China-Norway FTA nearer with resumed ties

By Chen Qingqing Source:Global Times Published: 2016/12/20 22:13:39

Restoring relations to help expand trade: expert


A Norwegian man fishes for salmon in the Atlantic Ocean. File photo: CFP

A Norwegian man fishes for salmon in the Atlantic Ocean. File photo: CFP

The resumption of China-Norway diplomatic relations on Monday brings the two countries a step closer to reaching a free trade agreement (FTA), an expert from China's national think tank told the Global Times on Tuesday.

Diplomatic relations were halted in 2010 due to a Noble Prize spat, and since then negotiations on trade and investment activities have been on ice for six years, noted Chen Xin, director of the economic division at the Institute of European Studies of China Academy of Social Sciences.

"They were so close to signing the FTA at that time, and now the two nations are expected to make significant progress," he said.

In June 2007, the first meeting concerning the feasibility of an FTA between two countries was held in Oslo, Norway. However, all exchanges have been halted since the eighth round of negotiations in September 2010.

Accelerating the China-Norway FTA process will help China in its negotiations with the European Free Trade Association, as Iceland and Switzerland, two member countries, already have signed FTAs with China, Chen noted.

By reaching an agreement with Norway, China will set a good example for negotiations with other developed countries, Chen told the Global Times on Tuesday.

From January to September, China exported $1.98 billion worth of products to Norway, an 11.1 percent drop year-on-year, according to a post published on the Ministery of Commerce's website on December 5.

China's imports from Norway also slumped 26.2 percent compared with the same period in 2015 to $2.37 billion.

Strengthening business ties

China is Norway's third largest source of imports as well as its most important trading partner in Asia, Liu Jianying, an associate research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times on Tuesday.

"The cooperation between the two countries has been expanding from trading activities to other sectors such as technology and construction at the moment," she said.

In fact, the main source of investment in Norway for Chinese companies is through mergers and acquisitions. At the end of 2015, there were 13 Chinese companies in Norway, with an accumulated investment of $3.47 billion, according to Liu.

Restoring relations will also push forward trading activities between the two countries, "which is also good news for Norway's salmon exporters," Chen noted.

"There will be more Norwegian salmon products entering the Chinese market in the near future,"  he said.

A stable political status, healthy legal system and strong research and development abilities may attract more Chinese companies to invest in the country, but challenges remain, Liu noted. "For example, the tax rates are relatively high, so is the labor cost."

Also, Chinese companies should be cautious about local regulations in terms of investment and business operations, Chen noted.

For instance, China Oilfield Services Ltd announced in March that two drilling contracts held by its European subsidiary have been terminated and suspended by its Norwegian counterpart.

"Before investing in the country, Chinese firms should thoroughly study and evaluate potential risks to prevent losses," Liu noted.

The largest sovereign fund in the world - Norwegian Government Pension Fund Global - has been active in China's capital market in recent years, Chen noted.

"As the two countries move forward in terms of diplomacy, the fund will likely have a larger part in portfolio investment in China," he said.

Posted in: ECONOMY

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