The Norwegian salmon industry has expanded its market share within the EU, while EU-based processors have been losing ground over recent years. Now retaliation is needed says key European advisory body.
The Market Advisory Council (MAC) has issued a comprehensive set of recommendations to the European Commission, emphasizing the need for a strategic rebalancing in trade relations between the EU and Norway.
In an official piece of advice to the Commission published in July, the Council raised significant concerns regarding the influx of Norwegian “production” grade salmon into the EU market in processed forms such as fillets and smoked products.
The Brussels-based Council is an advisory body established under the EU’s Common Fisheries Policy. Its role is to provide direct advice to the European Commission and EU Member States on market-related issues. The European Commission is expected to respond to the MAC’s recommendations.
The body notes that while Norway prohibits the export of whole “production” grade fish, these products are still entering the EU market in processed forms, leading to competitive disadvantages for EU-based processors.
Background
In 2023, Norway was the EU’s 6th most important trading partner for goods, with a significant portion of this trade involving fishery and aquaculture products. Norway exported an average of 1.3 million tons of these products to the EU annually between 2021 and 2023, with a value of €7.856 billion, representing nearly 28% of Norway’s share in EU imports by value.
The trade relationship between the EU and Norway is shaped by several key agreements, including the European Economic Area (EEA) Financial Mechanism, the Norwegian Financial Mechanism, and protocols related to the temporary liberalization of access to the EU market for certain fish and seafood products. Additionally, three EU-Norway fisheries agreements play a significant role in shaping trade dynamics.
Over recent years, the Norwegian salmon industry has expanded its market share within the EU, while EU-based processors have been losing ground.
Significant concerns over production fish
The advice from the Council highlights the broader market distortions caused by the influx of Norwegian “production” grade salmon into the EU under processed forms such as filleted or smoked products.
The body notes that while Norway prohibits the export of whole “production” grade fish, these products are entering the EU market under processed presentations, exacerbating the competitive disadvantage for EU processors.
Norwegian law classifies farmed salmon into three quality categories: “superior,” “ordinary,” and “production.” The “production” grade, which includes salmon with minor defects, is prohibited from being exported as whole fish but can be filleted and then exported.
By processing “production” grade salmon into fillets, Norwegian processors can remove visible defects, making the fillets indistinguishable from those made from higher-grade salmon. These fillets are then exported to the EU and other markets.
In 2024, the share of “production” grade salmon surged to over 35% of Norway’s farmed Atlantic salmon output, significantly higher than the historic 4-6% share in previous years.
Fillets from “production” grade salmon, when exported to the EU, compete directly with fillets produced locally in the EU from higher-grade salmon. The price difference between these supply chains is substantial, with Norwegian fillets being approximately €4.30 to €4.50 per kilogram cheaper.
This price discrepancy puts EU processors at a competitive disadvantage, as they are producing fillets from higher-grade salmon but facing competition from cheaper, production-grade Norwegian fillets.
This development is significant as it not only affects trade relations between the EU and Norway but also has broader implications for the competitiveness and sustainability of the EU salmon processing industry.
A fivefold rise in Norwegian smoked salmon
The Market Advisory Council’s advice to the European Commission raises significant concerns regarding the competitive disadvantages faced by the EU processing industry.
The Council points to the substantial increase in the market access provided to Norwegian smoked salmon products under the adopted bilateral protocol.
The increase from 450 to 2,500 tonnes (a fivefold rise) is viewed as disproportionate, and the MAC warns that this could severely harm EU food business operators.
On 11 March 2024, the Director-General for Trade of the European Commission officially registered the Norwegian ban as a market access barrier that may conflict with international trade law.
Leverage EU market access
A formal letter from the EU to the competent Norwegian Minister was sent on early May to open for a bilateral dialogue. This invitation is still awaiting a reply from Norway.
In the advice published in July, the Council urges the Commission to recognise and leverage the value of EU market access when negotiating fisheries agreements.
The MAC calls for various measures to address this imbalance, potentially including the introduction of taxes on imports of fillets from “production” grade fish if Norway continues to restrict the export of whole fish.
The council warns that the ongoing developments in EU-Norway trade relations could negatively impact the competitiveness and employment in the EU salmon processing industry.
