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 will hold the rotating European Union (EU) Presidency in the second half of 2010.

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 stabilised when 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 (see below). The coalition is expected to remain in place until the next Belgian federal elections in mid-2011.

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 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 was appointed Minister for Foreign Affairs and Foreign Trade. His predecessor in that portfolio, Karel De Gucht, replaced Louis Michel as Belgium's representative on the European Commission (Commissioner for Development and Humanitarian Aid) following Mr Michel's election to the European Parliament. Mr De Gucht has subsequently been nominated as EC Commissioner for Trade for the 2010–2014 term. 

On 19 November 2009, EU heads of government appointed Mr Van Rompuy as the inaugural permanent President of the European Council, a post he took up on 1 January 2010. Mr Leterme replaced Mr Van Rompuy as Belgian Prime Minister, and Deputy Prime Minister Steven Vanackere was appointed Minister for Foreign Affairs and Foreign Trade.

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$3.0 billion in 2008–09. 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. 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 Economist Intelligence Unit (EIU) forecasts moderate economic growth of 0.9 per cent in 2010 and 1.4 per cent in 2011. The Belgian government proposes to continue to implement the economic stimulus package introduced in 2009, although elements of it may be reconsidered.

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". The centenary of World War I will increasingly provide a focus for bilateral commemorative activities. 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 2008–09 13,600 Belgians visited Australia. In 2007, there were just over 6,000 Belgium-born people in Australia (an increase of 3.5 per cent since 2006).

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.

An Australian Parliamentary delegation visited Belgium 7–11 November 2009 for a program of NATO-related briefings before attending the NATO Parliamentary Assembly session in Edinburgh (13–17 November 2009). While in Belgium, the group also participated in Remembrance Day activities in Flanders.

The Minister for Foreign Affairs and Trade, the Hon Stephen Smith MP, met then Belgian Foreign Minister Yves Leterme at the United Nations 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.

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 is a Belgian publicly-listed joint-venture between Australian zinc miner Zinifex and Belgian metals company Umicore.

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$134 million worth of services to Belgium/Luxembourg in 2008–09 (note: the Australian Bureau of Statistics does not separate services trade data for Belgium and Luxembourg). Major services exported were recreational travel services (A$43 million) and transportation (A$37 million). Services imports from Belgium were valued at A$83 million in 2008–09 and were dominated by business and professional services (A$36 million) and recreational travel (A$21 million).

Updated: 10 January 2010