The importance of bilateral trade between the UK and Belgium

This week the Brussels Chamber of Commerce explore the link between the UK and Belgium in trade and how it is key to both the UK and Belgium going forwards.

There is a strong and longstanding trade relationship between the UK and Belgium. It is without doubt this relationship is of great importance to both countries. UK exports to Belgium were worth 17,4 billion Euro in 2014[1], making Belgium  the eighth largest export market for the UK. In 2015 Belgium exports to the UK were worth 31,9 billion Euro,[2] which makes it the fourth largest export market for Belgium. It is of great importance to maintain this relationship.

The prospect of Brexit gives a great deal of uncertainty for the economy. Negotiations between the mainland and the island are bound to be tense. Both having different visions on Brexit. Today we can only speculate about the scope and impact of Brexit. But whatever the outcome will be, it has already had a huge impact on the economy, causing political and institutional instability. Article 50 has not yet been invoked, but the psychological impact is increasing with talk of a possible ‘hard’ or ‘soft’ Brexit.

At this moment, it is unclear which direction it will take. Either way, the impact will rather be mild for most of the European countries, but, along with a few others, not for Belgium. Although there will be a huge direct impact, such as a descending BBP, there will be also be various indirect effects. Think about quality control, labels and certification in all industries. Think about the common CE-marking which are based on a EU decision (93/465/EEG) and is connected to the free movement to lift trade barriers.

Could we have predicted Brexit? It would not have been a surprise knowing the history of economics with its cyclical movements whereby either the government takes charge and setting rules to protect, or capitalism prevails with less rules and more economical freedom. At this moment capitalism seems to be its own victim. Geopolitical threats and economic crises push boundaries of the free movement of people, goods and services. With the backdrop of global insecurity and discontent, such trends it is not surprising citizens come into revolute and demanded for Brexit through the referendum. Brexit could be considered as an indication of a rise in protectionism, deglobalization, nationalism and isolationism in Europe.

Without doubt, protectionism seems the holy grail to have a government intervention to protect your own citizens and build a solid future for the country. However, the purchasing power of citizens will decrease, imports will be more expensive and both importing and exporting will be more difficult resulting in less economic growth and even more discontent of citizens. There is no solid future if the importance of trade is disregarded. Even though we don’t know what consequences Brexit will have, it does not need to be a matter of playing it ‘hard’ or ‘soft’. We would all benefit of a rather pragmatic and sustainable approach.

For example, once the UK leaves the EU, a new trade agreement with the EU will be one of the most important agreements to be negotiate. However, Brexit already gives uncertainty and there cannot be trade without protecting the rules. After all, keeping a good trade relationships works both ways. As both importing and exporting will come with more rules, it is fair enough to protect both exporters and importers to counteract arbitrariness to avoid even more uncertainty. As it would take years to negotiate new agreements, it is obvious that if we want to benefit from trade and avoid more uncertainty, the European Court of Justice needs to be acknowledge by the UK when they leave.

However, there is more than trade for which Belgium – and Brussels in particular – can become even a more important partner for the UK. As Brexit also affects the willingness of companies to stay in Britain and Brussels is just around the corner. A report of the high level expert group of the banking sector, published in January 2016[3], stated that there needs to be an important role for the banking sector in Brussels for companies. The financial sector will invest and develop in this sector which makes Brussels a perfect location nearby London with an excellent connection. Brussels is not only strategically located vis-à-vis London but houses the main European institutions and related lobbies. It is close to top decision makers of the European Union. Thereby Brussels is a buzzing hub of entrepreneurship. All this attracts ambitious, highly educated people who speak different languages and English is widely spoken. Belgium is an interesting place to headhunt for their companies on the mainland.

In this respect it is in all parties interests to maintain the long standing trade relationship between the UK and Belgium. The UK has a lot to win from a partner as Belgium in this changing environment. Belgium, as one of the most important trade partners, will have to keep the excellent relationship and make trade with the UK companies. Both countries have a lot to gain and need to take the opportunity to strengthen their ties in a decade where it needs to be released the importance of such a relationship.

This piece was written by Amy Kessels, Coördinator Strategy at the Brussels Chamber of Commerce.

[1] Agentschap van Buitenlandse Handel  (2016, augustus). http://www.abh-ace.be. Extracted of  http://www.abh-ace.be/sites/default/files/Bilateral_notes/September_16/nota-stat-verenigd_koninkrijk-augustus2016_version_a4_-_ld_2.pdf, p. 5.

[2] Agentschap van Buitenlandse Handel  (2016, augustus). http://www.abh-ace.be. Extracted of  http://www.abh-ace.be/sites/default/files/Bilateral_notes/September_16/nota-stat-verenigd_koninkrijk-augustus2016_version_a4_-_ld_2.pdf, p. 3.

[3] High Expert Group  (2016, Januari). Febelfin. Extracted of  https://www.febelfin.be/sites/default/files/InDepth/hleg_report_-_the_future_of_the_belgian_financial_sector.pdf, p. 3.

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