Trade Negotiations: The Role of Private Stakeholders

By César Guerra Guerrero
Partner & Director of Trade Policy at Euraffex

The number of Free Trade Agreements (FTAs) have surged in the last years. It is clear that applied tariff levels and the number of comprehensive trade agreements of a country determine its readiness to constructively engage in ambitious trade treaties. For example, it is relatively easy to strike deals with Singapore or Chile, but it is completely different with Mercosur. In my view, a successful conclusion of a process depends on the political will and the real room for manoeuvre to accommodate each other’s interests.

Most of the time, governments must make important and difficult decisions to bridge gaps, especially in the final stages of negotiations. Trade negotiators have the ability to present results in a way that shows the benefits and minimises concessions to justify their decisions, so that FTAs will always prove positive in countries, or blocks of countries, that are so lined up with the free trade agenda. However, this is not exempted from partisan backfire that would normally use political arguments to prevent moving forward on the trade agenda. As long as negotiators prove that sensitivities were protected by using alternative treatments and specific non-trade concerns were addressed somehow, countries would be inclined to make hard calls to close a deal.

In the meantime, the private sector- whether on the offensive or the defensive side- is faced with uncertainty. It is difficult to know how their products are going to be treated if they are part of the final package that would solve the most difficult issues to clench a deal. The reading and identification of true red lines is crucial for governments. Stakeholders play an important role to influence this vision. Using the example of the EU-UK trade negotiations, is the level playing field a true red line for the European Union or is it just the access to British fishing waters? What are the potential trade-offs all parties can live with? The answer is communication and creativity. The private sector must be part of the solution and governments should be open for feedback as it is in their best interests. The successful outcome for business sectors and individual companies often depends on the engagement with trade negotiators and making the case with sound arguments, whilst providing reasonable alternatives to the ideal outcome.

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Here at the British Chamber of Commerce, we will continue to update you with the necessary information to help all our members to succeed. 
We are all in this together, and with the right plans in place, consumer confidence can be restored. BritCham offers support, guidance and specialised coverage for both Brexit and COVID-19, including webinars, workshops and events that will give your firm the tools it needs to navigate through this challenging period. Click here to register: https://www.britishchamber.be/upcoming-events

New Belgian Furlough Schemes: Which is Best for You?

By Yasmine Lingemann

On Friday 28th August the British Chamber of Commerce EU & Belgium had the pleasure of hosting Sophie Maes and Sieglien Huyghe from Claeys & Engels to discuss the new changes to the Belgium temporary unemployment scheme from today, September 1st. 
The existing scheme will be split up into five new schemes for Belgian businesses to choose from. See below for a full breakdown of each scheme.

1. Corona temporary unemployment scheme valid until 31 December 2020
Conditions-
The firm must either belong to a sector that has been heavily affected by the Coronavirus OR have a minimum of 20% days of unemployment in one quarter compared with the previous quarter.

Application process-
Applicants must complete a C160A- HGO form to send to the National Employment Office (NEO) and receive a confirmation from NEO.

Formalities during use-
Notify & inform employees, the Work Council/ Trade Union.

Advantages & disadvantages-
+Few formalities and applicable to all workers (blue and white collars).
-Expires on the 31st of December.

2. “Normal” economic temporary unemployment scheme for white-collar workers
Conditions-
The firm must prove a loss in turnover, production or orders by at least 10% OR a reduction in employment for blue-collar workers by 10% OR sufficient recognition by the Ministry of Work as a company in difficulty.

Application process-
A new CBA or Business Plan must be drawn. The Business Plan MUST be approved by the Commission for Business Plans which takes roughly two weeks.

Formalities during use-
A C160A form must be completed together with supporting documents. 
If you have a CBA, send this to the NEO.
If you have a Business Plan, send this to the FPS.
Notify the NEO and all employees a minimum of one week before starting date of unemployment.
Communicate the economic reasons to support your application to either the Work Council or Trade Union Delegation.
Keep record in a validation book.
Deliver a C3.2A form to each employee an notify the NEO before the first day of unemployment every month.
A daily supplement of €5 is required.

Advantages & disadvantages-
+Possibility to regulate temporary unemployment for an immediate period of one year
+Maximum of 16 weeks for full-time workers and 26 weeks for part-time workers (of minimum 2 working days per week)
-Approved Business Plan or CBA is required
-Daily supplement paid by the employer

3. New “Transitional” economic temporary unemployment scheme for white-collar worker
Conditions-
The firm must prove a loss in turnover or production by at least 10%
Offer two training days per month to employees.

Application process-
A new CBA or Business Plan must be drawn. Business Plans must be submitted to the FPS but does not need approval.
Submit a C160A form to the NEO.

Formalities during use-
Notify the NEO and all employees a minimum of one week before starting date of unemployment. This can be done electronically via www.socialsecurity.be
Communicate the economic reasons to support your application to either the Work Council or Trade Union Delegation.
Keep record in a validation book.
Deliver a C3.2A form to each employee an notify the NEO before the first day of unemployment every month.
A daily supplement of €5 is required.

Advantages & disadvantages-
+Maximum of 24 calendar weeks for full-time worker and 34 weeks for part-time workers (of minimum 2 working days per week).
+No approved Business Plan required.
-2 training day required per month.
-Only valid until the 31st of December.
-Daily supplement paid by the employer.

4. Economic temporary unemployment scheme for blue-collar workers
Conditions-
The firm must be in economic difficulties due to an external problem e.g. The Coronavirus.

Application process-
Inform the NEO.

Formalities during use-
Notify the NEO and all employees a minimum of one week before starting date of unemployment. This can be done electronically via: www.socialsecurity.be.
Communicate the economic reasons to support your application to either the Work Council or Trade Union Delegation.
Keep record in a validation book.
Deliver a C3.2A form to each employee an notify the NEO before the first day of unemployment every month.
A daily supplement of €2 is required.

Advantages & disadvantages-
+Few formalities.
+Maximum of 4 weeks for full-time workers and 18 weeks for part-time workers (of minimum 3 working days per week).
+Small suspension also available for up to 12 months (of minimum 3 working days per week).
-Only valid until the 31st of December.
-Daily supplement paid by the employer.

5. “Normal” temporary unemployment scheme for force majeure
Conditions-
Unforeseen, unexpected event independent of the will of all parties.

Application process-
Notify the NEO and all employees a minimum of one week before starting date of unemployment. This can be done electronically via: www.socialsecurity.be.

Formalities during use-
Deliver a C3.2.A form to the employee concerned.

Advantages & disadvantages-
+Notice period is suspended.
-Case specific.

We hope that with this information, you will now find the temporary unemployment scheme that suits you and your company best.

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Here at the British Chamber of Commerce, we will continue to update you with the necessary information to help all our members to succeed. 
We are all in this together, and with the right plans in place, consumer confidence can be restored. BritCham offers support, guidance and specialised coverage for both Brexit and COVID-19, including webinars, workshops and events that will give your firm the tools it needs to navigate through this challenging period. Click here to register: https://www.britishchamber.be/upcoming-events

Belgian Savings Reach Record High Amid Coronavirus Confidence Crash

By Yasmine Lingemann

Belgians are big savers. According to recent figures released by the National Bank of Belgium (BNB), Belgians have reached a record high in average household savings, with figures reaching 290 billion euros in aggregate regulated savings accounts. On average, the household savings ratio in Belgium is 12.6%, which by comparison is just over double that of the UK, where households save 6.2% of their disposable income. Belgians have traditionally saved a lot, yet even in an era of zero or negative interest rates on savings, the lack of spending is beginning to become problematic and even a hinderance to the national economy.

Globally, the Coronavirus pandemic has hurt economies everywhere. With firms in the UK and Europe also having to simultaneously adapt and create contingency plans to prepare for the end of the Brexit transition, businesses face the situation where they need to use alternative methods to attract clients and re-establish confidence in their company. In Belgium, that means trying to encourage people to spend more and save less at the same time as rising unemployment, weakening job security, and people generally tightening their belts and restricting spending to the bare necessities.

Despite this, firms must not lose hope: Now is the time to seek new opportunities. Businesses are responding, many are offering their goods and services in a different way. In Belgium, where consumers have traditionally been less open to online commerce, increased time at home in front of a screen enables households to be more susceptible to e-commerce and advertising. Businesses must use this time to improve communication and dialogue with their clients to reestablish trust and retain brand loyalty. Getting active online and keeping your customer base up to date on changes will help businesses in the long run and hasten the adoption of a more digitalised economy.

Belgium government support has not been as forthcoming as in the UK. However there are a variety of loans and tax deferral schemes that have been put in place to weaken the damage felt by Belgian firms.

Click here for Belgium’s government website to see how your business can benefit from the support available: https://www.belgium.be/en

Here at the British Chamber of Commerce, we will continue to update you with the necessary information to help all our members to succeed. We are all in this together, and with the right plans in place, consumer confidence can be restored. BritCham offers support, guidance and specialised coverage for both Brexit and COVID-19, including webinars, workshops and events that will give your firm the tools it needs to navigate through this challenging period.

See our website here for more details on how we can help you: https://www.britishchamber.be/

UK-EU Border – The Devil’s in the Detail

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The practical implications of Brexit on everyday UK-EU trade is becoming clearer week by week. This week, Amazon announced changes affecting Amazon sellers, customs briefings and enquiries ramped up, and the impact on product availability and businesses started to become evident. The detail is very welcome, and helps businesses prepare further. For some, the impact will be more difficult to manage and will effect consumer choice, price and availability.

The UK government’s publication of its border operating model provided traders and logistics operators with more detailed information on the requirements for UK exports and imports. While much of the overall approach was predictable, the details of the arrangements make clear the challenges that traders will have to adapt to, and the costs likely to be incurred.

This week, retail giant Amazon announced the end of Fulfilment by Amazon (FBA) for UK sellers delivering to customers in the single market (and vice-versa). Sellers will now have to divide their inventory between UK and EU-Based Fulfilment Centres to avoid losing sales in either market.

This will raise the cost of reaching customers through increased storage and transaction costs of shipping their goods to warehouses in both markets. With Amazon putting in transitional measures before 1st January 2021, sellers Christmas trade may be affected too.

As so often, it’s the detail that counts. The UK’s plan to introduce postponed VAT accounting will be a boon to the cashflow of UK importers. But some businesses are beginning to see additional unwelcome challenges. For example, fresh fruit and vegetables delivered by air from Africa to the UK and its Benelux neighbours are distributed across the region. Since these goods movements will now need phytosanitary checks at the entry point, the opening hours of phyto offices at ports and airports now become a critical factor in avoiding lengthy delays.

With the time for preparation now short, the UK government is stepping up its communications to businesses with webinars for Belgian and Irish firms this week and more to come.

With its network of expert members and the backup of its UK chambers, Britcham is there to help you. If you have questions, contact us at BusinessContinuity@britishchamber.eu

Glenn Vaughan – Senior Adviser

UK Govt – Border Operating Model: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/899991/200713_BPDG_-_Border_Operating_Model_FINAL_1320_edit.pdf

The EU Recovery Plan

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Last week’s virtual summit of EU leaders discussed the proposal for a revised long term budget and EU Recovery Plan – put together by the Commission in double quick time. Much of the discussion between member states is inevitably informed by a calculation of who gets what and who pays, so it will not be easy or very quick. But the effectiveness of the EU response will really depend on how the money is spent and avoiding the temptation to create new barriers to business.

At the end of May 2020, the European Commission presented its proposal for a comprehensive reconstruction plan. 750 billion will be mobilised for the “Next Generation EU” action. In addition, the long-term EU budget 2021-2027 will be increased to a total of EUR 1.85 trillion.

The Commission says the plans will deliver resources at the scale and speed needed and focused on green and digital as engines of growth as well as increased resilience for Europe’s ‘open strategic autonomy’ model. It also emphasises the importance of avoiding fragmentation of the single market. Good to hear.

The package focuses mainly on cohesion and recovery along with a boost to Horizon Europe and more money for the planned Just Transition Fund for decarbonisation, and a new health program.

The biggest lump of cash – a new Recovery and Resilience Facility of €560 billion – will offer financial support for investments and reforms with a grant facility of up to €310 billion, and will be able to make up to €250 billion available in loans.

The scale and effectiveness of spending will be central, but it also needs broader global coordination. As pointed out by JBCE (Japan Business Council in Europe) recently, this is not just about the EU alone. So the EU’s response needs to be timely, but also coordinated wherever possible through multilateral and bilateral action. More important for the medium term, the EU’s openness to trade, ideas, innovation and people needs to be part of the answer.

The recovery plan will be based on a model of “open strategic autonomy” and there has been much made of the need to strengthen and diversify supply chains. While that’s undoubtedly true, there’s always a risk that the need to protect its people and companies can be used to push a protectionist agenda. 

That’s why it will remain important for business to make the case, loudly and persistently that recovery will be built on international cooperation and free and fair trade, as well as a vibrant single market and that Europe remains #Open4business

Glenn Vaughan – Senior Adviser

Declaring your UK income in your Belgian Tax Return

If you have any income that you receive in the UK and are unclear how to declare this in your Belgian income tax declaration, here’s some advice from Eric Laurent. If you need more, sign up for our webinar on Wednesday 24 June, especially as the deadline for personal tax declarations is 30 June!

Eric is a Partner at ERYV – a family business working in accountancy and tax that have been operating in the Belgian market for over 30 years! Eric is a chartered accountant & tax adviser who specialises in cross-border income.

When you are working, or residing, in Belgium you have to file a Belgian tax return. The principle in international taxation is that you have to declare your worldwide income in the country you are residing in. So if you are an expat, it is likely that you have some kind of foreign income; perhaps from interest earned from a savings account or rental income.

You have to report this information in your tax return, but don’t worry you shouldn’t be charged twice! Some tax treaties in place prevent you from being charged twice but this depends on the type of income for example, or on the specific articles from the bilateral tax treaty between Belgium and the source country.

In Belgium, for individuals, you can file a resident tax return or a non-resident tax return. For a resident tax return in Belgium you must declare your worldwide income. This applies even if you are working outside of Belgium. Even if you have had your contract terminated, or you have changed jobs or maybe you have retired, you are still a Belgian resident and have to go through the same process.

For non-resident there are several sub-categories: there are those who are in Belgium under the special regime of taxation for foreign executives, a very special category; there are also those who don’t live in Belgium but do generate some income there.

In addition, there are some people who have a specific status and have to find their way into the resident or non-resident category. These are the people that either work for the Commission or another EU institution or someone working for an international or government organisation like NATO or for a foreign embassy for example.

This touches upon a few issues but greater explanation will be given during the webinar on Wednesday 24 June. The following subjects will be covered during the webinar:

• Concept of Belgian tax residency
• Consequence: taxation (declaration) of worldwide income
• Tax treaty: which state has the right to tax
• Tax treaty: how to avoid double taxation
• How declaring UK real estate income in Belgium
• How declaring foreign professional income in Belgium
• How declaring foreign financial income in Belgium
• Other items linked to foreign assets:  bank accounts, life insurance, legal structures

Need to know more? Register here

The 110th Annual General Meeting

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I wouldn’t say I’m an old hand at AGM’s but I’ve sat through quite a few and organised some too.  But this year was another new experience, and somewhat of a challenge – the Chamber’s first digital AGM. 

Over the last few months’ we’ve all discovered the joys of Zoom, particularly the ease of moving from one meeting to another and how good it is to be able to meet with people whatever their location.  AGM’s, however, are a very particular kind of meeting and the governance requirements impose some challenges.  They are a hybrid between a presentation and a meeting and need to allow maximum participation from all who attend.  The Chamber team did some extensive research and trialling of other platforms.  There are some fabulous webinar platforms available but the need for flexible participation pulled us back to Zoom.

So, to the Chambers 110^th AGM.  We had near 100% attendance from those registered (another benefit of remote meetings) and a very interactive meeting.  It’s my observation that remote meeting platforms allow participants to contribute more, it is easier to speak and less intimidating for those who might be intimidated.  On a meeting platform there is no separation in any way between speakers and ‘audience’ and this creates a different dynamic. 

While AGM’s legally are focussed on reviewing the previous year, the current circumstances necessitate more focus on the now and the future.  Our President, Tom Parker reiterated how central the Chamber is for businesses who are active in the UK-Belgian space and after his review of the year the ‘floor’ was taken by our new CEO Dan Dalton.  Dan brings his wealth of experience as an MEP to the Chamber at exactly the right time – his stature and connections will enhance the Chamber, attract more members and give top level insight into the pivotal relationship as the UK negotiates its future trade relationship with the EU. 

We had presentations from our key committees: the EU Committee, the Future Relations Committee and the Business, Trade and Investment Committee.  There are exciting times ahead for the Chamber in all these areas and there is a key message – be involved, this is your Chamber, we represent your interests and want to understand more how we can work effectively to support your business. 

So, now the less exciting stuff – writing minutes and following up with the our new Council members.  Actually, just kidding, I love this stuff and good governance is the bedrock of effective and appropriate decision making.  It’s a privilege to be part of this and to support the Chamber and our members in these challenging times.  I hope that next year we can see each other in person and look back on a very particular time. 

Melanie Barker – Membership and Operations Manager

UK joining Lugano Convention is essential for EU Business and Consumers

There are many outstanding issues still to be negotiated as part of the future relationship between the EU and the UK, however one area where there shouldn’t be much disagreement is over the British government request to join the Lugano Convention.

There should be an overwhelming interest for both sides to keep the existing relations in this field. The consequences would be severe and very negative for businesses and consumers on both sides of the Channel should there be no agreement to continue enforcement of civil and commercial judgments.

The Lugano Convention covers cross border enforcement of civil and commercial legal judgements. It applies between the EU and Switzerland, Norway and Iceland and sits alongside the Brussels 1 Regulation rules for the EU member states.

Although the UK will not be an EFTA member, the Convention is also open to non-members, such as the UK. In addition, the existing ETFA members (Norway, Iceland and Switzerland) have all supported the UK’s accession.

The decision to support the UK’s application should not be overly controversial. It eliminates the need for multiple legal actions in different countries, and the risk that companies can’t get their assets that are in other countries. As a result, the system significantly reduces the risk of doing business with someone in another country. Once a judgment is reached under the system, enforcement is rarely contested.

Without this system in place businesses will need to calculate for potentially multiple actions in different countries, especially in cases related to assets that are in another country.

Without Lugano accession enforcement of judgments will no longer happen automatically and the result is likely to lead to the other business party challenging the judgment. This can open up multiple issues, such as whether the compensation that the first court awarded is acceptable or whether the original judgment is questioned by the enforcing court. All substantive laws as to how disputes are settled are different from one European country to another and the Lugano/Brussels system is the only way to smooth these differences over and ensure that a pan-Continental dispute settlement system can work.

Most businesses aim to reduce these risks by agreeing choice of court clauses. Brussels I and Lugano reduce the risk further by setting the rules under which the choice of court clauses are respected by all. As national laws differ on this point, without the overarching framework, there is still the risk of litigation surrounding whether the choice of court clause that you have negotiated and expected to be able to rely on, is in fact valid.

If a business ends up in litigation, much more expense is needed to solve what are essentially procedural issues (such as whether you are in the right court that has the power to solve issue). Litigation also lasts longer as there are more complex issues to be solved. In addition, the end result can still be questioned by another court, costing businesses even more money.

This significantly raises the cost of doing business and this will often have bigger impact on SMEs. Smaller companies, without large legal departments, would have to budget for costs that have not existed in Europe since the 1970s, when the first Brussels convention came into force creating the system which is now applied throughout Europe.

Consumers on both sides of the channel also risk losing out, as under this system the legal system used is based on where the consumer is based, allowing consumers to easily get legal remedy. Without this, consumers buying across borders will be at a serious disadvantage and will find it far harder to enforce their rights.

The damage will not just be inflicted on UK based businesses and consumers. Those based in the EU will also suffer significantly and needlessly if there is no agreement on this point.

All trade needs a secure legal system to underpin it. We have one which already exists, and which works well. This hugely benefits businesses and if the UK does not have access to it, it will significantly increase the cost and reduce the amount of trade that will take place between the EU and UK.

The British government has recognised the benefits which comes with staying in the system. Switzerland, Iceland and Norway want the UK in the system. We urge the European Union to recognise this and ensure that the UK can swiftly accede to the Lugano Convention. In doing so cross border trade, which already faces significant challenges post Brexit, will at least be underpinned by a common legal system for civil and commercial trade.

Daniel Dalton – CEO

Fiscal representative to become mandatory for UK established companies in Belgium

As part of the VAT consequences of the departure of the UK from the EU, Belgian VAT authorities have officially communicated to business their position as to the need for UK established companies, that currently are VAT registered in Belgium via a direct VAT registration, to appoint an individual fiscal representative as a result of Brexit.

The letter of the Belgian VAT authorities confirms that UK established taxable persons will have to fulfil the VAT obligations which are imposed on all VAT taxable persons who are not established in the EU. The most significant VAT obligation is the requirement to appoint an individual fiscal representative for VAT in Belgium.

Because of the general nature of this obligation, UK established companies will no longer be able to operate a direct VAT registration as from the date Brexit will be effective, in principle 30 March 2019.

To discuss this, please feel free to get in touch with Peter Empsten (details below) and ensure your business meets this new administrative formality. Peter will also be able to share a letter from the Belgian VAT authorities outlining the change.

Peter Empsten – Head of Indirect Tax

Crowe VAT Representation 

E-MAIL : peter.empsten@crowe.be

Will robots steal your job? A report on the British School of Brussels Expert Panel

Although those headlines that tell you robots are going to steal your job can be disheartening, the overarching message that came from last week’s panel was a positive one. Though the term Artificial Intelligence may seem scary, the panel reminded us that we actually already use A.I everyday – when we search Google, choose from recommendations on Netflix or Spotify or find more similar products on Amazon. Overall, the discussion made it clear that as automation advances, it will be the most human-centric skills that become the most valuable.

On the 12^th February, our Chief Executive Glenn Vaughan chaired an expert panel discussion on automation at The British School of Brussels, in collaboration with AmCham Belgium. Discussing the ‘Jobs Lost, Jobs Gained: workforce transitions in an age of automation’ McKinsey Global Institute report from 2017, the panel provided a great insight for the future workfoce – the students from BSB and other local schools – as well as the current one – parents and corporate representatives from across Brussels.

Key note speaker Jacques Bughin, Director of MGI and co-author of the report, gave the message that instead of fearing this new technology and worrying about what jobs it might take away, it is better to view these new advancements as opportunities and seize each one. Jacques’ confidence that it is not that today’s jobs will all disappear, that instead they will transition as they have done in the past and it is up to us to decide how these transitions unfold, was an aspirational takeaway for the audience.

Catherine Stewart, Senior Advisor at Interel Group, was clear that there are still ways to stay ahead of the automation trend. Though machines and A.I are advancing in cognitive tasks related to memory and learning new information, they lack our people skills and emotional intelligence. Catherine’s advice to the future workforce, and also to the current one, is “learn to be clear, constructive, creative and adaptable, learn to listen and to challenge in a positive way” in order to thrive.

‘The high-skill, high-pay jobs of the future may involve skills better measured by EQs (a measure of emotional intelligence) than IQs’

Andy Haldane, Chief Economist at the Bank of England

Angela Dong, Senior Vice President Human Resources, Research & Innovation, Solvay, is witnessing the A.I transition first hand, and advised the audience that in fact, not everyone needs to master the potentials from A.I and new technology, but to stand out you will need to understand what it is that it can help you achieve.

Melanie Warnes, Principal and CEO of The British School of Brussels, concluded the panel discussion in agreement with the other panellists that the way the future workforce interact with each other, human to human, will be crucial, and that an optimistic view on the topic remains important.

Though automation may be on the rise, the take home message of the night was to take a positive outlook – the robots won’t beat us yet!

‘The future is not predictable, it is to be shaped’

Jacques Bughin