The Most and the Least Favoured Nations: Norway's Trade Policy in Perspective

Abstract

This article reviews some recent developments in Norway's trade policy, in the light of the WTO's Trade Policy Review of Norway, 2004. A main focus is on the relationship between MFN trade policy and Norway's numerous preferential trade arrangements. In spite of a growing number of free trade agreements the paper suggests that Norway's trade regime has not become more discriminatory. The reason is that cuts in MFN tariffs as well as improvements in GSP have eroded preference margins in manufacturing faster than the coverage of free trade agreements has expanded. As a result of liberalisation, the trade regime for manufacturing has become less discriminatory, not more. While Norway is on the whole a liberal‐minded supporter of the world trade system, it has twice in recent history reacted with protectionism. Around 1980, a restrictive quota regime for clothing was implemented. This has later been dismantled, contributing to sharply increased imports from developing countries. For agriculture, Norway has currently high protection, and tariff preferences are limited. It is likely that agricultural protection will be gradually reduced due to the WTO, as well as through free trade agreements and improvements in GSP.