At first glance, the Brexit effect for Dutch trade is not too bad

November 22, 2021 by No Comments

What would happen to Dutch exports to the United Kingdom if the British left the internal market of the EU and out of the customs union? There has been much speculation in recent years about the effects of such a ‘hard’ Brexit. On January 1, the time had come: the British left the EU market, a trade agreement was signed in its place. On Thursday, the Central Bureau of Statistics (CBS) published the first figures on trade since then.

At first glance, the Brexit effect for Dutch trade appears to be not too bad. In the first quarter of 2021, the total value of Dutch exports to the UK amounted to 8.9 billion euros – the same as in the first quarter of 2020. The value of imports from the UK did fall, from 5.8 to 5. 2 billion euros.

Don’t draw any conclusions yet

Can it be concluded from this that Brexit will not affect Dutch exports? No, says Marjolijn Jaarsma, researcher at CBS. “We prefer to look at a longer period,” she says. The corona crisis is clouding the picture, both this year and last year. And companies in the EU and UK hoarded for January 1, 2021 and January 31, 2020, the formal Brexit date.

Jaarsma believes that the effect of the trade agreement can already be seen in the CBS figures. So-called re-exports – the importation and re-export of products – from the Netherlands to the UK fell sharply, from 4.3 billion euros in the first quarter of 2020 to 3.2 billion euros in the same quarter this year. Since 1 January, so-called ‘origin rules’ apply between the EU and the UK: tariff-free trade does not simply apply to goods that originally come from ‘third’ countries, such as China. Re-exports therefore become more difficult.

Increase in Dutch exports

The decline in re-exports is fully compensated in the CBS figures by an increase in the export of goods of Dutch manufacture. More oil and gas was exported and more money was made from that, due to the increased oil price. Flower exports, among other things, also picked up – which is striking, because flower exporters feared red tape at the border due to Brexit. That has not yet been forthcoming because the British, unlike the EU, do not strictly check health certificates at the border. As soon as the British do this, the Dutch export of flowers, vegetables, fruit and meat could still take a hit. The strict controls that EU customs authorities are already carrying out are probably reflected in the 11 percent drop in imports from the UK, says Jaarsma.

According to the CBS economist, Dutch exports to the UK have been performing worse for years than exports to other countries, both in the EU and beyond. In 2020, Dutch earnings from exports to the UK were 2 percent higher than in 2015, a year before the Brexit referendum. Total Dutch export earnings were 7 percent higher than in 2015.

Eurostat, the EU statistical office, has for the time being noted a stronger Brexit effect than Statistics Netherlands. In the first two months of this year, Eurostat sees a drop of more than 20 percent in exports from the entire EU to the UK compared to a year earlier and a drop of no less than 46 percent in imports from the UK. Whether Brexit will permanently disrupt trade with the UK will only become clear from longer-term data.