreement, she thinks that the status quo is supported by a “broad majority” of the population, “who understand its benefits”. While the government will continue to push Norway’s interests, she predicts that in ten years time, it will still be an EEA member and its relationship with the rest of Europe will be broadly unchanged.

Despite being in the single market, Norway is outside the EU’s customs union. This means that there are some border controls between it and neighbouring Sweden. Jensen thinks that this is not a major problem for businesses on either side of the border, as the two countries have been able to cooperate well. On the issue of free movement, she has previously stated that Europe’s rules have made it too easy for migrants to gain access to some benefits, such as child benefit for non-resident children. However, she now thinks that opinion within Europe is starting to shift on this specific issue, if not on the wider principle.

Overall, Brexit “isn’t something that is frequently discussed by the average Norwegian”, she admits. However, like most Norwegian officials and politicians, Jensen is keeping a close eye on developments, not least because it will affect Norway’s own relationship with the UK. She refused to be drawn on how the Norwegian government would respond if Theresa May changed her mind and applied to be part of the EEA, emphasising that she can’t answer such a hypothetical question – before adding, “we always take the UK seriously on every question”.

  • Cynic_Rick

    I must first congratulate Matthew on this choice of subject.

    Quote this article:

    “One of the main worries about the European Economic Area (EEA) option, which comes up time and again, is that being part of the single market requires full compliance with the relevant European rules, limiting our freedom to set out our own regulation (see last week’s interview).”

    For the avoidance of doubt the relevant European rules do not include EU laws. As I stated in the comments to “last week’s interview”:

    “As members of Efta we would neither be subject to EU laws or to ECJ jurisdiction but to the Efta Court.” We would have left the EU, we would have Brexited.

    I refer to the following website:

    http://www.efta.int/faq

    “The EEA Agreement has a unique institutional set-up for decision making, surveillance and judicial review, often referred to as the “two-pillar structure”. To ensure unified application of the EEA rules, the EEA EFTA States established the EFTA Surveillance Authority and the EFTA Court, which respectively mirror the surveillance functions of the European Commission and the competences of the Court of Justice of the European Union.”

  • Cynic_Rick

    Quote this article:

    “However, Jensen points out, both in her speech and afterwards, that an increasing amount of financial regulation is carried out at the global level. This process has intensified in the last decade with the G20, International Monetary Fund, and other global bodies developing “a set of common international standards and rules for the regulation and supervision of the financial sector”.”

    It’s relevant to state the above quote concerning regulation is not just applicable to financial aspects of regulation but most if not all trading aspects. So, there won’t be a wholesale bonfire of regulations as the Ultra Brexiteers seem to consider virtuous.

    As I stated in the comments to “last week’s interview”:

    “There are very many regulations to which the UK would continue to be subject whatever way in which we leave the EU.

    “Of these “globalist” regulations there are very many with which we would be all the poorer in terms of quality of life to be without.”

  • Cynic_Rick

    Quote this article:

    “She [Jensen] refused to be drawn on how the Norwegian government would respond if Theresa May changed her mind and applied to be part of the EEA, emphasising that she can’t answer such a hypothetical question – before adding, “we always take the UK seriously on every question”.

    When I first read through the article I thought Jensen was quoted as saying words to the effect that insofar as Britain joining Norway in Efta was concerned an approach by Britain to the Norwegian government had never been made and that they felt it was not in their place to initiate an invitation to the British.

    The best time for Britain to have approached the Efta countries would have been before Article 50 was invoked. Flexcit had been around for at least two years before the Referendum let alone before the invocation of Article 50.

    Instead our Government, appearing to the initiated to be out of its depth as is quite normal, is blundering through the Brexit process like a blind man without a guide dog in unfamiliar territory.

    However, we are where we are and we’re all going to have to pay for the Government’s incompetence.

    Richard North’s latest article is, in this vein and (indirectly maybe) in the realms of the Ultra Brexiteers’ expectation of Britain largely being in control (not) of the regulations to which it would be subject after taking the WTO option, very apt:

    http://eureferendum.com/blogview.aspx?blogno=86827

    For instance:

    “Perversely, though, this situation [of the EU now threatening to make trade deals conditional upon regulatory and suchlike alignments] only arises because the EU is able to exert leverage over the extent of the free trade agreement which it will conclude with the UK. Had the government immediately opted for continued participation in the EEA [via Efta membership], the EU would have had less opportunity to load the dice.”

  • Cynic_Rick

    It’s not just Richard North people need to pay attention to but to his son Pete North:

    http://peterjnorth.blogspot.co.uk/2018/04/the-long-shadow-of-brexit.html

    “From the moment Article 50 was invoked there were only two options for Theresa May. Either to make an unpopular choice in the national interest or kick the can down the road until circumstances dictated the path. Having chosen the latter over the EEA [Norway option], Mrs May has put the Brexit process on autopilot. One gets a sense that this government is no longer even trying to negotiate and will simply roll over at every turn.

    “The consequence of this now looks like a hybrid of both hard Brexit and Brexit In Name Only whereby we remain ensnared by all of the regulation, no say in its formulation, but with substantially less market participation. We are being steamrollered by the EU into a situation where the EU can cannibalise UK industries but leaving the UK on a tight leash.”

    • Wynne Carter

      So the whole brexit conspiracy is being implemented by an incompetent government.
      For God’s sake kick the lot out and return to sanity before its too late!!

      • anoneemouse1

        Yes. The thoughts that have crossed my mind several times as the costs and/or disadvantages and ramifications of Brexit become apparent is something along the line of “Hang on I thought this was beneficial and we’d be better off as a result of all this?! Millions for the NHS and all that!? If that’s not the case then… why the hecck are we so hell bent on pursuing all this still? Indeed if the premises on which Brexit was sold is now turning out to be flawed or outright fabrications, and/or it is becoming clear we will end up being worse off if we continue, then isn’t the rational thing to do to … reconsider?”

        • Cynic_Rick

          In what way(s) would you consider the Norway option (EEA/Efta route) of leaving the EU to make us “end up being worse off”?

  • Cynic_Rick

    Referring to the Norway (Efta/EEA) option:

    In as far as the direction in which Brexit appears to be progressing, the over-riding impediment, the one from which a lot of problems with potentially disastrous consequences emanate, is Mrs May’s redline of Britain leaving the Single Market.

    If having left the EU (presently giving us access to the EEA and hence the Single Market) we immediately rejoined the EEA via membership of Efta, we would retain most of the current advantages we have from Single Market access.