Belgium Country Brief
Overview
Australia enjoys positive and constructive relations with Belgium, with a growing bilateral commercial relationship. We share similar approaches to many international issues, including climate change, arms control, whaling and Antarctica. Australia and Belgium are partners in NATO's International Security Assistance Force (ISAF) in Afghanistan. Belgium is a member of the Australia Group on Chemical Weapons. Belgium is a focus of European government with the European Council, the European Commission and the North Atlantic Treaty Organisation (NATO) all based in Brussels.
Political Overview
System of Government
Belgium is a constitutional monarchy. King Albert II (who acceded to the throne in 1993) is head of state. The country became a federal state in 1995. There are three main forms of government in Belgium: the federal government, regional governments and community councils. The Federal government is responsible for issues such as justice, the interior, foreign policy, defence, social security and some health matters.
Belgium is divided into three regional government areas. Flanders comprises mainly Dutch speakers while Wallonia and Brussels are French speaking regions (a small German speaking community also exists). The regions have jurisdiction over a wide range of policy areas, including economic, transport, public works, and industrial policy. Education and other ‘cultural issues' are devolved to three community councils that have similar levels of authority to regional governments. These are divided along linguistic, not geographic, lines representing the Dutch, French and German speaking peoples.
The Belgian government devolved agriculture and foreign trade responsibilities to the regional governments through part of a June 2001 institutional reform program. The regions were also granted greater fiscal autonomy, and there was a restructuring of finances for the linguistic community councils.
Major Parties
There are four main groups of mainstream political parties in Belgium, which are then split along linguistic lines: Christian Democrat (CD&V, CdH); Liberal (Open VLD, MR); Socialist (PS, SP.A); and Environment Groups (Ecolo-Groen). The far-right Vlaams Belang party is also a key player in Flanders, although Belgium’s other political parties have agreed to not enter into coalition agreements with the Vlaams Belang, in an arrangement known as the cordon sanitaire.
Political Developments
In recent years, the Belgian federal government had been in crisis, largely due to political and cultural divisions between the Dutch-speaking region of Flanders and francophone Wallonia. The political situation has stabilised since Herman Van Rompuy (Flemish Christian Democrats or CD&V), a well-respected elder statesman of Belgian politics, became Prime Minister on 30 December 2008. The governing coalition of CD&V, Flemish Liberal Open-VLD, Francophone Liberal (MR), Francophone Socialists (PS) and Francophone Christian Democrats (CdH) has remained in office with only minor changes to the ministerial line-up.
Regional elections in Flanders, Wallonia and Brussels-Capital were held on 7 June 2009, delivering mixed results for the main political parties, showing a divide in voter preferences, with Christian Democrats winning in Flanders, Socialists holding on in Wallonia, and the Liberals narrowly ahead in the Brussels-capital region. Coalition negotiations have seen the Liberal Open-VLD and MR parties excluded from all regional governments. The CD&V, NV-A and SP.A have formed government in Flanders, and the PS, CdH and Ecolo are working in coalition in both Wallonia and the Brussels-capital region.
European Parliament elections were also held on 7 June 2009. In a federal government reshuffle on 17 July 2009, Yves Leterme, who was Belgium’s Prime Minister in 2008, was appointed Minister for Foreign Affairs and Foreign Trade. His predecessor in that portfolio, Karel De Gucht, has been nominated as Belgium’s EU Commissioner for the 2009-2014 term.
Economic Overview
Since 1921 Belgium has had an economic union with Luxembourg, the Belgium-Luxembourg Economic Union (BLEU). The BLEU is Australia’s 11th largest investor with total inward investment valued at A$19.5 billion at December 2008. The BLEU is the fifth largest EU investor in Australia. Two-way trade between Australia and the BLEU is also substantial, reaching A$3.68 billion in 2008. Both Belgium and Luxembourg have sophisticated open market economies although, as members of the EU, their agriculture sectors remain subject to market access limitations. The currency in Belgium is the Euro.
Belgium is a major trade gateway to the rest of Europe. Belgium's top export markets are its neighbours in the EU - Germany, France and the Netherlands. More than two-thirds of Belgium's GDP is derived from foreign sales, one of the highest percentages among industrialised nations.
The Belgian economy initially weathered the global financial crisis well but the banking sector was severely affected in September-October 2008, prompting Belgian government intervention. Figures released by the National Bank of Belgium (NBB) indicated that GDP growth was 2.6 per cent in 2007, slightly above the EU-average. The NBB revised downwards its official estimate for GDP growth in 2008 to 1.0 per cent with inflation running at 4.5 per cent. Forecasts for 2009 have been downgraded with the NBB currently estimating that the economy will contract by 3.5 per cent, with inflation to run at 0.1 per cent. The IMF is forecasting a GDP contraction of 3.8 per cent in 2009. The government proposes to implement an economic stimulus package in 2009 which is expected to result in a budget deficit of 3.4 per cent of GDP.
Bilateral Relationship
Historical Ties
The contemporary bilateral relationship is underpinned by binding historical ties stemming from World War I. Many Australians served in Belgium between 1916 and 1918, especially during the Battle of Messines, 7 June 1917, and the Third Battle of Ieper (Ypres), 31 July to 6 November 1917. More than 12,500 men of the AIF died, of whom half have ‘no known grave’.
The Minister for Veterans’ Affairs, the Hon Alan Griffin MP attended the 90th Anniversary of Armistice Day commemorations in Belgium (Ypres) on 11 November 2008. In April 2009, he visited Belgium as part of the Western Front Anzac Day commemorations, including to sign with Minister-President of Flanders, Mr Kris Peeters, an Arrangement between the Governments of Flanders and Australia to “Cooperate in the Shared History of the World Wars of the Twentieth Century”. An Anzac Trail will develop seven key sites in France and Belgium over the next four years, to honour the courage and sacrifice of Australians on the Western Front. The sites currently under consideration are Villers-Bretonneux, Pozieres, Bullecourt, Fromelles, Mont St Quentin, Ypres and Tyne Cot.
In 2008 13,700 Belgians visited Australia. The 2006 Census recorded just over 5,000 Belgium-born people in Australia (an increase of 2.8 per cent since 2001).
Agreements
Australia and Belgium have concluded a number of bilateral agreements. A Working Holiday Maker Arrangement took effect in November 2004. Australia and Belgium have had a Double Taxation Agreement since 1977 (amended in 1984). Australia and Belgium both recently ratified a bilateral Agreement on Health Care Insurance, which entered into force on 1 September 2009.
An Agreement between Australia and Belgium on Social Security entered into force in 2005, providing improved social security protection to people who have lived and/or worked in both Australia and Belgium. The social security agreement also exempts Australian employers from the need to provide Belgian social security support for Australian employees sent temporarily to work in Belgium, provided the employee remains covered in Australia, by compulsory superannuation arrangements. Further information is available on the Australian Taxation Office website.
High Level Visits
High level visits and meetings are important in promoting cooperation and understanding between Australia and Belgium.
The Minister for Foreign Affairs and Trade, the Hon Stephen Smith MP, met Belgian Foreign Minister Yves Leterme at the UN General Assembly in September 2009.
The Minister for Trade, the Hon Simon Crean MP, visited Brussels and Ghent 21-23 June 2009, holding the inaugural Ministerial Trade Policy Dialogue with European Trade Commissioner Ashton, and meeting with then Belgian Deputy Prime Minister and Minister for Foreign Affairs and Foreign Trade, Karel De Gucht, as well as undertaking trade and investment promotion activities.
Mr De Gucht visited Australia 3-8 May 2009, holding discussions during the visit with Mr Smith. Mr De Gucht also examined further opportunities for commercial cooperation in Western Australia, New South Wales and Victoria. Mr De Gucht was accompanied by a business delegation. Mr Smith had previously met Mr De Gucht in Brussels during his visit to Belgium 30 November - 2 December 2008, as part of a broader program of NATO and EC-related meetings. During that visit, Mr Smith signed the Australia-EC Wine Agreement with EC Commissioner for Agriculture and Rural Development, Ms Mariann Fischer Boel.
The former Minister for Human Services, Senator the Hon Joe Ludwig, held discussions on the delivery of social security services, employment and social policy with interlocutors in the Belgian Government and European Commission during his visit to Belgium 21 - 22 January 2009.
The Minister for Trade, the Hon Simon Crean MP, visited Brussels 28 - 29 October 2008, carrying out a program of bilateral commercial and EC-related meetings.
On 7 July 2008, the Minister for Transport, Infrastructure, Regional Development and Local Government, the Hon Anthony Albanese MP, met Mr De Gucht in Brussels. While in Brussels, Mr Albanese completed a bilateral program including discussions with Belgian Transport Minister Mr Etienne Schouppe and Flemish Government Minister for Public Works, Ms Hilde Crevits.
In April 2008, the Prime Minister, Mr Rudd, visited Brussels for EC talks and met then Belgian Prime Minister Mr Yves Leterme in Bucharest in the margins of the NATO Summit.
Bilateral Economic and Trade Relationship
Australia’s investment relationship with Belgium significantly overshadows the trading relationship. In 2008, Belgium was ranked as Australia’s 12th largest source of foreign direct investment valued at A$5.2 billion. Total investment in Australia in the same period was valued at A$11.8 billion. Total investment outwards from Australia to Belgium totalled A$2.6 billion.
The Macquarie Group, as a whole, owns 75 per cent of Brussels International Airport. The European headquarters and regional headquarters for the Middle East and Africa of Ansell Limited (formerly Pacific Dunlop) are located in Brussels. Rio Tinto Diamonds NV and BHP Billiton Diamonds sell their rough diamonds throughout the world via offices in Antwerp. The Belgian branch of De Bortoli Wines (Europe) NV distributes the company’s wines throughout continental Europe. Amcor has two manufacturing sites in Belgium and a corporate office near Brussels International Airport. Nyrstar, a joint-venture between Australian zinc miner Zinifex and Belgian metals company Umicore, has temporarily closed one of its smelting plants in Belgium due to the global economic crisis.
In 2008-09, Belgium was ranked as Australia’s 25th largest merchandise trading partner, with total two-way trade in goods with Belgium valued at A$3 billion, consisting of Australian exports of goods to Belgium worth A$1.3 billion and imports of goods worth A$1.7 billion. Australia’s major merchandise export to Belgium was coal. Major Australian imports from Belgium included passenger motor vehicles and medicaments (including veterinary).
Australia exported A$163 million worth of services to Belgium/Luxembourg in 2008 (note: the Australian Bureau of Statistics does not separate services trade data for Belgium and Luxembourg). Major services exported were transportation (A$58 million) and recreational travel services (A$43 million). Services imports from Belgium were valued at A$61 million in 2008 and were dominated by recreational travel (A$17 million) and business related travel (A$7 million).
Updated: 10 November 2009