121 million euros paid in duties on imports from the UK

As of 1 January 2021, goods trade with the UK takes place via customs. Aside from possible import tariffs, Dutch traders have also been faced with customs controls and administrative procedures at the border.

Most goods from the UK imported tariff-free

In the first eight months of 2021, the Netherlands imported goods from the UK to an amount of 15.3 billion euros. Of this amount, 8.6 billion involved goods that were subject to a zero tariff since tariffs were reduced or removed over the past decades under the direction of the World Trade Organization (WTO). To the remaining 6.6 billion, in principle a European Union import tariff of 6.0 percent on average applied as of 2021. However, this amount includes 4.5 billion in goods that were not subject to import tariffs due to the EU-UK Trade and Cooperation Agreement (TCA). Duties were paid over the remaining 2.1 billion, resulting in 121 million euros in tariff costs for Dutch importers.

Most tariff charges paid on clothing imports from the UK

Under the TCA, tariff-free bilateral trading applies to products which were demonstrably manufactured in either the EU or the UK for a sufficient proportion. This means it applies more readily to agricultural products (such as vegetables) than to cars, for instance, which consist of components from all around the world. Of the 121 million euros in import duties paid, one third comprised duties on imports of clothing from the UK; almost 10 percent of the import duties involved footwear imports while another 10 percent of the duties paid concerned machinery imports.

Less re-exportation to the UK

In exports to the UK, traders must also demonstrate that a satisfactory proportion of the product was manufactured within the EU in order to be able to export it tariff-free. Not all products meet this requirement, however. The Netherlands imports large quantities of goods that are (barely or) not processed here before they are exported again: the so-called re-exports. Re-export flows from the Netherlands to the UK have decreased substantially as of 2021.

Import tariffs could be an explanation for this decline in re-exports. A proportion of the goods that are (re-)exported from the Netherlands to the UK originally comes from outside the European Union. Figures over 2017 show that this was the case for approximately 9 billion out of the 17 billion euros in re-exports from the Netherlands to the UK. A substantial part of these goods originated from China (2.5 billion) or the United States (1.8 billion). These goods, most likely not compliant with the TCA’s rules of origin, might be subject to tariffs twice: during importation into the Netherlands and during importation into the UK. Moreover, the traders would have to deal twice with customs formalities and controls, if any. This may have provided reasons to divert trade flows and import directly from the country of origin.

The latest edition of the CBS Internationalisation Monitor focuses on two recent exogenous shocks: the coronavirus crisis and Brexit. How has international trade developed during these two shocks? And how might trade have developed if these shocks had not taken place? How have various types of enterprises been dealing with them? What is the impact of the new trade agreement with the UK on Dutch goods flows to and from the UK?