RegrEXIT: Norway and Brexit

Photo: Paul Hackett / Aftenposten
Businesses and markets tremble now that the UK will be out of the EU. Brexit may also lead to serious consequences for Norway.

Lina Aas-Helseth
San Jose, Calif.

Linn Chloe Hagstrøm
The Norwegian American

During the past few weeks, “Brexit” has already proven itself to be a failed promise and a rash decision with consequences in both politics and economics. No one quite knows what will happen if the United Kingdom (UK) leaves the European Union (EU), but Norway has come up as an example a few times. As a non-EU European country with its own currency, which is a member of the European Economic Area (EEA), the European Free Trade Association (EFTA), and the Schengen Area, might Norway have some insight to share with the UK?

Nigel Farage, the leader of the UK Independence Party (UKIP) who resigned following the Brexit vote, wanted the UK out of the European Union, and he finally got what he wanted. Yet, VG reports that Farage was not interested in Norway’s solution because he thinks it is awful. “Norway’s situation would have been unacceptable for UK. The Norwegian people have voted against EU membership and you would think that the first commandment of politicians would be to honor their word. The Norwegian Parliament has betrayed their people and tricked Norway into a bad deal with the EU. This is something from which I want to protect the British people. When we exit the EU, we will have a good deal,” Farage told VG prior to his resignation.

Norway’s Prime Minister, Erna Solberg, said in an interview with NRK that an EU without the United Kingdom will move backwards and their exit will create future political challenges for Europe.

Brexit is bad news for Norwegian business sectors, says the Confederation of Norwegian Enterprise (CNE). The United Kingdom is Norway’s third-largest export market. The CNE points out that an increase in uncertainty will therefore also affect Norwegian businesses and that the kind of solution the United Kingdom comes up with to secure market access is still in the air. Were the United Kingdom to join EFTA, this could have negative implications for Norway. “It will put the EEA in jeopardy and will be the worst thing that could happen to Norway. We will be guaranteed not to get a good deal like we have now, and it will be unfortunate to be pulled into the negative process that surrounds the United Kingdom’s negotiations with the EU,” said Division Director of Internationalization and European Policy in the CNE, Tore Myhre, to NRK.

Halvard Haukeland Fredriksen, a Faculty of Law professor at the University of Bergen explains to VG that, “If the UK decides to join the European Free Trade Association (EFTA), Norway will be reduced from big brother to little brother. The whole EEA structure is frail. It is not easy to estimate how much the EEA agreement can handle; it can fall apart if the UK becomes a member.”

Brexit can have huge consequences for the European Economic Area (EEA). This agreement ensures free flow of goods, people, services, and capital (“the four freedoms”) between all 31 countries in the European Economic Area, in addition to equal competition and equal access to the internal market throughout the EEA (government.no). Norway joined the EEA in 1992. This means that Norwegian citizens and businesses are treated as equal to EU citizens and businesses within the EU. Also, the EEA facilitates combined efforts within areas such as education, social policy, science and development, consumer protection, tourism, environment, and culture (government.no). This internal market is based on a common set of rules that are practiced equally throughout the EEA, which means that when the EU adopts regulations and directives that govern the internal market, these must also be taken into the EEA agreement and thus into Norwegian law (government.no). Today, citizens from countries in the EU and EEA can freely move to and live in the UK.

“The UK is currently not a member of the Schengen agreement. There will likely be no changes in border control for Norwegians following the Brexit,” Thomas Laudal at the University of Stavanger told VG. The Schengen Agreement, which was accepted in 1995, means that participating countries have established an inner common area of free movement, where there are no passport checkpoints at borders between these countries (government.no). Member states cooperate to control the outer border and lead a common visa policy.

Perhaps the most powerful force behind Brexit has been the idea that the influx of immigrants over the past few years has been a drain on the system. Whether an EU migrant can claim benefits when he or she arrives in another EU country is dependent on several conditions. Upon a stay of more than 90 days, an EU migrant must be in work, or actively seeking work with a genuine chance of being hired, or be able to show they have enough money not to be a burden on public services. This therefore refutes the argument of immigration draining the UK economy (The Telegraph), and it’s unclear to what degree Brexit will allow the UK to slow immigration.

Professor Grete Brochmann at the University of Oslo believes that labor migration to Norway will increase because of Brexit. “After the British referendum, new labor migrants will most likely look for other places to go than the United Kingdom. Countries like Norway and Sweden can therefore appear attractive,” said Brochmann to VG. Although Brochmann believes that the labor migration in Norway has historically had positive consequences, she warns against immigration in economic recessions as they may have negative effects on the Norwegian economy. From a macroeconomic perspective, labor migration has proven to be fruitful. However, now that the Norwegian economy is declining, migration has also declined and more newly arrived labor migrants cannot find gainful employment. Brochmann fears that the labor migration will push down wages in certain occupations and that workers in these occupations will notice increased competition.

Chief Economist Frank Jullum of the Danish Bank said that the uncertainty following Brexit will lead to a decrease in growth in EU, which again will spread to Norway. This will mar the growth rate Norway had predicted, and this decrease in growth will affect Norway in the form of heightened unemployment rates, lower purchasing power, and a thinner wallet (E24). “We’re talking about a few thousand Norwegians becoming unemployed. This situation can both worsen and become better depending on the type of agreement that occurs between the United Kingdom and the EU,” said Jullum.

Fisheries Minister Per Sandberg of the Norwegian Progressive Party states that the seafood industry has no reason to worry over the United Kingdom’s EU exit. “We can register a price decline in Norwegian fish, but we have had high prices over a longer period now. We will pay close attention to what is happening, but it will take a long time before the United Kingdom is completely out of the EU,” Sandberg told NRK.

It’s an understatement to say that there’s a lot of uncertainty throughout Europe. What this will ultimately mean for Norway has yet to be seen.

Lina Aas-Helseth is from Halden, Norway, and has spent the past five years on the west coast of the U.S. She is a scholar with an M.A. in Intercultural Communication, now residing in San Jose, Calif.

Linn Chloe Hagstrøm is from Bergen, Norway and lives in the Denver area. She is a recent Pacific Lutheran University alumna in Global Studies and Cultural Anthropology.

This article originally appeared in the July 15, 2016, issue of The Norwegian American. To subscribe, visit SUBSCRIBE or call us at (206) 784-4617.