WT/TPR/S/205 Trade Policy Review Page 12 II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES (1) OVERVIEW 1. No significant changes have been introduced to Norway's general legal framework since its last Review in 2004. Norway acknowledges that its economic prosperity is dependent on trade, and considers that a binding and predictable open trade regime should be accompanied by a well functioning and competitive domestic environment. Norway has an independent trade policy, which places support for the multilateral trading system at its core. 2. Norway is an original Member of the WTO and has participated actively in the multilateral trading system. In the context of the DDA, Norway has presented several proposals individually and together with other Members. It has also submitted numerous notifications to the WTO, although a few are lagging in areas such as agriculture, state trading and import licensing. Norway ratified the Fourth Protocol on basic telecommunications and the Fifth Protocol on financial services; it is a party to the Government Procurement Agreement and to the Information Technology Agreement. It has been involved in multilateral dispute settlement procedures in two cases as a respondent and in ten as a third party. It is an active participant in the WTO's work on aid for trade and a significant provider of assistance to developing countries; it has decided to increase its contribution to aid for trade from 2008 mostly through multilateral channels. 3. Norway sees its membership in the European Economic Area (EEA) as an essential complement to the multilateral trading system; its trade related regulations are largely implemented within the context of its EEA membership. As a member of the EEA, Norway grants largely unrestricted access to goods, workers, services, and capital from other members. In the context of the European Free Trade Association (EFTA), Norway is part of an expanding network of free-trade agreements, including FTAs with 16 trading partners, of which six were signed during the period under review. In 2008, changes were introduced to Norway's GSP scheme in order to expand duty- free and quota-free access, originally granted to LDCs, to 14 low-income developing countries. 4. Norway maintains restrictions to foreign investment in fisheries, audiovisual services, and maritime and air transport; with the exception of certain restrictions in the fisheries sector, these do not apply to investors from EEA member countries. The participation of domestic and all foreign investors is restricted by the de jure monopolies the State holds in certain postal and railway services, and in the retail sale of alcoholic beverages. Additionally, in practice, the participation of national and foreign private investors is limited in sectors where the State holds significant shares in large companies, such as telecommunication, electricity, financial services, and petroleum and gas extraction. Norway has bilateral investment treaties in force with 13 countries. (2) TRADE POLICY FORMULATION AND IMPLEMENTATION (i) Institutional framework 5. Norway is a constitutional monarchy with a parliamentary democratic system of government. Since Norway's Trade Policy Review in 2004, minor changes have been introduced in the constitutional regime (see below). State power is formally distributed among three institutions: the Government (the executive power), the Storting (the legislative power) and the Supreme Court (the judicial power). Norway WT/TPR/S/205 Page 13 6. The Government's most important functions are to submit bills and budget proposals to the Storting and implement decisions through the Ministries.1 Although the Constitution grants many executive powers to the King, these are always exercised by the Council of State (Council), which comprises a Prime Minister and 18 other Ministers. Members of the Council who are elected members of the Storting are required by the Constitution to take leave of absence from the Storting. 7. The legislative authority is vested in the Storting, a unicameral parliament composed of 169 members. When the Storting is exercising legislative functions, it is divided into two chambers, the Odelsting and the Lagting.2 Nevertheless, in February 2007 the Storting passed a constitutional amendment abolishing this division of chambers as from 2009 election.3 Parliamentary elections are held every four years; the latest was in September 2005. 8. Amongst other things, the Storting adopts the fiscal budget, fixes direct and indirect taxes, including import tariffs, monitors the Government and public administration, and authorizes plans and guidelines for state activities, including foreign policy.4 The Storting is informed of all international treaties signed by the Government.5 9. Most of the issues tabled at Storting are analysed by one of the 12 standing committees before plenary discussions take place. The standing committee on foreign affairs discusses matters of trade policy, including the review of all international agreements and treaties.6 Consultations between the Government and this committee represent both an indirect way through which the Storting can influence the outcome of international negotiations, and a way for the Government to secure majority support in advance of an eventual voting process.7 Consent of the Storting is required when a treaty is of particular importance or necessitates a new statute or decision; however, the Storting may not amend trade agreements negotiated by the Government. Every year the Government submits a proposal on tariff rates for the Storting's approval but temporary tariff reductions for agricultural goods may be authorized through administrative decisions (Chapter IV(2)).8 10. Under normal circumstances bills passed by the Storting require the King's approval before becoming law, but this is a formality, since the King does not usually refuse to approve a bill passed by the Storting.9 All Royal Decrees must be signed by the King and the Prime Minister.10 Laws and regulations, as well as Supreme Court decisions, are published in Norway's Legal Gazette; some have an unofficial translation to English.11 11. Norway's court system comprises courts of first instance, courts of appeal and the Supreme Court. The latter, Norway's highest court, is responsible for ensuring uniformity of the legal process and hears both civil and criminal cases. Its 18 ordinary justices and Chief Justice, as well as other 1 Norwegian Government online information. Viewed at: http://www.regjeringen.no/en.html?id=4, and http://www.norway.org.uk/facts/political/government/government.htm. 2 For further details see WTO (2004). 3 Act No. 365 of 30 March 2007. 4 Article 75 of the Constitution of Norway. 5 Article 26 of the Constitution of Norway. 6 Norwegian Parliament online information. Viewed at: http://www.stortinget.no/english/committees. html. 7 Langhelle and Rommetvedt (2004). 8 Regulation No. 1723 of 22 December 2005, which substituted regulation No 1315 of 18 December 2000; and Regulation 1647 of 21 December 2001. 9 Article 77 to 79 of the Constitution of Norway. 10 Article 31 of the Constitution of Norway. 11 Legal Gazette online information. Viewed at: http://www.lovdata.no/info/uenga.html. WT/TPR/S/205 Trade Policy Review Page 14 court judges, are appointed by the King-in-Council.12 In the exercise of its judicial authority, the Supreme Court acts wholly independently of the other organs of State. The Supreme Court and the other courts are empowered, inter alia, to review the legality of Government decisions and the constitutionality of legislation adopted by the Storting. (ii) Trade policy formulation, implementation and objectives 12. The Ministry of Foreign Affairs has overall responsibility for the formulation of foreign trade policy. It represents Norway at the WTO, and is responsible for multilateral trade negotiations. Other ministries and agencies are also involved with various aspects of trade policy, most notably: the Ministry of Finance (tariff policy and taxation); the Norwegian Customs and Excise (import and export control and collection of customs duties, excise duties, and VAT on importation); the Ministry of Trade and Industry (preferential trade negotiations, bilateral economic relations, business promotion abroad, and e-commerce); and Innovation Norway (export promotion). The authorities indicate that the ministries and their subordinate directorates consult extensively on trade-related issues with business and other non-governmental institutions. 13. Norway acknowledges that its economic prosperity and high level of employment are dependent on trade with other countries; it also considers that a binding and predictable open trade regime should be accompanied by a well functioning and competitive domestic environment.13 In order to benefit from comparative advantage and economies of scale, Norway continually seeks to extend access for its goods and services to new markets. It recognizes the importance of the multilateral trading system, and sees its participation in the EEA as an essential complement to the WTO. Norway also continues to liberalize its trade on a bilateral basis through reciprocal agreements negotiated by EFTA, and through its non-reciprocal preferential schemes for developing and least developed countries. 14. As part of EFTA, Norway has concluded preferential trade agreements with several countries, and it is currently negotiating five new agreements (section (4), (ii) below). Given that Norway's MFN applied tariffs on industrial goods