EFR-Eclaire Volume 33 Number 5 'Trade'

VOLUME 33

JULY 2013

NUMBER 05

ECLAIRE

TRADE IS FAIR TRADE REALLY THAT FAIR? THE PORT OF ROTTERDAM: GATEWAY TO THE WORLD THE SIGNIFICANCE OF TRADE UNIONS

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Index world

Taxes

EFR Study Trip

Activities overview

DO TAXES INFLUENCE TRADE?

JORDAN’S HIDDEN TREASURES

ESE

Find out more about how they influence trade

A report of the first EFR-Study Trip

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The significance of trade unions Fact page Photopage Do taxes influence (international) trade?

How fair is Fair Trade?

EFR Study Trip Port of Rotterdam

Trade

IS FAIR TRADE REALLY THAT FAIR? Find out what fair trade is and how it works

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Trade

06 07 08/09 10 12/13 14/15 16/17 18/19 20/21

PORT OF ROTTERDAM How this city became Europe’s biggest port

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Trade

THE SIGNIFICANCE OF TRADE UNIONS

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COLOFON Editorial Address Burgemeester Oudlaan 50, HB-20 3062 PA Rotterdam tel: 010 - 408 11 46 email: reporters@efr.nl Visual Styling Buro NCP

Printing OCC De Hoog

Editor in Chief Floris van Prooyen Schuurman

Commercial officer Johan Schoone

Secretary Marc Hendrickx

Photography Nina Zimberlin Ka-chun Lo Romy Verstraten William Miero Max Eleveld

Writers Max Eleveld Jasper de Ruijsscher Charlotte Sonneveld Nina Zimberlin Floris van Prooyen Schuurman

If you no longer wish to receive the EFR-Eclaire, please send an e-mail to info@efr.nl

THE SIGNIFICANCE

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Foreword world

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WORD OF PRESIDENT WORD OF EDITOR-IN-CHIEF DEAR READERS, While writing my last Presidential, all the great experiences from the past year came to mind. Starting it all, the Champagne Drink, when the 49th Board was announced. That moment when over 50 Active Members ate pizza after helping enthusiastically at the EFR/ EenVandaag Political Debate in September. The time we opened our spacious new office at HB-20, once again located in the midst of university life and of course the trip with the EFR-Board to the WU Ball in Vienna. These are only a few of the amazing moments the EFR had in the past year. I would like to thank you, our readers, (Active) Members, faculty staff, friends and everyone else who contributed in making this year as great as it was!

Although the sun starts to come out and holiday season is around the corner, we have not been sleeping at the EFR. A successful first Study Trip went to seek the treasures of Jordan, the last preparations for Involve are being made and we enjoyed the BBQs of the IBEB and the Start committee. Moreover, the Bachelor Accountancy Day, the International Day, the Rotterdam Student Party and the Port Days took place.

In the meantime the 50th EFR-Board was presented on the Champaign drink and I would like to take this opportunity to wish them all the best in the challenging upcoming year. I do not have any doubts that they will succeed in taking the EFR to the next level.

Congratulations to Jolien Paalman, Marloek Hoogewoud, Kees Mackenbach, Marjolein Volkers, Niels Tigges, Jasper Huurman, Bob Lemmens and Edwin van Vliet!

I wish you a lot of fun while reading this Eclaire and enjoy your holidays!

Kind Regards, Nienke Benders President of the 49th EFR-Board

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The economic crisis that has been going on for the last few years has a huge effect on the Dutch economy. Our economy is suffering from huge debts and a burst real estate bubble, which has stalled growth and endangered jobs. Also the consumer’s confidence is very low, with a record low in February 2013.

Despite these problems the Dutch trade sector is doing well. The Dutch export, referred to as ‘the engine of our economy’ by economists, is expected to keep growing in 2013.

Our country is still in the top ten export countries of the world and it is likely that it will stay there for a while. In this Eclaire ‘trade’ will be the main topic. The Netherlands is home to the biggest port of Europe: the Port of Rotterdam. How did the Port of Rotterdam become such an important port and is it likely to remain important in the future? These are some of the questions that are answered in the article ‘The Port of Rotterdam: Gateway to the world’. Another article in this Eclaire covers the topic of Fair Trade. By buying ‘Fair Trade’ products you would help farmers in poor countries, but has this idea become a form of protectionism? Read ‘Is Fair Trade really that fair?’ and find out whether Fair Trade really is the best way to help farmers in poor countries.

Thanks to Romy Verstraten and William Miero for sending us some great photos for the Photo Contest for this Eclaire and enjoy reading the last Eclaire of this academic year!

Enjoy reading this Eclaire!

Floris van Prooyen Schuurman Chairman of the EFR-Reporters

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world EFR

ACTIVITIES OVERVIEW JULY - AUGUST JULY 24-AUG 16

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BOOKSALE BLOCK 1

DEADLINE PART TIME RECRUITMENT ROUND 2

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world ESE

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ERASMUS SCHOOL OF ECONOMICS Erasmus School of Economics Centennial Committee Mark the 8th of November 2013 in your agenda! On this day, exactly 100 years ago, three entrepreneurs founded the ‘Nederlandsche Handels-Hoogeschool’, predecessor of Erasmus School of Economics. One century later, Erasmus School of Economics remains a unique school of economics in the Netherlands.

From September 2013 onwards, Erasmus School of Economics organises a wide range of activities and events during the academic year 2013-2014. The types of activities included in our programme vary from international conferences to pub quizzes, and master classes to a clash of the bands competition. The chosen Centennial theme ‘100 Years of Impact’ refers to the moments of impact on economy and society of the past hundred years. Increasing the synergy between university, industry and government is of great importance.

In February 2013, a Centennial Committee was appointed.

This team of students is responsible for the organisation of all the student activities. And, what would a birthday be, without a big student party? On November 7th 2013 THE Student Party will take place, for which all of you are invited!

The Centennial Committee invites you to celebrate the 100th birthday of the Erasmus School of Economics and make sure this anniversary year will be an unforgettable experience for everyone!

For more information, keep an eye out on the Centennial website www.ese.eur.nl/100 or head over & Like our facebook page facebook.com/ESEcentennial!

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Trade world

THE SIGNIFICANCE OF TRADE UNIONS Text: Nina Zimberlin

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Trade world

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Trade unions are an accepted part of modern labour, unions monitor that their members’ needs are met. The labour movement began during the Industrial Revolution, gathering speed to eventually overcome the many obstacles such as opposition and legislations.

In 1961, Dr. Martin Luther King equated equal rights to labour rights, defining labour’s needs as decent wages, fair working conditions, liveable housing, old age security, health and welfare measures, and arguing that in order to fight for justice for one, justice must be fought for all. Conversely, Margaret Thatcher, who served as Prime Minister for the United Kingdom from 1979 to 1990, believed that high unemployment was partly to blame on the power of trade unions. Thus the influence of trade unions is a debated topic, and this article will attempt to further examine the advantages and disadvantages to having representatives for the labour work force.

Trade unions were formed during a time of oppression for the lower level working class. They fought for better working conditions and fair wages, and many new labour laws can be attributed to their success. Nowadays, the fight for equality and fairness in the workplace is nearly a done battle. Thus trade unions argue for higher wages, which will only to lead to wage inflation. They ask for provisions for the interests of their members, leaving the unemployed and other non-members to struggle for their voices to be heard.

The methods of trade unions are peaceful, yet result in lost productivity due to collective actions and boycotts. These are some of the many disadvantages trade unions bring about, their effects which could only be governed through careful observation and correct legislation.

However, these unions do still stand for a cause. They are the bargaining force for increased wages when economic circumstances change, such as a rise in oil prices. They are

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the only representatives workers can rely on to bargain for the collective good, and counterbalance monopsony. Companies and trade unions do not always find an agreed mean, but trade unions might influence companies to consider higher wages as efficiency wages – guaranteeing increased productivity.

Since unions are typically limited to a single field (such as medicine) and a single country (or collective group, such as the European Trade Union Confederation, which promotes the interests of working people at a European level and represent them in EU institutions), their power remains effective only within borders.

In conclusion, the income distribution within a country depends significantly, according to Keynesians, on bargaining power – not only relative scarcity and productivity. Trade unions are an example of an institutional arrangement with bargaining power that, along with some downsides, is present for the collective good of the economy and the people. However dangerous the power of representation for one group may be, it is necessary for the offset of monopolies and thus trade unions are an important element in maintaining democracy and continuing economic development.

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Facts world

Some interesting facts about trade The thirty richest countries control over

82

of the world trade.

In 2012, re-exported products accounted for approximately two thirds of the 22 billion value growth of exports.

The world's top 50 economic powers consist of 38 countries, five firms, three government agencies, three state owned enterprises and one non-profit organization!

Exports to Germany, our most important trading partner, grew most rapidly.

The value growth of goods exported to Germany increased by approximately 5.7 billion euro (5 percent).

The port of Rotterdam is the biggest port of Europe and third on the list of world's busiest ports by cargo.

Just five countries – the USA, Germany, Japan, France and the UK control almost half of the world trade.

Currency trading is the world's largest market.

China is the second largest economy and biggest exporter in the world.

The 49 poorest countries control just 2 percent of world trade.

China and the EU are trading more than 1 billion euro every day.

1.000.000.000

95

Some countries rely mainly on just one export.

95 percent of Nigeria’s earnings come from oil; 75 percent of Botswana’s come from diamonds.

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The value of Dutch exports reached an unprecedented 431 billion euro in 2012. The exports growth over the past year was largely due to an increase in re-exports and higher prices.

x125.000

Text: Jasper de Ruijsscher

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Family businesses are a true phenomenon in business. Before the economic crisis, the Netherlands had a count of 180.000 family businesses, which were responsible for 40% of the total employment the Dutch GNP. Why do family businesses have such a big position There and are 50% moreof international laws regulating the trade of bananas within the than economy how dothe theyweapons affect it?trade. lawsand regulating

Text: Jasper de Ruijsscher

Oil tankers carry crude and refined petroleum.

Supertankers can hold around 550 million kilograms of oil.

That is enough for more than half a million people to drive their car for a year.

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Taxes world

DO TAXES INFLUEN INTERNATIONAL TRA Looking at flows of goods in international trade, we see many remarkable transactions. Some goods make a huge detour from manufacturing to consumer. Why do these remarkable transactions occur and do they raise prices for the consumer? The answer to the last question is in most cases no, but it is more difficult to find an answer to the first question.One thing is clear: taxes are an important factor.

Taxes are an enemy to many traders: they lead to higher costs which result in either lower profits or higher prices. Taxes are also referred to as a barrier to trade. There are many different taxes, where profit tax, VAT and import tax have the biggest influence on (international) trade. An interesting fact for traders is that these taxes have different rates in different countries. So in the decision of which country to establish their company in, they take rate of taxes into account.

Historically, import taxes are introduced by governments to reduce import en protect own industry. With the formation of the European Union as an economic collaboration, we saw trade between member states increase. This was a direct result of the abolition of import taxes between member states, while import taxes more and more are seen as an obstacle for trade.

But the barrier of import taxes still remains between countries outside the European Union and countries of the European Union. Through dependence between countries for some products, they negotiate more and more to close a trade treaty. These trade treaties are meant to minimise import taxes for special groups of products where countries depend on each other. In that way they will stimulate trade for these products.

Profit taxes and VAT are taxes levied in almost every country.

This does not mean that the tax rates are equal in every country, there are certainly differences. These differences

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make it interesting for big companies to investigate which country is best for them, meaning in which country they have to pay least taxes. From this fact, strange trade routes as mentioned at the beginning of this article are caused. Because of the low taxes in a specified country, it is interesting for companies to transport products to a country with low tax rates and sell it from that country to customers in the country the product is made.

Within the European Union there are some agreements about different taxes, including profit tax and VAT. These agreements are made to harmonise taxes in member states and reduce competition between states. The agreements do not include mandatory rates, but only maximum and minimum rates.

Within these boundaries member states can decide which rate they want to wield.

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09

ENCE TRADE?

The Netherland have many trade treaties and a relatively beneficial tax system for companies. Therefore the Netherlands is an interesting country for companies to get established. In previous years there has been a big discussion in the Dutch parliament about the so called ‘brievenbusmaatschappijen’. These companies only have a mailing address in the Netherlands and the rest of the company is established in another country, often with lower wages. Through their mailing address, these companies have to pay tax in the Netherlands and dodge taxpaying in the country where the company is really established. At the moment 84 of 100 biggest companies in the world are a so called ‘brievenbusmaatschappij’ in the Netherlands.

Despite the tax income from ‘brievenbusmaatschappijen’ of around 57 billion euro, Dutch parliamentarians satirise that these companies do not contribute to employment in the Netherlands.

Concluding, taxes have an important influence on (international trade) and investment decisions of companies.

Governments try to reduce this influence by closing trade treaties and economic collaboration. Yet there remain tax differences between countries, which influence the decision of companies about where to establish themselves. The so called ‘brievenbusmaatschappijen’ is a relative new phenomenon which has led to discussion in parliament.

Text: Jasper de Ruijsscher

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Fair Trade world

IS FAIR TRADE REALLY THAT FAIR?

Text: Charlotte Sonneveld

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Fair Trade world

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The idea of fair trade may sound good: fighting poverty through direct trade with farmers in developing countries to give them a better price for their goods. By buying ‘Fair Trade’ products you would help farmers in poor countries. But is this idea becoming a form of protectionism? And is Fair Trade really as fair as they make us believe?

For farmers in Third World countries it is almost impossible to operate in Western markets because of the agricultural subsidies in the United States and the European Union. Hence, participating in Fair Trade projects is the only option for farmers to earn more, but actually it means another agricultural subsidy.

Farmers who do not participate in fair trade projects do not have a chance in the Western markets.

The farmers who do participate in Fair Trade projects depend on it. When consumers would decide not to buy Fair Trade products anymore, farmers would be in financial difficulties.

The distinction between farmers who do or do not participate in Fair Trade projects leads to an unwelcome fragmentation of the agricultural market. The Fair Trade principles conflict with the idea of a free market and create unfair situations.

Beside this, consumers do not receive the best quality. Farmers only sell part of their harvest to Fair Trade organisations; the rest is sold on the free market.

Because Fair Trade organisations offer them a fixed price for their products,

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farmers are inclined to save their best products for the free market.

Lastly, criticism has been made to the fact that farmers would only receive a small part of the price premium that a consumer pays for Fair Trade products.

This would be consumer deception.

Consumers do not receive the best quality products. Because Fair Trade organisations offer the farmers a fixed price for their products, farmers are inclined to save their best products for the free market.

Advocates of the Fair Trade idea say that the profit margins for Fair Trade products are not higher than for other products. They state that the costs are simply higher. Products need to be traceable and shipping needs to be separated from other products to prevent confusion. When the market share increases and economies of scale exist, costs and hence prices would decrease and solve this problem.

Moreover, the advocates claim that Fair Trade does not disturb the free market.

Fair Trade also works with supply and demand. Their farmers have to compete as well and outlet is not guaranteed.

The farmers with the best price-quality relation win.

They also say that Fair Trade plays a positive role in society, because it attracts attention to inequality and makes people aware. It is not supposed to be an alternative commercial system, but it surely can bring more equality in the current system.

For the time being, Fair Trade still is a success, since sales keep increasing.

But this success also leads to rising criticism, which might change the general vision on Fair Trade in the future.

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-advertorial-

world Centraal Bureau voor de Statistiek

Would you like to introduce yourself?

My name is Deon Tanzer. I was born and raised in South Africa and emigrated to the Netherlands when I was 20 years old.

I completed my Bachelor of Commerce at the University of the Witwatersrand in Johannesburg, followed by a master’s degree in economics at the University of Amsterdam. My first economics-related job was at the consulting agency Nederlands Economisch Instituut, now called Ecorys. For the past seven years I have worked for Statistics Netherlands (CBS), of which for the last five years for the Department of government finance and consumer price statistics.

How did you end up at Statistics Netherlands?

Well, I worked in the hospitality industry for fourteen years, and even set up my own business. Although I enjoyed it very much, I didn’t feel intellectually challenged. Thanks to my experience at Ecorys, I knew there was one employer that met all my demands: Statistics Netherlands. My contact with the organization had given me a favorable impression of its professionalism and the comprehensiveness of its output. So I decided to apply for a job, and I was hired.

What is your specific function?

Within the team responsible for government finance statistics, my main work relates to the government debt and deficit figures. We collect figures from all levels of government and analyze their implications for the National Accounts, producing statistics along the way. In addition, I also do research myself and have been appointed project manager for new monthly statistics on these topics.

Do you feel your work is sometimes put under a microscope?

At certain points definitely. The work we do is significant at both a national and an international level, especially in the current economic climate. Our work is highly regarded, not only by the general public and national experts, but also by international organizations such as Eurostat and the IMF. The reputation we have is something we value very much, so I make a concerted effort to ensure we do everything correctly. In this way we make sure our system is solid enough to avoid grave errors like the ones made in Greece, where in 2010 it turned out the statistics on the government deficit were extremely unreliable. This turned out to be one of the sparks of the Eurozone crisis.

What is the work climate like at Statistics Netherlands?

Statistics Netherlands is a very professional environment, which gives you the drive to perform much better than you normally might. My relation with my co-workers is great, and I see some of them outside work as well. It is also a very accessible and mostly informal place to work. This is enhanced by the hierarchy we work in, which based on responsibility rather than rank. There is a lot of room for input from all levels. I also enjoy the amount of freedom we are allowed to realize our goals. It is important to achieve these goals, but how you do so is almost entirely up to you.

What are the facilities like?

The facilities are a good reflection of the professional work environment Statistics Netherlands creates. We recently moved to a brand new office, built according to the latest developments in ‘open-office’ design. What I like most are the good IT facilities: it is possible to connect to your work station from the comfort of your own home or during a meeting.

What are the possibilities for students at Statistics Netherlands?

The interesting thing about Statistics Netherlands is that we produce statistics for the Netherlands as a whole. So we look at economic figures, but also at historical developments, health care statistics and many more things. As a result, people from a wide range of backgrounds can find their place here, providing valuable insights for people with other backgrounds.

We have sociologists, philosophers, economists, and even medical doctors working here on all kinds of statistics. People who have a broad orientation and an ambitious mindset can go in many different directions at Statistics Netherlands. If you aspire to do so, it is even possible to change your topic of research after many years of work.

Do you have any tips for students who would like to apply for a job at Statistics Netherlands?

It is important to be bold, I would say. Don’t be too self-conscious or shy, and make sure you are noticed. Also, make sure you stand out of the crowd by doing extra things besides studying, like actively joining a students’ union or society, or participating in cultural activities. For example, I have travelled extensively and have been involved in various cultural initiatives. These kinds of things make you one of a kind and give you an advantage over other people.

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EFR-STUDY TRIP THE HIDDEN TREASURES OF JORDAN It is 7:45 in the morning, the second of May. Rotterdam is cold and windy in the morning.

We all stand on the platform at Rotterdam Centraal. But finally it is going to happen: The first EFR-Study Trip is going to take place: Discover the hidden treasures of Jordan!

Since the beginning of September, we, the Study Trip committee, have been planning this first study trip in EFR’s history. We wanted to make sure that it would be an unforgettable experience by combining history, culture, economics and business life in an absolutely new environment: Jordan.

After a transfer in Istanbul we finally arrive at Amman. It is difficult to describe our happiness when we landed in the capital of Jordan! Since the beginning of September we were looking forward to this moment. The magic of Petra, a desert trip, the Dead Sea and company and university visits were awaiting us.

The first morning we had to leave early to take the bus along the King’s Highway,

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one of the most famous trade routes in the Middle East. The road took us through the mountains and dessert with multiple stops at beautiful sites and pittoresque villages. By the end of the day we arrived at Petra, the first highlight of this trip.

Because it was already late, we had dinner at Little Petra. The next morning we met the sunrise at one of the world wonders: Petra. This ancient city won our hearts by its beauty. The same day we drove further to Wadi Dissah to enjoy the dessert safari and spend an unforgettable night in the desert. The comfort of the hotel was changed to Bedouin tents and sleeping bags and we can say for sure: this night will never be forgotten! The next day we continued our day to the Dead Sea, an experience which is hard to explain.

Jordan, and the more western Deloitte was really interesting. Furthermore, we visited the University of Jordan, the parliament, the Dutch embassy and the Jordan stock exchange. It would not be a study trip if we made all the participants experience the local culture and city life.

It is 11 a.m., we are again at Schiphol airport, a bit tired, but absolutely happy.

The past 8 days were incredible, with a lot of valuable experiences, beautiful sights and the best group we could have imagined.

These were 8 days never to forget!

The EFR-Study Trip committee

After this we went back to Amman, where we would spend the rest of the trip. Contrary to the belief of many, this was the busiest part of the trip. Visits to companies as Aramex and Deloitte were scheduled. It was interesting to see how international companies operate in the Middle East. Especially the difference between Aramex, a company founded in

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worldof Rotterdam Port

THE PORT OF ROTTERDAM: GATEWAY TO THE WORLD

HOW THE PORT OF ROTTERDAM BECAME EUROPE’S BIGGEST PORT

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Port of Rotterdam world

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Throughout time, one of the most important parts of the Dutch economy has been international trade. The world’s first cooperative private enterprise was a Dutch organisation, the Dutch East India Company. Considered the world’s first multinational enterprise, it played an important part in worldwide trade for almost two centuries.

In modern times however, if there is one place that has helped turn the Netherlands into the important trading nation it is today, it is Rotterdam. The city is home to Europe’s biggest port. The Port of Rotterdam is regarded as a vital connection in many international trade routes. In this piece we look at how the Port of Rotterdam became such an important hub, and see why it is likely to remain important in the future.

ports in the world. A good part of the container-loading in the port is handled by robotic cranes and computer controlled vehicles and the port’s infrastructure network is one of the most advanced in the world.

It was not until the nineteenth century that the Port of Rotterdam became the Netherland’s most valuable port.

Before that time, the major Dutch port was located in Amsterdam, the center of colonial trade. Amsterdam was easier accessible than Rotterdam in that time. Moreover, most of the major Dutch entrepreneurs and financial institutes were based in Amsterdam. This all changed in the nineteenth century when industry began to thrive in the German Ruhr district. Thanks to its strategic position, situated in the river delta of some of Europe’s major rivers, the Port of Rotterdam became vital for the throughput of resources and products from all over Europe.

At the moment, Rotterdam’s port and accompanying industrial area stretch from the city to the North Sea, comprising some 5,200 hectares. Since World War Two, the port has expanded constantly in response to an increasingly strong private sector’s Until the nineteenth century demand. Between the 1950s and Amsterdam was the most important 1970s the port area more than tripled port in The Netherlands, due to it’s in size. More than ever, industrial activity started to thrive throughout the high accessibility. port. In 2012, the ‘Tweede Maasvlakte’ was completed, an all new part of the port. It was created to provide extra space for the Port of Rotterdam, giving it a lot more opportunities. In the future, most container ships will Even with the current economic situation, freight throughput have a much deeper draught than most European ports can in the Port of Rotterdam grew by 1.7 percent in 2012. In total, accommodate. Through the construction of a 20 meter deep an astounding 442 million tons of cargo was shipped through port, located directly besides the sea, Rotterdam has assured the port. The direct value added to these goods by seaport itself of a unique market position. related activity in 2012 was in excess of 11 billion eEuros.

Over the past few decades, the world has seen intensified The Port of Rotterdam will most likely remain to have a vital globalisation take place. This globalisation has resulted role in the worldwide shipping of goods, natural resources in an increase in international competition – even between and other products. The 2012 expansion has made sure ports. For the Dutch government, it is vital to keep the Port of that ships will continue to unload their goods in Rotterdam, Rotterdam competitive in relation to other ports. The Dutch ensuring that the Port of Rotterdam remains the Dutch state has invested in the design and accessibility of the port, gateway to the world. making the Port of Rotterdam one of the most advanced

Text: Max Eleveld

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world Businesses Family

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www.werkenbijpwc.nl

Soms ben je tevreden

Soms drijf je jezelf tot het uiterste Je hebt tijdens je studie alle mogelijke kennis opgedaan.

En nu wil je aan de slag. Op een plek waar je al je ambities kwijt kunt. Waar de lat hoog ligt en waar je samenwerkt met professionals. Je start je carrière vliegend en gaat recht op je doel af. Dat is: het beste in jezelf naar boven halen.

Kom verder op werkenbijpwc.nl

Neem voor meer informatie contact op met een recruiter: 088 792 87 77 werkenbijpwc@nl.pwc.com www.werkenbijpwc.nl/contact Volg werkenbijpwc op Facebook en Twitter

Š 2012 PricewaterhouseCoopers B.V. (KvK 3412089) Alle rechten voorbehouden.

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