March 16, 2016 / 1:46 PM / 3 years ago

Norway satisfies EU smoked salmon appetite through Polish back-door

OSLO (Reuters) - Thousands of workers in Poland have jobs marinating and smoking Norwegian salmon thanks to a difference in tariffs imposed by the European Union on the Nordic non-member which is the world’s biggest exporter of the fish.

A fishing boat returns from a trip to the Barents Sea to the tiny port of Sommaroya, north Norway, in this January 31, 2013 file photo. REUTERS/Alister Doyle/Files

Norway, which farms salmon in pens in fjords, sells fresh and frozen salmon to the EU in 2016 with a minimal two percent tariff. But it has to pay a 13 percent rate on processed fish, making it unprofitable to process salmon at home.

To skirt the higher rate, Norway sends container-loads of fresh fish to EU member Poland, the top single destination for Norway’s salmon.

Norwegian exporters pay smokehouses in Poland, where wage costs are much lower than in Norway, to process the fish that then gets re-exported tariff-free within the 28-member EU.

Some Norwegian companies including top salmon farmer Marine Harvest have bought smokehouses in Poland, so the profits go straight back to Norway. Other smokehouses are Polish-owned.

Salmon is one example of how the Nordic country has managed its relationship with the European Union, sometimes cited as a model if British voters decide to leave the EU in a June 23 referendum. [L5N16G4SI]

Norway’s ties with the EU have not always been amicable. The EU imposed anti-dumping penalties on Norway’s salmon exports in 2006. Norway took the case to the World Trade Organization, and a compromise paved the way to the current regime of duties.

Norway has free trade in many areas with the 28-nation EU but has stayed outside fisheries and farm policies, forcing it to negotiate deals, such as the one satisfying the EU appetite for smoked salmon through the back door of Poland.

“We’re moving employees and activity out of Norway and into EU countries,” said Trond Davidsen, deputy managing director of the Norwegian Seafood Federation which represents 500 fish farming firms.

PACKAGING, HYGIENE AND SEA LICE

Norway’s cabinet minister who deals with the European Union, Elisabeth Aspaker, estimates that Norway has created 12,000 jobs in the EU, mainly processing fish. “There’s no such thing as a free lunch,” she said of Norway’s complex EU ties.

Norway exported 1.19 million tonnes of salmon worth a record 47.7 billion crowns ($5.56 billion) last year, from sushi to frozen fish, according to the government-owned Norwegian Seafood Council. Poland was the biggest market on 5.8 billion crowns, ahead of France and Britain.

Norwegian farmers raise fish in pens in their picturesque fjords along a long, rugged coastline, and compete with EU farmers in Scotland and Ireland. Farmed salmon was first reared in Norway in the 1960s.

Norway must abide by EU rules on packaging and hygiene - for example controlling the sea lice that stick to the fish, or the use of antibiotics. The Oslo government says those rules are not hard to implement.

“We generally have stricter standards,” said Paul Aandahl, an analyst at the Seafood Council.

Overall, Davidsen says Norwegian fishermen oppose the idea of EU membership, even though it would mean easier access for salmon.

Fishermen reckon the Oslo government is better than Brussels at setting sustainable quotas for fish such as cod or herring to avoid over-fishing. Staying outside the EU has also let Norway keep harpooning whales, despite strong opposition by the EU.

Beijing has restricted salmon imports from Norway since the Norwegian Nobel Committee awarded the 2010 Peace Prize to Chinese dissident Liu Xiaobo. Davidsen said it was impossible to know if EU membership might have given Beijing pause, fearing EU sanctions in return.

Reporting By Alister Doyle, editing by Peter Millership

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