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UK close to signing trade deal with Norway

The UK is on the cusp of signing a trade deal with Norway and other members of the European Economic Area, with a formal announcement expected as soon as Friday.

Norway, whose biggest trading partner is the UK, thanks to sales of North Sea gas, has been particularly worried about protecting its small but politically vital agriculture sector from the threat of cheap British beef and cheese in an election year.

Before its formal exit from the EU in January, the UK signed a continuity trading agreement with Norway, Iceland and Liechtenstein that covered goods. Negotiations for a comprehensive free trade deal have taken place throughout 2021.

One UK government insider confirmed that an agreement was “almost done” that would improve trading terms with the members of the EEA, and would be announced “within the next 24 to 48 hours”.

A Department for International Trade insider said: “It’s very close, but negotiations are still live. Any agreement will include important wins in digital trade that go beyond the deal the EU has, and gains on agricultural market access. It’ll be a great deal for the UK”.

Officials with knowledge of the negotiations said the impending agreement had “very good” provisions on digital services that went beyond the EU’s agreement with the EEA. They added that there was “good news” for British agricultural markets and fish processing.

“The deal is hopefully going to mean more exports for farmers and cheaper imports for the fish processing sector, which is great for ‘red wall towns’ such as Grimsby,” the individual said, in a reference to English areas that voted Conservative for the first time in the 2019 election.

NRK, the Norwegian state broadcaster, reported on Thursday that an agreement had been struck and would be announced on Friday, so it could be put into law before its parliament went into the summer break.

The broadcaster also reported that negotiations on access to seafood markets had proven difficult. The deal is expected to include trade-offs between quotas in the UK’s fishing water versus access to Norwegian markets for British beef and cheese produce.

The deal comes at a crucial time for Norway’s centre-right government, which is behind in the polls to the centre-left opposition that includes a party close to farmers. The government has appeared split on how many concessions to give the UK.

Prime minister Erna Solberg told NRK last month that the negotiations were “challenging”, as although Norway had relatively few import barriers it was highly protective of its meat and dairy goods. Import duties on foreign cheese are 277 per cent, while beef tolls are 344 per cent.

Trade between the UK and both Iceland and Norway was worth £27bn in 2019. Oslo is keen to gain better access in the UK for Norway’s fish and seafood products after a lengthy dispute with London over fishing rights. 

The Christian Democrats, a member of Solberg’s minority coalition, have been the strongest opponents of granting the UK better access for beef and cheese to the Norwegian market now it is out of the EU. “It has been an important issue and therefore also difficult,” party leader Kjell Ingolf Ropstad said about discussions inside the government. 

The Johnson government is also close to signing a trade deal with Australia, which is expected to be announced the week of June 14 following the G7 summit of western leaders in Cornwall.

This article was first published at https://www.ft.com/content/e1a00536-4743-4b7a-862c-fb107d30056f

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The Markets Today