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N
AVIGATING BY THE
S
TARS
N
ORWAY
,
THE
E
UROPEAN
E
CONOMIC
A
REAAND THE
E
UROPEAN
U
NION
M
ICHAEL
E
MERSON
, M
ARIUS
V
AHLAND
S
TEPHEN
W
OOLCOCK
WITH
J
OANNA
A
PAP
, D
ANIEL
G
ROS
, A
LEXANDR
H
OBZAAND
M
ARC
H
OUBEN
C
ENTRE FOR
E
UROPEAN
P
OLICY
S
TUDIES
B
RUSSELS
 
The Centre for European Policy Studies (CEPS) is an independent policyresearch institute in Brussels. Its mission is to produce sound policyresearch leading to constructive solutions to the challenges facingEurope. As a research institute, CEPS takes no position on matters of policy. The views expressed are entirely those of the authors.The present study was prepared at the invitation of the Confederation of Norwegian Business and Industry (NHO) as a contribution to itsconference entitled ‘Navigating by the Stars’,
 
in Brussels on 28 February-1 March 2002.
ISBN 92-9079-370-8© Copyright 2002, Centre for European Policy Studies.
All rights reserved. No part of this publication may be reproduced, stored in aretrieval system or transmitted in any form or by any means – electronic,mechanical, photocopying, recording or otherwise – without the prior permission of the Centre for European Policy Studies.
Centre for European Policy StudiesPlace du Congrès 1, B-1000 BrusselsTel: 32 (0) 2 229.39.11 Fax: 32 (0) 2 219.41.51e-mail: info@ceps.beinternet: http://www.ceps.be
 
C
ONTENTS
Executive Summary
i
Introduction
1
2. The Single Market and the European Economic Area
52.1 Core properties of the EEA system 5
2.1.1 The institutional framework of the EEA Agreement 
5
2.1.2 The scope of the EEA
8
2.1.3 EEA cooperation beyond the single market 
122.2 The expanding EU-EEA
acquis
12
2.2.1 Energy
13
2.2.2 Transport policy
16
2.2.3 Electronic communications
17
2.2.4 Postal services
192.3 On the margins of the European Economic Area19
2.3.1 Fisheries
20
2.3.2 Agriculture
23
2.3.3 Trade policy
262.4 The functioning of the EEA institutions29
2.4.1 Input of the EEA states into shaping the
acquis29
2.4.2 The EEA Council and political dialogue
31
2.4.3 Supranationality in the EEA: The ESA and the EFTA Court 
322.5 Preferences of Norway and its EEA partners34
2.5.1 Iceland 
35
2.5.2 Liechtenstein
372.6 EU enlargement38
2.6.1 The EU-EEA balance
38
2.6.2 EEA enlargement 
40
2.6.3 Costs to Norway
412.7 Assessing the alternatives to the EEA432.8
 
Conclusions on the functioning of the EEA system48
3. The Broader Economic Agenda
513.1 Norway’s macroeconomic performance in the last decade513.2 Energy in the Norwegian economy –How special?553.3 Is the Norwegian krone a petro-currency?583.4 Norway and the euro: The costs and benefits of exchange rate stability60
3.4.1 The standard optimum currency area indicators
61
3.4.2 Exchange-rate variability and Norwegian labour markets
66
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