Norway WT/TPR/S/15
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IV. TRADE POLICIES AND PRACTICES BYSECTOR
(1) Introduction
1. PostUruguay Round tariffs applied byNorway in1995 (Table AIV.1) show theeffect of
agricultural tariffication intheagriculture, foodandbeverages sectors, withunweighted averages of
some 74percentin"agriculture, hunting, forestry andfishing" (ISIC Division 1)andofover
107percentin"manufactureoffood,beveragesandtobacco"(ISICSection31),togetherwithmaximum
dutyratesestimated ranging upto606percentadvalorem equivalent. Forothermanufacturing sectors,
theunweighted average rateislow,at6.1percent, withthehighest sectoral averages inclothing,
leather products, plastics andcleaning products. Outside agricultural-based products, thehighest tariff
isintheregion of24percent. Thetariff structure onmanufactures, asawhole, appears relatively
even, withlittleescalation.
(2) Agriculture
2. Parliament endorsed anumber ofchanges inagricultural policies in1993; theresults ofthe
Uruguay Round underpin these reform efforts. Current policies seektoimprove thecost-efficiency
andmarket orientation ofNorwegian agriculture through moretransparent andsimpler support schemes,
thusallowing cutsinagricultural support inlinewiththeGovernment 'sgeneral policy toreduce
assistance totrade andindustry. Amore competitive agricultural sector, including theprocessing
industry, would alsofacilitate reductions inthegapbetween foodprices inNorway andthose in
neighbouring countries.1
3. Thereorientation ofagricultural policies hasbeenreflected intheAgricultural Agreements
concluded withthefarmers 'unions since 1993. Over theperiod, annual government transfers to
agriculture havebeenreduced byNKr1.2billion andlower product prices account forfurther cuts
ofNKr1.8billion.2Costs offarminputs havealsobeenreduced, notably through lower prices for
grains andfeedstuffs.
4. Current agricultural policies assign highpriority tonon-economic objectives suchascultural,
landscapeandenvironmentalconsiderations,includingsupporttomountaindairyfarmingandpromotion
ofecology-friendly production. Measures encouraging labour intensive production inruralareas are
retained,sinceagricultureremainsthebackboneofmanysmallruralcommunities.However,diversified
economic development ofremote areas isencouraged bygrants andother assistance under aRural
Development Support Scheme.
5. TheMarketing Actof10July1936(Omsetningsloven )isthelegalbasisfordomestic regulation
ofagricultural markets.3Regulatory measures areintroduced bytheNorwegian Agricultural Marketing
Board (Omsetningsrådet ),which collects producer levies tofinance thevarious schemes. Additional
funds areprovided bytheGovernment through theAgricultural Agreements. TheMarketing Actdoes
1Theproposed newagricultural policy wasoutlined inaWhite Paper toParliament, St.meld. 8(1992-93)
"Jordbruk iutvikling ".
2Thereduction intransfers from 1994-95 to1995-96 amounted toalmost NKr400million (Table AIV.2).
3TheMarketing Actemanated from thecrises ofthelate1920s andearly 1930s, characterized bysurplus
production, lowprices andfarm bankruptcies. Theprincipal policy response tothistypeofmarket disruption
wasregulation through producer co-operatives.WT/TPR/S/15
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notspecify thetypeofmeasures tobeemployed; overtheyears funds havebeenusedtofinance exports,
storage, salespromotion, advertising andtransport.
6. Milkproduction continues toberegulated bystrict production quotas, butthereallocation of
milkquotas islikely tobecome more flexible andaccompanied byasimplified price system. Further
effortstoadaptregulatorysystemstomarketsignalsincludeincreasesinceilingsonthesizeofproduction
units intheporkandpoultry sectors, butwithcontinued focus onfamily farming.
7. Under theAgricultural Agreements, guaranteed prices existonlyforfoodgrain andgrain used
infeeding stuffs; formost other main farm products inthemeat, dairy, poultry andegg,and
horticultural sectors, target prices areestablished, defined asthemaximum levelfortheaverage market
price overtheyear1July-30 June. Funds formarket intervention tosecure target prices come partly
from producer financed levies andpartly from theState budget. Theauthorities statethattariffs are
tobeusedactively tocontrol domestic prices; ifthedomestic price exceeds anupper price limitof
10percentabove thetarget formeat andeggsand12percentforhorticultural products fortwo
consecutive weeks, tariffs willbereduced foracertain period.
8. Asrequired under theUruguay Round Agreement onAgriculture, Norway transformed its
previous import licensing restrictions onagricultural products intobound tariffs witheffect from
1January 1995. Until theimplementation oftheUruguay Round Agreement, import licensing, often
administered byproducers 'associations orStateimport monopolies, andinmany cases directly linked
tothedomestic supply situation, wasapplied toliveanimals, meat, eggsandpoultry, horticultural
products, wool, oilseed products foranimal feed, dairy products andmargarine, cutflowers, plants
andother vegetable materials. Preferential access wasgranted tosome products imported from the
European Communities (EC).4
9. Asnoted inChapter II,Norway hasapplied thereduced ratesofduty, bound fortheyear2000
under theUruguay Round Agriculture Agreement, withimmediate effect from1January 1995. Even
so,bound ex-quota ratesofdutyonfarmandfoodproducts arehigh, ranging uptoover600percent
inadvalorem terms.5
10. Norway hasalsonotified totheWTO Committee onAgriculture theadministration ofcertain
tariffquotas forwhich minimum orcurrent access commitments havebeenagreed intheUruguay Round
(Table IV.1). These tariff quotas areapplied onaglobal basisbytheNorwegian Grain Corporation,
which hasbeengiven theresponsibility foradministering theimport régime foragricultural products.
Most quotas areallocated byauction; however, some areallocated onthebasis ofpastimports.
11. Norway iscommitted toreduce export subsidies foragricultural products by36percentand
subsidized exported quantities by21percentbytheyear2000. Export subsidies continue, forthe
timebeing, tobefunded through producer levies andgovernment transfers through theAgricultural
Agreement.However,theshareofgovernmentfundinghasdiminishedandthepresentmarketregulation
system isunder reconsideration.
4GATT (1991).
5Both advalorem andspecific rates arebound. However, theGovernment hasdetermined that, for
transparency, onlythespecific rateistobeused. Theadvalorem rates are,however, applied onveryfewtariff
lines.Norway WT/TPR/S/15
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Table IV.1
Norway: Tariff quotas, percalendar year
Product HScode Tariff quota In-quota rate Over-quota rate
Meat forpromotional
fairsandproduct
testingChapter 02 35tonnes 2.40NKr/kg. upto429%
AVE
Bovine meat, frozen 0202 1000
0202 2000
0202 30000tonnes (I)
1,084 tonnes (F)
(calculated asbone-in)130%/ 12.15
25.00
44.80 NKr/kg.344%/ 32.28
66.40
119.01 NKr/kg.
Pigmeat, frozen 0203 2100 0tonnes (I)
1,381 tonnes (F)137%/
9.28NKr/kg.363%/
24.64 NKr/kg.
Sheep andgoatmeat,
fresh, chilled or
frozen0204 1000
0204 2100
0204 2200
0204 3000
0204 4100
0204 4200
0204 4300
0204 50000tonnes (I)
206tonnes (calculated
asbone-in)162%/ 12.23
9.09
32.10
12.23
9.09
32.10
28.97
14.01 NKr/kg.429%/32.49
24.15
85.27
32.49
24.15
85.27
76.96
37.21 NKr/kg.
Poultry meat 0207 2100 95tonnes (I)
221tonnes (F)109%/
9.68NKr/kg.290%/
25.71 NKr/kg.
Turkey meat 0207 2200 95tonnes (I)
221tonnes (F)94%/
10.33 NKr/kg.251%/27.45
Meat ofduck, geese,
guinea-fowls0207 2300 94tonnes (I)
221tonnes (F)160%/
18.22 NKr/kg.425%/48.40
Meat ofdeer 0208 9041 25tonnes 344%/
122.30 NKr/kg.344%/122.30 NKr
Meat ofelk 0208 9042 100tonnes 344%/
122.30 NKr/kg.344%/122.30 NKr
Meat ofgame 0208 9010
0208 9099250tonnes 0.60NKr/kg. 429%/31.83 NKr
344%/119.01 NKr
Butter 0405 0000 324tonnes (I)
575tonnes (F)60%/
4.42NKr/kg.343%/25.19 NKr
Hens'eggs 0407 0019 492tonnes (I)
1,295 tonnes (F)109%/
5.04NKr/kg.272%/12.59 NKr
White cabbage 0704 9013
0704 90200tonnes (I)
134tonnes (F)74%/
1.43NKr/kg.upto184%/3.58 Nkr
Redcabbage 0704 9040 0tonnes (I)
134tonnes (F)41%/
0.74NKr/kg.102%/1.86 NKr
Apples 0808 1011 (seasonal quotas) 0.03NKr/kg. 188%/
upto4.83Nkr/kg.
Pears 0808 2021 250tonnes 0.02NKr/kg. 121%/
upto4.41NKr/kg.
Turkey roll 1602 3100 20tonnes 12.5%/kg. 293%/64.08 Nkr/kg.
(I)=initial quota: (F)=finalquota
Source: WTO Schedule XIV-Norway anddocument G/AG/N/NOR of24August 1995.WT/TPR/S/15
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(i) Crop production
(a) Cereals
12. The1995-96 Agricultural Agreement introduced anewmarket system forgrain. Theformer
Statemonopoly onimports wasabolished, buttheGovernment 'sobligation topurchase domestic grain
atguaranteed farmgateprices wasmaintained forwheat, rye,oats,barley andoilseeds.
13. Applied tariffs inthegrain sector haveinthepastfluctuated throughout theyear, mirroring
changes inguaranteed producer prices forNorwegian grain. Tariff ratesweresetinsuchawaythat
domesticgrainwasattractivelypricedfortraders,whilesupplementaryimportscouldbeeffectedwithout
resorting toquotas orindicative ceilings. Grain tariffs were established inadvance foraperiod of
oneyear, butcould bechanged administratively onshort notice toprevent "market disturbance".
Under theUruguay Round agreement, tariffs ongrain, other thanseed, were bound atadvalorem
rates between 318and347percent. Norway didnotinvoke thespecial safeguards oftheWTO
Agreement onAgriculture during 1995.
(b) Fruit andvegetables
14. Horticultural products aremarketed through twoco-operative market organizations:
Gartnerhallen andNorske Potetindustrier .There isahighleveloftariffprotection, withpostUruguay
Round rates ranging uptomore than300percentonfresh andover400percentonprocessed
vegetables, butreduced through bilateral preferences andGSPimports. Production regulation measures
onapples andpears, introduced inresponse tothefindings oftheGATT Panel, nolonger apply.
Fortropical products, where there isnodomestic production, Norway 'strade régime isopen.
15. Market regulation programmes, affecting relatively fewhorticultural products, aretobereduced
andcover onlyapples, pears, potatoes andstrawberries. Production ofpotatoes, fruitandberries receive
acreage support.
(ii) Livestock
16. Lessthan1percentofNorway 'sconsumption ofmeatiscovered byimports; inpractice no
imports oflowprocessed meats haveoccurred overthelasttwodecades.
(a) Milk anddairy production
17. Havingreplacedprevious(low)unboundtariffsandarestrictivelicensingsystembynewspecific
tariffs,accordingtoSecretariatestimatesaveragingsome360percentadvalorem(TableAIV.1),border
protection remains highfortheNorwegian milkanddairy sector.6Tariffs onsome products may,
however, bereduced byadministrative decision.7
6Thenewtariffs maybeexcessively high. Incalculating effective rates ofassistance, theCentral Bureau
ofStatistics usedDanish producer prices withtransportation costs added -rather thanworld market prices -as
thereference import price. Thedifference between thedomestic price andthereference price amounted toa
tariff equivalent of69percentin1989 and63percentin1991.
7Them.f.n. tariffs onyoghurts arecurrently significantly below bound levels. Yoghurts arealsocovered
bypreferential arrangements withBulgaria, theBaltic States, theCzech Republic, Hungary, Israel, Poland,
Romania, theSlovak Republic, Slovenia andTurkey. Atariff preference ofNKr2.80perkg.applies tobutterNorway WT/TPR/S/15
Page 63
18. High domestic prices haveencouraged production; Norwegian supply ofmilkhasgenerally
outstripped internal demand fortwodecades.8Consumption ofliquid milkhastended todecrease in
recent years; thedecrease hasbeenonlypartly offset byariseinthedemand forcheese. Milk
production quotas were introduced in1983. While preventing further growth inproduction, the
authorities hesitated tousetheprice mechanism toreduce thestructural surplus. Apublic committee
concluded intheearly 1990s thattheannual production capacity exceeded current andfuture demand
formilkanddairy products by150to200million litres.9
19. Themilkproductionquotahasbeenreducedeachyearsince1991andissetat1,720millionlitres
for1996.10Farmers receive NKr0.15perlitrefordeliveries inexcess oftheirquota entitlements.
Thepresent quota system isrigid. TheGovernment andthefarmers 'unions havediscussed modalities
forreallocation ofquotas; thisdiscussion willcontinue. Some changes havetaken place, including
anewruleallowing allocation of2million litres annually tonewproducers establishing ecological
milkproduction. Asimplification ofthenational price equalization system andother measures are
under preparation. These include institutional changes tofacilitate theestablishment ofproduction
outside thefarmers 'co-operative.
20. Producers ofcowandgoatmilkreceive various forms ofgovernment support through the
Agricultural Agreement.11Structural income support formilkproduction, NKr1.6billion in1995-96,
isdifferentiated byfarmsizeandlocation withtheobjective ofequalizing income between small and
large holdings. Headage payments aregranted forsome 319,000 dairy cows, 17,000 suckling cows
and59,000 goats; theamount peranimal varies withthesizeoftheherd.12Production subsidies consist
ofabase deficiency payment, granted foramaximum 1,720 million litres ofcowmilk and
24.9millionlitresofgoatmilk,andaregionallydifferentiatedpricesupplement.13Governmenttransfers
under these schemes arebeing reduced gradually, buttheeffect onfarmincomes ismitigated through
lower feedprices.
21. Norway 's27,000 registered milkproducers own16regional dairies which collectively form
theNational Association ofNorwegian MilkProducers (Norske Melkeprodusenters Landslag )andthe
Norwegian Dairies Association (Norske Meierier )(Box IV.1). Farm revenue thusalsodepends on
andmilk fatsfrom EFTA countries.
8Limited imports ofcheese nevertheless takeplace duetopreferential arrangements with theEUand
Switzerland.
9Theeconomicallyoptimalproductionlevel,assumingcertainpolicyconstraints,wasevenlower(about1,400
to1,500 million tonnes peryear) according toacademic studies.
10Production hasfrequently fallen short oftheoverall quota duetotimelagsinthetransfer ofquotas from
farmers having ceased production andbelow-quota output, particularly atsmall farms. However, totaloutput
in1994 and1995 were close totargeted levels.
11"Consumer" subsidies onliquid milkandcheese havebeenabolished since 1991. However, acompensation
arrangement reduces theeffect ofvalue-added taxonthese products.
12This typeofsubsidy waspreviously granted asman-year support.
13Thebasedeficiency payment amounted toNKr0.22perlitrein1995-96. Fortheregional supplement,
Norway isdivided intotenzones withpayments ranging from zerotoNKr1.56perlitre. Thehighest support
isgiven inthenorthernmost districts.WT/TPR/S/15
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themarket prices obtained formilkanddairy products. Target prices established intheAgricultural
Agreement comprise maximum wholesale prices forskimmed, lowfatandwhole milkandaverage
wholesale prices forother dairy products (cheese, butter, yoghurt, cream, etc.). TheMarketing Act
authorizes imposition ofataxonfresh milk andice-cream toequalize producer prices formilk
irrespective ofenduse.Theeffective producer priceisaccordingly tiedtodairies 'revenues andcosts,
including expenditure onmarket regulation activities.
BoxIV.1: On-farm dairying inNorway (Nordås Gårdsmeieri AS)
Current market regulation measures intheNorwegian dairy sector reflect thelong-standing defacto
processing monopoly held bytheNational Association ofNorwegian Milk Producers (NML) andthe
Norwegian Dairies Association. However, asmall on-farm dairy began production inJuly1995. The
process leading toitsestablishment illustrated some oftheanomalies ofexisting intervention mechanisms:
(a)Thefarmer inquestion doesnothave amilk production quota andthepresent system does notallow
purchasing ofquotas. Hisdeliveries toalocal dairy would thusberemunerated attheexcess-quota rate,
amere fraction ofthein-quota producer price andaguaranteed loss.
(b)Thenewdairy would beunable toprocess milkfrom other farms since existing legislation prohibits
farmers from switching deliveries between dairies. Moreover, thedairy would beineligible forany
government subsidies.
(c)Thenewdairy opted toproduce liquid milk, theproduct withthehighest profit margin. However,
theprice pooling arrangement oftheNML taxes production ofliquid milk tocompensate dairies forless
lucrative output mixes. Theproposed taxonNordås Gårdsmeieri became acontroversial issue. The
Ministry ofAgriculture finally setalevyofNKr1.15 perlitrefortheindependent dairy.
TheMinistry 'sdecision appears toallow sufficient profitability foron-farm dairying. Thepioneering
firm(Gårdsmeieriene A/S) hasannounced plans toestablish further production facilities andother private
interests have signalled readiness toopen dairies inother parts ofNorway. Thechallenge from
independent producers should nevertheless beputinperspective; theplanned 240,000 litre annual
capacity ofNordås Gårdsmeieri compares with some 1,700 million litres processed bythemembers of
theNorwegian Dairies Association.
Source: Aftenposten, Dagens Næringsliv andStavanger Aftenblad ,various issues.
22. In1995, aworking group examined thepooling arrangement toequalize producer prices paid
bydairies. According tothe1995-96 Agricultural Agreement, theaimwastoapply asimplified and
more transparent system from1July1996, permitting independent dairies tocompete onequal terms
withthedominant farmers 'co-operative. Alevelplaying fieldwould alsopermit revision oflegislation
tying milkproducers totheirlocalassociation.
23. Themilksurplus hasbeenexported, largely intheformofcheese. However, Norway 'ssubsidy
commitments under itsUruguay Round schedule willgradually tighten budgetary outlays onexported
cheese, butter andwhey powder.Norway WT/TPR/S/15
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(b) Meat
24. TheNorwegianFarmers'MeatMarketingOrganization(NorskKjøtt)regulatesdomesticmarkets;
stabilization measures include storage, exports andimports, salespromotion andgeneral pricesetting.
Regulation activities areguided bythetarget wholesale prices established intheAgricultural Agreement.
25. Pricesupports areregionally differentiated, withthehighest levels inthenorthernmost counties.
Transport support isgranted tonarrow anydifferences infarmgatereturns duetodistance toprocessing
plants. TheMeatMarketing Organization alsoreceives support tomaintain Norwegian producer prices
forwool above world market levels. Forpork, thesizeofproduction units isregulated; however,
ceilings havebeenincreased.14
(c) Eggs
26. Norwegian eggproduction hasexceeded domestic demand since theearly 1980s, witha
production surplus amounting to5to8percentinrecent years. Thepotential forincreased domestic
consumption islimited, asexperience suggests thatdemand isrelatively price inelastic. Thedifficult
market outlook andlimited export opportunities haveprompted changes intheregulatory system.
27. Theprincipal market regulation instrument hasbeenacontract production scheme, introduced
in1983, granting asubsidy (unavailable tonon-participants) inreturn forproduction restraint. The
scheme, financed byStatecontributions through theAgricultural Agreement andproducer funds through
theNorwegian Agricultural Marketing Board, istobeterminated byApril 1997.15
(d) Honey
28. Natural honey imported fromdeveloping countries enters dutyfreeunder anannual GSPquota
of192tonnes; above thislevel, a15percentreduction onthenormal tariff ofNKr24.47 perkg.
applies toadditional GSPimports.16Thepreference hasmade imports fromcountries suchasMexico
andArgentina attractive. However, Norwegian production hasgenerally outstripped domestic demand
since themid-1980s.
29. Norway 's1,500 beekeepers areorganized inHonningcentralen A/L. Honey isnotcovered
bytheMarketing Act,buttheNorwegian Agricultural Marketing Board hasnevertheless provided
around NKr5million annually inrecent years tofinance exports andstorage. The1995-96 Agricultural
Agreement foresees asharp reduction inmarket intervention measures. Norway isalsocommitted
toreduce export subsidies onhoney under theWTO Agreement onAgriculture.
14Perfarm increases are: forsows from 18to70;forslaughtering swine, 700to1,400; eggproduction,
2,300 to5,000; chickens, 42,000 to80,000; turkeys 8,000 to20,000.
15TheGovernment contribution in1995 amounted toNKr36.8 million, NKr16.8 million lessthaninthe
previous year. Provisions stipulate thatabolition ofthescheme requires 94weeks 'notice; thetermination period
commenced on1July1995.
16Theadvalorem equivalent inNorway 'sschedule is356percent.WT/TPR/S/15
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(3) Forestry, wood andpaper products
30. Norway isanetimporter ofrough timber andnotariffs apply onimports. M.f.n. dutyrates
onwood andwood products, including furniture range upto5percent; theratesforpulp, paper,
andpaperboard products range upto15percent.
31. Topographicandclimaticconditionscreateconsiderablevariationsinyieldandcostsforoperators
intheforestry sector inNorway. Thesector isassisted through several schemes administered bythe
Ministry ofAgriculture through theNational Forest Service (Table IV.2).17Some schemes areavailable
toallforest owners, while other forms ofassistance haveadistinct regional dimension. Long-term
investments inforestry arepromoted through taxconcessions. Taxcredit isaccumulated through the
Forest Trust Fund andtheapplication offive-year-average taxassessments.18Forest management
planning, including resource registration surveys andtraining, issupported through grants. Therate
ofsubsidy isdecided byeachCounty Governor, withpriority given tosmaller properties participating
injointmunicipality surveys.
Table IV.2
Support measures fortheforestry sector, 1994
(NKr million)
Initiation
yearExpiry
1965 ... Taxconcessions 70.0
1971 ... Forest management planning 35.0
1931 ... Afforestation andsilviculture 121.0
1961 ... Construction offorest roads 85.4
1976 ... Harvesting ofround wood indifficult terrain 13.0
1976 1996 Transport subsidy 9.6
... Notavailable.
Source: WTO document G/SCM/N/3/NOR, 3August 1995.
32. Afforestation andforest regeneration (sitepreparation, scarification, planting, seeding, fencing,
fertilization, etc.)andmaintenance aresupported either asashare oftotalverified costs-onaverage
30percent-oraperhectare grant. Subsidies amounting toNKr89million were provided tothe
sector in1995. Thedensity offorest roads onproductive woodland isconsidered inadequate; thus,
grants covering 35percentonaverage ofcostsofroadconstruction orup-grading inaccordance with
standards setbytheMinistry ofAgriculture areavailable, primarily forproperties innorthern and
17Norway 'slatest subsidy notification (G/SCM/N/3/NOR, 3August 1995) contains further details about the
various schemes.
18TheForestry Actrequires 8to25percentofsales revenue from gross round wood tobedeposited in
non-interest-bearing accounts withtheForest Trust Fund. Atthetimeofinvestment, theentire amount will
betaxdeductible while onlyacertain share (65to95percent) ofwithdrawals from theForest Trust Fund is
counted astaxable income. Thefive-year-average taxassessment scheme accords forest owners atwo-year tax
credit andcounters theeffect ofincreasing marginal taxrates onhighincomes.Norway WT/TPR/S/15
Page 67
western Norway ormountainous regions elsewhere. Grants under thisscheme amounted to
NKr68million in1995. Foranumber ofyears subsidies havebeengranted fortransportation of
round wood incertain areas ofthecountry. Following thereduction ofsuchgrants, thisscheme will
onlyapply innorthern Norway for1996. Jobcreation incertain ruralareas istheprincipal objective
ofthesupport scheme forharvesting ofround wood indifficult terrain.19Subsidies maybegranted
perhectare, differentiated according tosteepness, orpercubic metre output andcorrespond roughly
to15to25percentofharvesting costs.
33. Thetimber processing industry consists ofsmall companies which areoftenthekeyenterprises
inlocalcommunities inforest areas; companies withlessthan100employees account for80percent
oftheemployment intheindustry. Themainproducts oftheindustry aretimber, chipboard andbuilding
materials. Norske SkogandLovenskiold Vaekero ASarethelargest timber producers. Approximately
45percentofthechipboard produced inNorway isexported. Attempts aremade toincrease exports
ofbuilding materials tocompensate forcyclical fallsindemand inthedomestic housing market. In
recent years theprefabricated building industry hasincreasingly produced forforeign markets.
Specialized chains suchasBlock Watre ,Mesterlus ,Norbo andSystemlus ,haveincreased theirmarket
share inprefabricated buildings.
34. Following company failures andintroduction ofnewtechnology, employment inthewood
manufacturing industry dropped fromapproximately 33,000 to20,300 between 1981 and1995. The
value added inwood manufactures fellbyaround 16percentduring theperiod 1988 to1992.
35. Production ofpaper, carton cellulose andpulpwhich hadslowed down in1991-92, increased
from 1993. Employment intheindustry hasbeen halved inthepast15years. Approximately
80percentofpaper andcarton production isexported, mostly totheEEAcountries andtotheUnited
States. Newsprint, printing andwriting paper, kraftpaper, corrugated board, andsanitary paper are
themainproducts.AlmostallNorwegianpulpexportsaretootherEEAcountries.Domesticproduction
ofpulpcovers mostofthedomestic demand andimports aresmall. Large companies -Norske Skog-
Industrier AS,Hunsfos Fabrikker, Union Bruk, Peterson andBorregaard arethemain producers.
36. Theprinting andpublishing industry employs 34,500 persons. Theprinting industry, with
itstradition ofcraftsmanship, waspreviously subject tolittleforeign competition. Theintroduction
ofcomputertechnologytoprintinghasbroughtpricecompetitionandwipedouttheindustry'smonopoly
intextprocessing. Asaresult, imports were approximately 22percentofthevalue ofNorwegian
production in1995. Thespecialist printing andpublishing chain, PRINTO, established in1988, is
owned by26independent printing firms; ithadacollective turnover ofapproximately NKr170million
in1995.
37. Publishing ofbooks, periodicals andnewspapers ischaracterized bylarge-scale operations -
56percentofemployment wasincompanies withover200employees. Thetotalcombined circulation
ofnewspapers is2.9million copies, equivalent to1.8newspapers perhousehold. Imports ofbooks
andperiodicals accounted forover3.4percentofthevalue ofproduction in1992. Twolargegroups
ofpublishers haveforeign owners.
19About onequarter ofNorway 'sproductive forest areaislocated insteep anddifficult terrain, andhalf
ofthisterritory isclassified asextremely difficult, thusrequiring highly labour-intensive harvesting.WT/TPR/S/15
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(4) Fisheries
38. Outofatotalof22,300 fishermen registered in1995, about 75percenthadfishing astheir
mainoccupation. Thenumber offishing vessels in1995was14,200. Approximately 10,900 persons
wereemployed intheprocessing industry in1995. There were485small andmedium-size companies,
down from 600in1988.
39. Allfirst-hand sales offishandshellfish, except forfarmed fish,arecarried outthrough
fishermen 'sownsalesorganizations which haveprotected rights tosaleseither inageographical district
orofcertain species offish. Thesales organizations 'righttoapprove buyers offisharecancelled
andsubstituted byaregistration arrangement administered bytheDirectorate ofFisheries.20Thisnew
arrangement forsupervision offirst-hand salesoffishwillbeimplemented byJuly1996. Surveillance
ofbuyers isperceived asimportant forthemanagement offishresources.21
40. ThenewFishExport Act22implies asimplification oftheexport regulations soastopromote
exports offish. Several regulations concerning centralized saleswereannulled withtheFishExport
Regulation of1991.23Norway mayestablish minimum import prices onfishandfishproducts iffaced
withasurge ofimports atabnormally lowprices.24Foreign vessels areallowed access tolandfish
inNorway, provided thecatchisnotinconflict withregulations onresponsible fisheries management.25
41. TheNorwegian Seafood Export Council (NSEC), established in1991, isresponsible forthe
jointmarketing ofNorwegian fishandfishery products bothabroad andonthedomestic market. NSEC
isalsoresponsible fortheregistration andapproval ofexporters. Theactivities ofNSEC aremainly
financed through thecollection ofanannual feeandanexport levyforevery exported consignment
offishandfishery products. Theexport levyisdifferentiated according tothespecies offishand
degree ofprocessing. Liberalization ofexports under theFishExport ActandtheFishExport
Regulation of1991 included thecancelling ofcentralized sales.
42. Preferences intheEUmarket havebeenextended through Protocol 9oftheEEAAgreement
which grants Norway improved access forcertain fishandmarine products. Customs duties are
eliminated orreduced by70percentonsomespecies, buttherearenoreductions inspecies ofparticular
export interest toNorway, suchasherring, mackerel, salmon andprawns. Allbilateral andEFTA
FreeTrade Agreements withother European countries include provisions onfreetrade infishand
fishproducts, although transitional periods apply fortheremoval ofcustoms duties insome cases.
43. Intra-EFTA tradeinfishwasliberalized witheffect from1July1990. Anagreement ontariff
quotas reached following theaccession offormer EFTA members Austria, Finland andSweden to
20Actof24June 1994, relating toRegistration.
21Raw FishAct,14December 1951, relating tofirst-hand marketing offish.
22Actof27April 1990, relating totheRegulation ofExports ofFishandFishery Products, replacing the
relevant legislation of1955.
23Regulation 157, 22March 1991, relating totheRegulation ofExport ofFishandFishery Products.
24Actof11June 1993, relating totheRegulation ofPrices onFishandFishery Products.
25ActNo.19of17June 1966, relating toNorway 'sfishery limit.Norway WT/TPR/S/15
Page 69
theEUwasbased ontheaverage export peryearofNorwegian fishery products tothese markets in
theperiod 1992 to1994.26
44. Norway hasconcluded agreements regarding reciprocal fishing rights withtheEU,theFaroes,
Greenland, Iceland andRussia. Other agreements provide access toNorwegian waters forfishing
vessels fromSweden, Finland andPoland. Fisheries incertain areas areregulated through tripartite
agreements. Norway isalsoamember oftheNorthwest Atlantic Fisheries Organization (NAFO) and
theNortheastAtlanticFisheriesCommission(NEAFC).Measurestoprotectfishresourcesarediscussed
within theCommission, butnocatch quotas havebeenestablished todate.
45. Under aseparate Protocol totheEEATreaty, Norway retains therighttorestrict ownership
bynon-nationals offishing vessels. Withrespect toestablishment, a60percentminimum Norwegian
ownership isrequired foranyforeign investment inaNorwegian fishing vessel. Consequently, the
maximum foreign share is40percent. Involvement offoreigners infleet-based activities isprevented
byaprohibition forforeign-controlled enterprises tofishwithtrawls from Norwegian vessels.
Moreover,insidethefishinglimitsortheNorwegianExclusiveEconomicZone,theprocessing,packing
orre-loading offish,crustaceans andmolluscs orpartsandproducts oftheseisnotpermitted onforeign
vessels without authorization.27
46. Norwegian harvest offarmed salmon isapproximately 250,000 tonsperyear, compared with
aquaculture production of15,000 tonnes oftroutand1,000 tonnes ofother fish. There arecurrently
about 800salmon farms. Exports ofsalmon products increased by22percentin1995. In
December 1995, theMinistry ofFisheries decided totakemeasures tocurbfishfarming production.
Theintroduction offeedquotas isexpected togiveaproduction in1996equivalent tothelevelin1995.
TheEuropean Commission decided toimpose afloorpriceforsalmon, ofEEAorigin, effective from
15December 1996 andwithaduration ofsixmonths.
47. Apart fromsalmon andtrout, Norway isfarming shellfish, cod,arctic char, halibut, turbot,
eel,catfish, pikeperch, perch, wrasse, andother polycultures. Norway resumed limited commercial
harvesting ofminke whales inmid-1993, reserving thecatch fordomestic consumption. Exports of
whale meatandother whale products require alicence from theMinistry ofFisheries; inpractice,
allexports areprohibited.
(5) Mining
48. Imports ofmetal orearedutyfree. Duties onother mining products range between zeroand
0.7percent. Norway had22mines inproduction in1970, butproduction ofmetal oreshasbeen
scaled backsignificantly since then. Today, ironoreisextracted fromfourmines, while three mines
produce copper containing paraitic oresandsulphitic ores. Further closures areforeseen; during
1996 A/SSydvaranger willcease production of(ironore)pellets andGrong Gruver (acopper mine)
isscheduled toclose attheendof1996 ifnonewreserves arefound.
49. Noimportant discoveries ofmetal oreshavebeenmade inNorway inrecent years. Remaining
exploitable reserves ofironoreareestimated atnearly 3,000 million tonnes. However, themarket
outlook forindustrial minerals andconstruction materials ispositive andtheseareas mayprovide new
26Council Decision of24July1995, OJNOL 187/14 of8August 1995.
27OECD (1995).WT/TPR/S/15
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impetus toNorwegian mining inthecoming years. Norway isanetimporter ofnon-ferrous metals
andexporter ofstone quarrying products, clayandsand.
50. Nationality restrictions forexploration rights exempt nationals andenterprises resident inany
oftheEEA countries. Extraction ofminerals require aconcession, which enables theGovernment
toenforce itsregulation aimed atcontaining undesirable social andenvironmental effects. Therevision
ofNorway 'smining lawisunder study byaworking group. Itisenvisaged thatdraftlegislation will
bepresentedin1996;herevisionisexpectedtoencompassthecurrentprohibitionofmineralexploration
bynon-EEA nationals.28TheGovernment willpresent aproposal fornewlegislation byAutumn 1997.
(6) Manufacturing, other thanFood Processing
(i) Textiles andclothing
51. Import duties ontextiles andclothing range upto23.9percent. Thesimple average tariff
isaround 13percent. Norway maintains restrictions onimports from20suppliers, ofwhich 16are
WTO members.29Inallcases, restrictions cover outergarments ofwoven material (twocategories
covering,broadly,jackets,suitsandcostumes,andtrousersexcludingshorts),andbedlinen;tensources
arealsosubject torestrictions onfishing andother nets. Under Phase 1ofthe"integration" process
oftheAgreement onTextiles andClothing, Norway eliminated, from 1January 1996, restrictions
onone-piece suitsandtrousers from allaffected WTO members except Hong Kong andMacau; on
knitted bedlinen from allexcept Pakistan; andforallaffected WTO members, onproducts falling
under HS6210.30
52. TheNorwegian textiles andclothing industry hasexpanded steadily inrecent years. Thevalue
ofproduction hasbeenstable around NKr5.8billion in1994 and1995. Exports, primarily tothe
otherNordiccountries,haverisensomewhatfasterandaccountforabout37percentofdomesticoutput.
Production, particularly ofyarns andknitwear, increased significantly inconnection withthe1994
Winter Olympic Games atLillehammer; signs thattheexpansion mayhavebeenexcessive relative
tolong-term demand began toappear in1995. Production hasaccordingly beenscaled back.
53. Norwegian manufacturers concentrate onproducts thatrequire hightechnology andspecialized
know-how. Furnishing fabrics, suchasupholstery materials, fishing tackle, fireproof materials and
woolforknitting andweaving arethemainNorwegian textile output. Clothing production isspecialized
inuniforms, working clothes andleisure clothes.
(ii) Leather products including footwear
54. Theaverage import tariff onfootwear isapproximately 8percent, withtariffs ranging up
to24percent. Other leather products aresubject toaverage tariffof6.6percentandthetariffrange
isupto21percent.
28OECD (1995).
29Thesuppliers are:theCzech Republic, Hong Kong, Hungary, India, Indonesia, Republic ofKorea, Macau,
Pakistan, Philippines, Poland, Romania, Singapore, Slovak Republic, SriLanka, Thailand, China, North Korea,
VietNam andChinese Taipei.
30Fordetails seedocuments G/TMB/N/61 andN/130.Norway WT/TPR/S/15
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(iii) Pharmaceuticals
55. Thesimple average tariffonimports ofdrugs andmedicines is1.3percent,withatariffrange
upto7.5percent. Forsoap, cleaning agents andperfumes simple average tariff isapproximately
19percent, withtariffs ranging upto170percent.
56. In1994, aninter-Ministerial working group, established toexamine pricing andmark-up
arrangements onpharmaceuticals inNorway, estimated themarket share fordomestic producers of
pharmaceuticals at22.4percentandsingled outthree regulations which mayhavehadeffects on
imports; (i)regulation ofprices atthetimeofregistration ofnewpreparations, (ii)aneedclause with
theobjective oflimiting thenumber ofpreparations withsimilar properties, and(iii)areference price
system forgenerics.
57. Observers havenotfound evidence thattheregulation ofprices hasoperated differently for
domesticrelativetoforeignproducers,whileproductsofNorwegianmanufacturerswererarelyexcluded
under theneeds clause, which typically setaceiling of4to6so-called synonymous preparations.
Theneeds testhas,however, beenabolished withtheentry intoforce oftheEEA Agreement, and
thenumber ofregistered preparations inNorway relative toother countries hassince thenbeenon
arising trend. Further increases canbeexpect.
58. Themonopoly inexport andimport ofpharmaceutical products andinmedical wholesale
previously heldbytheState-owned company Norsk Medisinal Depot (NMD) hasbeenabolished due
totheEEAAgreement. Provided wholesale approval isgranted bytheNorwegian Board ofHealth,
there arenownorestrictions onsetting upmedical wholesale businesses. InJanuary 1996therewere
three medical wholesalers inNorway.
59. TheEEA Agreement hasalsobrought some liberalization inadvertising regulations. Prior
permission isnolonger required, butadvertising ofpharmaceutical products issubject toex-post
supervision.
60. Thereference pricesystem, introduced in1993, stipulates thattheleastexpensive preparation
must bechosen formaximum reimbursement when equivalent options existforprescription drugs.
Thescheme isthought tohaveresulted inpricereductions upto40percentonsome drugs andannual
savings totheNational Insurance Scheme intheorder ofNKr80million. However, theoverall effect
ofthesystem islimited asgeneric drugs account forasmall share ofthetotalmarket. According
tooneproducer (Glaxo), thegeneral price levelforpharmaceuticals inGreece isroughly 30percent
below Norway. Since theentry intoforce oftheEEAAgreement, parallel imports arepermitted and
regulated inthesame wayasintheEU. Parallel imports might thusserve asatooltoforce further
price reductions inNorway.
(iv) Petroleum
61. Theproperty rights toNorway 'soilandgasresources arevested intheState. Licences to
explore forandexploit hydrocarbons areissued bytheStateunder terms stipulated inthePetroleum
Act.31Control oftheactivities isensured bythisActanditsregulations andissupervised bythe
Ministry ofIndustry andEnergy. Anamendment tothePetroleum Act,Section 54,witheffect from
31ActNo.11,22March 1985.WT/TPR/S/15
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1January1994requireslicenseestograntnon-discriminatorytreatmenttosuppliersofgoodsandservices
from EEA member States.
62. Bydecision No.19of5April 1995 (19/95), theEEA Joint Committee decided toinclude
Directive 94/22/EC oftheEuropean Parliament andoftheCouncil ontheconditions forgranting and
using authorizations fortheprospection, exploration andproduction ofhydrocarbons (theLicensing
Directive)inAnnexIVoftheEEAAgreement.AfterParliamentaryconsenttotheEEAJointCommittee
decision, theDirective entered intoforceinNorway onSeptember 1995. According totheauthorities,
theLicensing Directive haslimited implications onNorwegian petroleum legislation andtheNorwegian
licensing system andpolicy. Nochange wasrequired inthesystem offorming groups oflicensees
onthebasis ofindividual applications foreachblock orproduction license, andtheauthorities may
continue toreserve acertain share ofeachlicense totheState Direct Financial Interest (SDFI).
63. TheGovernment isproposing measures toimprove thecompetitiveness oftheNorwegian
continental shelf. ABilltoreplace thePetroleum Actanditsregulations waspresented toParliament
inMarch 1996. Provisions inthePetroleum Actregarding duration, extension andrelinquishment
ofproduction licenses aretobemade more flexible andanewprovision which willallow carve-out
ofproduction licences issuggested. Theauthorities state thatthepurpose istoprovide more
cost-efficient conditions forexploration andproduction ofpetroleum.
64. Statoil isa100percentState-owned company, andtheGovernment receives dividends
accordingly. However, asaconsequence oftheimplementation oftheLicensing Directive, Statoil
nowoperates asacommercial company. Statoil istreated onequal terms withother companies.
65. Through SDFI, Stateparticipation inpetroleum activities isfinanced directly through theState
budget andchannelled through theMinistry ofFinance. ThesizeoftheSDFI varies from licence
tolicence. Until the14thlicensing round in1993, theStatecould increase itsshare aftertheexploration
phase under theso-called "sliding scale". Thisopportunity hasbeenabolished foralllicences. SDFI
isnowpaying allitsexpenses according toitsinterest inalicence.
66. PetroleumactivitiesontheNorwegianShelfareundertakenbycommercialcompanies'activities,
themajority ofwhich areforeign companies. TwoofthethreeNorwegian companies haveasignificant
foreign ownership. Theauthorities regard itasimportant tohaveavariety ofqualified companies
ontheNorwegian Shelf andtofindtherightbalance ofcompetition andco-operation between these
companies. Foreign companies areviewed asimportant tosecure efficient exploration andproduction
ofpetroleum ontheNorwegian Shelf. Intheawards ofthe15thlicensing round in1996 foreign
companies wereawarded about halfofthetotalinterests intheround. Theotherhalfwasshared equally
between theNorwegian companies andtheSDFI.
67. Exploration anddevelopment takeplace under licences issued bytheMinister ofIndustry and
Energy. Production licences aregranted inconcession rounds ofwhich therehavebeen15untilnow.
Production licences will,aswasthecaseforthe15thround, begranted tocompanies onthebasis
oftherelevant non-discriminatory criteria.
68. Norway'stotalexportsofcrudeoil,gasandNGLwereUS$18billionin1995.Totalproduction
fromthethree Norwegian refineries was12.5million tonnes in1995, comparable withearlier years.
Approximately 44percentofproduction ofrefined products wasexported.
69. Import tariffs onnatural gas,LNGandsomeotherpetroleum products range upto6.2percent.Norway WT/TPR/S/15
Page 73
(v) Plastic products
70. Thesimple average tariff is9.6percent. Tariffs range upto17.3percentin1996.
(vi) Cement
71. Thesimple average tariffis0.3percent. ThesoleNorwegian producer (Norcem) holds about
90percentofthelocalmarket forcement, theremainder issupplied byoneimporter. Duetopotential
abuseofthedominantposition,theNorwegianCompetitionAuthorityobligesNorcemtonotifyannually
itsstandard terms ofsaleandsignificant exceptions from thestandard terms. TheAuthority has
intervened inexclusive dealerships between Norcem, wholesalers andtransporters.
72. Norcem wasfined ECU 40,000 bytheEuropean Commission inAutumn 1994 foralleged
participation inamarket sharing agreement among European producers. TheNorwegian Competition
Authority participated inthefinalstages oftheinvestigation.
(vii) Metals andmetal products
(a) Ironandsteel
73. Import tariffs range upto14percent. Themain output ofNorway 'scurrent soleproducer
ofbasiccrude steelisreinforcing bars,steelsections andwirerod.Anewwirerodlineopened during
1995. Norsk Blikkvalseverk (inBergen) produces tinplate. Themost important endusers arethe
building andconstruction industry andshipyards. Industry profitability hasbeenlowrecently, reflecting
inpartadecline inoutput offinished steelproducts duetoreconstruction work, butitisexpected to
improve during 1995 and1996. Employment intheNorwegian ironandsteelindustry appears to
havestabilized ataround 2,000.
(b) Ferro-alloys
74. Norway istheworld 'sfifthlargest producer offerro-alloys. The15production plants are
owned byElkem andFesil AS.Theindustry ishighly export oriented.
(c) Aluminium
75. Norway istheworld 'sseventh largest producer ofprimary aluminium. Theseven production
plants arerunbyHydro Aluminium AS(asubsidiary ofNorsk Hydro A/S), Elkem andSøral.Elkem 's
twoplants areowned jointly withAlcoa, while Søralisowned byNorsk Hydro andAlusuisse. The
combined annual production capacity amounts tosome 900,000 tonnes. In1994, output totalled
857,000tonnes.Asignificantproportionoftheprimaryaluminiumisprocessedintosemi-manufactured
productsinNorwayorinNorwegian-ownedsubsidiariesabroad.Theindustryisstronglyexportoriented.
76. Asudden surge ofaluminum exports fromtheCommonwealth ofIndependent States triggered
anunprecedentedpricecollapseinworldmarketsintheearly1990s.Discussionsbetweentheauthorities
ofmajor producing countries -Australia, Canada, theEuropean Union, Norway, theRussian Federation
andtheUnitedStates-resultedinaMemorandumofUnderstanding,applicableformaximumtwoyears,
inMarch 1994.
77. TheMemorandum outlined specific production cutsinRussia, leaving reductions inother
countries to"market oriented commercial decisions bycompanies onanindividual basis". AccordingWT/TPR/S/15
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totheNorwegian authorities, themain Norwegian producer (Hydro Aluminium AS)announced the
temporary withdrawal of70,000 tonnes ofannual production capacity onanindependent basis.
Norwegian output inthefirsthalfof1995 was4.5percentbelow theyear-earlier level.
78. Having norawmaterial deposits, theestablishment oftheNorwegian industry wasdetermined
bytherelative abundance ofcheap hydro-electric power. Thechiefsuppliers ofaluminum oxide are
Surinam, Jamaica, Ireland, Australia andGuinea. Rawmaterial imports enterdutyfree,while current
advalorem m.f.n. tariffs onsemi-manufactures andfinished products range from3.6to12percent.
Norway 'stariff commitments intheUruguay Round involve areduction oftopratesto8percent
andelimination ofpresent specific tariffs onvarious finished goods.
79. Raufoss andHydro Aluminium havefocused ondevelopment ofaluminium automobile parts.
Raufoss isamong world market leaders intheproduction ofcarbumpers andHydro Aluminium in
theproduction ofspecialized aluminium tubing forautomobiles. Theautomobile industries in
Western Europe andtheUnited States arethemost important customers towhich these companies
annual salesofaluminium parts totalNKr2.5billion.
(viii) Transport equipment
(a) Ships
80. In1995, 32yards werebuilding newships larger than100gt.Overall, about 60yards build,
convert orrepair ships inNorway. More thanhalftheyards building newships areenterprises with
lessthan100employees andabout onethirdhavemore than200persons employed. Most yards are
situated intypical ruralareas inthewestern partofNorway. Theshipbuilding industry isparticularly
significant inMøreogRomsdal. About 48percentofallpersons were employed innewbuilding
ofships, asofDecember 1995.
81. ShipsbuiltatNorwegianyardsaremainlysmallandmedium-sizedspecializedships,forexample
product andchemical carriers, general cargo ships, fullcontainer ships, ro-ro vessels, seismic vessels,
fishing vessels, ferries andpassenger ships. Alarge partoftheoutput from Norwegian shipyards
isexported.
82. Shipbuilding hasbeenpartoftheEEA Agreement since 1May1995. Thesubsidy scheme
fortheindustry hastherefore beenchanged inaccordance withEU's7thdirective fortheshipbuilding
industry. Subsidy rateshavebeenreduced inaccordance withtheceiling established bytheEEAJoint
Committee andthemaximum ceiling onimports oftheshipbuilding industry fromEEAcountries has
beenabolished.
83. Thesubsidy arrangement isnowbased onacontract subsidy toyards fornewbuildings and
conversions. Thescheme wasscheduled tobeabolished on1January 1996, according totheOECD
Agreement onnormal competitive terms intheshipbuilding industry. However, theentry intoforce
oftheOECD Agreement hasbeenpostponed, duetodelays intheratification inUnited States and
Japan. TheEuropean Union, accordingly, hasdecided toextend the7thdirective until1October 1996
orthefirstdayofthemonth following ratification oftheagreement byallmember parties (whichever
comesfirst).ThroughadecisionoftheEEAJointCommittee,Norwayhasextendedtheexistingsubsidy
arrangement temporarily.
(b) Motor vehicles
84. Thesimple average tariff is4.8percentandthetariffs range upto10percent.Norway WT/TPR/S/15
Page 75
85. Nofuel-driven motor vehicles areassembled inNorway.32Imports ofpassenger carsamounted
toNKr7.5billion in1994; trucks, buses andother utility vehicles accounted foranother
NKr4.3billion. TheEuropean Union -notably Germany andSweden -istheprincipal supplier with
amarket share ofclose to70percent,followed byJapan (23percent). Thecustoms duties onmotor
vehicles were removed on15November 1995, mainly affecting imports from Japan andthe
United States, since preferential trade agreements already ensured zerotariffs formost European
producers. However, excise taxes aretheprincipal fiscal instrument affecting retail prices forcars
inNorway.33
86. Withnonational carproducer, anumber ofsmall andmedium-sized enterprises nevertheless
export motor vehicle components (Box IV.2). Norwegian manufacturers appear tohaveovercome
drawbacks suchasdistance toassembly plants andrelatively highcosts, through product quality,
innovationandproductivitygains.ExportsincreasedfromNKr1.27billionin1989toNKr1.75billion
in1994. Norway mainly supplies carparts totheEuropean Union, butsome enterprises alsosell
components totheUnited States, Canada, Latin America, AsiaandAustralia.
BoxIV.2: Theautomotive components industry inNorway
Several small andmedium-sized Norwegian enterprises produce avariety ofvehicle components ranging
from electro-optical instruments, bumpers, rims, pumps, heating systems andsafety equipment.
Common parts aretypically notmade ofsteel, butofnon-traditional materials such asplastics,
magnesium andaluminium. Themotor vehicle industry hasforsome timepaidconsiderable attention to
alternative input materials tosaveweight (aluminium is40percentlighter thansteel) inorder toreduce
fuelconsumption. Successful product development maythusopen interesting perspectives forNorway 's
metals industry. Norsk Hydro AS,forexample, produces tyrerims through itssubsidiary Fundo.
Elkem Aluminium hassince 1992 developed andsupplied special aluminium alloys forthemotor vehicle
industry butnotbeen involved inanyfurther processing. However, inSeptember 1995 aleading U.S.
producer ofaluminium carcomponents, owned jointly byAlcoa andCMI International (A-CMI), decided
tolocate production ofcastaluminium parts atLista insouthern Norway, based onnext-door supplies of
melted aluminium from anexisting Elkem Aluminium plant.
TheLista factory willmainly produce structural parts such asbody frames andsteering components
(currently made ofsteel). Supply contracts have been concluded forthe1998 models ofVolvo; thenew
production facility must accordingly beoperational bymid-1997. A-CMI willalsoestablish aproduct
development centre designing andtesting prototype parts fornewcarmodels. Thecentre istoserve the
entire European carindustry from Lista.
TheNorwegian authorities encourage growth innon-petroleum related value added andconsider the
Elkem/A-CMI project averypositive development. TheNKr260million investment hasbeen supported
through theNorwegian Industrial andRegional Development Fund (SND), theNorwegian Corporation
forIndustrial Estates andDevelopment (SIVA) andlabour training programmes.
Source: Information supplied bytheFederation ofNorwegian Process andManufacturing Industries
(PIL) andElkeminfo No.3,October 1995.
32However, production ofelectric-power vehicles isintheearly stages.
33Thetariff maynevertheless havebeen asource oftrade diversion since taxation ofvalue andvalue-added
tax,waslevied onthetariff-inclusive price. Thetariff reduction together withsales promotion rebates hascut
retail prices byNKr10,000 to20,000 oncertain models. Thetariff reduction isautonomous; Norway 'sbound
tariff onpassenger carsis5.3percent, while varying forother types ofmotor vehicles.WT/TPR/S/15
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(7) Services
(i) Financial services
(a) Main features
87. Value added inthefinancial services sector represented 4.2ofGDP in1995, ofwhich the
banking sector 'sshare wasthelargest. Thefinancial sector alsoaccounted for2.6percentof
employment with54.800 employed inthesector.
88. Attheendof1995therewere17commercial banks, ofwhich threeweresubsidiaries offoreign
banks, and133savings banks, accounting fornearly 50percentofallcredit outstanding intheprivate
andlocalgovernment sector34.Between 1980and1992, thenumber ofbanks wasreduced from366
to180asaresult ofmergers andacquisitions inthesector.
(b) Banking
Thebanking crisis oftheearly 1990s
89. Between 1987 and1991, anumber ofeconomic andinstitutional factors united togenerate
asevere crisis intheNorwegian banking system. Thereport oftheCommission appointed bythe
Government toexamine thecauses ofthebanking crisis stated thatitstemmed from acombination
ofvigorous domestic demand growth, contributing togrowth inbanklending byanannual average
ofalmost 20percentin1984-87; increasing losses onthese loans, exacerbated bythedownturn in
theNorwegian economy from 1987; thederegulation ofthecredit market, leading torisky loans as
financial institutions struggled formarket share; andaspects oftheNorwegian taxsystem which led
tolowornegative realinterest rates.35
90. Thecrisis ranthrough twophases; afirstphase in1987-88 asthebusiness cycle turned
downwards following thesharp decline inthepriceofoil,andasecond, moreserious, phase in1990-91
whenmajorbanksencounteredheavylossesanditbecameclearthattheguaranteefundstheninexistence
(theCommercial Banks Guarantee Fund andtheSavings Banks Guarantee Fund) wereinadequate to
provide asafety net.36In1991, tostemthecrisis, theGovernment established theGovernment Bank
Insurance Fund (GBIF) and,through successive capital injections fromthisandtheGovernment Bank
Investment Fund, became soleormajority shareholder inthethree largest commercial banks (Den
Norske Bank, Christiania Bank andFokus Bank).37
91. Thetotal value ofbank support during theperiod 1989 to1993 amounted tosome
NKr30billion, orsomewhat under 5percentofannual GDP; capital injections during theperiod
1991-93 from theInsurance Fund alone totalled some NKr16.2billion.38Theauthorities estimate
34EFTA (1994), p.15.
35EFTA (1994), p.21.
36Wilse (1995).
37Wilse (1995).
38Wilse (1995).Norway WT/TPR/S/15
Page 77
thattheywillbeabletorecover atleastthemajor partofthepublic support byre-privatization of
thebanks temporarily taken overbytheState, andfrom theproceeds oftheassets absorbed.39A
proposaltoreformtheguaranteefundarrangementwastobepresentedbytheBankingLawCommission
totheParliament inthespring of1996. TheCommission alsoproposes rules concerning liquidity
andcapital deficiencies infinancial institutions aswellasrules relating tothepublic administration
ofbanks andinsurance companies.
Current structure ofthebanking sector
State banks
92. Seven traditional specialized Statebanks shared 20percentofthestock ofcredit inNorway
in1995. TheStatebanks arefinanced through government guaranteed bonds orloans fromtheState.
Parliament decides eachyearlending quotas fortheStatebanks, and,tosome extent, theinterest rates
theymaycharge onState Bank credit. TheHousing Bank, thelargest oftheState banks, provides
48percentoftotalState Bank credit; theEducational Loan Fund, afurther 27percent; the
Municipalities Bank, 14percent; andtheremaining fourState banks (theIndustrial andRegional
Development Fund; theBank forAgriculture; theBank forFisheries andtheStateNewspaper Loan
Fund) provide loans tothebusiness sector.
Private mortgage companies
93. Private mortgage companies havespecialized inlending toparticular markets, suchasloans
withcollateral inrealproperty orfixed assets, loans forshipbuilding andexport credits.40These
companies accounted for4.7percentofallcredit outstanding in1995.
Foreign-owned banks
94. Attheendof1995, there werethreeforeign banks operating through subsidiaries inNorway.
They areregarded asNorwegian legalentities andoperate onthesamefooting ascommercial banks.41
However, bytheendof1995, 12banks originating inEEAStates hadnotified Norwegian authorities
thattheywould openbranches inNorway pursuant totheSecond Banking Directive (89/646/EEA).
Nine foreign-owned banks haveestablished representative offices.
95. Entry intotheNorwegian market forsubsidiaries offoreign banks became possible after
liberalization measures introduced inthe1980s andtheearly1990s. Themarket share offoreign owned
banks (measured bysales) increased from0.6percentin1985to1.9percentin1992. Foreign banks
havelargely catered forselected market segments andthemajority offeralimited range ofservices.
39Wilse (1995) notes that"The Government andtheStorting havestated thattheactivities of[theInsurance
Fund] shall beoflimited duration. TheFund'svarying participation inthebanks either directly orthrough the
banks'ownguaranteefundsmustbegraduallyphasedoutoncethebankingcrisisisbehindusanddepositinsurance
canagain bebased oncapital generated bythebanks."
40EFTA (1994), p.15.
41EFTA (1994).WT/TPR/S/15
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Legal structure ofbanking inNorway
Domestic legislation
96. Themain legislation applicable tothefinancial sector, including commercial banks, other
financial institutions andthesecurities market, iscontained inthefollowing Acts: theCommercial
Banks Act,theSavings Banks Act,theFinancing Activities Act,theCompanies Act,theSecurities
Trading ActandtheBanking, Insurance andSecurities Commission Act.42TheCommercial Banks
ActandtheFinancing Activities Actregulate issues relating tobanking operations, including capital
adequacy requirements.
97. TheMinistry ofFinance grants licences toengage inbanking activities andissues regulations
pursuant totheCommercial Banks ActandFinancing Activities Act.Theauthorization oftheMinistry
ofFinance isrequired foranyfundamental changes undertaken byabank, suchasamendments to
itsarticles ofassociation, anyincrease orreduction inshare ofcapital, transfer ofitsbusiness toanother
institution, winding upofitsbusiness orpurchase oformerger withanother bank.43
Supervision ofbanks
98. Theliberalization ofthefinancial sector inthe1980s increased theimportance ofadequate
prudential standards andeffective supervision. TheBanking, Insurance andSecurities Commission
("Kredittilsynet")undertheMinistryofFinance,isresponsibleforthepublicsupervisionoftheoperation
ofcredits, financial, insurance andsecurities institutions andmarkets. BISC undertakes document-based
supervision, which involves monitoring andanalysis andverification procedures. Italsogives advice
toinstitutions under supervision, andconsiders statutory management functions intheformofindividual
decisions onauthorizations andlicences.44
99. Capital adequacy rules apply tocommercial andsavings banks andfinance companies. The
Norwegian rules applicable tobanks aresimilar totheEUrules, which themselves arebased on
recommendations fromtheBankofInternational Settlements. Asaresult oftheBasle G-10Agreement,
stricter rules were established concerning thesolvency ofbanks, including anincrease ofthe
risk-weighted capital ratiorequirement to8percent, from1January 1993. TheMinister ofFinance
hasalsoissuedaproposalbasedonEUCouncilDirective93/6ofMarch1993,oninvestmentcompanies'
andcredit institutions 'capital adequacy levels. Other banking regulations cover exposure withregard
toliquidity, foreign currencies, single customer risk,interests inholding andother companies, and
evaluation oflosses onloans, guarantees, etc.
42TheCommer cialBanksAct,24May1961,No.2;theSavingsBanksAct,24May1961,No.1;theFinancing
Activities andFinancial Institutions Act,10June 1988, No.40;theCompanies Act,4June 1976, No.59;the
Securities Trading Act,14June 1985, No.61;theSupervision ofCredit Institutions, Insurance Companies,
Securities Trading, etc.Act,7December 1956, No.1.TheGovernment proposed arevision oftheSecurities
Trading ActtotheParliament on17November 1995, inview oftheimplementation ofEUCouncil Directive
93/22.
43Fokus Bank Report (1995), p.78.
44Fokus Bank Report (1995), p.81.Norway WT/TPR/S/15
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Ownership andmanagement limitations
100. TheBanking Actof1961andtheFinancial Institutions Actof1988specify thatacommercial
bank must beajointstock company. Single ownership islimited to10percentoftheshares ina
commercialbank.Anexemptionismadeforfinancialconglomerates.45Thesameownershiplimitations
applywhensavingsbanksissueprimarycapitalcertificates.Thepreviousrulelimitingforeignownership
toonethirdoftheshare capital inafinancial institution wasrepealed on1January 1995.
Commitments under GATS
101. UnderNorway'sGATSScheduleofSpecificCommitments,establishment(commercialpresence)
inNorway ofbranches ofbanks, financing undertakings, securities, brokerage firms andmanagement
companies forcollective investment funds, established inanon-EEA State, isnotpermitted.46
102. Norway 'sSchedule binds theexisting ownership limitations inthebanking sector. Forone
ormore foreign banks tobepermitted toestablish anewNorwegian commercial bank, noonesingle
foreign bankisrequired toownmore than50percentoftheshare capital inthenewbank. Nosingle
orco-ordinated group ofinvestors (shareholders acting together) mayacquire more than10percent
oftheshare capital inexisting commercial banks orfinancial undertakings ormore than10percent
oftheequity certificates ofsaving banks. Atpresent themajority oftheshares inthelargest commercial
banks (DenNorske Bank andChristiania Bank ogKreditkasse )areheldbytheState; Norwegian
ownership isthusretained through State ownership.
103. InitsSchedule, Norway alsoimposes limitations onnational treatment withrespect tothe
management ofbanks. Themanagers, atleasthalfthemembers oftheboard ofdirectors andhalf
themembers ofthecommittee ofrepresentatives ofcommercial banks, securities brokerage firms and
managementcompaniesforcollectiveinvestmentfunds,arerequiredtobepermanentresidentsofNorway
orcitizens ofEEAmember States thathaveresided inNorway forthelasttwoyears. Insavings banks
andfinancialenterprisesthatarenotorganizedasjointstockcompanies,themembersofdecision-making
bodies must bepermanent resident citizens ofEEA Member States.
104. Reciprocity conditions apply toestablishment offoreign-owned banks inNorway.47Under
theEEAAgreement Norway isentitled toagree withthirdcountries, afterconsultation withtheother
EEA contracting parties, ontheapplication ofreciprocity conditions, different from those ofthe
directives onthethird-country régime oftheEU,provided thatnon-EEA banks donotreceive treatment
45TheseconglomeratesaresubjecttospecialregulationaccordingtotheFinancingActivitiesAct,Chapter2A.
Asageneral rule, afinancial institution mayfully ownanother financial institution subject totheapproval of
theMinistry ofFinance. However, abank maynotownanother bank.
46GATS/SC/66/Suppl.1/Rev.1, 4October 1995.
47Theprinciple ofreciprocity iscontained inAct2,24May1961 oncommercial banks, section 8.However,
forthebanksoperatinginNorwaypursuanttotheSecondBankingDirective(89/646/EEA),theprincipleisfulfilled
through theapplication ofidentical rights tothose available toNorwegian institutions under theDirective.WT/TPR/S/15
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more favourable thanEEA banks.48TheGovernment hasprepared aproposal totheParliament
concerning theconditions thatfinancial institutions fromnon-EEA States mustfulfilinorder toestablish
branchesinNorway.Theproposalisbaseduponthemost-favoured-nationprinciple.Asaconsequence,
thepresent reciprocity conditions willbeabolished. However, theestablishment ofsuchbranches
willdepend uponaconcession fromtheMinistry ofFinance. Thiswillenable theauthorities toensure
thatthebranches fulfil thelegalrequirements offinancial institutions.
105. Limitations onmarket access infinancial services alsoinclude arequirement ofcommercial
presenceinanEEAStateforactivesupplyinNorwayofservicesrelatedtobanking,financing,securities
brokerage (buying andselling ofsecurities onbehalf ofcustomers, marketing orunderwriting of
securities) andunitsofcollective investment funds. Financial service suppliers notestablished inan
EEAStatemaynotleadormanage public offerings denominated inNorwegian kroner ontheNorwegian
capital market. Access todepository andcustodial services related toregistration ofsecurities inthe
Norwegian Registry ofSecurities islimited toauthorized institutions established inNorway.
106. Norway hasalsobound therequirement thatregistration ofsecurities issubject toamonopoly;
andthatallcommercial banks, securities firms andmanagement companies forcollective investment
funds incorporated inNorway beorganized asjointstock companies.
TheEEA Agreement
107. European Union legislation hashadamajor impact onthepolicy oftheEFTA countries
regarding banking operations abroad andforeign banks 'access totheirmarkets. These considerations
werefurther intensified bytheEEA negotiations. In1991, limitations onforeign competition were
completely removed, foreign operations liberalized anddomestic markets opened toallEEAmembers.49
108. TheEEAAgreement extends thesingle market inbanking services toEFTA countries. The
singlelicenceisthemostimportantelementofthesinglemarketinbanking.Abank,orotherinstitution,
authorized inanyoneoftheEEAcountries mayoperate inanyother EEAcountry based onitsoriginal
authorization, either bysetting upbranches orbyproviding services across theborder. Theauthorities
inthereceiving country maynotrequire anynewauthorization asaprecondition forundertaking
activities forwhich thebankisalready authorized initshome country.50Thehome country authorities
thatissue thesingle licence (i.e.authorize thebank) areresponsible forsupervising theconduct of
business ofthatbankasawhole, including itsbranches andsubsidiaries andtheprovision ofservices
toclients outside thehome country.
109. TheEEAAgreement prohibits anydiscrimination inestablishment andcross-border trade on
grounds ofnationality within theEEA. TheAgreement encompasses thewhole acquis communautaire
relevant tobanking activities, except inrelations withthirdcountries, where specific adaptations cover
theauthorization ofsubsidiaries ofthird-country banks, andinnegotiations withthirdcountries on
48EFTA (1994), p.71.
49EFTA (1994), pp.34-35.
50EFTA (1994), p.40.Norway WT/TPR/S/15
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consolidated supervision ofbanks.51Norway isnowopen forbanks ofanyEEA member State to
establish themselves, openbranches orprovide cross-border services. Bytheendof1995, 12EEA
credit institutions hadnotified theNorwegian Banking, Insurance andSecurities Commission oftheir
intention toestablish branches inNorway; 21notifications regarding cross-border services were
received.
(c) Insurance
Main features
110. Theshare oftheinsurance industry intotalGDP was0.8percentin1995.
111. Theinsurance sector inNorway contains tencompanies inthelifesector, and53companies
inthenon-life sector. UNIStorebrand (theleading company), Gjensidige andVesta inthenon-life
sector, andUNIStorebrand ,KLPandVitalinthelifesector account forasubstantial partofthemarket.
Industry concentration ishigh; theshare oftheleading company, UNIStorebrand ,intotalpremium
income is29.9percentinlifeinsurance, and42.7percentinnon-life insurance.52
51TheFirst Banking Directive (77/780/EEC; OJL322/77) defines theconcept of"credit institution" and
establishes therequirement ofprior authorization fortheactivities oftheCredit Institutions. TheSecond Banking
Directive (89/646/EEC; OJ386/89) liststheactivities subject tomutual recognition andestablished conditions
fortheauthorization ofacredit institution andhasabolished therequirement forseparate authorization bythe
authorities fortheopening ofabranch inanother country andtherequirement forseparate capital endowment;
under thetitle"Provisions relating tofreedom ofestablishment andthefreedom toprovide services", activities
subjecttomutualrecognitionmaybecarriedouteitherbytheestablishmentofabranchorbycross-borderprovision
ofservices.
TheRevised Directive ontheSupervision ofCredit Institutions onaConsolidation Basis (92/30/EEC) establishes
arequirementforconsolidatedsupervisionoftheheadofficeandsubsidiaries.TheDirectiveReinforcingPrudential
Supervision relates notonlytobanking activities butalsotothewhole financial services area, including insurance,
thestock exchange andinvestment funds.
TheOwn Funds Directive (89/299/EEC) defines separate items of"own funds" anddefines theownfunds core
capital andadditional capital. TheDirective implementing theOwn Funds Directive (91/633) stipulates that
"funds forgeneral banking risks" maybeincluded within theoriginal ownfunds.
TheSolvency Ratio Directive (()/647/EEC) establishes aminimum solvency ratio of8percentforallcredit
institutions, withthepossibility fornational authorities toprescribe higher ratios.
TheAnnual andConsolidated Account Directive (86/635/EEC) establishes general accounting rules.
TheLarge Exposure Directive (92/121/EEC) obliges credit institutions tohave "sound administrative and
accounting procedures andadequate internal control mechanisms forthepurpose ofidentifying andrecording
alllarge exposures" andtoreport tothecompetent authorities eachexposure toaclient orgroup ofconnected
clients which is10percentormore ofitsownfunds.
TheDeposit Guarantee Directive (94/19/EEC), adopted inMay1994, wasintegrated intotheEEA Agreement
on28October 1994.
52EFTA, (1994).WT/TPR/S/15
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112. TheFinancial Services ActandtheInsurance Actof1988 prescribe solvency requirements
andinformation forpolicyholders. Insurance companies require aconcession granted bytheMinistry
ofFinance toconduct business. Norwegian companies mustbeorganized intheformoflimited joint
stock companies ormutual companies. Asageneral rule,companies 'governing bodies mustconsist
ofaboard ofdirectors, amanaging director, acommittee ofrepresentatives andacontrol committee.
113. Nosingle orco-ordinated group ofinvestors mayacquire more than10percentoftheshare
capital inanexisting Norwegian insurance company. TheMinistry ofFinance may, inspecial
circumstances andonatemporary basis, make exemptions fromthislimitation; thisisrarely done.
However, aninsurance company maybepartofafinancial conglomerate.
114. Theminimum capital ratiorequirement isprescribed asatleast8percentofthecompany 's
risk-weighted assets. Companies mustmaintain satisfactory capital management andarerequired to
distribute theircosts, losses, income andallfunds inareasonable manner between thevarious types
ofinsurance, insurance contracts andinsured parties. Thepremiums charged mustbeinareasonable
proportion totheriskwhich isundertaken andtotheeconomic situation ofthecompany. Non-life
companies must beamember ofguarantee arrangements.
115. Subject tolicence bytheNorwegian authorities, insurance companies fromcountries outside
theEEAareamayprovide insurance services inNorway through abranch orasubsidiary. However,
these must notreceive more favourable treatment thaninsurers from EEA member States.
TheEEA Agreement53
116. TheEEA Agreement extends theEUSingle Insurance Market toNorway. Thenewrégime
ischaracterized bythebasic principle offreedom ofestablishment viabranches andagencies, freedom
toprovide cross-border services without additional authorization, asingle licence andhome-country
control, minimum harmonization andmutual recognition.
117. Foreign insurance companies fromotherEEAStates mayconduct insurance business inNorway
either through asubsidiary withaNorwegian licence, through abranch, orbywayofcross-border
activities according toalicence given intheirhome States. However, suchcompanies must notify
theNorwegian supervisory authorities when entering insurance business inNorway. Under theEEA
Agreement, theNorwegian authorities havebeennotified that62non-life insurance companies, and
tenlifeinsurance companies, willprovide cross-border services pursuant totheThird Generation
Insurance Directive (92/49/EEA).
Pension Schemes
118. Areport toParliament inJune1995proposed thestrengthening ofthepublic pension scheme
andlong-term planning ofprivate sector pension schemes. AWorking Group hasbeensetupbythe
Government toprepare anActonprivate pension schemes.
119. Allprivate pension schemes inNorway mustbefullyfunded, although funding criteria differ
slightly from theconventional accumulated benefit obligation requirements. Allrecognized private
53EFTA (1994).Norway WT/TPR/S/15
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pension schemes, whether individual oroccupational, aresubject tofavourable taxtreatment, with
fullexemption from taxation oftrustfunds andofincome funds committed forfuture contributions
andpremiumpayments.Pensionincomeissubjecttonormalincometaxation,albeitwithlowereffective
ratesthanforwages. Toenjoy favourable taxtreatment, benefits must taketheform oflong-term
insurance annuities paidoutfromthemandatory minimum ageof67years foroldageretires (orfrom
theonset ofoccupational disability), andmust satisfy non-discriminatory replacement ratios across
income levels.
(d) Schedule ofSpecific Commitments under GATS54
120. Active cross-border supply inNorway ofinsurance services requires acommercial presence
inaState which isacontracting party totheAgreement ontheEuropean Economic Area.
121. Intermediation through anauthorized broker ofnon-life insurance toaninsurer established
inaStatewhich isnotamember oftheEEA, andnotauthorized tooperate inNorway asacompany
orabranch, islimited tomarine andtransport insurance, insurance related tooffshore exploration
activitiesorinsurancecontractsregardingdomesticcompanieswithanactivityofatleasttenmanyears55,
orannual salesofatleastNKr50million.
122. With regard tolimitations oncommercial presence, allinsurance brokers mustbeorganized
asjointstock companies; Norway hasalsobound therequirement thatforeigners other thanforeign
financial institutions maynotsupply insurance services through asubsidiary orabranch. For
subsidiaries orbranches offinancial institutions fromnon-EEA States, aseparation requirement applies
among lifeinsurance, non-life insurance andcredit risk insurance. The Amendment of
24November1995totheFinancialServicesActof1988allowstheestablishmentofabranchinNorway
ofinsurance brokers fromoutside theEEA-area, provided thattheNorwegian Banking Insurance and
Securities Commission grant aconcession.
123. There arealsolimitations onnational treatment asregards ownership (commercial presence):
order toestablish aNorwegian subsidiary partly owned byaforeign insurance company, theother
ownersmustbeforeigninsurancecompaniesorNorwegianfinancialinstitutions.InNorwegianinsurance
companies themanager, atleasthalfthemembers oftheboard ofdirectors, halfthemembers ofthe
corporateassemblyandhalfthemembersofthecommitteeofrepresentativesmustbepermanentresidents
ofNorway andhaveresided there forthelasttwoyears. Thisrequirement doesnotapply tocitizens
ofEEA States whoreside inthese States. According totheCompanies Actof1976, theMinistry
ofIndustry andEnergy maygrant exemptions from therules concerning therequirements ofthe
management ofthecompany.
54GATS/SC/66/Suppl./Rev.1, 4October 1995.
55Aman-labour year("årsverk ")isameasure ofthequantity ofwork performed inabusiness during ayear.WT/TPR/S/15
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(ii) Telecommunications
(a) Structure oftheSector
124. In1994, theNorwegian telecommunication industry 'sgross output wasNKr20.4billion.
Asof31December 1995, thenumber ofsubscribers was1,772,000 forprivate telephone service and
330,000 forbusiness.
125. TheMinistryofTransportandCommunications(MTC)istheregulatoryauthorityatthenational
level. MTC isincharge ofgranting licensing orother forms ofapproval toservice suppliers. The
Norwegian Telecommunications Authority (NTA), under thecontrol ofMTC, wasestablished on
1July1987 toseparate regulatory andadministrative matters. NTA isresponsible fordeveloping
technical regulations, typeapproval ofuserequipment, radio frequency management, licensing for
cable networks andtelecommunications market surveillance.
126. Basic telecommunications suppliers areinvolved inregulatory policy through public inquiries,
buttheytakenopartintheenforcement ofregulations (S/NGBT/W/3/Add.10). Suppliers canhave
acasereviewed bytheNTA. Itsdecisions maybeappealed totheNorwegian Telecommunications
Authority Complaints andAdvisory Board ortotheMinistry ofTransport andCommunications.
127. Other thanhorizontal limitations onnational treatment, therearenosector-specific limitations
onnational treatment extending toforeign suppliers oftelecommunication services lessfavourable than
fordomestic suppliers. There aremore than20foreign telecommunications operators/providers in
Norway. Entry offoreign companies hasbeenbyestablishing subsidiaries, salesoffices, co-operation
withNorwegian agents orbybuying shares indomestic companies.
(b) Deregulation oftelecommunications services andequipment
128. Guidelines developed onthebasisofa1985White Paper oncompetition interminal equipment
andinternal networks ledtoinitial changes inthesector. Themarkets forterminal equipment (modems,
PABXs) andinternal networks wereliberalized on1January 1988. Value-added services byprivate
operators based onleased linesfrom former Norwegian Telecom (now Telenor AS)56were allowed
from 1989; radio paging anddigital mobile communication were liberalized in1990. Oneprivate
GSM operator formobile communication, Netcom GSM AS,waslicensed in1991, tocompete with
Telenor Mobil AS57inthismarket. Bothoperators must actincompliance withtheopen-network
principles setoutinNorwegian legislation and,ifnecessary, withthose ofEUlegislation; thusboth
suppliers arerequired tomake theirservice available tothepublic generally. At31December 1995
thenumber ofmobile telephone subscribers was981,305 -apenetration rateof22percent. By1997,
theGSM system willcover almost thewhole country. Dataservices were liberalized andresale of
capacity inleased lineswasallowed from 1January 1993.58Satellite communication andnetwork
services were liberalized in1995.
56TelenorAS,awhollyState-ownedlimitedcompanyisthesuccessortothepublicutilitycompany,Norwegian
Telecom asfrom 1November 1994.
57Awholly-owned subsidiary ofTelenor AS.
58EFTA (1994).Norway WT/TPR/S/15
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129. Thetraditional monopolistic structure ofthetelecommunications sector isthusbeing replaced
byamore competitive environment. However, Telenor AS,thepublic telecommunications operator,
isstillthedominant entity inpublic services andterminal equipment: onlyTelenor ASmayconstruct
telecommunications networks toprovide public services including public voice telephone services,
infrastructure (leased lines), telexservices andanalogue cellular telephony. Telenor ASalsohasthe
exclusive righttosetupandoperate public networks (infrastructure) andtoprovide two-way realtime
switched voice telephone services, leased lines(where resale isallowed), telexservices andtelegraph
services.
130. Competitionbetweenpublicandprivateoperatorsispermittedinotherbasictelecommunications
services(e.g.datatransmissionservices,digitalcellulartelephony(GSM),satelliteservices,value-added
services andpaging).
131. AnewTelecommunications Act,which entered intoforce on1January 1996 hasintroduced
alicensingrégimefortelecommunicationsnetworksandservices.Generalderegulationofinfrastructure
andservices inthesector willbediscussed inareport toParliament in1996/97. TheGovernment
intends topropose toParliament thatthesector bederegulated, under certain conditions, according
tothetimetablesetoutbytheEuropeanUnion;i.e.thatinfrastructureandvoicetelephonybederegulated
by1January 1998.
132. TheNorwegian market forcommunications equipment hasbeenopen tocompetition since
1January 1988. Oneobjective oftheliberalization oftheequipment market wastoensure the
separation oftheequipment andservice markets. Themanufacturers/suppliers ofcommunication
equipment inNorway include Ericsson, Mitsubishi, Motorola, NEC, Nokia, Phillips andSiemens.
(c) Prices
133. Telenor ASfollows accounting rulesdeveloped bytheNTA. Itmustsubmit annual reports
totheNTAonthefinancial status ofreserved services andmustmaintain separate accounts foroperation
ofpublic networks. AllofTelenor 'scosts arefullydistributed toservices, including costs withno
causal relationships (i.e.jointandresidual common costs). IfTelenor provides aservice forwhich
there iscompetition theprice ofthereserved service mustbethesame forbothTelenor ASandthe
competitors. Changes intheprices ofpublic voice telephony andleased lines(monopoly services)
must beapproved bytheMinistry ofTransport andTelecommunications.
134. Duetotechnical improvements, increased efficiency andcompetition inthesector, charges
fortelecommunication services havedecreased notably. Charges havefallen about 45percentinreal
terms overthelastfiveyears. Adecade ago,telecommunications services inNorway were among
themost expensive intheEurope; today, theyarerated among thelowest bytheOECD.
(d) Standards andcertification requirements
135. TheNTA isresponsible forformulating standards. Inpractice, thishasmeant transposing
European Telecommunications Standards intoNorwegian standards. Suppliers mayinfluence the
standards byparticipating inthestandardization process andthrough public inquiries.
136. Telecommunications equipment tobeconnected tothepublic telecommunications network
issubject totypeapproval. Equipment tested andcertified according toCommon Technical Regulations
(CTR -mandatory standards developed byETSI) byanaccredited laboratory inanEEAcountry canWT/TPR/S/15
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beimported intoNorway anddistributed without further administrative involvement. Equipment for
which there isnoCTR needs tobetype-approved byNTA according tonational standards. These
arepublished inNorwegian andEnglish.
(e) Changes introduced bytheEEA Agreement
137. Withitsliberalization andderegulation overthepastdecade, Norway complies withtheexisting
conditions oftheEEAAgreement, andhence tothepolicy oftheEUinthetelecommunications field.
AsrequiredintheEEAAgreement,NorwayhasincorporatedintonationallawallEUDirectivesadopted
todatebytheEEA Joint Committee. TheGovernment intends toliberalize thesector according to
thetimetablesetbytheEU,i.e.liberalizationofinfrastructureandvoicetelephonyfrom1January1998.
(f) Norway 'soffer intheGATS59
138. InitsdraftofferintheNegotiating Group onBasic Telecommunications, Norway binds the
present status quointhesector. Inthesub-sectors ofvoice-telephony, telexservices, telegraph services
andmobile andpersonal communications andservices andsystems, therewillbenolimitation onmarket
access orcommercial presence asof1January 1998. Theprovision ofservices already opened for
competition (packet-switched andcircuit-switched datatransmission services, facsimile services and
leased circuit services andother suchservices) issubject totheavailability ofscarce resources, e.g.
frequency.
139. Forswitched voice capacity, resale ofexcess leased voice circuit capacity isnotallowed when
there isconnection atbothendstothepublic network, there were noneasof1January 1998. For
mobile digital cellular telephony (GSM), thenumber ofoperators/providers islimited totwo;changes
inownership mustbeaccepted bytheGovernment andnetworks mustbebased onleased circuits from
Telenor ASexcept forown-base stations andswitches, there were noneasof1January 1998. For
satellite communication, provision ofpublic voice telephony isnotallowed, there were none asof
1January 1988.
(iii) Airtransport
(a) General features
140. Airtransport services accounted forapproximately 0.63percentofGDP in1994.
141. Scandinavian Airlines Systems (SAS) dominates themarket forscheduled international flights
toandfrom Norway. Braathens SAFE ,Wideröe andSASarethemajor airlines inthescheduled
domestic market andBraathens andPremiair inthecharter market.
142. Domestic airtransport wasliberalized under theAviation Actof11March 1994andtherelated
regulations. Bymid-1995, themaineffects werea30to50percentincrease infrequency andcapacity
onthemain routes (flights between OsloandStavanger, Bergen, Trondheim andnorthern Norway
andStavanger-Bergen), while capacity onlessprofitable routes remained virtually unchanged. Changes
infares-upto8percentincreases ordecreases -reflected thelevelofcompetition ontherespective
59WTO document S/NGBT/W/12/Add.12.Norway WT/TPR/S/15
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routes. Certain unprofitable regional routes, forwhich carriers arepaidcompensation, haveyetto
beliberalized.60Compensation toaircarriers fortheoperation ofregional services istobebased on
thepublic tender procedure provided forinCouncil Regulation (EEC) No.2408/92 of23July1992.61
143. TheCivil Aviation Administration (CAA) owns andrunsalmost allairports andprovides air
traffic services, suchasairtraffic control. Airline companies havenoobligations concerning network,
frequency, fares anddiscounts ontheirunsubsidized network.
144. TheCivilAviationAgreementof16August1993deregulatedinternationalairtransportbetween
Norway, Sweden andDenmark. Liberalization istobecompleted on1April 1997when thedomestic
market isopened tocarriers fromother EEAStates. Compensation toaircarriers fortheoperation
ofregional services istobebased onapublic tender procedure. However, duetocongestion atthe
mainairport inOslo(Fornebu) competition isnotexpected tointensify untilthenewGardermoen airport
isinaugurated inlate1998.
(b) TheEEA Agreement
145. Inparallel withtheimplementation ofEEC Council Regulation 2409/92 of23July1992
onfaresandratesinairtransport, in1994theNorwegian Competition Authority became thecompetent
price authority inairtransport. Following deregulation, theNorwegian Competition Authority, the
NorwegianCivilAviationAdministrationandtheNorwegianMinistryofTransportandCommunications
established agroup ofrepresentatives meeting twice ayeartobring upmatters ofmutual interest.
146. TheThird Aviation Package oftheEEC, which entered intoforceon1January 1993andwhich
abolishes mostrestrictions onmarket access, wasextended toNorway bytheEEAAgreement in1994.
Fullcabotage liberalization istobecompleted on1April 1997. Duetotheircommon ownership of
SAS, Norway co-ordinates bilateral negotiations concerning airservices withDenmark andSweden.
Norway adheres tothemain rulewithin theEuropean Economic Area(EEA) concerning prices, i.e.
prices arenotregulated, except asprovided forbycompetition law. Asregards airservices between
Norway andcountries outside theEEA, prices areregulated through bilateral AirService Agreements.
Norway, together withSweden andDenmark, asjointowners ofSAS, re-negotiated theirAirService
Agreement withtheUnited States in1995, resulting inan"open sky"agreement.
(c) Commitments under GATS
147. There arenolimitations onmarket access withregard toComputer Reservations System (CRS),
selling andmarketing ofairtransport services, except regarding presence ofnatural persons, which
isunbound. National treatment (cross-border supply andcommercial presence) isunbound for
obligations ofparent orparticipating carriers inrespect ofCRScontrolled byanaircarrier ofone
60Wider øe'sFlyveselskap ASreceived NKr282million insubsidies from theState in1995 fortheoperation
ofitsSTOL (Short Take OffandLanding) network, covering 26airports innorthern andwestern Norway. In
addition, Coast AirKSreceived NKr10million tooffer flights toasmall regional airport (Fagernes) from Oslo
andBergen.
61TenderingprocedureswillbeeffectedinaccordancewithArticle4ofCouncilRegulation(EEC)No.2408/92
of23July1992, andapply asfrom 1August 1996 forFagernes airport andfrom 1April 1997, oneyearlater
forthenetwork currently serviced byWider øe'sFlyveselskap .WT/TPR/S/15
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ormore thirdcountries andconcerning selling andmarketing ofairtransport services fordistribution
through theairtransport services provided byCRSparent carrier.
(iv) Maritime services
(a) Structure oftheindustry
148. TheMinister ofTrade andShipping isresponsible forinternational maritime transport via
theShipping Department intheMinistry ofForeign Affairs, thesubordinate Maritime Directorate
andtheShipRegisters62.
149. Maritime transport services represented approximately 2to3percentofGDP, in1990-1995.
Netfreightincomehasincreasedsubstantiallysince1987whentheNorwegianInternationalShipRegister
(NIR) wasestablished. After doubling in1991, itremained stable ataround NKr18billion in1992-
1994. There wasaslight decrease inthenetfreight income in1995 toapproximately 15billion.
Gross freight income accounted for13percentoftotalexports in1994.
150. In1992, 79percentofimports and67percentofexports were viamaritime transport;
35percentofimports bytonnage werecarried byNorwegian flagvessels, compared to54percent
ofexports.63
151. Inthefirstquarter of1995, theNorwegian owned commercial fleet, including theNorwegian
Ordinary Register (NOR), theNorwegian International ShipRegister (NIR) andNorwegian owned
fleetunder foreign flag,consisted of1,381 ships representing atonnage of47million dwt.Measured
intonnage, theNorwegian fleetiscurrently thethirdlargest intheworld. Norway ranks fourth in
terms ofvolume offreighted goods, afterJapan, Greece andtheUnited States.
152. Despite adecline inthenumber ofships inthefleet, themarket value hasincreased inrecent
years duetoregistration ofnewvessels andthesaleofolder ships. Theaverage ageoftheNorwegian
flagfleet,which ispresently 12years, has,asaresult, alsodeclined. Inaddition, Norwegian shipowners
haveregistered approximately 13million dwtunder foreign flagsandhaveafleetof15million dwt
onmanagement ortimecharter.64
153. IntheNOR register, theminimum participation ofNorwegian nationals issetat60percent
ofcapital ineachship; theshipowning company mustbeheadquartered inNorway; andthemajority
ofthemembers oftheboard mustbeNorwegian nationals resident inNorway foratleastthelasttwo
years. IntheNISregister, ships withmore than40percentforeign ownership mustbeoperated by
aNorwegian shipowning company withitsheadoffice inNorway orbyaNorwegian management
company. Iftheshipisdirectly registered intheNISbyaforeign company, aNorwegian representative
isrequired.65
62S/NGMTS/W/2/Add.6
63S/NGMTS/W/2/Add.6.
64OECD, (1993), p.32.
65S/NGMTS/W/2/Add.6.Norway WT/TPR/S/15
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154. TheNorwegian Government presented aWhite Paper onmaritime policy totheNorwegian
parliament on15March 1996. TheWhite Paper gives areport onthesituation forthemaritime
industries inNorway andpresents several proposals forpolicy adjustments. These include expanding
thetaxreimbursement scheme forseafarers, increasing thedepreciation rateforships from 20to
23percent,andadjusting therulesfortaxation ofNorwegian controlled foreign companies. Parliament
isexpected todiscuss theWhite Paper inJune1996.
(b) Taxreimbursement scheme forNorwegian seafarers
155. Inorder tofacilitate therecruitment totheNorwegian fleet, ataxreimbursement scheme was
introduced in1993. Parliament allocated NKr340million tothescheme for1995. Thescheme is
subject toanumber ofconstraints, themainonebeing thattheshipping industry should alsocontribute
anequivalent amount. Thetaxreimbursement scheme applies toseafarers employed onshipsregistered
intheordinaryNorwegianregister,NOR,andwhoareliabletoNorwegiantaxation.Italsoencompasses
seafarers onships intheNISregister iftheentire mandatory crewissubject toNorwegian taxation.
(c) Market access
156. Norwegian coastal tradeisopen. Moreover, Norway hasnobilateral freight sharing agreements
orother restrictions onfreight. Therespective bilateral agreements allow access tocabotage inthe
United Kingdom andDenmark.
157. Norway isparty totheUNConvention onaCode ofConduct forLiner Conferences; its
instrument ofratification istheLawonLiner Conferences of8June1984.
158. EUlegislation onmaritime transport contained intheEEA Agreement are: (i)Council
Regulation 4055/86 onfreedom toprovide services; (ii)Council Regulation 4056/86 onapplication
ofcompetition rulesinmaritime transport; and(iii)Council Regulation 954/79 ontheimplementation
oftheUNCTAD linercode. There isnoreciprocity astomarket access inthemaritime transport
sector intheEEA Agreement.
(d) Competition66
159. TwoActsgovern competition inmaritime transport: theCompetition Actof11June1994
andtheLiner Conferences Actof8June1984, implementing theUNCTAD linercode. Thelatter
Act,which exempts linerconferences from competition law,applies tointernational shipping only.
TheActincludes specific provisions governing restrictive practices ininternational shipping andits
application islimited geographically totradebetween contracting parties totheUNCTAD Liner Code.
160. Themost important prohibitions setoutintheCompetition Actwhich mayberelevant to
collaboration inthemaritime transport sector aretheprohibition against collaboration onprices and
theprohibition against market sharing. TheCompetition Authority maygrant exemptions fromthese
prohibitions when suchrestraints oncompetition would mean thatcompetition inthemarket concerned
would beincreased, orwhen thegaininterms ofefficiency would begreater thanthelosscaused
bytherestraints oncompetition, orwhen therestraints would beoflittlesignificance forcompetition,
66S/NGMTS/W/2/Add.6/Suppl.1.WT/TPR/S/15
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orthere arespecial considerations tobetaken intoaccount. Theauthority granted twoexemptions
fromtheprohibition against collaboration onprices andtheprohibition against market sharing in1995.67
161. Liner conferences thatdonotcome within thescope oftheActof8June1984willasageneral
rule, beregarded ascontrary totheprohibition against collaboration onprices andmarket sharing
setoutintheCompetition Act.Suchcollaboration istherefore onlylegaloncondition thattheparties
toithavebeengranted exemption, andthere maybeconditions attached tosuchexemption.
(v) Electric energy
162. In1992, thegross output ofNorwegian electricity supply amounted toNKr54.7billion. The
sector contributed 4percentofGDP.
163. Allelectricity production inNorway ishydro-based. Thepotential forfurther increase in
production through large-scale development ofwater courses islimited forenvironmental reasons.
Norwegianelectricitysupplyfluctuatesduetosubstantialvariationinprecipitation,whiledemandfollows
seasonal variations intemperature.
164. Norway hasabout 200energy utilities, many ofwhich aresmall. Thelargest power production
utility, Statkraft SF,controls around 30percentofproduction capacity. Other public utilities are
owned byregional andlocalauthorities. About 15percentofproduction capacity isowned byprivate
enterprises, someofwhich aresimple production companies while others areowned byenergy-intensive
industries suchasmetals, chemicals andpaper.
165. Under the1991 Energy Act,power production andpower trading areactivities which may
besubject tocompetition inthemarket. Power networks have tobedeveloped andoperated as
monopolies. Monopoly activities suchastransmission anddistribution areregulated through alicensing
system. Themonopolist mustprovide facilities toallcustomers inaspecific area. Anyindependent
energy contractor orenduserhastherighttousethenetwork facilities onnon-discriminatory conditions.
166. Tariffs areregulated byaspecial regulatory body, theNorwegian Water Resources andEnergy
Administration (NVE). Network owners cansettransmission tariffs tomeetoperating costsandprovide
thenecessary yield oninvested capital, thepresent yield ofwhich ismaximum 7.5percent. All
producers, network owners andendusers areconnected towelldefined points inthenetworks. They
payonlyonetariff depending ontheleveltowhich theyareconnected, andtheypayonlythelocal
network owner. Tariffs areindependent ofgeographical distance between seller andbuyer.
167. Before 1991, alicence wasrequired totradeelectric power withforeign countries; according
totheauthorities, thisensures thatsuchtradeisbased onadequate environmental andsecurity ofsupply
67The three shipping companies Ofotens ogVesteraalens Dampskibsselskab AS, Troms Fylkes
Dampskibsselskabs ASandFinnmark Fylkesrederi ogRuteselskap ASwere granted anexemption, foraperiod
ofsixyears, fromthese prohibitions inorder tomaintain theirservices offered through theCoastal Liner Express.
Thisliner carries freight andpassengers ondaily sailings along theNorwegian coast from Bergen toKirkenes.
Thesecond exemption, granted foraperiod offiveyears, from theabove mentioned prohibitions wasgranted
tothethree shipping companies Stavangerske Linjefart AS,ASMørerutene andNor-Gargo AS.Theexemption
enabledthecompaniestoofferafreightlinerservicebetweenseveralportsalongtheNorwegiancoastandbetween
some domestic andforeign ports.Norway WT/TPR/S/15
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considerations andontheprinciple ofsound management ofresources. Thenational gridcompany,
Statnett SF,hasaconcession toorganize short-term power exchange. Foreign companies maybuy
orsellpower intheshort-term market without aseparate licence. In1992, theParliament decided
topermit contracts forpower exports, validforuptofiveyears, without therequirement foralicence.
Such contracts arelimited toatotalof5GWh peryear. Norwegian andSwedish power companies
areallowed toenter intobilateral agreements onfuture prices butallphysical deliveries ofelectricity
areorganized through thespotmarket. Therulesfortrading ontheStatnett SFmarket hasbeenadjusted
sothattheyapply inthesame waytoNorwegian andSwedish market participants. TheNorwegian
market forregulation ofelectricity supply (regulerkraftmarkedet )isreserved fornational enterprises.
Transfers ofregulation power onlytakes place between Statnett andSvenska Kraftnät .
(vi) Audiovisual services
(a) Films andTelevision Programmes
168. Theprincipal subsidy schemes tosupport Norwegian culture intheaudiovisual sector are
subsidies fortheproduction offilms andtelevision programmes andlicence feestotheNorwegian
Broadcasting Corporation (NRK), themain public service broadcaster.
169. TheFoundation forAudiovisual Productions wassetupinJuly1994. Itsmainobjectives are
topromote theproduction offilms andthelocalbroadcasting sector. Subsidies tofilms areawarded
intheformofgrants, onthebasis ofapplications. Grants areprimarily intended fortheproduction
offeature length filmsanddocumentaries ofspecial value. Inprinciple, onlyindependent filmproducers
maysubmit applications forgrants. Theproducer must finance atleast10percentofthetotal
production costs. Thetotalsumgranted in1995 wasNKr160million.
170. Thetwoother modes ofsupport forNorwegian feature filmareproduction support andbox
office bonuses. Production support isawarded selectively andisintended principally toprovide a
source offunding forfilms ofartistic aspiration. Production support isdistributed bythree national
institutions; theNorwegian FilmInstitute, theFoundation forAudiovisual Production andNorsk Film
A/S. Boxoffice bonuses actasapremium ontheability oftheindividual filmtoattract anaudience,
andtheNorwegian FilmInstitute calculates theupper limitforeachfilmbased ontheamount offinancial
risktaken bytheproducer.
171. TheFoundation forAudiovisual Production awards grants tolocal radio stations thathave
alowrateofrevenue from advertising andserve language orethnic minorities. Grants mayalsobe
granted toprojects ofgeneral interest.
172. AspartoftheEEAAgreement, theCouncil Directive 89/552/EEC, theso-called "Television
Without Frontiers" directive isincorporated inNorwegian law.
173. TheNorwegian Parliament decides annually theamount ofthelicence feetobepaidbyevery
television owner. In1994, theNRK received approximately NKr2billion fromlicence fees,outof
atotalincome ofNKr2.5billion. Asapublic service broadcaster, NRK isanimportant institution
forproduction ofcultural programmes, drama, children 'sprogrammes, etc.WT/TPR/S/15
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174. Norwayhasjoinedtheco-productionanddistributionofcreativecinematographicandaudiovisual
works ("Eurimages"), theMedia Programme oftheEuropean Union ("Media 95")andtheNordic
FilmandTelevision Fund.
(b) Advertising
175. Various provisions oftheGeneral Civil Penal Code, applying tothepress andadvertising,
include provisions prohibiting communications which threaten individuals orgroups onthegrounds
ofreligion, creed, race,colour, national orethnic origin, orbecause oftheirsexual status ororientation.
Advertisements promoting pornography, alcohol andtobacco products, advertisements which arenot
inaccordance withtheprinciple ofequality between thesexes, andadvertising formedicines which
areavailable onlyonprescription areprohibited.
176. TheBroadcastingActandRegulationsonadvertisinginbroadcastingalsosetlimitstothevolume
ofadvertising allowed andprohibit advertising directed towards children.
(vii) Tourism
(a) General structure
177. In1993thegross output oftourism services amounted toNKr42.9billion. Thekeyindustries
inthetourism sector arethehotel andrestaurant industry, which accounts for41percentoftotal
production, transport services (49percent)andtravel agencies, including touroperator services. Value
added inthewhole tourism sector isestimated tobeintheregion of2.5to3percentofGDP. About
31percentofconsumption wasbyforeign tourists. Approximately 80,000 persons wereemployed
inthesector in1993.
178. In1994, Norway 'stotalforeign travel receipts amounted toNKr15.3billion, andtravelling
expenditures abroad were about NKr27.8billion.
179. Theactivities oftheNORTRA Foundation, thecentral international marketing agency ofthe
Norwegian tourism industry, havetwomajor elements. Thefirstisthegeneral promotion ofNorway
asatourism destination; thesecond iscommon marketing projects withtheparticipation ofthetravel
industry, aimed atdeveloping newproducts andmarkets. NORTRA alsocontributes tocompilation
anddistribution ofmarket information useful totheindustry inplanning andproduct development.
Most ofNORTRA 'sproject activities takeplace inEurope andtheUnited States. Theagency also
carries outpromotion activities related torural tourism.
180. Thetourism industry hasrecently restructured itsorganization forcommon marketing efforts.
These reforms aimatasimpler hierarchy, better co-operation andclearer definition oftaskstobecarried
byvarious organizations. Themostimportant change hasbeenthedevelopment ofregional marketing
companies covering twoormore countries. Their activities arecarried outonbehalf oftourist
enterprises andmunicipalities.
(b) Travel agency andtouroperations
181. Gross output inthesector wasNKr2.57billion in1993. Sector employment wasataround
3,313 manyears, andtherewere549firms. Thesector shows pronounced concentration. ThelargestNorway WT/TPR/S/15
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touroperator hasabout 40percentofthemarket and,among travel agencies, thelargest corporation
hasabout 20percentoftotalturnover.
182. Themain source ofincome oftravel agencies isairticket salestobusiness customers. The
main market ofNorwegian touroperators ischarter customers travelling from Norway tothe
Mediterranean.
183. Norwegian travel agencies takepartininternational interlinkages between travel agencies,
using cross-border computerized reservation systems (CRS). Thelargest touroperators havemade
some direct investments intheMediterranean andtheCanary Islands, mainly inhotels andservice
offices.
184. There isnolicensing requirement toestablish atravel agency ortouroperator. TheActon
Travel Guarantees of1981 requires agencies toprovide sufficient evidence ofsecurity fortherefund
ofthemoney paidoverandfortherepatriation ofconsumers intheevent ofinsolvency.
185. AnewActimplementing theEUPackage Travel Directive (PTD) concerning package travel
became effective on1January 1996. Higher guarantee requirements areplaced ontouroperators,
expected toenhance financial solidity inexisting firms butalsotohigher costs forservice providers.
Inaddition, theECDirective, aimed atreducing theanti-competitive useofCRSs isexpected tohave
apositive effect ontravel agencies andtouroperators, especially small firms thatarenotapartof
astrong chain.
186. Increased competition following liberalization ofairtransport mayaffect travel agencies in
twoways. Thedirect effect willbeamodest increase intravelling volume; however, airlines may
havetherighttoselltickets exclusively tocustomers through theCRS, threatening theincome potential
oftravel agencies.
187. InNorway'sScheduleofSpecificCommitmentsunderGATS,therearenolimitationsonmarket
access oronnational treatment inthetravel agencies andtouroperators andtourist guide services.
Bindings inthehorizontal section apply tothepresence ofnatural persons.
(c) Hotels
188. There were 1,222 firms inthehotel sector in1993, withemployment at14,008 manyears.
Gross output inthesector wasNKr9.7billion. Thenumber ofhotel guest nights increased by
27percentfrom 11.6million in1989 to14.8million in1995, with1percentgrowth in1995.
189. Although theaverage sizeoffirms issmall, duetothedevelopment ofhotel chains sector
concentration ishigh. About 330hotels areeither members of,orareowned byachain. The
concentration ratio, measured asthemarket share (turnover) ofthefourlargest corporations, increased
from 21percentin1985 to36percentin1991.
190. Profitability andcapacity utilization hasbeenlow,withtheaverage profit margin forthesector
2.6percentin1992. Thegrowth ofhotel chains andstrategic alliances inthesector indicates the
needforincreasing returns toscale, andscope forsome activities suchasbooking, distribution and
sale.
191. TheHotel Actof1983, which iscurrently being revised, gives localauthorities therightto
award licences torunahotel andrestaurant business. TheActalsocontains certain requirements
regarding managers 'experience, closing hours, classification as"tourist hotel" and"mountain hotel".WT/TPR/S/15
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192. TheEEA Agreement doesnotimply important changes inregulation directly affecting the
hotelsector. However, some regulatory adjustments regarding comparative advertising, standardized
hotel ratings andimproving firesafety standards havetobemade inorder tobeEEA compatible.68
NordoestheEEA Agreement regulate tax-free shopping ontheferries between Norway andEC
countries suchasDenmark andGermany.
193. InNorway'sScheduleofSpecificCommitmentsunderGATS,therearenolimitationsonmarket
access oronnational treatment inthehotels andrestaurants sector. Bindings inthehorizontal section
apply tothepresence ofnatural persons.
68EFTA (1994).