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I understand that Norway doesn't have duty-free import of goods into the EU. What I'm referring to is that the existing tolls and import duties weren't negotiat
by avar 9y ago
I understand that Norway doesn't have duty-free import of goods into the EU. What I'm referring to is that the existing tolls and import duties weren't negotiated with the assumption that Norway has tariff-free access to the biggest producer of cheap goods in the world.
I elaborated a bit on this in a sibling comment[1], but let's say for example that the import duties on electric drills from China into the EU are set at 30%, but the same duty for Norway is 10%.
After signing a FTA with China Norway can simply import the drills at 0%, then re-export them to Germany at a rate of 10%.
Even if they can't simply re-export finished products a Norwegian company could buy cheap Chinese parts for making drills, then finish constructing them domestically and export them to the EU.
Even if they don't directly re-export anything from China Norwegian industry would be more competitive than its neighbors, e.g. a Norwegian paper mill might buy cheap acids for industrial from China that their neighbors in Sweden don't have access to. This would make Norwegian paper cheaper than Swedish paper, and Sweden would pressure the EU to adjust its import duties accordingly.
Thus the EU will start having to either treat Norway and Iceland more like China in terms of tariffs and import duties, or to treat China more like Norway and Iceland.
1. https://news.ycombinator.com/item?id=15409391 https://news.ycombinator.com/item?id=15409391
- Reason077 9y agoNorway certainly can't import Chinese drills at 0% and then re-export them to Germany under the Norwegian tariff. Those drills are still of Chinese origin, and re-labeling them otherwise would be illegal. Only Norwegian drills can benefit from Norway's 10% tariff. As for goods of mixed origin (manufactured in Norway but benefiting from Chinese inputs/components), that is indeed where things get complicated. And that's one of the reasons why trade agreements typically run many thousands of pages and take years to negotiate! But the WTO has pretty comprehensive "Rules of origin" to use as a starting point.
- avar 9y agoYes legally it can't, but enforcing this on an open border with a direct road connection to the rest of the EU is going to be quite interesting. Right now this situation exists in theory, but in practice pretty much nobody in the EU has any cause to try to import something via Norway, since its trade deals are quite similar to what the EU itself has. But the EU has huge tariffs on some Chinese products, including slapping China with 30-70% tariffs on basic metal alloys in some cases[1][2]. The difference can be so large that it becomes beneficial for you as a private EU citizen to drive up to Norway yourself to fetch e.g. basic alloys at lower prices. Nothing remotely like this situation exists within the land borders of Schengen today. There's the agreement with Iceland, but as it's an island enforcement is much easier. 1. https://www.cnbc.com/2017/06/09/reuters-america-update-2-eu-sets-steel-import-duties-to-counter-chinese-subsidies.html https://www.cnbc.com/2017/06/09/reuters-america-update-2-eu-... 2. https://www.theguardian.com/business/2016/oct/07/european-union-import-duties-chinese-steel-port-talbot-tata https://www.theguardian.com/business/2016/oct/07/european-un...