The stock of U.S. foreign direct investment in Norway was $4.3 billion in 1994, a 13.8 percent increase over that in 1993. U.S. direct investment in Norway is concentrated largely in the oil and gas sector and related services

On November 28, 1994, Norwegian voters rejected membership in the European Union. Norway retains membership in the European Economic Area (EEA) which consists of the EU member countries together with Norway, Iceland, and Liechtenstein. As an EEA member, Norway has assumed most of the rights and obligations of the EU Single Market. However, Norway has very little ability to influence EU decisions.

Norway has its own tariff system, but nearly all trade and investment barriers which limit U.S. access to the EU are being implemented in Norway either on the basis of EEA obligations or Norwegian government policy. There are a number of non-tariff barriers in addition to preferential tariff rates for EEA members. The most significant EEA non-tariff barriers which affect U.S. commercial interests in Norway concern labeling, mutual recognition agreements, restrictions on agricultural goods (related to genetically modified organisms and growth hormones) and preferential treatment of EEA-based firms in publicly tendered major projects.

Norway's trade and investment regime is in a state of flux, with continuing implementation of Uruguay Round and EEA commitments. Additional liberalization steps may be possible based on the successful conclusion of ongoing WTO negotiations in specific areas.

IMPORT POLICIES

Agricultural Tariffs

In July 1995, Norway accelerated its WTO implementation commitments for tariff reduction on agricultural commodities by immediately adopting the year 2000 bound tariff rate targets. In actual fact, many agricultural product tariffs rose considerably compared to pre-Uruguay Round levels, and the new nontransparent variable system adopted by the Norwegian government has made imports from the United States of fruit, vegetables and other perishable horticulture products more difficult than under the previously existing import regime. New Norwegian regulations permit duty increases and reductions with little or no notice based on domestic production levels. These frequent ad hoc duty changes are typically announced only a week or two in advance and last from a few weeks to several months.

Commercial uncertainty caused by such duty fluctuations or the possibility of such fluctuations, even within Norway's Uruguay Round bound rates, could effectively prevent the U.S. exports of price sensitive and perishable products, and favor nearby European suppliers.

Tariff-Rate Quota Administration

The Norwegian Ministry of Agriculture has established an auction for the rights to import under the tariff- rate quotas established for meats, butter, eggs, and cabbage. If the auction proceeds to the Norwegian Government, plus the applicable tariff, exceed the bound rate, then Norway may be in violation of Article II of GATT 1994.

SERVICES BARRIERS

Financial Services

Norway's barriers to entry and operation for foreign financial service providers are in transition. Implementation of the EEA accord removed many such barriers for EU and EFTA member countries and recent deregulation of financial markets appears to have eliminated many of the barriers facing U.S. financial institutions seeking to operate in Norway. Norway has also adopted the EU's Second Banking directive which, among other provisions, allows financial institutions established in the EEA to open branches in Norway. Branch banking from the United States is still not permitted, although the Norwegian government has expressed its intention to introduce legislation which would permit it.

INVESTMENT BARRIERS

At present, foreign investors must have permission of the Norwegian Government to purchase more than 10 percent of the equity of an existing financial institution, and foreign investors may not own more than 33 percent of the equity of any financial institution without a government concession.

On January 1, 1995, in accordance with EEA National Treatment Directives, the Norwegian Government changed the rules governing foreign investment in industrial companies. Under the new system, foreign investors no longer need to obtain a government concession before buying limited shares of Norwegian corporations. However, both foreign and Norwegian investors are still required to notify the government when their ownership in a company exceeds certain levels (e.g., 33 percent, 50 percent, 67 percent). The Norwegian Government can then take action if the purchase is considered contrary to national interests.

There are no specific performance requirements imposed on foreign investors. In the offshore petroleum sector, Norwegian authorities encourage the use of Norwegian goods and services. The Norwegian share of the total supply of goods and services to the offshore petroleum sector has been between 50 to 70 percent in the past decade.

Certain investment barriers for telecommunications and information services also exist, and the U.S. will continue to seek action to lower these barriers to a more acceptable level.

OTHER BARRIERS

Telecommunications Equipment

Despite ongoing reform of its telecommunications market, Norway still maintains some restrictions that limit market access for U.S. telecommunications services and equipment. The state–owned corporation, TELENOR, maintains an effective monopoly on fixed-line voice services, infrastructure and telex services.

Equipment which has not been tested and certified under the European Economic Area's common technical regulations must be type approved by the Norwegian telecommunications authority. American companies report that this type of approval process is slow and costly for companies offering new products.

Import Monopoly for Alcoholic Beverages

In accordance with EEA Directives, Norway lifted its national monopoly for the importation and wholesale distribution of alcoholic beverages. However, for political and social reasons, Norway retains its high taxes and retail distribution monopoly for alcoholic beverages, with the exception of beer.

Government Support for the Shipbuilding Industry

In 1995, Norway continued its direct subsidy scheme, which provides government aid up to 11 percent of vessel contract value. The Norwegian Government has announced its intention to eliminate shipbuilding subsidies once the OECD Shipbuilding Agreement -- designed to eliminate shipbuilding subsidies and to establish a mechanism to addresses the dumping of ships -- enters into force in July 15, 1996.