The Netherlands

An Expert's View about Business Environment in the Netherlands

Posted on: 28 Feb 2012

Recent Developments
•As the Netherlands is a member of the European Union (EU), its trade relations with Hong Kong/the Chinese mainland are affected by EU’s common external trade policy and measures. As a euro-zone member, it has also adopted the euro as its legal tender from 1 January 2002.
•Upon the expiry of the textile safeguard quotas by the end of 2007, a joint system with China had been established to monitor EU imports of Chinese textiles and apparel, which was scheduled to operate for one year, covering 8 out of the 10 previously restricted categories. Starting 1 January 2009, textile and clothing products originating in China no longer require any import licence or surveillance document before entering the EU.
•The EU’s scheme on generalised system of preferences (“GSP”) entered into effect on 1 January 2009, and has been extended to remain in force until 31 December 2013 (or until such time as the next Regulation becomes applicable, whichever comes first). While the Chinese mainland remains a beneficiary, it is among the group of to-be-excluded countries, which also includes India, Brazil, South Africa, Indonesia, Malaysia and Russia, while Chinese mainland exports of, among other product categories, toys, electrical equipment, footwear, textiles, wooden articles, and watches and clocks have already been excluded from the preferential treatment.
•A number of Chinese mainland-origin products are subject to EU’s anti-dumping duties, including bicycles, candles, fasteners, ironing boards and saddles, which are of interest to Hong Kong exporters.
•Hong Kong’s total exports to the Netherlands slid by 4% to US$5,423 million in 2011, while its imports from the Netherlands increased by 25% to US$2,782 million.
•Dragged by low confidence levels, both consumption and investment have lost momentum since the second half of last year. Blown also by the government’s cost-savng measures and the gloomier global trade prospects, the Dutch economy is estimated to have ended 2011 with lower growth of 1.5%. Looking ahead, fiscal tightening and the uncertain export outlook due to the lingering European sovereign debt crisis remain major hindrances ahead, limiting the country’s economic growth in 2012 to 0.5%.

Current Economic Situation

Thanks to an upswing in the inventory cycle and a revival of exports, the Dutch economy fared well in the first half of 2011. However, the increasing uncertainty of the European sovereign-debt crisis and the resultant demand for governments to tighten fiscal discipline and households to deleverage set in in the second half of last year, cooling off the momenum of domestic demand and public spending, as well as investor confidence. For 2011 as a whole, the Dutch economy is estimated to have grown by 1.5%, slightly slower than 1.7% in the previous year.

Looking forward, consumer demand is set to remain subdued as a result of lower wage growth, sizable cuts in social secturity transfers such as health care allowances, and a relatively larger wealth effects due to the country’s high levels of accumulated financial assets and leveraged housing wealth. On the other hand, business investment will be limited by low capital utilisation rates and ever-shrinking profit margins. These together with the uncertain export outlook in the light of the lingering debt crisis in Europe will continue to hover over the Dutch economy. Taken together, the Dutch economy is forecast to grow much slower in 2012, at 0.5% only.

Trade Policy

The Netherlands is a member of the EU, and it follows EU's common external trade policy and measures. As a euro-zone member, it has also adopted the euro as its legal tender from 1 January 2002.

Textiles and Clothing

Hong Kong’s textiles and clothing exports to the EU were previously subject to the World Trade Organisation (WTO) Agreement on Textiles and Clothing (ATC), under which quantitative restrictions on textiles and clothing were eliminated completely on 1 January 2005.

Likewise, the previous quotas imposed by the EU on textiles and clothing products originating from the Chinese mainland were removed on 1 January 2005. However, as a result of the EU-China agreement reached in June 2005, the EU imposed safeguard quotas on 10 categories of Chinese textile products for the period of 2005-2007. Upon the expiry of the textile safeguard quotas by the end of 2007, a joint system with China was established to monitor EU imports of Chinese textiles and apparel for one year, covering 8 out of the 10 previously restricted categories.

Starting 1 January 2009, textile and clothing products originating in China no longer require any import licence or surveillance document before entering the EU.

Non-textile Manufacturing Products

Previously, the EU also imposed Union-wide quotas on three categories of non-textile products originating from the Chinese mainland, including certain footwear, porcelain and ceramic tableware/kitchenware. But these quotas were liberalised on 1 January 2005.

Scheme of Generalised Tariff Preferences

The EU’s scheme on generalised system of preferences (“GSP”) entered into effect on 1 January 2009, and has been extended to remain in force until 31 December 2013 (or until such time as the next Regulation becomes applicable, whichever comes first). While the Chinese mainland remains a beneficiary, it is among the group of to-be-excluded countries, which also includes India, Brazil, South Africa, Indonesia, Malaysia and Russia, while Chinese mainland exports of, among other product categories, toys, electrical equipment, footwear, textiles, wooden articles, and watches and clocks have already been excluded from the preferential treatment. Regarding Hong Kong, the territory has been fully excluded from the EU’s GSP scheme since 1 May 1998.

Anti-dumping Measures

The EU has initiated anti-dumping (AD) proceedings against certain mainland-origin products. Currently, there are a number of mainland-origin items subject to EU’s anti-dumping measures, including bicycles (at a duty rate of 48.5%), fasteners (27.4%-85.0%), ironing boards (42.3%) and saddles (29.6%), which are among the affected products of interest to Hong Kong. As at the end of 2011, the EU did not apply any AD measures on imports from Hong Kong.

Other Measures

To combat the spread of the Asian longhorn beetle, the EU introduced in July 1999 emergency controls on wooden packaging material originating in the Chinese mainland. Wood covered by the measures must be stripped of its bark and free of insect bore holes greater than 3mm across, or have been kiln-dried to below 20% moisture content.

For health reasons, the EU has adopted a Directive on the control of the use of nickel in objects intended to be in contact with the skin, such as watches and jewellery. Following the emergency ban adopted in December 1999, the EU has adopted a Directive to ban the use of some phthalates in certain PVC toys and childcare articles on a permanent basis, which will come into effect from 16 January 2007. In addition, the EU has adopted a Directive to prohibit from September 2003 the trading of clothing, footwear and other textile and leather articles which contain azo-dyes, from which aromatic amines may be derived.

On the other hand, the EU has adopted a number of Directives for environmental protection, which may have an impact on the sales of a wide range of consumer goods and consumer electronics. Notable examples include the Directive on Waste Electrical and Electronic Equipment (WEEE) implemented in August 2005, and the Directive on Restriction of Hazardous Substances (RoHS) implemented in July 2006. On 3 December 2008, the European Commission (EC) presented two proposals: one for a recast RoHS Directive and the other for a recast WEEE Directive.

The recast RoHS Directive was published on 1 July 2011. It will have to be implemented throughout the EU-27 as of 2 January 2013. The new Directive will continue to prohibit EEE that contains the same six dangerous substances as the old RoHS Directive. Nonetheless, the new Directive will widen, as from 22 July 2019, the current scope of the previous RoHS Directive, by including any EEE that will have fallen out of the old RoHS Directive’s scope, with only limited exceptions.

Another important law for Hong Kong companies to grapple with concerns waste EEE, i.e., the WEEE Directive. Under the recast, the new rules will include higher WEEE collection targets and broader scope of measure. Subject to European Council’s approval, the new WEEE Directive is expected to enter into force in the summer of 2012, while member states will have 18 months after to transpose the directive into national law.

On the heels of the recast RoHS Directive and the soon-to-be adopted recast WEEE Directive, the EU’s new framework Directive for setting eco-design requirements for energy-related product (ErP) is now in place. The ErP Directive is no longer limited to only EEE (as it was under its predecessor, the energy-using product, or EuP, Directive), but potentially covers any product that is related to the use of energy, including shower heads and other bathroom fittings, as well as insulation and construction materials.

Moreover, REACH, an EU Regulation which stands for Registration, Evaluation, Authorisation and Restriction of Chemicals, entered into force in June 2007. Among others, it requires EU manufacturers and importers of chemical substances (whether on their own, in preparations or in certain articles) to gather comprehensive information on properties of their substances produced or imported in volumes of 1 tonne or more per year, and to register such substances prior to manufacturing in or import into the EU.

Following the entry into force of the new Toy Safety Directive (Directive 2009/48/EC) on 20 July 2011, the Official Journal of the EU published on 11 August 2011 references to two important safety standards concerning electric toys (EN 62115:2005 and its amendment EN 62115:2005/A2:2011) and two previous standards on the mechanical and physical properties of toys and a standard on the flammability of toys.

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Posted: 28 February 2012

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