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The importance of the long-term view.

There is no doubt that foreign trade pays off It is a fundamental prerequisite for economic growth and increased wellbeing. This widely recognised fact has been validated by economic theory and practical experience. It also underpins the creation and continued existence of EFTA.

These views are fully shared by the EFTA Consultative Committee. This advisory body includes representatives of labour unions and business associations from the four EFTA countries. Its members are particularly well placed to assess the relevance of EFTA free trade agreements to EFTA businesses, as well as the contribution of those agreements to the living standards of the countries' citizens.

To thrive on the international scene, businesses need a predictable regulatory framework, rather than a power play environment. The World Trade Organization, with its multilaterally agreed set of rules, provides the most important such framework. For small open economies, such as the EFTA countries, a well functioning multilateral system is a necessity. To this date, however, the further dismantling of trade barriers through the WTO Doha Round has proved to be impossible. This gives the EFTA States added impetus to broaden and deepen their access to global markets for goods. services and investment via the FTA route.

At the same time, it is essential for EFTA to maintain a competitive position on world markets vis-a-vis businesses from the European Union. As the European Union is negotiating with a large number of FTA partners, including the United States, EFTA must continue to monitor developments carefully so that the competitive position of companies from the EFTA States is not weakened.

While improving market access for export-oriented businesses is often the motivation for negotiating FTAs. it should not be forgotten that, for importers. FTAs can be equally important. These agreements take the long view in providing for a predictable and stable trading platform. For many importers, this is a prerequisite for entering into procurement agreements and long-term supply contracts.

The long-term view also plays a key role in investment decisions. By their nature, investments tend to be long term and may require a comprehensive set of agreements creating a predictable business framework. During the early phases of new business activity in a host country, and before the economic benefits of the investments become apparent, projects are often exposed to political risks. In this context, bilateral investment treaties can offer an additional safety net, providing protection throughout the life of the project. The conclusion of trade agreements through EFTA ought therefore to be followed up by further work on the promotion and protection of investments.

The EFTA States are placing increased focus on working conditions and workers' rights in prospective partner countries. From a Norwegian perspective, Virke, the Enterprise Federation of Norway, agrees with this approach and has given its support to including clearer and more binding formulations in EFTA free trade agreements with regard to social and environmental standards. This is very much in line with the conclusions of the 2010 EFTA Ministerial meeting in Reykjavik.

Concerning the choice of future FTA partners, it is worth noting that seven out often of the world's fastest-growing economies are now in Africa. More and more businesses from the EFTA countries are positioning themselves in the African markets. The fact that EFTA is considering pursuing FTAs with countries from this region is both relevant and important.

"To thrive on the in scene, businesses need a predictable regulatory framework ..."

Thomas Angell

Director, Virke--the Enterprise Federation of Norway Chairperson of the EFTA Consultative Committee
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Author:Angell, Thomas
Publication:EFTA Bulletin (Switzerland)
Geographic Code:4EXSI
Date:Dec 1, 2013
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