Tuesday 12 November 2002

Pic of the day: "'Cause civilization should be free!" (And Norway too.) Screenshot from Freeciv. And yes, those are Norwegian flags.

Trade wants to be free

We interrupt the introspection in order to comment on the now pretty official rumors that the extended European Union will demand a yearly compensation of ca $500,000,000 to let Norway continue to be part of the European Economic Area.

Admittedly the EEA agreement is quite a bit more than a common trade treaty. It allows Norway a part in the non-democratic parts of the EU administration. Basically we take part in all programs like an EU member state, except we have no voting rights in the federal assembly that creates the EU law, and no part in the executive branch that make these laws into actual political decisions. Uhm, and for this we pay? Shouldn't it be the other way around, that they pay us to comply with their regulations, thus widening their trade area?

A more practical argument is that Norway is far richer than the EU average (or indeed most countries that don't subsist on illegal activities). Indeed the money we pay to the EU is mainly funneled into a "cohesion fund" that transfers money to the less developed parts of the union. The basic premise seems to be that it is for the best of all that all states have a roughly similar standard of living. (This can certainly be argued against, but let us just accept it as a political goal. It is ethically sound, at least.)

Norway is however not a member state in the EU. We simply want to trade with them, and to harmonize our standards in such a way that people, goods and money can flow between our countries without undue friction. For this, we really need nothing more than a common treaty of free trade. It is already a shame that such treaties don't exist between all peaceful nations. I can see trade sanctions being wielded against rogue dictatorships like North Korea or Iraq. But free trade should be the default. The fact that it isn't reflects insufficient thinking.

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What does the EU have to lose from free trade with Norway? What is their cost that we should compensate them? It is not as if the treaty will force them to sell goods at below market price, or buy them at above market price. Furthermore, in so far as Norway can sell some products (oil, fish) cheaper than any member state, this benefits the citizens of the EU greatly. Ideally they should seek similar treaties with all nations, so that their common people could buy their goods at the lowest possible price. The fact that voters don't take to the streets demanding this is surprising in itself. It just goes to show that most humans are stupid. Not a big revelation, I suppose.

What more is there to add? Mainly the fact that Norway depends more on trade with the EU than the other way around. This goes without saying, since Norway has less than 5 million inhabitants. The EU seems willing to use this to pressure Norway. I suppose this is possible, but it is not ethical. What is the alternative? If both sides raise their customs barriers, it will over time become less attractive for Norway to trade with its neighbors, and more to sail equivalent goods in from the Asia, Africa and the Americas. Sea transport in bulk is still very cheap, and even then much of the cost is incurred during loading and unloading rather than in transit. With the rapid expansion of the Internet into the developing world (except the very poorest parts), it will be easier for Norwegian importers and exporters to establish links in more remote parts of the world. The costs will still be higher, but hardly enough to send our standard of living down to the level of Catholic countries. And it certainly won't make the EU any richer.

In conclusion, Norway should put its foot down and stand on it. Rather than paying for being allowed to run after the train, we should graciously offer to help pull it for free. If we want to give development aid to southern and eastern Europe, it should be billed as such. It's not such an honor to be allowed into the company of nations that are our inferiors in terms of economy, government and civil liberties. But by all means, if they beg let them have some scraps. We can afford it.