Dutch face tough challenges to safeguard interests in Brexit negotiations, say experts

Source:Xinhua Published: 2017/3/28 7:21:59

Just days before British Prime Minister Theresa May activates the Brexit process, Dutch experts warned the Netherlands face a difficult balancing act of negotiating within a united European Union (EU) front, while confronting thorny issues to safeguard its own interests.

UNITED EUROPEAN FRONT

"The Netherlands and Britain have shared many common interests as EU members, but the situation during the Brexit negotiations will be fundamentally different from business as usual with the UK being the departing state on the one side and Netherlands being part of the EU27 on the other," said Joris Larik, senior researcher at The Hague Institute for Global Justice.

The expert on EU law and foreign policy suggested the Netherlands should focus its strategy on being part of a united EU front in the upcoming negotiations and refrain from entertaining any British proposals, which could incite internal divisions among the EU27 even if short term gains for the Dutch economy and citizens are being promised.

"Important as the UK is as a trading partner for the Netherlands, even more important is the integrity and viability of the EU for Dutch prosperity and foreign policy," said the expert and author of the book Foreign Policy Objectives in European Constitutional Law.

His remarks echoed the Netherlands' Advisory Council on International Affairs (AIV), which stressed in a Brexit report published last week that the EU member states should represent a united front in the negotiations for British withdrawal from the EU.

In particular it called on the Dutch government not to be receptive to any British proposals which clearly intend to turn EU member states against each other.

"Harsh fights about Brexit within the EU would be negative for the Netherlands especially now that the EU is going through difficult times for its unity," explained Adriaan Schout, senior research fellow at Clingendael, the Dutch institute of international relations and co-author of the AIV report.

For the Netherlands, being the third largest exporter to Britain at 6.3 percent of GDP) and fourth largest importer (3.7 percent of GDP) among EU states, consequences will be more significant.

According to Larik, the EU's cohesion is more important for the Netherlands even if the country stands to suffer negative consequences in terms of trade. "In that sense, no deal with the UK would indeed be better than a bad deal that erodes the cohesion within the EU," he told Xinhua.

BUDGET CONTRIBUTIONS

"European capitals have different priorities. For the Netherlands, trade with the UK is of outmost importance as well as the issue of contributions to the EU budget," commented Schout.

"Whatever hampers trade might be devastating for the Dutch economy, but the issue of contributions to the EU budget is a highly sensitive issue, directly visible and symbolic," said Schout.

The size of Britain's exit bill set around 60 billion euros (65.2 billion US dollars) covering liabilities such as pensions for EU officials, infrastructure projects, and the bail-out of Ireland, will be among the first topics for discussion.

"The Netherlands, being a net contributor, would be under pressure due to Brexit and the country may suffer heavy losses if the exit bill cannot be worked out with the UK," Larik warned.

The Netherlands' annual contribution to the EU budget is slightly below 6 billion euros (4.9 percent of GDP) and is ranked sixth. Britain, with a contribution of 15.4 percent of GDP, is the third largest contributor.

According to Larik, there are little chances to prevent an increase of the Dutch net contribution to the EU budget post-Brexit in particular given the stated ambitions of the EU to cooperate more closely in defense, security, financial and other matters.

"That will create additional costs, not fewer, in the near term. However, the biggest catastrophe for the Netherlands would be a weakening or even disintegration of the EU rather than a deal leading to higher costs," he commented.

FUTURE RELATIONSHIP

Schout stressed the need for a transitional period after the Brexit negotiations begin so that both sides avoid entering into the World Trade Organization (WTO) regime, referring to WTO tariffs and regulations. "Trade tariffs and other restrictions would be painful for both sides," he told Xinhua.

The Dutch Bureau for Economic Policy Analysis (CPB) has estimated that Brexit would cost the Dutch economy 10 billion euros annually by 2030, but a new British-EU agreement cutting trade tariffs in half would reduce this figure by 20 percent.

As for the future relationship, the Dutch advisory body AIV suggested that that the EU could engage in a comprehensive free trade agreement with Britain, modeled after the recent trade agreement with Canada, CETA, and going beyond that where possible through additional provisions.

The proposal seems impossible according to Larik. "It is important to recall that even a 'CETA plus' would mean less single market. Moreover, it took seven years to negotiate CETA, not least due to the arduous ratification process in the EU member states," he said. (1 euro = 1.09 US dollars)

Posted in: EUROPE

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