Nova workboard

a blog from young economists at Nova SBE

Say cheese

The first of January 2013 did Norway increase their toll barriers on cheese and beef by changing the former toll from a set amount in NOK per kg, to a set percentage tax, calculated from the imported product´s price. For example did beef use to have a set import price per kg of 119 NOK (14,5 Euros). The new system gives beef a toll per kg of 344 %[i], which makes it significantly more expensive to import.

The increased toll barriers in Norway made it straight up to top level in the EU, causing great harm. The EU is claiming Norway´s new toll laws is a step backwards, referring to article 19 in the EFTA agreement[ii], which is concerned with getting a more liberal trade of agriculture products between the EFTA countries[iii]. Top politicians in the EU have several times demanded Norway to change the toll laws, and in July 2013 did the EU decide, with majority, a resolution with severe critics of Norway´s new toll laws on cheese and beef. The situation has caused a tense relationship, leaving Norway with the task of deciding how important an increased protection level of its agriculture is, compared to the risk of loosing goodwill from the EU.

The changes made can be justified by the need of protecting and increasing the Norwegian food production[iv], in order to ensure food security, rural employment and settlement[v]. As Norway do not have the best conditions geographical and climate wise for agriculture production, protection is needed in order to stay competitive with countries that can produce the products cheaper. Another argument is that many of the foreign products that are not in direct competition with Norwegian products, are kept outside the change in the toll laws, and can thus still compete on price in the Norwegian market.
On the other hand is Norway heavily reliant on their export of fish and energy. To stay competitive, Norway is dependent on good trade terms. Not following EU´s recommendations may end with a “punishment” in form of tougher toll barriers on the EU market for Norwegian products, which will be very costly for Norway. Further do we have one of the main reasons for why we have the EU/EFTA agreement in the first place; free trade. Free trade contributes to ensure an efficient distribution of production between countries, as each country will produce goods and services in line with their comparative advantages. This ensures the best total value, as each country will produce the goods and services that give the highest return. For this reason should Norway decrease the protection level of its agriculture, letting more competitive countries produce more of the Norwegian market´s agriculture products.

This is of course a very simple and short derivation of a complicated question. So far has no agreement been reached. It will be interesting to follow the development of this cheese drama!

Mari Olsen

[i] http://www.nrk.no/livsstil/dette-betyr-okt-ostetoll-for-deg-1.8350334

[ii] http://www.regjeringen.no/upload/UD/Vedlegg/Europa/brev_svar_venstre2711.pdf

[iii] http://europalov.no/rettsakt/utvidet-handel-med-landbruksprodukter-mellom-norge-og-eu/id-4180

[iv] http://www.regjeringen.no/nb/dokumentarkiv/stoltenberg-ii/lmd/Nyheter-og-pressemeldinger/pressemeldinger/2012/forsterker-importvernet-for-utvalgte-lan.html?id=701321

[v]http://books.google.no/books?id=KReYAAAAQBAJ&pg=PA172&lpg=PA172&dq=why+norway+needs+protection+of+agriculture&source=bl&ots=rxcITU73o1&sig=KcC9Fn8pvJD5xEvSFupGmRfXQZo&hl=no&sa=X&ei=sIkWVIuUFoztO4PqgeAD&ved=0CB0Q6AEwAA – v=onepage&q=why norway needs pr

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Author: studentnovasbe

Master student in Nova Sbe

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