How Will Norwegian Companies Adapt to Brexit

In less than two weeks, the UK will officially leave the EU and enter into a brief transitional period with the single bloc. While many are looking to celebrate this as a major breakthrough for the Brexit cause, however, economists have been quick to label this as simply the end of a ‘phoney’ war ahead of intense and potentially difficult trade negotiations. 

After all, these will define the UK’s future trade agreement with the EU, while also determining whether or not Britain remains a member of the European Economic Area (EEA) via the European Free Trade Area (EFTA).

Interestingly, this will also impact on the relationship between the UK and nations like Lichtenstein, Iceland and Norway, who are currently the only countries to enjoy this type of relationship with Britain. So, how will Norwegian companies adapt to the next Brexit stage, and is this likely to become a legal issue for businesses?

The Story so Far – Why Norway is Concerned About UK-EU Trade Talks

According to most independent sources, Norway is far from enthusiastic about the prospect of the UK remaining a key member of the EEA and EFTA at the end of the transition period (which is due to expire on December 31st, 2020).

The reason for this is simple; as Norway is one of only three nations that belongs to the EEA as a result of the EFTA agreement rather than direct EU membership. 

While the primary purpose of these associations is to extend the breadth of the single market to willing, non-EU nations, Norway is concerned that the addition of the UK to this select grouping would dramatically undermine their own economic influence.

This is due largely to the sheer size of the UK economy, as while this may have contracted slightly against the backdrop of Brexit it’s currently the sixth biggest in the world.

It would therefore have the capacity to dominate the EEA and undermine Norway’s existing level of influence, potentially encouraging the Scandanavian nation to reconsider its own, long-term relationship with the EU.

Why Brexit Could Propose a Legal Issue for Norwegian Firms?

Of course, there’s no guarantee that the UK will end up in the EEA, particularly as this would arguably require Britain to retain freedom of movement with the members of the single bloc.

Remember, this was a key trigger for the leave vote in the 2016 referendum, and it would be hard to argue for full EEA membership without completely contradicting the notion of more stringent border controls.

Additionally, senior officials from both Norway and Iceland have stated that the UK would have to accept the free movement of people if they were to welcome such an agreement, despite the latter’s relative reluctance to interfere with British politics.

So, should the UK be afforded a bespoke deal that replicates membership of the EEA while enabling them to disregard the freedom of movement, there’s a chance that lobbyists and business-owners in Norway could revisit the terms of their own agreement and seek clarification from the EU.

Ultimately, neither the Norwegian government, Parliament of business owners were aware of just how expansive the EEA would become when they joined after declining EU membership in 1994. Nor did they ever consider a nation the size of the UK joining their ranks, and while they may have theoretically have agreed to future changes as part of their EEA agreement this could well trigger a legal challenge in the future.

Regardless of how this situation plays out, it makes sense for Norwegian firms and entrepreneurs to consider their options and liaise with an expert legal advisory service such as RSM.

More specifically, companies need to make contingency plans that safeguard their own interests as the nature of the EEA changes, while considering the various scenarios that my unfold should Norway choose to alter or end its EEA membership.

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