VZCZCXYZ0000
RR RUEHWEB

DE RUEHNY #0073/01 0141318
ZNR UUUUU ZZH
R 141318Z JAN 09
FM AMEMBASSY OSLO
TO RUEHC/SECSTATE WASHDC 7288
RUCPDOC/USDOC WASHDC
RUCPCIM/CIM NTDB WASHINGTON DC

UNCLAS OSLO 000073 
 
SIPDIS 
 
STATE FOR EUR/NB, TREASURY FOR DO/JMACLAUGHLIN 
USDOC FOR ITA/JKOZLOWICKI, USTR FOR JKALLMER 
OPIC FOR RO SULLIVAN 
 
¶E. O. 12958:  N/A 
TAGS: EINV OPIC KTDB USTR NO
SUBJECT:  NORWAY ? 2009 INVESTMENT CLIMATE REPORT 
 
REF:  08 SECSTATE 123907 
 
¶1.  (U)  Summary.  Here is the submission for Norway's  2009 
Investment Climate Report.  Per reftel, it will be 
incorporated in the Country's Commercial Guide.  End summary. 
Chapter 6: Investment Climate 
Openness to Foreign Investment 
Conversion and Transfer Policies 
Expropriation and Compensation 
Dispute Settlement 
Performance Requirements and Incentives 
Right to Private Ownership and Establishment 
Protection of Property Rights 
Transparency of Regulatory System 
Efficient Capital Markets and Portfolio Investment 
Political Violence 
Corruption 
Bilateral Investment Agreements 
OPIC and Other Investment Insurance Programs 
Labor 
Foreign-Trade Zones/Free Ports 
Foreign Direct Investment Statistics 
Web Resources 
 
Openness to Foreign Investment 
 
General Government Attitude 
 
Norway welcomes foreign investment as a matter of policy and 
generally grants national treatment to foreign investors. 
Norwegian authorities encourage foreign investment 
particularly in the key offshore petroleum sector, mainland 
industry (e.g., high-tech and advanced areas), and in less 
developed regions such as northern Norway.  The policy vis-a- 
vis third countries, including the United States, will likely 
continue to be governed by reciprocity principles and by 
bilateral and international agreements.  The European Economic 
Area (EEA) free trade accord, which came into force for Norway 
in 1995, requires the country to apply principles of national 
treatment in certain areas where foreign investment was 
prohibited or restricted in the past. 
 
While the Norwegian government officially endorses a level 
playing field for foreign investors, existing regulations, 
standards and practices often marginally favor Norwegian, 
Scandinavian and EEA investors, in that order.  Norway's 
investment regime is generally based on the equal treatment 
principle, but national restrictions exist on activities and 
ownership in the fishing and maritime transport sectors (the 
chairman of a joint-stock fishing company, for example, must 
be a Norwegian citizen).  According to the OECD (Organization 
for Economic Cooperation and Development), Norway is ranked 
close to the OECD average (but marginally more restrictive 
than the United States) with respect to restrictions on 
foreign direct investment (FDI), with restrictions on foreign 
personnel a leading factor. 
 
Laws/Rules/Practices affecting Foreign Investment 
 
As an EEA signatory, Norway continues to liberalize its 
foreign investment legislation to conform more closely to 
European Union (EU) standards.  Current laws, rules, and 
practices follow below. 
 
Government Monopolies 
 
Norway has traditionally barred foreign and domestic investors 
alike from investing in industries monopolized by the 
government, including postal services, railways, and the 
domestic production and retail sale of alcohol.  In 2004, 
Norway slightly relaxed the restrictions, allowing foreign 
companies to bid on providing certain postal services (e.g., 
air express services between countries) and railway cargo 
services (notably between Norway and Sweden).  The government 
may grant foreign investment in hydropower (though limited to 
20 percent of equity), but rarely does so.  Norway has fully 
opened the electricity distribution system to foreign 
participation, however, making it one of the more liberal 
power sector investment regimes in the world. 
 
Government Ownership 
 
The government continues to play a strong role in the 
Norwegian economy through its ownership or control of many of 
the country's leading commercial firms.  The public sector 
accounts for nearly sixty percent of GDP. The Norwegian 
government is the largest owner in Norway, and 80 enterprises 
are managed directly by its ministries.  Central or local 
authorities own approximately 35 percent of the companies 
listed on the Oslo Stock Exchange, and approximately 40 
percent of the stock exchange's capitalization is in 
government hands. The current center-left government, which 
assumed power in October 2005, has indicated that it will not 
sell any additional state-owned shares of partially privatized 
companies, in essence freezing state ownership at current 
levels.   In fact, there are indications that the current 
coalition government seeks to increase governmental ownership 
in certain sectors and industries. 
 
Ownership of Real Property 
 
Foreign investors may generally own real property, though 
ownership of certain real assets is restricted.  Companies 
must obtain a concession to acquire rights to own or use 
various kinds of real property, including forests, mines, 
tilled land, and waterfalls.  Foreign companies need not, 
however, seek concessions to rent real estate, e.g. commercial 
facilities or office space, provided the rental contract is 
made for a period not exceeding ten years.  The two major laws 
governing concessions are the Act of December 14, 1917 and the 
Act of May 31, 1974. 
 
Petroleum Sector 
 
The Petroleum Act of November 1996 (superseding the 1985 
Petroleum Act) sets forth the legal basis for Norwegian 
authorities' awards of petroleum exploration and production 
blocks and follow-up activity.  The act covers governmental 
control over exploration, production, and transportation of 
petroleum. 
 
Foreign oil companies report no discrimination in the award of 
petroleum exploration and development blocks in recent 
licensing rounds.  Norway has implemented EU directives 
requiring equal treatment of EEA oil and gas companies.  The 
Norwegian offshore concession system complies with EU 
directive 94/33/EU of May 30, 1994, which governs conditions 
for awards and hydrocarbon development.  Norway's concession 
process operates on a discretionary basis, with the government 
awarding licenses based on subjective factors, e.g. what 
company is judged the best operator for a particular field, 
rather than according to competitive bidding or other 
objective basis. 
 
The Norwegian government has dismantled former tight controls 
over the gas pipeline transit network that carries gas to the 
European market.  All gas producers and operators on the 
Norwegian Continental Shelf (NCS) are free to negotiate gas 
sales contracts on an individual basis, with access to the gas 
export pipeline network guaranteed. 
 
The government initiated partial privatization of the state- 
owned oil company, Statoil, in 2001 and partially sold off 
state oil and gas assets to Statoil and other operators on the 
NCS.   Further privatization, however, was halted by the 
current government.  Statoil and Norsk Hydro?s oil and gas 
division, Norway's two major petroleum producers and largest 
NCS operators, merged on October 1, 2007.  The new entity, 
StatoilHydro, controls 80% of NCS operatorships.  Following 
the merger, the Norwegian government held a 62.5% share in the 
merged firm, which has since been increased to 66.4%.   Given 
the dominant role the two Norwegian petroleum firms have 
played on the NCS, the merger could have significant 
ramifications for foreign competitors operating offshore 
Norway. 
 
On June 22, 2007, the Norwegian government also bought a 30 
percent share in the Norwegian company Aker Holding AS, which 
in turn is a 40 percent owner of the largest Norwegian-owned 
company in the country?s oil and gas industry, AkerKvaerner. 
AkerKvaerner is the largest equipment supplier to Norway?s oil 
and gas industry.  The approximately $800 million investment 
was prompted by the government?s call to ensure national 
ownership in key businesses.  The impact on market access to 
U.S. companies resulting from both the StatoilHydro merger, 
and AkerKvaerner buy-in, remains unclear. 
 
Norwegian authorities encourage the use of Norwegian goods and 
services in the offshore petroleum sector, but do not require 
it.  The Norwegian share of the total supply of goods and 
services on the NCS has remained approximately fifty percent 
over the last decade. 
 
Manufacturing Sector 
 
Norwegian legislation granting national treatment to foreign 
investors in the manufacturing sector dates from 1995. 
Legislation that formerly required both foreign and Norwegian 
investors to notify and, in some cases, file burdensome 
reports to the Ministry of Industry and Trade if their 
holdings of a company's equity exceeded certain threshold 
levels was repealed in July 2002.  Foreign investors are not 
currently required to obtain government authorization before 
buying shares of Norwegian corporations. 
 
Financial and Other Services 
 
Effective January 1, 2004, Norway liberalized restrictions on 
acquisitions of equity in Norwegian financial institutions. 
Prior to that time, any investor, foreign or domestic, had to 
obtain a concession from the Norwegian Finance Ministry to 
acquire more than 10 percent of such equity (or shareholder 
stake), unless they went on to acquire 100 percent of the 
financial institution. Current regulations delegate 
responsibility for acquisitions to the Norwegian Financial 
Supervisory Authority and streamline the process. 
 
The Financial Supervisory Authority permission is required for 
acquisitions of Norwegian financial institutions that exceed 
defined threshold levels (20, 25, 33 or 50 percent).  The 
Authority assesses the acquisitions to ensure that prospective 
buyers are financially stable and that the acquisition does 
not unduly limit competition. 
 
The Authority applies national treatment to foreign financial 
groups and institutions, but nationality restrictions still 
apply to banks.  At least half the members of the board and 
half the members of the corporate assembly of a bank must be 
nationals and permanent residents of Norway or another EEA 
nation.  Effective January 1, 2005, there is no ceiling on 
foreign equity in a Norwegian financial institution as long as 
the Authority has granted permission for the acquisition. 
 
The Finance Ministry has abolished remaining restrictions on 
the establishment of branches by foreign financial 
institutions, including banks, mutual funds and other types. 
Under the liberalized regime, Norway grants branches of U.S. 
and other foreign financial institutions the same treatment as 
domestic institutions. 
 
Media 
 
No individual party, domestic or foreign, may own more than 40 
percent of one single national newspaper, radio and/or 
television company without a concession.  National treatment 
is granted in line with Norway's obligations under the EEA 
accord.  The introduction, and growing importance, of new 
media forms (including those emerging from the internet and 
wireless industries) raises concerns that the existing 
domestic legal regime (which largely focuses on printed media) 
is becoming outmoded. 
 
Investment Screening Mechanisms 
 
Investment applications, when required, are processed by the 
ministries concerned.  For example, the Ministry of Trade and 
Industry handles applications to acquire real property in 
Norway when permission is required.  The Finance Ministry 
handles cases involving financial institutions.  The Ministry 
of Culture is responsible for media cases.  Decisions are 
normally taken at the Ministerial level.  However, in some 
cases with significant political implications, the minister(s) 
may ask the entire cabinet to make the decision. 
 
The processing time for acquisition applications depends on 
several factors, but is normally from one to three months. 
The government may set conditions when a concession is 
granted, which is commonly done in cases involving more than 
one-third foreign ownership.  Concession agreements do not 
permit a company to engage in business activities other than 
those specified.  In general, the government screens 
investments on a case-by-case basis based on the "public 
interest" principle.  This principle is vague and permits 
broad discretion, which the government has sometimes used to 
protect domestic business interests and preserve jobs. 
 
Competition, Acquisition and Takeovers 
 
Current legislation governing competition went into effect on 
May 1, 2004.  The legislation established a Norwegian 
Competition Authority (NCA) under the authority of the 
Ministry of Government Administration and Reform (whose name 
was changed from the "Ministry of Renewal" in 2006).  The NCA 
is authorized to conduct non-criminal proceedings and impose 
fines, or "infringement fees," for anti-competitive behavior. 
The size of the fees may vary according to a number of 
factors, including company turnover and severity of the 
offense.  The NCA may impose lower infringement fees if a 
company under investigation cooperates. 
 
The 2004 legislation also empowers the NCA to halt mergers 
that threaten to significantly weaken competition.  Companies 
planning mergers are obliged by law to report their plans to 
the NCA, which may conduct a review. 
 
The Ministry of Government Administration and Reform amended 
its regulations on the threshold values for triggering a 
merger review, effective January 1, 2007.  The revisions 
increase the value thresholds to exempt more transactions from 
the obligation to submit a standardized notification to the 
NCA.  Mergers in which the companies involved have a combined 
annual turnover in Norway exceeding NOK 50 million (about USD 
8 million) must notify the Competition Authority.  However, if 
only one of the undertakings concerned has an annual turnover 
in Norway exceeding NOK 20 million, notification is not 
required. The former thresholds for triggering a merger review 
were quite low -- NOK 20 million (USD 3.3 million) and NOK 5 
million (USD 800,000), respectively. 
 
Public Procurements 
 
Pursuant to its obligations under the EEA, Norway implemented 
EU legislation on public procurements on January 1, 1994. 
Norway is also a signatory to the WTO Government Procurement 
Agreement (GPA).  The EEA/EU legislation and WTO agreement 
oblige Norway to follow internationally recognized, 
transparent procedures for public procurements above certain 
threshold values. 
 
All public procurement contracts exceeding certain threshold 
values must be published in the Official Journal of the 
European Union and in the EU's Tenders Electronic Daily (TED) 
databank.  Norway instituted an electronic notice database 
more than a decade ago and currently transmits all tender 
notices electronically through this database to the TED 
system. 
 
The rules apply to procurement by the central government, 
regional or local authorities, bodies governed by public law, 
or associations formed by one or more such authorities or 
bodies governed by public law.  In addition, special rules 
apply to the procurement by certain entities in the 
"utilities" sectors of water, energy, transport and 
telecommunications. 
 
Public agencies must publish general annual plans for 
purchases of goods and services, as well as general 
information on any major building and construction projects 
planned.  No later than two months after a contract has been 
awarded, a notice stating which company won the contract must 
be published.  All notices must be published in an EU 
language. 
Discriminatory technical specifications may not be used to 
tailor contracts for a local or national supplier. Any 
technical standards applied in the procurement process must be 
national standards that are harmonized with European 
standards.  If no such standards exist, other international or 
national standards may be applied.  All specifications that 
are to be used in evaluating tenders must be included in the 
notice or in the invitation to tender. 
In general, public procurements are non-discriminatory and 
based on open, competitive bidding.  There are exceptions, 
however, notably in defense procurements where national 
security concerns may be taken into account.  Exceptions for 
defense procurement leave a ?gray area? for dual use items 
that also can be used in military operations.  Large public 
procurements can also become politicized.  In 2006, for 
example, the government vacillated over awarding a large 
contract for an emergency communications system while several 
ministries carried on an internal debate, fueled by media and 
political critics, over the business ethics of the apparent 
winner. 
 
In January 2003 the Norwegian Parliament established an 
independent review body for bid challenges that offers 
suppliers an inexpensive complaint process. This Complaint 
Board can issue ?non-binding opinions? and review the legality 
of the procurement in question.  More serious disputes may be 
taken before the European Surveillance Authority (ESA), or the 
courts, but the decision making process can be unduly lengthy. 
 
Investment Incentives 
 
Norway offers no significant general tax incentives for either 
domestic or foreign investors.  There is an exception for 
investments in sparsely settled northern Norway, where reduced 
payroll taxes and other incentives apply.  There are no free- 
trade zones, although taxes are minimal on Svalbard, a remote 
area, which is subject to special treaty provisions.  A state 
industry and regional development fund provides support (e.g., 
investment grants and financial assistance) for industrial 
development in areas with special employment difficulties or 
with low levels of economic activity.  Tax deductions are 
allowed for research costs in key industries, including the 
petroleum sector.  Petroleum sector regulations for write-offs 
of exploration expenses are generous to encourage the search 
for new hydrocarbon resources. 
 
Discriminatory/Preferential Export/Import Policies 
 
An export promotion organization, Innovation Norway, assists 
export-oriented firms to market their goods and services 
internationally.  Norway also maintains an export credit 
institution (Eksportfinans) and an export guarantee 
institution (GIEK). 
 
Norway's agricultural sector is highly protected from external 
competition through a variety of tariffs, subsidies, and other 
barriers.  Norway imposes high variable tariffs on farm 
product imports that compete with domestic products, largely 
excluding them from the market.  Tariff rates on agricultural 
products currently average about 38 percent -- in comparison 
to less than one percent for non-agricultural products -- and 
can range up to several hundred percent.  Agricultural export 
subsidies are also high. 
 
Norway strictly limits imports of agricultural products 
containing genetically modified materials.  Norway has 
gradually adopted the EU's biotechnology policies with regard 
to allowable content and labeling of genetically modified 
materials in foodstuffs, the culmination of an administrative 
review process initiated earlier this decade.  Adopting EU 
standards has not necessarily eased entry for genetically 
modified agricultural products, however, as Norway still 
maintains a separate and independent domestic approval process 
that has kept practically all genetically modified foodstuffs, 
even many of those approved in the EU, off the local market. 
 
Conversion and Transfer Policies 
 
Dividends, profits, interest on loans, debentures, mortgages 
and repatriation of invested capital are freely and fully 
remissible, subject to Central Bank reporting requirements. 
Ordinary payments from Norway to foreign entities can normally 
be made without formalities through commercial banks. 
 
Expropriation and Compensation 
 
There have been no cases of questionable expropriation in 
recent memory.  Government  "takings" of property are 
generally limited to non-discriminatory land and property 
condemnation for public purposes (road construction, etc.). 
The Embassy is not aware of any cases in which compensation 
has not been prompt, adequate and effective. 
 
Dispute Settlement 
 
Norway has ratified principal international agreements 
governing arbitration and settlement of investment disputes, 
including the New York Convention of June 10, 1985.  No major 
investment disputes have occurred in recent years. 
 
Norway's legal system is well developed and provides effective 
means for enforcing property and contractual rights.  Laws 
governing commercial matters are consistently applied without 
undue government interference. 
 
Performance Requirements and Incentives 
 
Norway does not impose performance requirements or incentives 
on foreign investors. 
 
Right to Private Ownership and Establishment 
 
Subject to the restrictions noted above, foreign and domestic 
entities are generally free to establish and own business 
enterprises and engage in all forms of legal commercial 
activity.  Norway generally treats private and public 
enterprises equally in terms of market access and other 
business operations.  Foreign investors are generally 
permitted to participate freely in privatizations of Norwegian 
state firms. 
 
Protection of Property Rights 
 
Norway recognizes secured interests in property, both movable 
and real.  The system for recording interests in property is 
recognized and reliable. 
 
Norway maintains an open and effective legal and judicial 
system that protects and facilitates acquisition and 
disposition of rights in property, including land, buildings 
and mortgages. 
 
Intellectual Property Rights 
 
Norway adheres to key international agreements for the 
protection of intellectual property rights (e.g., the Paris 
Union Convention for the Protection of Industrial Property, 
the Berne Copyright Convention, the Universal Copyright 
Convention of 1952, and the Rome Convention).  It has notified 
its main intellectual property laws to the World Trade 
Organization.  Norway's intellectual property statutes cover 
the major areas referred to in the Trade-Related Aspects of 
Intellectual Property Rights (TRIPS) Agreement. 
 
The chief domestic statutes governing intellectual property 
rights include:  the Patents Act of December 15, 1967, as 
amended; the Designs Act of March 14, 2003; the Copyrights Act 
of May 12, 1961, as amended; the Layout-design Act of June 15, 
1990, as amended; the Marketing Act of June 16, 1972; and the 
Trademarks Act of March 3, 1961, as amended.  The above 
legislation also protects trade secrets and industrial 
designs, including semiconductor chip layout design.  As an 
EEA member, Norway has implemented the 2001 EU Copyright 
Directive, though its implementation could be subject to 
challenge (see below). 
 
Patents 
 
The patent office (Styret for det Industriale Rettsvern) 
grants patents for a period of 20 years (Acts of June 8, 1979, 
and May 4, 1985).  Patent protections are weak, however, in 
the pharmaceutical sector.  Until 1992, Norway limited patent 
protection for pharmaceuticals to the manufacturing process 
for a drug's active ingredient.  Although Norway introduced 
product patents for pharmaceuticals in 1992, the old system 
has left a difficult legacy for pharmaceutical companies, as 
competitors claiming to use non-patented processes have 
continuously entered the market.  Several U.S. pharmaceutical 
companies began filing patent infringement lawsuits in 
Norwegian courts in 2005 to fend off these new entrants.  One 
U.S. company lost a preliminary injunction in a patent 
infringement case in 2006, which allowed the copycat drug to 
enter the market immediately, cost the company significant 
revenue, and led to layoffs of local employees.  In May, 2007, 
a Norwegian court ruled that a generic competitor did not 
infringe upon the leading local selling drug of a U.S. 
pharmaceutical company, which accounted for 25 percent of its 
local revenues.  In 2008, American pharmaceutical companies 
led court challenges against other generic providers.  The 
majority of prescription drugs currently sold in Norway are 
covered by the old "process" patent system, placing a 
significant amount of foreign pharmaceutical firms' local 
revenues at risk. As a result of this patent protection issue, 
U.S. companies were forced to restructure their Norwegian 
operations, and cut approximately half of their employees in 
Norway. 
 
Given the significant and continued U.S. governmental and 
private industry concerns over the lack of Norwegian 
pharmaceutical patent protections, Norway was placed on the 
2008 Watch List in the Office of the U.S. Trade 
Representative?s Special 301 Report. 
 
Copyright 
 
Internet piracy exists in Norway .  Broadband internet is 
standard, making peer-to-peer downloads of music and video 
easy and common.  Groups that release early copies of new 
motion pictures (including so-called ?encoding groups,? 
release groups? and ?top sites?) on the internet are 
problematic.  In 2008, Norway experienced its first handful of 
?camcording incidents,? where motion pictures are illegally 
recorded in cinemas.  Relatedly, the first global piracy of a 
U.S. 2008 blockbuster movie (Iron Man) occurred in Norway. 
 
Private organizations like the Motion Picture Association are 
attempting to raise public awareness of internet and video 
piracy, for example by running anti-pirating advertisements in 
movie theaters.  Norwegian authorities have not undertaken any 
serious public relations efforts to combat internet or other 
piracy of copyrighted property.  The Norwegian government does 
not consider itself obligated under the European Economic Area 
Agreement to implement the European Union Enforcement 
Directive. 
 
In June 2005, Norway enacted legislation based on the EU's 
2001 Copyright Directive that combats internet piracy and 
addresses some gaps in Norway's intellectual property rights 
protections.  The legislation bans unauthorized peer-to-peer 
file sharing and requires that creative works can only be 
downloaded from the internet with the artist's prior approval. 
The legislation also grants legal protection to technological 
protection measures designed to prevent unauthorized use of a 
creative work.  The law bars the intentional circumvention of 
such systems in most circumstances. 
 
However, an exception is made for ?private use? on certain 
playback equipment, concerning the circumvention of copy 
protection exclusively on audio CDs.  This measure allows 
music CD owners to breach protection measures in order to 
transfer copyrighted music to an MP3 player.  Although not 
expressly stated in the law, the legislative history of this 
provision suggests that ?private use? also includes providing 
free copies to family and friends. 
 
In compensation, Norway budgeted NOK 34.8 million in 2007 and 
NOK 36.3 million in 2008 for payments to affected music and 
motion picture rights holders.  Norway plans to make such 
payments annually from future government budgets.  The funds 
will be paid only to rightsholders in the EU and EFTA 
countries, though copyrighted American products undoubtedly 
comprise a high percentage of downloaded material. 
 
In 2008, analog TV broadcasting was discontinued,with the 
digital broadcasting standard implemented nationwide.  All TV 
viewers now require an annual subscription and a digital 
receiver. This assists in combating a previous free-rider 
issue, where a significant amount of people would pick up TV 
signals with analog antennas without paying the annual license 
fee.. 
 
Counterfeit and Pirated Goods 
 
Norway does not expressly ban imports of counterfeit or 
pirated goods.  A trademark or copyright holder must obtain a 
court order and have the case referred to the police before 
customs authorities will take action to stop entries of 
pirated goods.  In September 2007 legislation was enacted 
providing Norwegian customs officials with discretionary 
powers to inform rightsholders of suspected 
counterfeit/pirated seized goods.  Previously, Norway?s strict 
privacy laws barred customs authorities from informing rights 
holders when questionable shipments arrived at the border. 
The new legislation provides rightsholders with a five day 
window following notice of the seized goods, during which the 
rightsholders must decide whether to proceed with an 
injunction (which, if it fails, translates into the 
rightsholders inheriting the burden of covering all legal fees 
related to the failed injunction). 
 
Digital Rights Management Technologies 
 
In 2006, the Norwegian government's stance toward Digital 
Rights Management (DRM) technologies garnered widespread 
attention when staff from the Norwegian Consumer Council, a 
quasi-public organization allied with groups challenging 
rights holder protections, complained to Norway's Consumer 
Ombudsman that they could not play music downloaded from 
Apple?s iTunes Music Store onto unrelated media.  The Consumer 
Ombudsman issued a decision letter asserting that iTunes 
violated Norwegian consumer laws and contract principles.  The 
letter called on Apple to allow iTunes customers to play 
downloaded music on non-Apple devices or face fines.  The 
Ombudsman was vocal in his public opposition to iTunes and 
attempted to organize fellow European Ombudsmen in a ?united 
front? against Apple.  In September 2008, the Ombudsman 
submitted the case to the Norwegian Market Council, which can 
reach a legally binding decision about the legality of Apple?s 
technology.  The eventual decision may influence the Norwegian 
government?s will to formally amend copyright legislation to 
address the DRM issue. 
 
Enforcement 
Enforcement of IPR protections is inconsistent.  Norwegian 
police and judicial authorities are generally committed in 
principle to taking action against piracy and intellectual 
property right infringement, to the extent authorized by 
Norwegian law, and have successfully prosecuted a number of 
high-profile cases.  However, the authorities lack the 
capability and resources to handle complaints about IPR 
violations effectively.  Given limited resources, Norwegian 
law enforcement authorities have placed higher priority on 
areas like computer crime than traditional IPR violations. 
Local business representatives indicate that complaints about 
copyright infringement usually either go unaddressed or are 
given low priority.  The Norwegian government is reviewing its 
Copyright Act in the preparation for a 2009 White Paper. 
 
Transparency of Regulatory System 
 
The transparency of Norway's regulatory system is generally on 
par with that of the EU.  Norway is obliged to adopt EU 
directives under the terms of the EEA accord.  Government 
directives or rulings that affect foreign investors or 
businesses are not always, however, communicated to interested 
parties in a transparent and effective manner.  Foreign 
investors and domestic companies sometimes complain that new 
regulations affecting their operations are announced and 
implemented on short notice with little effective opportunity 
to provide comments or input to policymakers. 
 
Efficient Capital Markets and Portfolio Investment 
 
Norway has a highly computerized banking system that provides 
a full range of banking services, including internet banking. 
There are no significant impediments to the free market- 
determined flow of financial resources.  Foreign banks have 
been permitted to establish branches in Norway since 1996. 
 
Foreign and domestic investors have adequate access to 
capital.  The private sector enjoys access to a wide variety 
of credit instruments.  The financial regulatory system is 
transparent and consistent with international norms.  The Oslo 
Stock Exchange is well established and facilitates portfolio 
investment and securities transactions in general. 
 
Norwegian banks are generally on a sound financial footing, 
and Norway has enjoyed a relatively sheltered position in the 
recent global financial turmoil.   Conservative 
asset/liquidity requirements limited the exposure of banks to 
bankruptcies and plummeting markets internationally. However, 
frozen capital markets prompted a temporary liquidity crisis 
in the fall of 2008, and the government was forced to issue a 
modest bail-out package. 
 
The Norwegian state acquired controlling stakes in the 
country's top three commercial banks in the government's 
bailout of the banking sector in the 1990s.  The state has 
subsequently reduced its stakes in the top two banks and sold 
its entire stake in the third biggest bank to private 
investors.  The assets of the top five commercial banks 
account for over 85 percent of total banking assets. 
 
In November, 2007, an Oslo-based investment house declared 
bankruptcy after Financial Supervisory Authority regulators 
revoked its license for failing to inform Norwegian townships 
of the high risks of their U.S. investments.  The four small 
townships in northern Norway had been embroiled in a conflict 
with the equity house over losses, alleging that the brokerage 
firm failed to inform them of the high risk of 451 NOK (USD 
$82 million) in investments placed through Citibank. All four 
of the townships had borrowed money against expected future 
income from municipal hydroelectric plants, and invested in 
complex funds in part based on risky subprime mortgages in the 
United States. 
 
The Norsk Hydro chairman resigned in August 2007, after the 
Norwegian government (the majority Norsk Hydro shareholder) 
instructed Hydro to end its stock option program, which the 
company chairman believed it was legally obligated to fulfill. 
A major U.S. shareholder of Norsk Hydro wrote to the Norwegian 
Trade Minister, critical of the government's pressure on the 
former chairman.  The U.S. company expressed concern that the 
Norwegian government failed to seek a change in the options 
policy through the proper corporate governance structures 
(such as calling an extraordinary shareholders meeting). 
 
Political Violence 
 
Norway is a vibrant, stable democracy.  Violent political 
protests or incidents are extremely rare.  There have been no 
recent occasions of politically motivated attacks on foreign 
commercial projects or property in recent years. 
 
Corruption 
 
Corrupt activity by Norwegian or foreign officials is a 
criminal offense under Norway's Penal Code.  Norway's anti- 
corruption laws cover illicit activities overseas, subjecting 
Norwegian nationals/companies who bribe officials in foreign 
countries to criminal penalties in Norwegian courts. 
 
Business is generally conducted "above the table" in Norway, 
though there have been some recent celebrated cases of 
corruption in commercial dealings.  In 2003, for example, 
Norway's economic crime police unit ("Oekokrim") initiated an 
investigation into allegations that a Statoil executive had 
bribed an official in Iran to expand the company's business 
there.  Oekokrim fined Statoil NOK 20 million (USD 3.3 
million) in June 2004 for the improper payments.  Statoil's 
Chief Executive Officer subsequently resigned and the firm 
announced in October 2004 that it would pay the penalty 
without admitting or denying guilt.  In mid-2005, Oekokrim 
opened a similar investigation of one of Norway's leading 
private research institutions, SINTEF, for questionable 
payments to procure contracts in Iran, and subsequently fined 
the organization NOK 2 million (USD 320,000). 
 
Allegations of corruption in the retail food and beverage 
sector have also arisen in recent years.  In January 2005, a 
number of managers and employees of the government retail 
alcohol monopoly, Vinmonopolet, were alleged to have 
improperly accepted gifts and other favors from Norway's 
leading wine importer in exchange for favored treatment for 
the company's wine offerings. 
 
Some of Norway's leading retail grocery chains were accused in 
2005 of abusing their market position, e.g., by demanding 
questionable payments for access to shelf space or barring the 
goods of food producers who sell to their competitors. 
Norway's National Competition Authority (NCA) initiated a 
study of questionable industry practices after media reports 
alleged that suppliers of everything from toothpaste to dairy 
products had long been pressured into paying large, 
undisclosed sums to the grocery chains to be able to sell 
their products in the stores or to ensure attractive placement 
on store shelves. 
 
A similar scandal embroiled Norway's leading dairy 
cooperative.  The NCA fined the dairy cooperative NOK 45 
million (over USD 7 million) in September, 2005 for making 
illicit payments to a grocery chain to be its sole supplier of 
cheese.  The dairy was also alleged to have paid another 
grocery chain to keep a much smaller, competing dairy's milk 
off its shelves. 
 
In October 2007, the StatoilHydro chairman resigned following 
a scandal concerning deals that Norsk Hydro allegedly made 
with consultants concerning Libyan petroleum operations.  The 
case was submitted for internal investigation and two reports 
were issued in October 2008. The first exonerated the 
chairman, while the second concluded that he had knowledge of 
the transactions. Two senior VP?s were forced to step down, 
following the publication of the report. 
 
The chairman of German-owned Siemens AG group?s Norwegian 
division stepped down in November 2007 following accusations 
of providing illegal trips to Norwegian military officials, 
including an alleged Spanish golfing excursion by the head of 
the Norwegian joint command.  In June 2006, a government 
commission found that Siemens knowingly overcharged the 
military $6.8 million between 2000 and 2004.  At that time, 
Siemens Norway apologized, promised to refund the excess 
charges, and replaced its entire top management.  Oekokrim 
also announced in November 2007 that they assessed a $1.6 
million fine against Siemens for defrauding the military. 
 
In December 2008, the highest ranking bureaucrat in the 
Ministry of Petroleum & Energy resigned after it was revealed 
that she had made targeted investments in the Norwegian oil 
industry through a private holding company, while serving as 
Director General. It is strictly forbidden for Ministry 
officials to own stock which is sensitive to their own 
political decisions. 
 
Norway is a member the Council of Europe's anti-corruption 
watchdog Group of States Against Corruption (GRECO). 
According to the most recent (September 2004) GRECO 
evaluation, Norway's law enforcement and judicial authorities 
are well equipped to deal with economic crimes, including 
corruption.  GRECO recommended that Norway step up training of 
police officers and prosecutors to better detect and fight 
corruption.  According to a follow-up report dated October 
2006, Norway satisfactorily implemented GRECO's 
recommendations. 
 
Bilateral Investment Agreements 
 
Norway has concluded investment protection agreements with 
numerous countries.  These agreements contain provisions for 
repatriation of capital, dispute settlement, and standards for 
expropriation and nationalization by the host country. 
 
Norway and other members of the European Free Trade 
Association (EFTA) -- Iceland, Liechtenstein and Switzerland - 
- have jointly concluded free trade agreements and/or 
declarations of cooperation with more than twenty countries, 
or blocks of countries, since 1960.  These include: , Canada, 
Chile, Colombia, Croatia, Egypt, Israel, Jordan, Lebanon, 
Macedonia, Mexico, Morocco, the Palestinian Authority, 
Singapore, Southern African Customs Union, The Republic of 
Korea, Tunisia, Turkey, Albania, Algeria, , the Gulf 
Cooperation Council, MERCOSUR, Mongolia, Serbia, --, and 
Ukraine.  The agreements cover trade in goods and services, 
services and investment, dispute settlement and other issues 
generally found in bilateral investment accords. 
 
OPIC and Other Investment Insurance Programs 
 
The Norwegian Guarantee Institute for Export Credits (GIEK) is 
the central governmental agency responsible for issuing export 
credits and investment guarantees.  GIEK operates under the 
authority of the Norwegian Ministry of Trade and Industry, 
which contains a section that oversees export and investment 
guarantees and domestic industry financing. 
 
GIEK's primary function is to promote export of Norwegian 
goods and services and Norwegian investment abroad.  It 
underwrites exports to over 150 countries of all types of 
goods and services.  The guarantees may encompass a single 
transaction or a series of transactions and cover not only 
commercial risk, i.e., bankruptcy on the part of the debtor or 
non-payment for other reasons, but also political risk, i.e., 
war, expropriation and actions by the public authorities that 
prevent payment. 
GIEK offers long term guarantees for export of capital goods 
to most countries, including emerging markets.  The gurantees 
are issued on behalf of the Norwegian goernment and can be 
used as security vis-Q-vis baks and other financial 
institutions to facilitat funding.  The Direcor General and 
a Board of seen directors are responsible for day-to-day 
opertions. 
GIEK's business is divided into three separate areas: General 
Scheme, Special Resolutions by the Storting and the Old 
Portfolio. GIEK also manages a separate scheme aimed at 
developing nations on behalf of the Ministry of Foreign 
Affairs. 
GIEK offers the following products and services: 
Individual policy - buyer's credit:  Covers the risk 
associated with individual deliveries of goods and services 
and is normally furnished for long-term credits (beyond 2 
years). GIEK guarantees for the down payment on a loan raised 
by the buyer for financing deliveries from a Norwegian 
exporter. 
Individual policy - supplier's credit:  Covers the risk 
associated with individual deliveries of goods and services, 
and is normally furnished for short-term credits (less than 2 
years) and/or smaller credits. GIEK guarantees for the down 
payment of the loan a Norwegian exporter grants the buyer. 
Pre-shipment guarantee:  Protects the exporter against losses 
that may occur during the production period, prior to 
delivery. 
Bond guarantee:  Helps the exporters to furnish guarantees for 
tenders, advance payments or completion (bonds). 
Investment guarantee:  Covers political risks associated with 
investments outside Norway. 
Building loan guarantee:  Scheme for the shipbuilding industry 
where GIEK shares up to 50% of the risk the building loan bank 
has. 
Tender guarantee:  Scheme for recovery of expenses related to 
participation in international tenders for development- 
assistance-financed projects in poor countries. 
Whole Turn-over Scheme:  Protects the exporter against losses 
on short-term export credits (up to 360 days). 
In 2001, GIEK turned over responsibility for operations in the 
market for short-term customer credit insurance to a wholly- 
owned subsidiary, GIEK Credit Insurance Ltd. (GIEK CI), which 
primarily services exporters who are unable to secure 
satisfactory offers on the private market.  GIEK CI protects 
against losses on short-term credits (up to 2 years) to 
foreign as well as to Norwegian buyers.  GIEK CI is covered 
against political and commercial risks outside the OECD 
countries through a reinsurance agreement with GIEK.  Risks 
within OECD countries are covered through a reinsurance 
agreement in the private market. 
GIEK is a member of the Berne Union.  Norway is a member of 
the Multilateral Investment Guarantee Agency (MIGA). 
 
Labor 
 
Skilled and semi-skilled labor is usually available in Norway, 
though strong economic growth in recent years has caused 
shortages in certain professions (e.g., nurses) and in 
unskilled labor (construction workers).  The labor force 
totals about 2.61 million persons (up from 2.52 million 
persons in 2007), representing 74.3 percent of the working-age 
population.  Unemployment stood at 2.5 percent as of September 
2008, similar to the end of 2007. However, as an effect of the 
global finance crisis, unemployment is expected to grow to 
reach 4.6 percent in 2010, before dropping off in 2011. 
 
From the third quarter of 2007 to the third quarter of 2008, 
the number of employed people increased by 83,000, while the 
number of unemployed rose by 3,000.  The net labor force thus 
increased by 86,000 people, slightly higher than the 
population growth which was 61,000.  The labor force 
participation rate rose by 1.1 percentage points from the 
third quarter of 2007 to the third quarter of 2008.  Both the 
female and the male participation rates increased. 
 
For the last few years, financial services and other business 
activities have shown the strongest employment growth..  Other 
recent growth sectors include legal, accounting, and auditing 
services, business and management consultancy, as well as 
temporary staffing agencies. these same entities are now 
contemplating large-scale staffing cuts. 
 
Union membership is in excess of 1.5 million persons, over 60 
percent of the labor force.  Labor benefits are generous, 
e.g., one year's paid maternity leave (financed chiefly by the 
government). 
 
The average number of hours worked per week, 34.3 as of 
December 2006, is among the lowest in the OECD.  Sickness and 
absenteeism rates in the third quarter of 2008 of 6.9 percent 
are among the highest in the OECD, and up a full percentage 
point from last year. The highest increase is among young 
males in the finance sector. 
 
Despite attempts to curb wage growth, Norwegian blue-collar 
hourly earnings are comparatively high.  (High wages encourage 
the use of relatively capital-intensive technologies in 
Norwegian industry.)  Top-level executives and highly-skilled 
engineers on the other hand, are generally paid considerably 
less than their U.S. counterparts. 
 
Obtaining work permits for foreign labor, particularly for 
semi-skilled workers, can be cumbersome.  Norway has witnessed 
a strong influx of foreign workers as demand for labor has 
outstripped supply in some sectors, e.g., construction. 
 
The government has a history of imposing mandatory wage 
mediation should strikes threaten key sectors in the economy, 
particularly the oil and gas and transportation sectors.  The 
government stepped in in 2006 to prevent a threatened strike 
in the banking sector. There was no mandatory wage mediation 
in the 2007 intermediate wage negotiations. 
 
Foreign-Trade Zones/Free Ports 
 
Norway has no foreign trade zones and does not contemplate 
establishing any. 
 
Foreign Direct Investment Statistics 
 
The following data are the latest available from the Norwegian 
Central Bank and the Norwegian Central Bureau of Statistics. 
Figures on investment position refer to book value.  These 
figures are limited to companies in which a single foreign 
investor holds 10 percent or more of equity capital and do not 
include foreign ownership interests via third party 
investment.  Flow investment statistics are based on market 
value.  FDI stands for Foreign Direct Investment. 
Note that the NOK/USD exchange rates were as follows for the 
period in review: 
Source: Norges Bank 
      2001  2002  2003  2004  2005  2006  2007  2008 
 
End-PeriodQQ9.01   6.97   6.68   6.04    6.77   6.23 
5.41   7.05 
(Last day recorded) 
Period-AverageQ8.99   7.97   7.08   6.74   6.45   6.42   5.86 
5.61(to date) 
 
 
 
Table I:  FDI Position in Norway by Country (NOK Bill) 
Source:  Statistics Norway 
 
Q                        2001   2002   2003_  2004   2005 
2006 
Total FDIQ   Q294.4  298.0  327.1   473.0  504.2  582.7 
 
of which from: 
U.S.                QQ28.2    33.6    33.3    94.4 
114.7    109.5 
 
Sweden              Q55.1    52.1    74.0   100.5   107.4 
111.4 
 
France            QQ14.5    20.4    18.6    34.2   35.8 
40.2 
 
Netherlands        Q52.1    47.5    55.0    38.2   40.4    58.7 
 
UK                 QQ24.8    30.1    29.5    46.3   46.3 
53.3 
 
Germany             Q5.4      5.7      6.0      9.5   14.4 
21.6 
 
Denmark            Q34.3    28.9    43.4    47.5   51.3    68.9 
 
Finland            Q 29.1    28.1      8.1    13.9   12.9 
10.6 
 
SwitzerlandQQ9.6      12.4      11.3      15.9    20.3 
20.2 
 
Japan                        Q4.0       3.4      2.6 
3.5     3.6    3.1 
 
All EUQQQ225.3  220.4  246.6  329.9  339.7  405.7 
 
FDI/GDP (%) QQ16.3    16.4    17.9    25.2    26.5 
30.3 
 
Table II:  FDI Position in Norway by Industry (NOK Bill) 
Source:  Statistics Norway 
 
           QQ             2001    2002    2003    2004 
2005    2006 
 
Total FDIQQ294.4   298.0   327.1   473.1    504.2    582.7 
 
of which in: 
 
Petroleum/MiningQ80.9    83.3     77.7   124.7    145.5 
164.8 
 
ManufacturingQQ56.8    64.1     66.7   134.5Q146.6 
153.5 
 
Bldg./ConstructionQ4.6      4.3       2.3        4.3Q    3.9 
4.6 
 
Dom. Trade/HotelQ42.4    37.2     44.2      60.9      61.9 
62.6 
 
Transp./Commun.Q20.1    19.7     40.1      47.4      44.2 
54.4 
 
Financial, Bus. 
Services/PropertyQ72.6     72.9     78.7      92.6      92.6 
126.2 
 
Other IndustryQQ16.0    16.5     17.4        8.6      9.5 
16.7 
 
 
Table III: Norway's Investment Position Abroad by Country (NOK 
Bill) 
Source:  Statistics Norway 
 
Q                           2001    2002    2003    2004 
2005    2006 
 
Total Inv. Abroad Q499.1   505.7   551.9   555.8Q 667.0 
764.4 
 
of which in: 
 
U.S.QQQ56.5     51.0    49.8    40.5    87.2    80.2 
 
SwedenQQ67.7     78.3   87.7   Q93.7   103.7    157.9 
 
DenmarkQQ39.9     38.8   45.6     36.9     38.1    33.0 
 
UKQQQ73.6     60.6   66.4     33.7     34.1    33.7 
 
NetherlandsQQ32.2     32.1   34.6     47.5     44.3 
59.8 
 
Germany            Q15.7     28.1   26.9     46.5     30.7 
27.5 
 
All EUQQQ276.3   297.7   325.6   332.9   354.9 
420.6 
 
Total/GDP (%)     Q27.7     27.8   30.2    29.6  Q 35.0 
39.8 
 
Table IV:  Norway's Investment Position Abroad by Industry 
(NOK Bill) 
Source: Statistics Norway 
 
           QQ  Q2001    2002    2003    2004    2005 
2006 
 
Total FDI            Q499.1   505.7   551.9  555.8   667.0 
764.4 
 
of which in: 
 
AgricultureQQ2.2       1.9       2.5       2.9      2.9 
3.7 
 
PetroleumQQ103.9   105.2   131.2   150.9   209.6    228.9 
 
Manuf./MiningQ240.7   241.2   252.8   235.6   240.2    238.2 
 
Power/Water suppl.,Q22.9     29.3     30.1     31.0     35.9 
38.1 
Construction. 
 
Dom. Trade/Hotl.Q19.4     14.4     16.3     16.7    18.7 
13.0 
 
Shipping/pipelinesQ29.9     27.3     26.3     25.6    41.2 
47.6 
 
Transp./Commun.Q25.3     21.7     23.1     34.0    57.0 
116.4 
 
Financial Serv.Q16.0     29.7     30.4     11.9    17.6 
14.7 
 
Business/PropertyQ37.2     33.9     38.1     42.9    43.3 
62.4 
 
Other IndustryQQ1.6     1.0        1.1       4.2      0.6 
1.2 
 
 
Major Foreign Investors 
 
Norwegian, American and other foreign petroleum companies have 
invested billions of dollars in the Norwegian offshore 
petroleum sector.  The major U.S. investors offshore are: 
ExxonMobil, ConocoPhillips, Chevron, Marathon, and Hess. 
Major U.S. petroleum service providers include Halliburton, 
Baker Hughes, National Oilwell Varco, Weatherford, and BJ 
Services.  The number of companies holding production/operator 
licenses on the Norwegian Continental Shelf currently totals 
57, including other international majors like BP-Amoco, Shell, 
ENI, and Total. In 2008, foreign and Norwegian petroleum firms 
invested approximately NOK 127 billion (USD 22 billion) in the 
offshore petroleum sector. 
On the Norwegian mainland, major U.S. investors and suppliers 
include: IBM, Microsoft, Dell, Google, Coca-Cola Norge, Pepsi 
Cola Norge, Kraft General Foods, American Express, General 
Electric, FMC, General Motors, Ford Motor Company, Avis, 
Hertz, Pfizer, Merck, Eli Lilly, Colgate-Palmolive, DHL 
International, Ernst & Young, Hewlett-Packard, Ingersoll-Rand, 
Kellogg, 3M, Manpower, Motorola, Wrigley and Xerox 
Corporation.  In all, over 200 American firms have established 
branch offices or subsidiaries in Norway. 
 
Note on Sources 
 
Information in this report was obtained from various sources 
within the Ministries of Finance, Trade and Industry, Labor, 
and Foreign Affairs, as well as the Norwegian Central Bureau 
of Statistics and the Central Bank of Norway. 
 
Web Resources 
 
Norwegian Ministry of Finance 
http://www.regjeringen.no/en/ministries/fin 
 
Norwegian Ministry of Trade and Industry 
http://www.regjeringen.no/en/ministries/nhd 
 
Norwegian Ministry of Labor and Social Inclusion 
http://www.regjeringen.no/en/ministries/aid 
 
Norwegian Ministry of Foreign Affairs 
http://www.regjeringen.no/en/ministries/ud 
 
Statistics Norway 
http://www.ssb.no/english/ 
 
Central Bank of Norway 
http://www.norges-bank.no/english/