Trade policy

 
Summary

Trade is the lifeblood of our country. More than 80% of our GDP comes from our exports to other countries. As a small, open economy, Belgium therefore has every interest in ensuring the smooth flow of international trade and investment. A dynamic trade policy that eliminates trade barriers, creates a level playing field for our firms and promotes universal values is essential for Belgium. The five most important objectives are the following:

  • opening up external markets to foster growth and job creation,
  • facilitating the introduction of global rules,
  • ensuring compliance with these rules,
  • integrating developing countries into the global trading system,
  • supporting sustainable growth, with respect for environmental and social standards.


Objectives for Belgium

Organisation of the EU's common commercial policy

Trade policy is an 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 on European Union, the Commission conducts tariff and trade negotiations with third party States or with international organisations, including the World Trade Organisation (WTO). It functions by consulting EU Member States in a dedicated Trade Policy Committee (TPC). Where agreements with third party countries have to be negotiated, the Commission is given a mandate through which the Council authorises it to open negotiations and conduct them under certain conditions. The Commission conducts these negotiations in consultation with the Trade Policy Committee and within the framework of any directives that may be issued by the Council.

At the Belgian level, the Directorate General Coordination & European Affairs (DGE) of the FPS of Foreign Affairs is responsible for preparing, defining, coordinating, representing, defending and supervising Belgian's European policy. The DGE prepares the Belgian decision process so that our country can speak with one voice to the EU Council and promote its interests. This is done on a weekly basis through consultation and coordination between the competent federal and federated bodies. In addition, the DGE assists the competent Minister in answering parliamentary questions in order to clarify the Belgian positions as coordinated. It is also important to highlight the work of the DGE within the meetings of experts, its role in disseminating information to diplomatic posts, bilateral contacts with the European Commission and in building alliances of interests with other European delegations.


Areas of work

The EU's approach to trade policy is multifaceted: firstly, the EU and Belgium prioritise a multilateral approach, the aim of which is to agree on global trade rules. This strategy increases trade opportunities for our companies and also promotes the integration of developing countries into the international trading system, a major concern shared by Belgium and the EU.

The EU and our country are strongly committed to the smooth functioning of the multilateral trading system based on the World Trade Organisation (WTO). For Belgium, the WTO and its regulatory, transparency and dispute settlement roles remain vitally important.

However, reform of the World Trade Organisation is crucial. For decades, the existence of agreed rules for international trade, overseen by the WTO and enforced by an impartial dispute settlement system, has helped reduce tensions and prevent trade wars. However, the WTO is not able to adapt quickly enough to the (r)evolutions of the international trade scene. Moreover, the organisation is hampered by rigid procedures and conflicts of interest between countries, while its role as an oversight body is also jeopardised by the lack of transparency in many countries. Since December 2019, the appellate body of the WTO dispute settlement mechanism has been in paralysis. While the EU has worked to establish an interim multi-party arbitration arrangement to defend the rights of the parties in ongoing and future disputes, a definitive solution has yet to be found.

The escalation of unilateral measures which are incompatible with WTO rules, which in some cases have already led to countermeasures, further complicates the situation. This trend represents a significant risk for the EU and Belgium, whose imports and exports depend to a significant extent on predictable, fair and rules-based international trade. Belgium therefore supports the EU's initiatives to reform the WTO, which should enable the organisation to respond to the challenges of this century (digitalisation, greening, etc.).

Multilateral negotiations have been difficult in recent years and have become particularly bogged down in the context of the WTO. The EU is therefore also taking a pragmatic approach in its efforts to further promote international trade as a driver for growth and jobs, and is also negotiating plurilateral and regional/bilateral free trade agreements. Belgium hopes that the 12th and 13th WTO Ministerial Conferences will make it possible to breathe new dynamism and legitimacy into the organisation on the international trade scene.

Plurilateral trade agreements under the WTO include several countries that share a common interest. In most cases, these are the consequence of the failure to reach a multilateral agreement with all WTO members. Belgium particularly welcomes the entry into force of the Trade Facilitation Agreement (TFA) in 2017 and the progress made in the negotiations on digital trade (E-commerce Joint Statement Initiative).

Besides multilateral and plurilateral negotiations, the European Union also conducts various regional and bilateral negotiations. For example, the EU has recently successfully concluded a raft of negotiations, which led to the entry into force of trade agreements with important partners including Japan (February 2019), Singapore (November 2019) and Vietnam (August 2020). Other negotiations are ongoing with Mexico, Chile, Mercosur, Australia or New Zealand.

Throughout the negotiations, Belgium actively defends and promotes its economic interests, in particular with regard to significant tariff reductions, ambitious provisions on sustainable development and compliance with European sanitary and phytosanitary (SPS) standards.

However, negotiations alone are not enough. Compliance with the rules must also be enforced, which is why the European Union has the necessary trade defence instruments, such as anti-dumping, anti-subsidy and safeguard measures. The strengthening of autonomous legislative instruments, aimed at creating a level-playing field, is also supported by our country.

Finally, it should also be stressed that the "development" dimension is not overlooked. This is therefore always taken into account in the negotiations for bilateral trade agreements with developing countries, in the sense that the EU adopts an asymmetric approach (i.e. the EU offers benefits that it does not ask in return from these countries). Besides negotiating these asymmetric agreements, the Generalized System of Preferences remains at the heart of the 'development' dimension of European trade policy. This system involves the EU unilaterally offering preferential market access to developing countries (and even near-total tariff exemption to least developed countries under the 'Everything But Arms' initiative).

 
Belgium's horizontal thematic priorities

Promoting sustainable development in trade policy is a key principle for Belgium. Ambitious and substantive chapters on sustainable development are an essential element of trade agreements for our country. Belgium would like these chapters to be further expanded and reinforced when new agreements are negotiated, and requires that specific attention be paid to their effective implementation. We also call for greater participation of civil society in mechanisms to monitor the implementation of commitments. The aim is to ensure that trade does not have a negative impact on sustainable development and that it has a positive impact on the environment and human rights. Trade agreements contain increasingly demanding standards, based on an incentive-based approach. The building blocks of this approach can be summarised as follows:

  • promoting the ratification and implementation of international instruments, in particular the ILO core conventions and the multilateral environmental (MEAs), biodiversity and climate agreements (COPs);
  • ensuring that the right to regulate is maintained;
  • introducing specific monitoring bodies in trade agreements, in the form of a committee in which the implementation of sustainable development commitments is discussed. This committee maintains direct contact with civil society (e.g. through the internal advisory groups set up by the various trade agreements). In the event of a dispute, the principles of dialogue and transparency are fundamental and the possibility of setting up an independent panel to assess compliance with commitments is provided for.

In line with Belgian support for the participation of civil society at EU level and the level of its trading partners, the Directorate for Trade Policy also organises regular consultations on trade policy with members of the Federal Council for Sustainable Development (FCSD).

Belgium attaches importance on negotiating new trade agreements, but also to the meticulous monitoring of trade agreements already in place. The European Commission's annual reports on the implementation of European trade policy illustrate the concrete benefits of the agreements in place. For example, European exports to Canada grew by 25% in 2019 compared to the last few years before CETA entered into force. As another example, the trade agreements concluded by the European Union saved Belgian companies more than €440 million in customs duties in 2019.

Finally, Belgium and the EU are continuing the process of investment protection reform. As such, the EU has developed a new approach to settling disputes in the area of investment, which incorporates the Investment Court System (ICS) into the EU's bilateral trade agreements (e.g. CETA and the investment protection agreements with Singapore and Vietnam). The ICS makes it possible to build a global coalition through trade policy with the ultimate goal of creating a multilateral investment court. Negotiations to this effect are currently ongoing within the United Nations Commission on International Trade Law (UNCITRAL), with a view to reforming the current system for settling investment disputes (ISDS). The objective is to create a permanent body for the settlement of investment disputes, thereby breaking with the ad hoc arbitration system of the ISDS. As Belgium is a member of UNCITRAL until 2026, our country will continue its efforts to support this multilateral reform project.


Useful links

 
Progress reports on trade agreements