UK and Wales likely to face additional trade barriers with Norway and Iceland after Brexit

External Affairs Committee
International Agreements: Norway & Iceland (pdf)
Published: 24th May 2019

Back in March, the Committee published the possible implications of UK-negotiated post-Brexit trade deals with Switzerland, Israel and Palestine. Now they’ve done the same for agreements with EEA (single market) non-EU members Norway and Iceland.

UK-Norway-Iceland trade agreement

Trade figures are for Norway and Iceland combined unless stated otherwise. The reason why the import figures are so high is primarily due to the import of Norwegian petroleum products and natural gas.

Signed: 15th April 2019
Ratification (under Constitutional Reform & Governance Act): 3rd June 2019
UK exports (2017): £7.2billion
UK imports (2017): £22.3billion
Welsh exports (2017): £104.3million (figures for service exports only available for Norway and dated from 2015)
Welsh imports (2017): £931.7million

How does the deal work?

  • This agreement will only come into force if the UK leaves the EU without a deal, or if any UK-EU agreement affects the terms of existing trade with Norway and Iceland.
  • The agreement only applies to trade in goods. Trade in services, regulatory alignment, procurement, competition and state aid rules haven’t been carried over from the EU-EEA trade agreement. For example, this means UK companies will lose automatic access to Norwegian and Icelandic markets for public procurement and vice versa.
  • Existing tariffs on industrial goods, agricultural products and fisheries products which are part of the EEA agreement have been carried over – so there’ll be no change and this is particularly important for the white fish processing industry in the UK.
  • Geographical protection of produce will continue in the UK and Iceland, but not Norway, while there’ll be no geographical protection of wines at all as these depend on EU rules.
  • EU rules on sanitary measures haven’t been carried over, meaning UK exports in animal products and live animals to Norway and Iceland will legally require additional checks – though there’s a non-binding agreement with Norway and Iceland that these products will be treated the same way as those from the EU.
  • All three parties have agreed to re-open trade negotiations as soon as possible after Brexit with a view to replacing it with a long-term agreement.

What does this agreement mean for Wales?

  • About 3% of Welsh trade is done with Norway and Iceland – though mainly Norway.
  • The Committee say this isn’t a simple “rollover agreement” of current terms and there are significant gaps in the agreement which involve areas devolved to Wales. They request regular updates from the Welsh Government.
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