Case handler: Charlotte Forns Tel: (+32)(0)22861861 e-mail: cfo@eftasurv.int Brussels, l8 October 2016 Case No: 79122 Document No: 820346 Norwegian Ministry of Trade Industry and Fisheries Postboks 8090 Dep N-0032 Oslo Norway Dear Sir or Madam, Subject: Complaint against Norway concerning levies on fish exporters and exported fish products contrary to Article 10 and Protocol9 EEA I The complaint By a letter dated 4 May 2016 (Document No 803500), the EFTA Surveillance Authority ("the Authority") informed the Norwegian Government that it had received a complaint against Norway regarding levies imposed on fish exporters and exported fish products. In particular, the complainant submits that marketing and promotional activities initiated by the Norwegian Seafood Councilr constitute a measure having equivalent effect to quantitative import restrictions in breach of Article I (2) of Protocol 9 to the EEA Agreement ("Protocol 9"). According to information submitted by the complainant, the activities of the Norwegian Seafood Council comprise joint marketing efforts abroad and on the domestic market including promotion of fish with Norweglan origin through the trademark "NORGE - Seafood from Norway" and a trout project for which alarge media campaign was launched on 26 September 2015. These activities are financed through mandatory levies imposed on fish exporters and exported fish products pursuant to the Regulation on the Regulation of Exports of Fish and Fish Productsz. 2 Initial observations made by the Norwegian Government With our letter dated 4 May 2016, you received a copy of the complaint and were asked to provide your initial observations on the complaint. You responded by letter dated 17 June 2016 (Document No 808978). As regards the alleged export restrictions in breach of Article 10 EEA and Protocol 9 to the EEA Agreement, you emphasise that the products covered by the Norwegian Seafood Council's activities are not covered by Chapters 25 to 97 of the Harmonized Commodity Description and Coding System and, therefore, pursuant to Article 8(3) EEA fall outside the scope of the EEA Agreement. tn addition, you note that no obligations related to the export offish are foreseen by Protocol 9. I Le. Norges sjomatrid. 2 Le. Forskrift om regulering av eksporten av fisk og fiskevarer. Rue Belliard 35, B-1040 Brussels, tel: (+32)(0)2 286 l8 I l, fax (+32X0)2 286 l8 00, www.ettasurv.int
Page2 As to the alleged import restrictions in breach of Protocol 9, your arguments which will be described in more detail below fall in two parts. Firstly, it is argued that the Authority lacks competence to assess the complaint, and secondly that the activities of the Norwegian Seafood Council do not constitute quantitative restrictions on import or measures having equivalent effect. 2.1 Alleged import restrictions in breach of Protocol 9: The Authority lacks competence Essentially, you reply that the Authority lacks competence to carry out surveillance of Protocol 9 and in particular surveillance of Article l(2) of Protocol 9. You hold that Protocol 9 is a unique construction in the EEA Agreement, which is not covered by the general supervisory regime of the Agreement, but instead establishes its own system, separate from the supervisory regime which apply to the parts of the EEA Agreement that mirrors the EU internal market law. In this respect, you note that the general supervisory regime is set out in Articles 108 and 109 EEA and Article 5 of the Surveillance and Court Agreement ("the SCA"), and that the Authority needs a clear and firm legal basis in order to exercise the responsibilities which the EFTA States have explicitly conferred upon it. In your view, the Authority has no competence to carry out surveillance of measures conceming products falling outside the scope of the EEA Agreement pursuant to Article 8(3) EEA, unless such competence is specifically foreseen. Although you recognise that in line with the general supervisory regime, the Authority normally has the competence to carry out surveillance of the protocols to the EEA Agreement, you submit that Protocol 9 and the system it creates derogates from the general supervisory regime. You recall that in Decisions 195/96/COL, lt6lo5lcol and 729l08lCOL the Authority concluded that it lacks the competence to assess state aid within the meaning of Article a(1) of Protocol 9, and you contend that statements made by the Authority in the said decisions provide general assessments on the interpretation of protocol 9 and its relationship with the main part of the EEA Agreement. On the basis of a particular statement made in Decision l95l96lcol, you infer that the general provisions in the EEA Agreement on the competence of the Authority are not applicable. Your citation (with emphasis added) reads as follows: "... it emerges clearly that Protocol 9 in principleforms an independent, basic set of rules governing trade infish and other marine products, separatefrom (except when otherwise provided) other provisions in Part II in the main body of the EiA Agreement. In othn,.ord* Proto"ol 9 it in prin"ipl" o lr* tr""iolit _for-firh ond rules including those on State aid set out in Chapter 2 of part IV of the Agreement (Articles 6l io 6e, are not applicable to the.fisheries sector. except when explicitly so provided in the relevant articles of the main part of the Agreement (cf,, Articles 2l (r), 23, second paragraph, and 65(1) and (2)) or in protocol 9.,,
Page 3 Furthermore, you submit that Protocol 9 must be interpreted with its context in mind, i.e. the fact that when the EEA Agreement was negotiated, it became clear that free movement of fish was not possible and instead it was agreed that the Contracting Parties would maintain their authority to exercise discretion when regulating the marketing of frsh. And you note that Article 6 of Protocol 9 clearly illustrates how violations of Protocol 9 are to be handled. 2,2 Alleged import restrictions in breach of Protocol 9: The activities of the Norwegian Seafood Council do not constitute quantitative restrictions on import or measures having equivalent effect In your reply, it is observed that the Norwegian Seafood Council is a limited liability company in which the Ministry of Trade, lndustry and Fisheries holds all the shares and appoints the board of directors, but that the authorities do not play an active role in the dayto-day operational decisions of the board or in the administrative tasks. Moreover, you obsave that the aim of the Norwegian Seafood Council is to increase the value ofnorwegian seafood resources and that its activities in the Norwegian market mainly seek to increase the overall consumption of seafood by focusing on the nutritional and health benefits of consuming seafood products regardless of their origin. You state that the Norwegian Seafood Council's campaigns are origin neutral and benefit all fish producers operating in Norway, i.e. not only the products holding the Norge-logo (i.e. Norwaybrandmark). As regards the Norge-logo, yort note that it is used as a mark of origin, but that is does not involve any discrimination on the part of the Norwegian Government against imported products. With regard to the trout project mentioned in the complaint, you indicate that the terrn Norwegian Trouthas been used in three TV-campaigns in Norway from 2014-20l5,but that the campaign is now terminated and that no further campaigns are foreseen. In your view, these activities do not breach Article 1(2) of Protocol 9. 3 The Internal Market Affairs Directorate's preliminary assessment 3.1 The Authority is competent to carry out surveillance of Protocol 9 You hold that Protocol 9 is a unique construction in the EEA Agreement, which is not covered by the general supervisory regime of the Agreement. As a starting point, the Internal Market Affairs Directorate ("the Directorate") observes that pursuant to Articles 108 and 109 EEA, the Authority is competent to monitor the EEA EFTA States' fulfilment of their obligations under the EEA Agreement. In this respect, the notion "EEA Agreement" covers the main EEA Agreement, its Protocols and Annexes and the acts referred to therein, cf. Article }EEA. More detailed rules on the Authority's competence are foreseen inarticle 5 (1) SCA, which i.a. reads as follows:
Page 4 "The EFTA Surveillance Authority shall, in accordance with the provisions oj'this Agreement and provisions of the EEA Agreement and in order to ensure the proper functioning of the EEA Agreement: (a) ensure the fuffilment by the EFTA States of their obligations under the EEA Agreement and this Agreement; [...J". In addition, Article 22 SCA provides that "In order to ensure the proper application of the EEA Agreement, the EFTA Surveillance Authority shall monitor the application of the provisions of the EEA Agreement and of the present Agreement by the EFTA States." Furthermore, Article 3l SCA provides that "If the EFTA Surveillance Authority considers that an EFTA State hasfailed to.fulfil an obligation under the EEA Agreement or of this agreement, it shall, unless otherwise provided.for in this Agreement, deliter a reasoned opinion on the matter after giving the State concerned the opportunity to submit its observations. If the State concerned does not comply with the opinion within the period laid down by the EFTA Surveillance Authority, the latter may bring the matter before the EFTA Court." Similar to Article 2 EEA, Article 1 (a) SCA foresees that the notion "EEA Agreement" covers the main EEA Agreement, its Protocols and Annexes and the acts referred to therein. Accordingly, it follows from Articles 108 EEA, 109 EEA, 5 (1) sca, 22 SCA and 31 SCA that the Authority has the competence and the obligation to ensure Norway's fulfilment of its obligations under the EEA Agreement including those foreseen in Protocol 9 and to monitor Norway's application of the EEA Agreernent including protocol 9. In other words, the said provisions provide a sufficiently clear and firm legal basis for the Authority to carry out surveillance of the EEA EFTA States' obligations under protocol 9. No provision in Protocol 9, in the EEA Agreement or in the SCA supports your argument that Protocol 9 derogates from the Authority's competence laid down in Articles 108 EEA, 109 EEA,5 (1) SCA,22SCAand 3l SCA. As regards the decisions to which you refer, i.e. Decisions l95l96lcol, 176lO5lCOL and 729l08lCOL, they all concern the Authority's competence to carryz out surveillance of State aid within the scope of Article 4(l) of Protocol 9. In the said Decisions, the Authority's starting point is that it considers Protocol 9 to form an independent, basic set of rules governing trade in fish and marine products separate from other provisions in Part II in the main body of the EEA Agreement. Next, the Authority observes that Protocol 9 only foresees an ex-post supervision of State aid, and not a continuous surveillance and monitoring function. The Authority then considers whether the competences foreseen in Protocol 26 to the EEA Agreement3 ("Protocol 26,,) and, Article 24 SCA applies to Protocol 9. To this end, the Authority notes that Protocol 26 andarticle 3 Protocol 26 on the powers and functions of the EFTA Surveillance Authority in the field of state aid.
Page 5 24 SCA lay down the Authority's competences in the field of state aid by explicitly enumerating the relevant provisions in the EEA Agreement, which the Authority is to ensure that the EEA EFTA States fuifii. As these enumerations do not include Protocol 9 and there is no reason to consider that Protocol 26 and Article 24 SCA were not intended to exhaustively enumerate the Authority's competences in the field of state aid, the Authority concludes that the competences foreseen in Protocol 26 and Article 24 SCA do not extend to Protocol 9. The same analysis can be found in the Authority's letter of 27 July 2016 (Document No 810449) on closure of Case No 79116 concerning the complaint submitted by Marine Harvest ASA and Marine Harvest (Scotland) Ltd on l3 May 2016 as regards alleged state aid in relation to levies imposed on fish exporters and exported fish products.a Clearly, this analysis has only one focus, i.e. the Authority's competence to carry out surveillance of State aid within the scope of Article 4(1) of Protocol 9. It does not touch on the Authority's competence to carry out surveillance of the EEA EFTA States' fulfilment of the obligations foreseen in Article I of Protocol 9 and, therefore, the Directorate cannot see that the said Decisions are relevant for the present case. In this connection, it is noted that the analysis concerning the Authority's competence to carry out surveillance of State aid within Article a(1) of Protocol 9 cannot be applied to Article 1 of Protocol 9 by way of analogy for the reason that the competence and the surveillance obligations conferred upon the Authority in the field of free movement of goods and state aid, respectively, are entirely diflerent. Whereas the Authotity's competence in the field of state aid is limited by the enumeration laid down in Protocol 26 and Article 24 SCA, no enumeration is foreseen in Articles 108 and 109 EEA or in Articles 5(1), 22 and 3l SCA. In fact, with the exception of public procurement, no specific provision on the Authority's competence to carry out surveillance of the EEA EFTA States' fulfilment of their obligations relating to free movement is foreseen in the main part of the EEA Agreement or in the SCA. Consequently, what can be inferred from the fact that neither the main part of the EEA Agreement nor the SCA foresees any explicit competence for the Authority to carry out surveillance of the EEA EFTA States'fulfilment of the obligations foreseen in Article 1 of Protocol 9 is simply that the general provisions on the Authority's competence, i.e. Articles 108 EEA, 109 EEA, 5 (1) SCA,22 SCA and 31 SCA, apply. As to your argument concerning the fact that when the EEA Agreement was negotiated, it became clear that free movement of fish was not possible and instead it was agreed that the Contracting Parties would maintain their authority to exercise discretion when regulating the marketing of fish, the Directorate observes that Article 1 of Protocol 9 explicitly limits the discretion of the Contracting Parties as far as customs duties and quantitative restrictions on import are concerned. ln the light of the above, the Directorate holds that the Authority is competent to consider whether the activities of the Norwegian Seafood Council breach Article 1(2) of Protocol 9. 4 On 20 September 2016, an application to have the decision to close the case annulled was submitted to the EFTA Court where it is being considered under Case No E-12l16.
Page 6 3.2 The activities of the Norwegian Seafood Council constitute measures having equivalent effect to quantitative restrictions on import From the information available to the Directorate, the marketing and promotional activities initiated by the Norwegian Seafood Council appear to have characteristics similar to the UKApple and Pear Development Council which was considered by the Court of Justice of the European Union ("the CJEU") in Case 2221825. The Apple and Pear Development Council was established by the UK Government with the dual purpose of promoting the sale and purchase of domestic apples and pears and the improvement of the quality of the said products. The board members were appointed by the Government, and the activities of the Apple and Pear Development Council were financed through a statutory levy imposed on producers of the said products. With reference to the "Buy lrish"-case6, the CJEU recalled that a publicity campaign promoting domestic products could come within the ambit of Article 30 EEC (now Article 34 TFEU), if the campaign was supported by the authorities. The CJEU held that "a body such as the Development Council, which is set up by the government of a Member State and is financed by a charge imposed on growers, cannot under Community law enjoy the same.freedom as regards the methods of advertising used as that enjoyed by producers themselves or producers'associations of a voluntary character."t The CJEU then stressed that such a body cannot lawfully promote the purchase of domestics products: "In particular, such a body is under a duty not to engage in any advertising intended to discourage the purchase of products of other Member States or to disparage those products in the eyes of the consumers. Nor must it advise consumers to purchase domestic products solely by reason of their national origin."8 (emphasis added). As for the marketing and promotional activities initiated by the Norwegian Seafood Council, the Directorate observes firstly that the Norwegian Seafood Council is a limited liability company in which the Ministry of Trade, Industry and Fisheries holds all the shares and appoints the board of directors. Accordingly, the Norwegian Seafood Council is ultimately under the Ministry's control. Secondly, it is observed that the Norwegian Seafood Council is funded through levies imposed on fish exporters and exported fish products. And thirdly, it is observed that an objective ofthe Norwegian Seafood Council is to increase the demand for Norwegian seafood domestically. The Directorate cannot see how it is possible to carry out marketing and promotional activities aimed at increasing the demand for domestic products on the domestic market without an element of discrimination against imported products being present. Against this background,the Norge-logo - which is more than a simple indication of origin - appears to constitute a measure having equivalent effect to quantitative restrictions on import. s App I e and P ea r D eve I opm ent C o uncil, Case 222 I 82,EU: C : I 9 83 : 3 70. 6 Supra, note 4. 7 Paragraph 17. 8 Paragraph 18.
PageT In the light of the above, the Directorate's preliminary conclusion is that the domestic marketing and promotional activities of the Norwegian Seafood Council constitute measures having equivalent effect to quantitative import restrictions and, therefore, believes that they infringe Article 1(2) of Protocol 9. TheNorwegian Govemment is invited to submit its observations on the content of this letter by 14 December 2016. After that date, the Authority will consider, in light of any observations received from the Norwegian Government, whether to initiate infringement proceedings in accordance with Article 31 of the Agreement between the EFTA States on the Establishment of a Surveillance Authority and Court of Justice. Yours faithfully, f,kfu Director Intemal Market Affairs Directorate