b'1.1 The Rotterdam Effect In the context of trade, and more specifically the UKs trade with the EU, the EUs situation (predicament may be the better word) is probably even worse than the series of tables and charts above suggest. This is due to the RotterdamEffect.Almost all trade figures have some distortions. This is because the primary purpose for which they are collected tends to be tax. Also, they do not take into account part-finished goods which may pass through several countries before reaching the end consumer. For example, high value parts for Airbus are exportedfrom the UK to France for assembly. The finished planes may then be sold to China, but that end-market will not feature in the UK statistics. Among other key distortions is the Rotterdam-Antwerpeffect, which is nowrecognised by the UKs ONS etc, and for which some crude allowance can be made:Even Eurostat, the EU institution responsible for providing statistical information on TheRotterdam-Antwerpeffectthe EU, acknowledges the impact of the applieslargelytotradeingoods.Rotterdam effect distortion:World statistical bodies like the ONS record only the first port of dischargeDutch imports, and therefore the trade of a consignment.deficit, are overestimated because of the Rotterdam effect, where goods destined Britishexportsareoftenhandledandfor the rest of the EU arrive and are recorded processedthroughRotterdaminthein harmonised EU external trade statistics NetherlandsandthroughAntwerpinin Dutch ports. This then has a positive Belgium. While some exportsare indeedeffect on the external trade balances with destined for the Netherlands or elsewhereChina of those member states to which the in the EU, much is trans-shippedoutsidegoods are re-exported, as these shipments the EU.would be recorded as intra-EU trade with the Netherlands, rather than extra-EU trade How big are the distortions? Global Britainwith China. To a lesser extent, Belgian has made careful estimates. The magnitudetrade figures are similarly over-estimated. of the distortions is considerable andRotterdam is the most important port in reduces UK exports to the EU by at least 5%continental Europe. Second is its near and may even be close to 10%. This sameneighbour - Antwerp.distortion also underestimates UK exports to the rest of the world by at least 5%. 155'