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.
Belgium held the rotating EU Presidency to the end of December 2010. Former Belgian Prime Minister Mr Herman Van Rompuy took up his role as the inaugural permanent President of the European Council on 1 January 2010. He was re-elected in March and appointed President of the Euro Summit. Former Belgian Foreign Minister Mr Karel De Gucht is currently EC Commissioner for Trade (2010-2014).
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. Regional elections in Flanders, Wallonia and Brussels-Capital held on 7 June 2009, delivered 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. The CD&V, New Flemish Alliance party (N-VA) and the Socialist Party — Different (SP.A) formed government in Flanders, and the Socialist Party (PS), Humanist Democratic Centre (CdH) and Ecolo worked in coalition in both Wallonia and the Brussels-Capital region.
In a federal government reshuffle on 17 July 2009, Mr Yves Leterme was appointed Minister for Foreign Affairs and Foreign Trade.Former Belgian Prime Minister Mr Herman Van Rompuy's appointment as the inaugural permanent President of the European Council, a post he took up on 1 January 2010, led to a further reshuffle of portfolios in the Belgian Government, with Mr Leterme replacing Mr Van Rompuy as Belgian Prime Minister, and Deputy Prime Minister Mr Steven Vanackere being appointed Minister for Foreign Affairs and Foreign Trade.
The governing coalition of CD&V, Flemish Liberal Open-VLD, Francophone Liberal (MR), Francophone Socialists (PS) and Francophone Christian Democrats (CdH) remained in office with only minor changes to the ministerial line-up until federal parliamentary elections were held on 13 June 2010 following the collapse of the coalition in April 2010. The N-VA won the most seats, followed by the PS, the CD&V, and other parties. While the process of negotiating a Coalition took place, the Belgian Government remained in caretaker mode with Mr Leterme as Prime Minister, and Mr Vanackere as Minister for Foreign Affairs and Foreign Trade.
Yves Leterme's caretaker Government drew praise for its solid performance, particularly during Belgium's EU Presidency. Mr Leterme took up a position as Deputy Secretary-General at the Organisation for Economic Cooperation and Development (OECD) in Paris. A breakthrough agreement on the treatment of a crucial electorate on 15 September 2011 and the 26 November 2011 agreement on the 2012 budget by political parties involved in government coalition talks, preceded the formation of a new government on 6 December 2011. The Government is led by head of the Francophone Socialist party (PS) Mr Elio Di Rupo. Mr Didier Reynders, Francophone Liberal (MR) is the Minister for Foreign Affairs, Foreign Trade and European Affairs. Mr Vanackere was appointed Minister for Finance.
Economic overview
Since 1921 Belgium has had an economic union with Luxembourg, the Belgium-Luxembourg Economic Union (BLEU). The BLEU is Australia’s 8th largest investor with total inward investment valued at A$36.2 billion at December 2011. The BLEU is the fourth largest European Union (EU) investor in Australia. Total two-way trade between Australia and the BLEU is also substantial, reaching A$3.4 billion in 2011. 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 import 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. The National Bank of Belgium (NBB) revised downwards its official estimate for GDP growth in 2008 to 1.0 per cent with inflation running at 4.5 per cent. The NBB estimated that the economy contracted by 3.5 per cent in 2009. The EC's European Economic Forecast – Autumn 2011 notes export-led growth in 2010 of 2.3 per cent of GDP, with the first half of 2011 continuing to benefit from increased exports, but flattening out towards the end of the year, with growth of 0.9 per cent of GDP forecast for 2012. Belgium plans to reduce its budget deficit from 3.6 per cent of GDP forecast in 2011 to 2.8 per cent of GDP in 2012, with the aim of reaching a balanced budget in 2015.
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'.
In April 2009, former Minister for Veterans' Affairs, the Hon Alan Griffin MP 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". The Centenary of World War I (2014-2018) will increasingly provide a focus for bilateral commemorative activities (www.anzaccentenary.gov.au). The Australian Government's Western Front Interpretive Trail will develop seven key sites in France and Belgium over the next four years, in partnership with local authorities, to honour the courage and sacrifice of the more than 290,000 Australians who served on the Front. The sites currently under consideration are Villers-Bretonneux, Pozieres, Bullecourt, Fromelles, and Mont St Quentin in France, and Ypres and Tyne Cot in Belgium.
In 2011, there were 5,762 Belgium-born people in Australia, and just over 10,000 who claimed Belgian ancestry.
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). A bilateral reciprocal Agreement on Health Care Insurance 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.
A bilateral Air Services Agreement was negotiated in February 2011.
High level visits
High level visits and meetings are important in promoting cooperation and understanding between Australia and Belgium.
The Minister for Veterans’ Affairs, the Hon Warren Snowdon MP, visited Belgium in October 2012 to progress projects and programs relating to the Centenary of WWI.
The Minister for Foreign Affairs, the Hon Senator Bob Carr, met his Belgian counterpart Mr Didier Reynders at the NATO/ISAF Foreign Ministers’ in Brussels on 18 April 2012.
The Minister for Defence, the Hon Stephen Smith MP, attended the ISAF Defence Ministers’ meeting at NATO headquarters in Brussels 2-3 February 2012.
Belgian Minister for the Economy Vincent Van Quickenborne visited Australia 3-7 March 2010 (Victoria, Tasmania and Western Australia) accompanied by a high-level Belgian business delegation.
Bilateral economic and trade relationship
Australia’s investment relationship with Belgium significantly overshadows the trading relationship. In 2011, total Belgian investment in Australia was valued at A$12.6 billion, of which A$5.6 billion was foreign direct investment (FDI). Total investment outwards from Australia to Belgium totalled A$5.5 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 is a Belgian publicly-listed joint-venture between Australian zinc miner Zinifex and Belgian metals company Umicore.
In 2011, Belgium was ranked as Australia’s 23rd largest merchandise trading partner, with total two-way trade in goods with Belgium valued at A$3.0 billion, consisting of Australian exports of goods to Belgium worth A$1.4 billion and imports of goods worth A$1.6 billion. Australia’s major merchandise export to Belgium was coal (A$318 million). Major Australian imports from Belgium included passenger motor vehicles (A$386 million).
Australia exported A$179 million worth of services to Belgium/Luxembourg in 2011 (note: the Australian Bureau of Statistics does not separate services trade data for Belgium and Luxembourg). Major services exported were personal travel services (A$51 million). Services imports from Belgium were valued at A$87 million in 2011 and were dominated by business and professional services (A$43 million).
Updated October 2012