Each year, Ikea serves up more than 40 tons of Swedish meatballs and sausages in its shops in Norway.

It pays the Norwegian authorities an import tariff on each kilo of $15 - far more than the meat itself is worth.

The situation has been going on for years, but now Ikea and the Swedish government have had enough.

Salmon threat

The company, which has stores all over the world, has threatened to cancel its annual purchase of $6m worth of Norwegian salmon in protest at the high tariffs.

Leif Pagrotsky: "Grotesque situation"

Swedish Trade Minister, Leif Pagrotsky, has poured fuel on the blazing row by accusing Norway of pursuing antiquated protectionist policies and creating a "grotesque situation".

Norway points out the tariffs violate no existing trade agreement, but Oslo admits its food and agriculture policies are comparable with those of Switzerland and Japan, two of the most protectionist states in the world.

Prices considerably higher in Norway Sweden's recent decision to join the European Union has combined with a sluggish economy to bring down prices sharply while Norway, which has twice rejected EU membership, continues to have the highest cost of living in Europe.

The increasingly disparate prices between Norway on one side and Sweden, Finland and Denmark on the other, has led to an increase in smuggling.

Entrepreneurs and some criminal gangs have taken to smuggling not just alcohol and tobacco but also basic foodstuffs into Norway.