New Dutch government sworn in: what does it mean for international trade, export controls and sanctions?

On 10 January 2022, nine months after the general elections, the new government of the Netherlands was sworn in. The People’s Party for Freedom and Democracy (“VVD”), the Democrats 66 (“D66”), the Christian Democratic Appeal (“CDA”), and the Christian Union (“CU”) have concluded a coalition agreement and will take office until 2025. The new coalition has agreed on a broad programme that will impact internationally operating business and the new cabinet entails a significant reshuffle of ministerial positions. BenninkAmar Advocaten has analysed the coalition agreement and the new cabinet and has identified the most important takeaways in respect of international trade and investment, export controls and sanctions.

Trade and investment policy

• The new government pledges to maintain an ‘active trade policy’, with trade and investment treaties (e.g. CETA), as key instruments stimulate trade and investment flows. The coalition agreement stresses that future trade and investment treaties should include high standards of fair production, human rights, food safety, sustainable growth and climate.
• The new government also seeks to protect Dutch entrepreneurs against unwanted foreign investments and unfair competition. However, the coalition agreement has yet to elaborate on how the government will shield companies from unfair competition in practice.

International sanctions and EU foreign policy

• The cabinet intends to advocate for the abolition of EU member states’ right of veto in respect of the adoption of new sanctions in the Council of the European Union (‘’the Council’’). It will also be assessed whether other areas of the EU’s foreign policy would benefit from the abolition of the right of veto.
• The coalition agreement also states that the cabinet intends to deploy the EU’s economic power more strategically, including by potentially adopting extraterritorial sanctions. However, use of extraterritorial sanctions has frequently been criticized by the EU as being prohibited under public international law. Therefore, it remains to be seen to what extend the new coalition will be successful in advocating for the adoption of extraterritorial sanctions.

Due diligence and corporate social responsibility

• The coalition parties agree to continue to support the introduction of EU-level legislation on mandatory corporate due diligence. On 5 November 2021, the previous government published an outline of key elements that the European legislation should contain ¹, namely that companies with more than 250 employees, and medium-sized companies in high-risk sectors, should be obliged to follow the six compliance steps laid down in the OECD Due Diligence Guidance on Responsible Business Conduct. This obligation would be enforced through binding administrative measures and fines.  
• The coalition is also considering to introduce complementary national due diligence legislation (“IMVO-wetgeving”) that takes into account a European level playing field and potential legislation on a European level. The coalition agreement does, however, not further stipulate what this will mean in practice.

Strategic autonomy and investment protection

• The new government is committed to an “open strategic autonomy”. At the same time, the government intends to stimulate innovation and to foster a “smart” industrial policy. In this way, the government aims to become a leader in digitalization and new technologies. What measures the new government will take to achieve these goals has yet to be decided.
• The cabinet strives for strategic autonomy through the production of critical products and technologies in Europe and by protecting vital processes and preventing undesired control of vital companies. While the coalition agreement does not list any concrete legislative proposals in this regard, it can be expected that the legislative proposal for a general investment screening mechanism (that was tabled in June 2021) will play a key role in achieving this objective ².

Defence

• The new coalition pledges to ensure a vital defence sector in the Netherlands and to level the playing field in the EU.
• The coalition also wishes to play an active role in the development of stronger European defence capabilities and is in favour of the mutual recognition of licenses.

The ministerial reshuffle of the cabinet

While the new government is formed by the same four political parties as the previous government, the ministerial positions have also been reshuffled and reallocated amongst the VVD, D66, CDA and CU. Different political parties and ministers will thereby be responsible for the implementation of trade policy, export controls and sanctions.

A notable change is the move by Wopke Hoekstra (CDA) from the Ministry of Finance to the Ministry of Foreign Affairs. As the new Minister of Foreign Affairs, Hoekstra will, amongst others, be responsible for the implementation of export controls policy.

Although Sigrid Kaag (D66) resigned as Minister of Foreign Affairs after the evacuation from Afghanistan, she has returned in the new cabinet as Minister of Finance. In her new capacity, Kaag will amongst others be responsible for assessing exemption and license requests in relation to financial sanctions. The Minister of Finance may grant exemptions from financial sanctions under certain conditions, for example for financing legal assistance or humanitarian aid.

Furthermore, Liesje Schreinemacher (VVD) has been appointed as the new Minister for Foreign Trade and Development Cooperation. In her previous role as Member of the European Parliament, Schreinemacher advocated, amongst others, for a more balanced trade relationship with China and for the strengthening of trade defence instruments in the maritime sector.

On Tuesday 18 and Wednesday 19 January 2022, the new coalition will read out the so-called ‘government declaration’ in parliament, followed by a parliamentary debate about the new coalition and the coalition agreement.

Questions?

Should you wish to receive more information about one of the topics described in this newsletter, please contact BenninkAmar Advocaten via e-mail at info@batradelaw.com or via telephone at +31203085918.

1. Minister for Foreign Trade and Development Cooperation, ‘Bouwstenen voor wetgeving voor internationaal maatschappelijk verantwoord ondernemen (IMVO)’, 5 November 2021.
2. Minister of Economic Affairs and Climate Policy, ‘Wetsvoorstel voor veiligheidstoets op investeringen, fusies en overnames’, 30 June 2021.