EsThe governments of Britain, Norway and Iceland have agreed to retain existing trading relations as a stopgap measure in the event of a no-deal Brexit, Bloomberg reports. The measure would be temporary but retained until a full trade deal can be signed.
In particular the deal would retain existing zero tariffs – which apply currently as a result of Norway and Iceland’s membership of the European Free Trade Association (EFTA) which is part of the European Economic Area (EEA) with the EU.
Securing relations both with EFTA members and with Switzerland – via the trade continuity agreement as outlined in Panjiva’s research of Feb.12 – shows that light-touch trade deals can be signed relatively quickly. Yet, a deal with the EU won’t be as easy given the EEA requires Norwegian compliance with a wide range of EU rules outside trade as well as payments into the EU budget without a vote on spending.
Panjiva analysis of official figures shows that British bilateral trade with Norway reached £23.8 billion ($31.6 billion) in 2018 after rising by 4.5% year over year. Imports from Norway outnumbered exports by 5.5x, suggesting trade terms with Norway would not be reflective of Britain’s wider trade position.
Source: Panjiva
Most of the imbalance though is driven by the energy sector, with British imports of oil having reached £9.37 billion in 2018 and shipments of natural gas equalling £8.02 billion. Indeed, excluding energy products the U.K. had a small trade surplus with Norway, providing an incentive to reach a deal to preserve British export earnings. Indeed, with Britain already having committed to cut duties on 90% of imports by number of tariff lines it may have little to negotiate with beyond status-quo type deals.
Leading export lines outside of energy include autos where shipments were worth £514 million in 2018, having risen 54.4% year over year, as well as chemicals (£318 million, up just 1.9%) and industrial machinery worth £269 million (1.5% higher).
Source: Panjiva
