Norwegian businesses are part of global value chains. This means that protectionist measures can spill over into the Norwegian economy even if Norway is not targeted. The international framework and trade agreements we have with other countries are essential to the Norwegian economy. The EEA agreement is of particular importance. Thanks to the free flow of goods, services, labour and capital within the EEA area, Norway’s domestic market is about 100 times bigger than it would have been otherwise. A good half of our trade with other countries is with EU countries (Chart 5). Common regulations and product standardisation facilitate market access for Norwegian firms. 1 Based on GDP at market rates. 6  NORGES BANK  Chart 5 We trade mostly with the EU. Goods and services. In billions of NOK. 2017 EU  US  China  ECONOMIC PERSPECTIVES 14 FEBRUARY 2019  Other countries  Exports  Imports  0  200  400  600  800  1000  1200  Sources: Statistics Norway and Norges Bank  Norwegian business and industry may soon feel the consequences of Brexit. The UK is an important trading partner. The UK’s exit from the EU means it will also exit the EEA agreement, creating uncertainty for many firms. At the same time, international economic cooperation is creaking. In the years ahead, the multilateral trade system is at risk of being undermined, which may leave us with a more fragmented system. This may adversely affect small countries in particular.
2018  Exports  Oil and gas1) Fish Other goods  Imports  0  200  400  600  800  1000  1) Includes refined oil products. Sources: Statistics Norway and Norges Bank  Access to capital and technology abroad has enabled us to develop new industries based on domestic natural resources. Hydropower and the oil industry are prime examples. We now invest our petroleum wealth in capital markets. The Government Pension Fund Global (GPFG) allows Norway to take a share in global value added. It gives us a cushion and helps trim the Norwegian state’s dependence on domestic economic developments. We need other countries – more than they need us. The foundation for today’s global trade cooperation was laid in the years following the Second World War. Institutions such as the IMF and the World Bank fostered closer economic cooperation between countries. The ratification of the General Agreement on Tariffs and Trade (GATT) marked the beginning of a gradual reduction of tariff barriers, which culminated in a rule-based, multinational trade system under the aegis of the World Trade Organization (WTO). History has shown that the trend towards a more open and liberal world order can reverse, as seen in the interwar period. This may now be happening again. Brexit, the UK’s exit from the EU, may take place a few weeks from now, and is the first major setback for European integration in several decades. The scaling back of tariffs has stopped, and new tariff barriers are being erected.