Our country lives from trade: more than 80 percent of our GDP is exported abroad. Smooth trade flows and international investments are therefore in the interest of a small, open economy such as Belgium’s. A dynamic trade policy aimed at removing trade barriers, creating a level playing field for our companies and promoting universal values is indispensable for Belgium. The four most important objectives are:
- opening up external markets to promote growth and employment,
- facilitating the introduction of global trade rules,
- ensuring compliance with the rules,
- integrating developing countries into the global trading system.
Objectives for Belgium
Organisation of the EU's common commercial policy
The common commercial policy falls within the exclusive competence of the European Union. The European Commission plays a key role in trade negotiations, under the supervision of the Member States and the European Parliament. In accordance with the Treaty of Lisbon, the Commission conducts tariff and trade negotiations with third-party states or with international organisations, in particular the World Trade Organisation (WTO). It acts by consulting the EU Member States within a special committee called the Trade Policy Committee (TPC). When agreements with third-party states have to be negotiated, the Commission receives a mandate from the Council to open negotiations and conduct them under certain conditions. These negotiations are conducted by the Commission in consultation with the Trade Policy Committee and on the basis of directives that may be issued by the Council.
At Belgian level, the Directorate General for Coordination and European Affairs (DGE) is responsible for the preparation, definition, coordination, representation, defence and monitoring of Belgium's European policy. Through the weekly consultation and coordination of the competent federal and federated bodies, the DGE prepares Belgium’s decision-making process in order to allow our country to speak with a single voice in the Council of the EU and promote its interests. In addition, the DGE assists the Minister in answering parliamentary questions and clarifying Belgian positions after coordination. It is also important to note the contribution of the DGE within meetings of experts, in distributing information to diplomatic posts, in maintaining bilateral contacts with the European Commission and in building coalitions of interest with other European delegations.
Areas of work
The EU approach to trade policy is multi-faceted. Both the EU and Belgium are in favour of a multilateral approach with global trade rules in order to increase trade opportunities for our companies and advance the integration of developing countries in international trade, which is still a major concern for Belgium and the EU.
The EU and Belgium are strongly committed to a well-functioning multilateral trade system based on the World Trade Organisation. The WTO and its functions with regard to regulation, transparency and dispute settlement remain of paramount importance to us.
However, a reform of the World Trade Organisation is necessary. The existence of agreed rules on cross border trade, monitored by the WTO and enforced through an impartial system for resolving disputes, helped for decades to defuse trade tensions and avert trade wars. However, the development of new rules on trade has not happened in sync with economic, political and technological changes. The WTO has not been able to adapt sufficiently rapidly to the changing global economy. The WTO is now increasingly burdened by inflexible procedures and conflicting interest amongst countries. In the short term, a solution needs to be found for the WTO Dispute Settlement Mechanism. In general, the WTO's role as a monitoring body is under threat by a lack of transparency from many countries.
The situation is further complicated by the escalation of unilateral and WTO-incompatible trade actions, which in some cases have already led to countermeasures. These developments represent a huge risk for the EU and Belgium, who both have an open economy whose imports and exports heavily depend on predictable, rules-based international trade. Our companies miss opportunities for growth due to the slowdown in the growth of international trade, the increase in protectionist trade barriers and the uncertainty that entails. Belgium therefore supports the EU initiatives to reform the WTO.
Following the difficulties encountered in multilateral negotiations, especially within the framework of the WTO, the EU applies a pragmatic approach when it comes to promoting international trade as an engine for growth and employment. That is why the EU also participates in negotiations on plurilateral agreements and regional/bilateral free trade agreements.
Plurilateral trade agreements in the framework of the WTO involve several countries with a common interest and usually come from the failure to conclude a multilateral agreement among all WTO countries. Belgium particularly welcomes the entry into force of the Trade Facilitation Agreement (TFA) in 2017 and the progress made on digital trade since the Ministerial meeting in December 2017. After a year of exploratory talks on a possible plurilateral agreement within the framework of the WTO, a ministerial declaration was adopted at a mini-ministerial breakfast meeting on e-commerce at the World Economic Forum in Davos on 25 January 2019, aiming to launch negotiations on plurilateral trade rules for e-commerce. Some 76 countries, including major economic powers such as the European Union, the United States, Brazil and China, have signed the declaration.
In addition to negotiations at multilateral and plurilateral level, the European Union also participates in various regional/bilateral negotiations. In 2018, for example, the EU concluded agreements with the following major trading partners: Japan (entry into force on 1 February 2019), Singapore, Mexico and Vietnam. Negotiations with, among others, Mercosur, Chile, Tunisia, Australia, New Zealand and Indonesia have also made considerable progress and will continue in 2019. The Commission is currently also negotiating with other Asian partners (in particular the Caucasus and Central Asia) and is pursuing discussions with the US on cooperation and with China on a comprehensive and deep investment agreement.
During negotiations, Belgium has always actively defended its economic interests and has called for ambitious chapters on sustainable development, sanitary and phytosanitary measures (SPS) and significant tariff reductions.
However, negotiations alone are not enough. In order to enforce compliance with the rules, the European Union has at its disposal the necessary trade defence instruments, such as anti-dumping, anti-subsidy and safeguard measures.
Finally, it should also be emphasized that the development dimension is always taken into account in negotiations of bilateral trade agreements with developing countries, where the European Union adopts an asymmetric approach (by offering advantages which it does not itself require from these countries). In addition to these asymmetric agreements, the Generalised System of Tariff Preferences, under which the European Union unilaterally offers preferential market access to developing countries (and even almost tariff-free access to the least developed countries under the Everything But Arms system) remains at the heart of the development dimension of European trade policy.
Horizontal, thematic priorities of Belgium
The promotion of sustainable development through trade policy is a priority for Belgium. Ambitious and substantial chapters on sustainable development are an essential part of trade agreements. Belgium aims to further broaden and strengthen these chapters when negotiating new agreements and asks for special attention to be paid to the implementation of these chapters. Belgium also wants to enhance civil society participation in the monitoring mechanisms for implementing commitments. The aim is to ensure that trade does not have any adverse effects on sustainable development and has a positive impact on employment and the environment. Trade agreements contain ever higher-standards based on an encouragement-centred approach. The building blocks with regard to sustainable development can be summarised as follows:
- Promoting the ratification and implementation of international instruments, in particular the main ILO conventions and the multilateral environmental agreements (MEAs);
- Monitoring the enforcement of the right to regulate;
- Introducing specific monitoring bodies into trade agreements: a committee to discuss the implementation of sustainable development commitments. This committee maintains direct contacts with civil society (e.g. the domestic advisory groups established by various trade agreements). In the event of a dispute, the principles of dialogue and transparency are central and provision is made for the possibility of setting up an independent panel to monitor compliance with commitments.
Belgium does not only attach great importance to the negotiation of new trade agreements, but also to the meticulous implementation of the trade agreements that have already entered into force. The European Commission's second annual report on the implementation of EU Trade agreements illustrates the concrete advantages of agreements in force. For example, the European Union made an initial positive assessment of the trade agreement with Canada (CETA), one year after its entry into force, with European exports to Canada having increased by 7 percent between October 2017 and June 2018. For Belgium, the increase in Belgian exports of vaccines, chemical products and chocolate to Canada was particularly noteworthy.
Belgium also asked for more monitoring and transparency with regard to the cumulative effects of the various existing trade agreements and the ongoing negotiations on our agricultural sector. For the first time, the implementation report included a chapter on trade in agricultural goods.
Finally, Belgium and the EU are continuing the reform of investment protection. For example, the EU has developed a new approach to investment dispute resolution, integrating the Investment Court System (ICS) in the EU’s bilateral trade agreements (e.g. in CETA, the Investment Protection Agreement with Singapore and soon also with Vietnam). ICS creates the possibility to build a global coalition through trade policy in order to eventually set up a multilateral court. Indeed, a consensus has been reached in the United Nations Commission on International Trade Law (UNCITRAL) on the need to reform the existing investment dispute settlement system (Investor-State Dispute Settlement, ISDS). The EU has therefore suggested to establish a multilateral investment court (MIC), which would be a permanent body to settle investment disputes and would thus break with ISDS’ ad hoc arbitration system. Belgium, elected as a member of UNCITRAL for the next six years, will continue its efforts to support this multilateral reform project.