The Act has later been amended by Directive 98/48 of the European Parliament and the Council of 20 My 1998.

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1 Brussels, 1 June 2004 Case no: 2743 Event no: Dec. no: 124/04/COL Dear Sir/Madam, tbject: Letter of formal notice for failure to notify draft technical regulations according to the Act referred to in point 1 of Chapter XIX of Annex II to the Agreement on the European Economic Area (Directive 98/34/EC of the European Parliament and the Council of 22 June 1998 laying down a procedure for the provision of information in the field of technical standards and regulations) a letter of 23 January 2003 the EFTA Surveillance Authority drew the Norwegian Government's attention to a received complaint pointing to a breach of the EEA Agreement. The complainant argues that the Norwegian Act on recreational craft ("Lov ov 26. juni 1998 nr. 47 om fritids- og smabater") which prohibits the use of personal watercraft is contrary to Article 11 of the EEA Agreement prohibiting quantitative restrictions on imports and all measures having an equivalent effect. Furthermore, the complainant states that the prohibition, which was introduced by amendments to the Act on recreational craft in July 2000, constitutes a technical regulation within the meaning of trie Act referred to at point 1 of Chapter XIX of Annex II of the EEA Agreement (Directive 98/34/EC of the European Parliament and the Council of 22 June 1998 laying wn a procedure for the provision of information in the field of technical standards and regulations), hereinafter referred to as "the Act". 1 Consequently, the complainant alleges tliat the amendments to the Act on recreational craft should have been notified to the Authority at the drafting stage in accordance with Article 8 of the Act. N [ission of Norway to the European Union Rue Archimede 17 1DOO Brussels The Act has later been amended by Directive 98/48 of the European Parliament and the Council of 20 My Rue de Treves 74, B-1040 Brussels, tel: (+32X0) , fex: (+32X0) ,

2 'age 2 1 EFTA SURVEILLANCE rference is further made to the Authority's letter dated 5 March 2003 (Doc. No D), Norway's reply received 23 May 2003 (Your ref. 2003/736-N/SLH), discussions during the package meeting in Oslo 23 to 24 September 2003 and the Authority's follow up letter (Doc. No D) as well as Norway's reply received 10 (binary 2004 (Your ref /BE). Through these contacts, views have been changed regarding both the application of Article 11 of the EEA Agreement and the A ^ Ii to the former issue, Norway informed the Authority, in the letter received 27 February 04, that the Norwegian Supreme Court on 5 December 2003 decided to ask the EFTA urt for an advisory opinion on the interpretation of the EEA Agreement in relation to of the Act on recreational craft. As far as the Authority is aware of, such an 0 inion is expected to include an interpretation of Article 11 and 13 of the EEA Agreement, but, due to objections raised by the State prosecutor, it is not yet finally dscided whether a request for an advisory opinion will actually be sent or not. In the light o the fact that an eventual opinion by the EFTA Court will initiate a new draft of the Act recreational craft, and that such a draft might differ from the Act currently in place, Authority will not for the time being address this issue. Thus, the present letter of rmal notice only addresses the notification obligation under the Act. However, in line with what is explained above, this does not preclude that the Authority might revert to the q estions regarding the compatibility of the Act on recreational watercraft with Article 11 the EEA Agreement at a later stage. The Norwegian Act on recreational craft was amended on 7 July 2000 by inserting a new chapter 5 comprising sections 38 to 40. The amendments entered into force on 1 January 01. However, the amendments were not notified to the Authority at the drafting stage according to the notification obligation laid down in Article 8 of the Act. TJhe first paragraph of Section 39 of the Act on recreational craft read in conjunction with ction 38 introduce a general prohibition on the use of personal watercraft and similar ssels. Municipalities may, however, according to the second paragraph of Section 39, cide to adopt full or partial exemptions from the prohibition within limited areas, provided that the use of personal watercraft in these areas will not involve danger, d isturbance of peace or be harmful to animals or plants. Furthermore, the third paragraph Section 39 also provide some general exemptions from the prohibition regarding use of personal watercraft or similar vessels related to police and rescue services, military training and transport as well as marine archaeological and other scientific research. the letter dated 5 March 2003, the Authority expressed its opinion that the Norwegian t on recreational craft seemed to have the characteristics of a technical regulation thin the meaning of the Act. hi its reply received 23 May 2003, the Norwegian vemment stated that the provisions regulating the use of personal watercraft in rway were not to be considered as technical regulations or other requirements pursuant

3 'age 3 to Article 1 (9) of the Act and that Norway consequently had not failed to fulfil its obligation under Article 8 of the Act by not notifying the amendments to the Act on recreational watercraft at the drafting stage. This position was upheld by representatives from the Norwegian authorities following further discussion regarding the issue during the package meeting in Oslo 23 to 24 September The obligation of the EFTA States to immediately communicate to the Authority any diaft technical regulation as defined by the Act follows from Article 8 of the Act. 2 Notification is only exempted if the proposed regulation merely transposes the full text of ail international or European standard, or under the specific circumstances listed in Article 10 of the Act. A 'draft technical regulation' is according to Article 1 (10) of the Act "the text of a technical specification or other requirement, including administrative provisions, formulated with the aim of enacting it or of ultimately having it enacted as a technical regulation, the text being at a stage of preparation at which substantial amendments can still be made". Tie term 'other requirement' is defined in Article 1 (3) of the Act, and comprises inter atia provisions that may significantly influence the marketing of a product. Furthermore, Article 1 (9) of the Act also states that the term 'technical regulation' include "laws, regulations or administrative provisions [...] prohibiting the manufacture, importation, marketing or use of a product" (outlined here). The Authority is of the opinion that the Norwegian provisions prohibiting the use of personal watercraft constitute a technical regulation which should have been notified under the procedure prescribed by the Act. From the definitions found in Article 1 of the Act it is clear that the term "technical regulations" also includes "other requirements" that aie not technical specifications in a strict sense, but which, nevertheless influence the narketing of a product. In the Authority's view, the provisions in question are bound to limit or restrict the use of personal watercraft, and thereby also significantly influence their marketing, thus falling within the concept of a technical regulation which needs to b; notified to the Authority at the drafting stage in accordance with Article 8 of that Act. The Authority's services cannot agree with the Norwegian submission that section 38 to 43 of the Act on recreational craft should not be regarded as a prohibition on the use of p&rsonal watercraft since there are express exemptions provided for certain types of use, aid because municipal authorities have the right to regulate other types of use of personal watercraft. The fact that municipalities may issue regulations allowing the use of personal \satercraft in defined areas does not change the characteristics of the main rule being a prohibition on the use of personal watercraft. iee in particular Case E-4/03 EFTA Surveillance Authority v The Kingdom of Norway of 5 May 2004.

4 'age 4 A 5 to whether the regulations significantly affects the marketing of personal watercraft, Norway, in the letter received by the Authority on 10 February 2004, claims that this was not considered to be the case, as the intention behind the regulations only was to keep the use of such watercraft within acceptable limits through municipal regulations. This st itement, however, seems to run counter to observations made in the preparatory works of the regulations. The attention of the Norwegian Government is in this respect drawn to point 12 of of. prp. nr. 38 ( ) under where it is stated that "it is anticipated that the restrictions in the regulations concerning the use of personal watercraft and similar vessels will lead to a decline in the sale of such vessels". 3 Thus, the Authority can not ac cept the arguments put forward by the Norwegian Authorities on this point. Moreover, the Authority would like to stress that the intentions of the Norwegian Government in this regard are of lesser relevance, as long as the regulations will have a dc, facto effect on the sale of personal watercraft. According to information provided by the Norwegian authorities during last years package meeting in Oslo, personal watercraft aie currently allowed for recreational use in only a few municipalities as well as the use ol: such watercraft being subject to substantial limitations in these municipalities. Based on this fact alone, it is the opinion of the Authority, that the marketing of personal watercraft is significantly influenced by the regulations currently in place. Finally, it should be noticed that the Norwegian regulation is inspired by and similar to tie corresponding Danish and Swedish regulations on the use of personal watercraft. 4 According to information from the Technical Regulations Information System (TRIS), comprising all notifications under the 98/34/EC-procedure, Denmark and Sweden notified their regulations on personal watercraft under notification 1994/207/DK and 2003/119/S, respectively. Accordingly, as its information presently stands, the Authority must conclude that Norway, by adopting the Act on amendments in the Act on recreational crafts of 7 July 2000 no 72 (Lov om endringer i lov av 26. juni 1998 nr. 47 omfritids- og smabater av 7. jiii 2000 nr. 72) without notifying it to the Authority at the drafting stage, has failed to fulfil its obligation under Article 8 of the Act referred to in point 1 of Chapter XDC of Annex II to the EEA Agreement (Directive 98/34/EC of the European Parliament and of t}& Council of 22 June 1998 laying down a procedure for the provision of information in the field of technical standards and regulations) as amended and adapted by Protocol 1 thereto. Under these circumstances, and acting under Article 31 of the Surveillance and Court Agreement, the Authority would like to invite the Norwegian Government to submit its ol jservations on the content of this letter within two months following receipt thereof. Unofficial translation by the Authority. The original reads: "Innstramning av reglene for bruk av vcamscootere og liknende kanforventes a fare til at omsetningen av denne typefartey avtar." 4! Jee, inter alia, ot. prp. No 38 ( ) point 4.

5 'age 5 EFTA SURVEILLANCE, After the time limit has expired, the Authority will proceed to consider, hi the light of any observations received from the Norwegian Government, whether to deliver a reasoned opinion in accordance with Article 31 of the Surveillance and Court Agreement. It is recalled that if the Norwegian Government would choose to amend or replace the alovementioned national act, the draft measures should be notified to the Authority according to Article 8 of the Act. r the EFTA Surveillance Authority UTS faithfully, Bprnd Hammermann liege Member