mean more EEA law?

THE HURDAL PLATFORM:

Does less EEA mean more EEA law?

With Senterpartiet (The Centre Party) having run an election campaign focused on examining alternatives to the EEA Agreement, while Arbeiderpartiet`s (The Labour Party) manifesto proclaimed a «rock-solid commitment» to that same agreement, there was considerable interest in learning how these seemingly sharply contrasting perspectives would be reflected in the policy platform of the Støre Government. The Hurdal Platform provided the answer: «The EEA Agreement shall remain intact», but there are multiple suggestions for seeking to exploit its room for manoeuvre. Senterpartiet`s desire to look to Switzerland and the UK appears to have been recognised: The EEA Agreement shall be evaluated anew, with a special focus on neighbouring non-EU countries’ experiences from alternative agreements with the EU.

Exploitation of the room for manoeuvre under the EEA Agreement

The Hurdal Platform makes multiple suggestions for seeking to exploit the room for manoeuvre under the EEA Agreement, and states that «The Government shall pursue Norwegian interests more actively within the scope of the Agreement». There shall be a special focus on ensuring «national control on issues such as Norwegian employment, energy and railways». On climate policy, Norway shall pay special heed to Norwegian interests upon changes within the EEA.

The railway package

The railway reform has sparked extensive debate, and the Hurdal Platform would not appear to put an end to that. The platform proclaims that the Støre Government will as soon as possible embark on a dialogue with the EU for the purpose of securing an exemption for Norway from part of the provisions under the EU’s fourth railway package. The package shall ensure full passenger transport competition on the railways. Parts of the EU’s fourth railway package relating to opening the market to competition were already implemented in Norwegian law in June this year, and the rest of the package was incorporated into the EEA Agreement on 24 September.

The Hurdal Platform proposes a reversal of this legislation by seeking to stop any further opening of railway passenger transport to competition, and by stopping the planned opening of railway infrastructure-related operational, maintenance and emergency preparedness duties to competition. The company structure established through the railway reform, which included Vy being spun off as purely a train company, shall also be reviewed with an aim of having fewer companies.

It is, however, legitimate to question how much the Government can expect to achieve in discussions with the EU in this regard. Stopping all future competition flies in the face of one of the key pillars of the EU railway legislation and the stated objective of establishing a fully harmonised single railway market. The legal structure defines a narrow scope for exemptions from this. Although a large and powerful EU country like Germany has been able to secure a much more attractive position with regard to protecting its Vy equivalent; DB, it is likely to prove most challenging for the new Government to negotiate a similar position.

Employment and the public sector

Safeguarding Norwegian jobs was high on the agenda of both Arbeiderpartiet and Senterpartiet in the election campaign. It is therefore no surprise that the Hurdal Platform aims to «fight for the Norwegian employment model by exploiting the room for manoeuvre under the EEA Agreement, and to pursue active political engagement within the context of EEA cooperation in situations in which Norwegian employment legislation and collective agreements are challenged.» Whether this means more general application of collective agreements, or the use of other policy tools, is not specified. What we do know is that the balance between national requirements regarding wages and other employment terms, on the one hand, and the rules on free movement of services and labour, on the other hand, has been explored in European courtrooms for many years. This has in many ways been a legal battle, and not a political one, as apparently proposed by the Government.

The platform also calls for services to be provided by the public sector itself, with much less reliance on the market for service provision. This implicitly

means that high public sector growth is envisaged. If this is considered in the context of the proposed reversal of the local government reform, it may necessarily entail a considerable expansion of the public sector. Central, regional and local government are considered separate customers under the procurement regulations, and it is not straightforward to solve tasks across municipal borders. In order for tasks to be performed internally one will therefore to a large extent have to expand the public sector by hiring additional personnel at all levels; in central, regional and local government.

The new Government goes to extraordinary lengths when it comes to ruling out any role for private providers in some markets. The welfare sector is a case in point, with the statement that «strict regulations shall ensure that the operation of governmentfunded welfare services is not attractive to commercial groups». It is clear that this may trigger a battle over the extent to which EEA law, including procurement law, permits the throttling of outsourcing to private providers in a sector that has until now made a significant contribution to the Norwegian welfare mix.

Energy

The Hurdal Platform makes it clear that the Støre Government will ensure national control over industrial policy, especially with regard to energy and natural resources. Trygve Slagsvold Vedum stated when the platform was presented that national control over electricity, power and energy policy is important to this Government. One aspect of this is that the Government intends to use Statkraft as a renewable energy development spearhead through active ownership.

The platform also states that the Støre Government will not approve new international interconnectors during this parliament. The Government shall «Ensure that decisions on power generation developments and the composition of the Norwegian power generation mix remain national Norwegian decisions. Statnett shall own and operate all international interconnectors.» This is not necessarily in breach of the EEA Agreement, but nonetheless highlights the prominence given to national ownership in the energy policy of the new Government.

The Government will also study how Norwegian power exports affect Norwegian security of supply and electricity prices, and what measures can serve to ensure that Norwegian renewable energy remains a competitive advantage for Norwegian industry. However, nothing is said about what specific measures might be contemplated if such study were to show that these exports have a negative impact on the security of supply and electricity prices.

Vedum stated during the presentation that the platform makes it «abundantly clear» that Norway shall have sovereignty, also with regard to how we are going to use the cables. This also sets the scene for at legal battle with regard to the scope of the EEA Agreement. Political interference with power flows in interconnectors with EU/EEA countries may raise issues both under the main body of the EEA Agreement and under the detailed EU energy market legislation incorporated into the EEA Agreement.

Public procurement and state aid

The platform states that the Government will «Change public procurement regulations and practices to support key goals such as sustainability, attractive wage and employment terms,

Arbeiderpartiet leader Jonas Gahr Støre and Senterpartiet leader Trygve Slagsvold Vedum during presentation of the policy platform on 13 October 2021

the use of apprentices, innovation and local spin-off effects. Public procurement needs to be designed, and contract volume tailored, to enable Norwegian businesses to participate in tenders.» It is specifically mentioned that one shall ensure that «transport construction project tenders shall be designed to enable local and regional providers to participate». There is no specific mention of what these regulations will stipulate. The procurement regulations represent an implementation of the corresponding EU legislative acts in Norwegian law, thus implying that there is not necessarily as much room for manoeuvre as signalled by the Government. The public procurement regulations are not only motivated by a desire to ensure that the public sector makes good procurement deals under whatever national policy is being pursued, as it is also a key priority to ensure that suppliers all over Europe are able to compete for public contracts in Norway on a par with Norwegian businesses. The Government’s ambition to protect Norwegian suppliers in tenders must therefore to a significant extent be balanced Foto: Torstein Bøe / NTB against free movement considerations.

The platform also includes some specific public procurement proposals

1. Giving climate and environmental considerations a minimum weight of 30 percent in public procurement decisions, and more where relevant;

2.Prepare a Norwegian model with national seriousness requirements for all public procurement; and

3.Strengthening ownership and tax transparency requirements in public procurement and examine whether public procurers should require public country-by-country reporting in major tender and procurement processes.

Specific proposals in this regard will also have to be harmonised with the implications of underlying EEA directives.

The platform entails considerable public spending proposals, with a significant

strengthening of available policy tools – especially in relation to green transition. The design of specific measures will have to abide by the state aid rules, but the new regulatory proposals from the EU in this regard also favour expanding the room for manoeuvre on aid that facilitates the green shift. The Government may find these developments in Brussels helpful in furthering its agenda. It does indeed appear that the Støre Government favours European cooperation through the EU in the regard. This is somewhat paradoxical, since the platform is otherwise focusing heavily on national ownership and exploitation of the room for manoeuvre under the EEA Agreement.

Study of experience with the EEA Agreement

The ambition to conduct a study «to examine experience from EEA cooperation in the last 10 years», including examination of «neighbouring non-EU countries’ experiences from alternative agreements with the EU», bears all the hallmarks of a Senterpartiet policy win. Nothing is said about the purpose or consequences of such a study, apart from Støre’s comment during the platform presentation that interesting findings were made in the previous study of the EEA Agreement, as reported in the NOU 2012:2 green paper; «Outside and Inside» (the «Europe Report»), and that such a study would be useful for Norwegian policy debate.

The committee preparing the Europe Report was appointed by the Ministry of Foreign Affairs in 2010, headed by Støre, who was then the Minister of Foreign Affairs in the Stoltenberg II Government. The committee then concluded that Norway could be characterised as a three-quarters member of the EU due to the massive incorporation of legislative acts, and that the agreement suffered from major democratic deficiencies.

Senterpartiet, including Sandra Borch, who is the current Minister of Agriculture and Food, strongly criticised the Arbeiderpartiet at the time for not allowing the Europe Report to compare the EEA Agreement to one or more alternatives. It would appear that the Hurdal Platform is aiming for such an examination of alternatives.

There may, however, be strong political pressure for any study of alternatives to the EEA Agreement to also include examination of full EU membership as an alternative.

It is more than a decade since the last study of the EEA Agreement. Norway has incorporated a large number of legislative acts over that period, including on the deregulation and opening of various markets. It therefore makes sense to conduct a new study to examine available alternatives and how these relate to the democratic deficiencies uncovered the last time round. Whether there is much to be concluded from the experience of neighbouring non-EU countries is, however, a different matter. It is presumably Switzerland and the UK one has in mind when referring to «neighbouring non-EU countries» in the platform. This begs the question of how representative an examination of those countries’ agreements is of Norway’s relationship with the EU in the years to come. Switzerland’s bilateral and highly fragmented model has evolved pragmatically over a long period of time, and is an example that the EU is unlikely to want to replicate. Experience with Brexit, on the other hand, is so recent that any study in the immediate future will not be able to serve as any form of significant compass for Norway.

The Støre Government does undoubtedly have high ambitions in several policy areas where the EEA Agreement will curtail its freedom of action. It also seems clear that the new parliament will provide the Government with majority support for its objectives of focusing more on national ownership, exploiting the room for manoeuvre under the EEA Agreement and seeking exemptions from the fourth railway

package, since Sosialistisk Venstreparti (The Socialist Left Party) also endorsed these positions in the election campaign.

It is, however, more uncertain to what extent the Government will prevail with these positions in negotiations with the EU. The room for manoeuvre is fairly narrow in many policy areas – and often of a more legal than political nature. The platform offers very few specifics on how the room for manoeuvre can be exploited. This is one of the challenges facing the Government: How will it be able to pursue a much more nationally-focused industrial policy, when the EEA Agreement is to remain intact?

The EEA Agreement will continue to define the legal scope for such a change of policy direction. The Government is proposing to challenge the EEA Agreement from the inside, in an attempt at pushing the envelope on what can be achieved within the existing room for manoeuvre. Norway has for a long time been best in class on implementation of, and compliance with, EU legislative acts. It will be interesting to see how the Støre Government is now envisaging that this line will change, and how far the most diligent class member is willing to go in challenging the EU.

Helge Stemshaug Partner

Arne Torsten Andersen Partner

Henrik Bjørnebye Partner

Ylva Kolsrud Lønvik Senior Associate

Jone Berg Associate