The Netherlands has been a leading trading nation for many centuries. Her prosperous and open economy depends heavily on foreign trade. In 1602, the very first international trade company, Dutch East Indian Company, was founded by Netherlanders. Although the Netherlands no longer occupies the governing position it held in the 17th and 18th centuries, her trading position still remains relatively strong. With 0.25% of the world population and a little under 1% of total global production, the Netherlands generates 3.2% of world trade – nearly four times as much as might be expected purely in terms of the size of her economy.

Since signing the Treaty of Paris to found ECSC (European Coal and Steel Community), Netherlands has become one of the very beginning member countries of EU. Along with 11 of its EU partners, Netherlands began circulating the euro currency on 1 January 2002. Major trading partners of Netherlands are EU (especially Germany: 24%, Belgium and Luxembourg: 12%, France: 10%, and UK: 10%), USA: 5%, and Asian countries: 7%.

Top exports and imports

Netherlands economy is renowned for stable industrial relations, moderate unemployment and inflation, a sizable current account surplus, and an important role as a European transportation hub. The major exports of Netherlands are machinery and transport equipment, which account for 32% of total exports, chemicals, 17%, manufactured goods, 22%, food, drink, tobacco products, 15%, raw materails, 6%, and fuels, 8%.

Top imports of netherlands are foodstuffs: 33%, machinery: 28%, consumer goods: 14%, mineral fuels and crude petroleum:12%, transportation equipment: 12%, and clothing: 5%. Foreign direct investments FDI to and from Netherlands declined for the second consecutive year in 2002, although at 714 billion guilders, inflows were still above the 1995-1999 average.

The openness of the Dutch economy is reflected in its success in attracting foreign companies. Favorable tax treatment for profits earned by multinationals has boosted the Netherlands’ attraction as a location for foreign direct investment. Moreover, international comparisons of the major economies (by the World Competitiveness Yearbook from the International Institute for Management Development) have consistently ranked the Netherlands as one of the most attractive destinations for FDI. In 2002 FDI inflows totaled 30.8bn, a dramatic decline compared with the 56.7bn in inflows registered in 2001, but still a strong performance in view of the sharp global decline in cross border capital flows in that year. Investment initiatives have attracted a wide variety of foreign firms in recent years, including Polaroid, Esso, Dow Chemical, Fuji, Nissan, Engelhardt, Amsco, Thorn EMI and Rank Xerox. Between 1998 and 2002 FDI inflows from abroad totaled 225.5bn.

Tariff policies As an EU member, Netherlands follows the common external trade policies of EU. The EU tariffs (customs duties) policies that Netherlands applies are based on the international Harmonized System (HS) of product classification. Duty rates on manufactured goods from the U.S. generally range from five to eight percent and are usually based on the C.I.F. value of the goods at the port of entry. The C.I.F. value is the price of the goods (usually the selling price) plus packing costs, insurance, and freight charges to the port of entry. Most raw materials enter duty free or at low rates while agricultural products face higher rates and special levies.