VI. TRADE REGULATIONS AND STANDARDS Tariffs and Import Taxes The Netherlands applies the EU tariffs (customs duties), which are based on the international Harmonized System (HS) of product classification. Duty rates on manufactured goods from the United States generally range from 5 to 8 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 sales 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. For information on EU duty rates levied on agricultural products, contact the U.S. Department of Agriculture, (202) 720-1322. For information on EU duty rates of manufactured and industrial products, contact the U.S. Department of Commerce, International Trade Administration's Office of European Union Affairs, (202) 482-5276. Excise Taxes Excise taxes are levied on a small number of products such as soft drinks, wine, beer, spirits, tobacco, sugar, and petroleum products. For imports, the excise tax is paid by the importer and is in addition to any customs duty or VAT. The EU plans to harmonize excise taxes and create the single internal market. Customs Valuation The Dutch, like the Americans, use the Harmonized System which is a system designed to classify goods in international trade for customs purposes and for developing trade statistics. It is arranged into 99 chapters. The sections are established according to categories such as agriculture, chemicals, chief material of the product, or type of manufacturing industry. The sections and chapters start with agricultural and primary products in the initial chapters, followed by products that are more processed and technically more complex. The HS classification number consists of a minimum of six digits, which are common to all countries using the Harmonized System. Additional digits can be used to meet each nation's individual statistical requirements and give greater detail as needed. If a HS number of the product being shipped is requested by the Dutch, importer, this information may be obtained from your closest US&FCS district office or from the Office of European Union Affairs, (202) 482-5276. The HS number is usually needed by the Dutch importer to determine the duties levied at time of importation. Prior to signing a long-term contract or sending a shipment of considerable value, it may be prudent for a U.S. exporter to first obtain an official ruling on the customs classification, duty rate, and taxes. Such requests should be sent to: Ministry of Finance, Director of Customs, P.O. Box 20201, 2500 EE The Hague. The request should describe the product, the material it is made from, and other details needed by customs authorities to classify the product correctly. While customs will not provide a binding decision, the advance ruling usually will be accepted if the goods are found to correspond exactly to the sample of description provided. Import Licenses Only a small number of goods of U.S. origin require import licenses, mostly agricultural and food items. Other items subject to import licensing requirements include coal and lignite fuel, a few specified base metal products, various apparel and textile products, and controlled items such as arms and munitions. Licenses are generally rapidly granted for goods of U.S. origin. Licenses are not transferable. They may be used to cover several shipments within the total quantity authorized. In general, the goods involved are indicated on the license by the Harmonized System classification number and the corresponding wording of the tariff position. Carnets As a result of various customs agreements, simplified procedures are available to U.S. business and professional people for the temporary importation of commercial samples and professional equipment. A carnet is a customs document that facilitates customs clearance for temporary imports of samples or equipment. With the carnet, goods may be imported without the payment of duty, tax, or additional security. The carnet also usually saves time since formalities are all arranged before leaving the United States. A carnet is usually valid for 1 year from the date of issuance. The cost ranges from $120 to $250. A bond or cash deposit of 40 percent of the value of the goods covered by the carnet is also required. This will be forfeited in the event the products are not reexported and duties and taxes are not paid. Carnets are sold in the United States by the U.S. Council for International Business at the following locations: 1212 Avenue of the Americas, New York, NY 10036, (212) 354-4480; 3345 Wilshire Boulevard, Los Angeles, CA 90010, (213) 386-0767; and 1930 Thoreau Drive, #101, Schaumburg, IL 60173. Export Controls For the purpose of national security, foreign policy, or short supply considerations, the United States controls the export of goods and technology with two broad categories of export licenses--general and validated. The vast majority of U.S. exports are shipped abroad under general licenses with no formal application required. For assistance in determining what type of license is needed and to initiate the processing of an application, contact your local Department of Commerce district office or the Bureau of Export Administration, Office of Export Assistance, Room H-1099D, U.S. Department of Commerce, Washington, DC 20230, (202) 482-4811. Import/Export Documentation Merchandise may be examined by the importer before customs clearance for the purpose of making an inventory. Goods cannot clear customs without shipping documents and payment of any customs duty, applicable value added taxes, and any excise taxes. These formalities must be undertaken by the importer at the time of clearing customs. Import licenses, if required, should be presented by the importer within the period for which they were issued. Shipments to the Netherlands require one copy each of the bill of lading (or air waybill) and the commercial invoice for customs clearance. There are no consular requirements, but certificates of origin may be required as set out below. U.S. Customs also requires two copies of the U.S. Shipper's Export Declaration (U.S. Department of Commerce Form 7525V) for goods valued at $1,500 or more. A declaration form must be completed for all shipments by regular mail or parcel post valued at $500 or more. The form must include the harmonized commodity number of the exported product as well as the weight stated in metric units. When sending goods through the mail, the exporter should inquire at the post office as to the proper documentation needed for mail shipments. For additional information or assistance on export documentation, readers should contact a local US&FCS District Office. Although no special format is prescribed for the commercial invoice, it is advisable to include the following: date and place of shipment; name (firm's name) and address of the seller and buyer; method of shipment; number, markings of the packages, and their numerical order; description of the goods using the usual commercial description according to kind, quality, grade, and the weight (gross and net, in metric units), along with any factors increasing or decreasing the value; agreed price of goods; unit cost; total cost f.o.b. factory plus shipping; insurance charges; delivery and payment terms; and the signature of a responsible official of the shipper's firm. Bills of lading should bear the name of the party to be notified. The consignee needs the original bill of lading to take possession of the goods. Certificates of origin are required for a small number of goods such as textile products. The need for a certificate of origin should be ascertained directly from the importer or from the appropriate customs authority. Letter-of-credit terms may stipulate that a certificate of origin be provided. Customs authorities accept certificates of origin issued by authorized local U.S. chambers of commerce or boards of trade. Temporary Entry Goods may clear customs with an EU transit procedure that provides for the issuance of a single transit document under which the goods may be easily shipped across frontiers of the EU member states. These transit documents are completed by the importer for a freight forwarder engaged for the purpose. The transit document provides the basis for a single, comprehensive procedure covering the goods within the Union. Since this is an EU Procedure, the European importer, customs house broker, freight forwarder, or shipper must prepare these documents at point of entry. Labeling, Marketing Requirements With only minor exceptions, there are no general requirements for marking imported goods with the country of origin. Requirements for specific products should be obtained from the importer. The import, export, or transit of non-Dutch goods having markings which would lead one to believe that the goods are of Dutch manufacture or origin is prohibited. There are no regulations for the marking of shipping packages. Good shipping practice dictates that packages should bear the consignee's mark and be numbered unless the shipment is such that the content of the packages can be readily identified without numbers. Hallmarking of gold and silver articles is required before they can be offered for sale. Only small tolerances are allowable for manufacturing errors. The hallmarking may done by a Netherlands hallmarking office after importation. Imports of certain commodities, including numerous foodstuffs, are subject to special regulations regarding the manner in which they must be labeled to show manufacturer, composition, content (in metric units), and country of origin. In view of the complexity of these regulations and changing requirements, information should be requested from the importer prior to shipment. When the services of an importer are not available, information can be obtained directly from the appropriate Dutch authority listed at the end of this publication. For agricultural and food products, the U.S. exporter should contact the U.S. Department of Agriculture for marketing and labeling information and exporting assistance at (202) 720-9408. As a member of the EU, the Netherlands applies the product standards and certification approval process developed by the Community. The Netherlands is required by the 1958 Treaty of Rome to incorporate in its national laws the EU directives. With the development of a single product standard, U.S. exporters may find that it is easier to comply with one EU-wide standard rather than having to meet several individual national standards when exporting to Europe. Prohibited Imports Certain imports into the Netherlands and the EU are prohibited or require an import license. These products fall under the categories of strategic goods or environmentally unfriendly items. U.S. firms exporting to the Netherlands or the rest of the EU can call a customs information hotline for a ruling. The number to call from the U.S. is 011-31-45-742700. Standards U.S. firms exporting to Europe are still confronted with both national and EU product standards. Further, these regulations occasionally change to meet new technology and more stringent demands. Key product areas are being regulated at the Union level for conformance to mandatory requirements to protect the health and safety of consumers, as well as the environment. To indicate this conformance to the mandatory requirements, a CE mark must be placed on all regulated products by the manufacturer or a representative before they can be sold on the EU market. The applicable product testing and certification requirements for individual product categories are specified in the various EU directives. The CE mark relates only to the mandatory health, safety, and environmental requirements established by the EU; it does not indicate conformity to European product standards. Thus, national marks of conformity with product standards remain compatible with the CE mark and both may be applied to the product. It should be noted, however, that the CE mark does replace all national safety marks for the regulated products. The EU Commission has released The Global Approach to Certification and Testing, a document that recommended harmonized testing and certification procedures within the Union. These proposals included establishing a "modular" system for demonstrating product compliance. Under this system, methods of demonstrating product conformity range from having the manufacturer self-certify the product to having a private testing company type-approve the product and provide market surveillance, depending on the probability and type of product risk. As standards and certification requirements are important in international trade, it is expected that more U.S. testing laboratories will be able to certify that products comply with EU requirements. Exporters can stay fully informed on the latest EU technical standards activities by contacting the National Institute of Standards and Technology (NIST). A part of the U.S. Department of Commerce, NIST offers industry an in-depth reference system on EU standards information gathered from the two European standards bodies tasked to write the EU 1992 norms--the European Committee for Standards (CEN) and the European Committee for Electrotechnical Standardization (CENELEC). NIST also can provide updated information from the EU which will elaborate on directives and provide assistance in identifying EU and member state standards and regulations. For more information, contact NIST at (301) 975-4038. To obtain copies of directives, amendments, and published updates, or to obtain a complete list of directives that could affect product sales to the Netherlands or another EU country, call the ITA Office of European Union Affairs at (202) 482-5276. Copies are available at a nominal fee. Other valuable sources of information with regard to foreign standards include the American National Standards Institute, 1430 Broadway, New York, NY 10018, (212) 354-3300, the Department of Commerce's National Technical Information Service, Springfield, VA 22161, (703) 557-4733, as well as various trade associations that follow international activities for their members. Free Trade Zones/Warehouses There are no free trade zones or free ports in the Netherlands in the sense of territorial enclaves where commodities can be processed or reprocessed tax-free (see part E the Investment Climate Section of this report). However, in a very real sense, the entire country is a free trade zone. American firms find that the numerous private and commercial warehouses located throughout the nation perform much the same function and with low costs. Bonded warehouse facilities of any size can be arranged with ease. Shippers can then maintain inventory without the payment of customs and value-added tax until the goods are needed for use and are then imported. Products also may be transshipped to other countries without technically entering the Dutch customs area. With an international distribution and warehouse center serving Western Europe, products can arrive at the customer's site quicker and with less complaints. The advantage of the free trade zone to American firms is having a European base of supply to assure customers prompt delivery and service, and being able to maintain inventory at a low cost. Adequate warehousing facilities are available in all major Dutch cities. In addition to the port areas, Dutch facilities in the east, such as Maastricht, Tilburg, Eindhoven, Nijmegen, and Enschede, provide storage facilities and distribution services. The Holland International Distribution Council is a organization composed of established Dutch transportation and warehousing firms that can help U.S. firms resolve transportation problems, locate facilities, and provide technical assistance on distribution networks. The council is composed of firms involved in international shipping that support promoting the Netherlands as a distribution center and gateway to Europe. For more details contact: Holland International Distribution Council, P.O. Box 85599, 2508 CG The Hague, The Netherlands. (tel: 31 70 3467272; Fax: 31 70 360 3698). Special Import Provisions Value-Added Tax The value-added tax, most frequently called by its acronym VAT, is charged on the sale of goods and services within the country. Unlike the customs duty, which is the same for all EU member countries, the VAT is established by the tax authorities of each country and differs from country to country. At each stage of the manufacturing and distribution chain, the seller adds the appropriate amount of VAT (tax on the amount of value that the seller added to the product, plus the amount of VAT passed on to the seller by the supplier) to the sales price. The tax is always quoted separately on the invoice. The firm periodically subtracts the VAT paid on its purchases of goods and services from the VAT collected on sales and remits the balance to the government. This process repeats itself at each stage until the product is sold to the final consumer, who bears the full burden of the tax. The box below provides a summary of the Dutch VAT rates. Value-Added Tax * exempted rate applies to exports. * 6 percent rate applies to necessities of life such as food, medicines, and transportation. * 17.5 percent rate is the general or standard rate and applies to most goods. For imports into the Netherlands, the VAT is levied at the same rate as for domestic products or transactions. The base on which the VAT is charged on imports is the c.i.f. value at the port of entry, plus any duty, excise taxes, levies, or other charges (excluding the VAT) collected by customs at the time of importation. This total represents the transaction value of the import when it clears customs. The importer is liable for payment of customs duties, VAT, and any other charges at the time of clearing the goods through customs. Exports from the Netherlands are exempt from VAT since they are not consumed in the country, but will be subject to any tax imposed in the country of destination. Temporary imports that will be reexported are not subject to the VAT. The importer may have to post a temporary bond for the amount of customs duty and taxes as security which will be canceled when the goods are taken out of the country. The EU is seeking to harmonize the range of VAT rates among the 12 EU member nations. The EU Council has adopted guidelines for converging the VAT rates over an extended transitional period such as seeking to establish a minimum VAT rate for most products, lifting border tax controls, and defining which products will be allowed an exempted or zero VAT rate. Each country will still retain the collection and enforcement authority that currently exists. Membership in Free Trade Arrangements The Netherlands has been a member of the European Union (EU) since its inception in 1958. The other EU members are Belgium, Denmark, France, Germany, Greece, Italy, Ireland, Luxembourg, Portugal, Spain, and the United Kingdom. Sweden, Norway, Finland, and Austria will join in January 1995, if their voters approve in scheduled referenda. The EU forms a customs union having free trade among the member states, but levies a common tariff on imports coming from non-EC countries such as the United States, Japan, and Canada. The EC also has a common agricultural policy, joint transportation policy, and free movement of goods and capital within the member states. Other aspects of commercial activity are being harmonized as part of the single market program. Under agreements reached between the 12 EU members and the 6 members of the European Free Trade Association (EFTA) -- consisting of Austria, Finland, Iceland, Norway, Sweden, and Switzerland--duty-free trade for industrial products has been achieved among these 18 countries. Taxes, such as the value-added tax (VAT) and excise taxes, are levied in the country of final destination. Currently, VAT rates differ among the various countries. See the "Value-Added Tax" section for the Dutch rates. In addition to the EFTA countries, the Netherlands and the other EC nations extend preferential tariff treatment to certain other countries and territories with historical ties to the EU and to less developed countries in Africa, the Caribbean, and the Pacific regions. The granting of reduced tariffs to developing countries is under the Generalized System of Preferences (GSP).