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Country Commercial Guides FY 2000: Belgium Report prepared by U.S. Embassy Brussels, released July 1999 Note*

CHAPTER I. EXECUTIVE SUMMARY

This Country Commercial Guide (CCG) presents a comprehensive look at Belgium's commercial environment, using economic, political and market analysis. The CCGs were established by recommendation of the Trade Promotion Coordinating Committee (TPCC), a multi-agency task force, to consolidate various reporting documents prepared for the U.S. business community. Country Commercial Guides are prepared annually at American Embassies through the combined efforts of several U.S. government agencies.

Belgium is a federal state composed of a central government, three regional governments (Flanders, Wallonia and Brussels Region) and three language communities (Dutch, French and German). There is no clear hierarchy among these policy levels and each has its own exclusive powers and areas of jurisdiction. The federal government is responsible for foreign affairs, national security, defense, taxes, and issues relating the European economic and monetary union while the regions manage a wide variety of socio-economic matters. Under the evolving federal system, the responsibility for areas of interest to American business such as foreign trade, environment and investment regimes and incentives will increasingly become the responsibility of the regional governments.

The Belgian economy has great depth and diversity. A highly developed market economy, it is heavily reliant on international trade. The country's Gross Domestic Product (GDP) is dominated by a very large service sector (70 percent of GDP), followed by manufacturing (25 percent) and agriculture (2 percent). Exports account for more than 70 percent of Belgium's GDP, making it one of the highest per capita exporters in the world. In addition to its own exports, Belgium functions as a transit and distribution center for many other countries to the rest of the European market. Consequently, almost 75 percent of Belgium's trade is with other European Union countries. This highlights the country's importance as a commercial axis in Western Europe. In addition, Belgium and the United States have enjoyed strong reciprocal trade relations over the years; Belgium ranks as the 9th largest trading partner of the United States. It is estimated that Belgium imported $11.2 billion from the United States in 1998, about half of which was re-exported to other markets.

Belgium has a number of factors that contribute to its attractiveness for trade and investment. Its capital, Brussels, is an urbane city and home to the headquarters of the European Union and NATO, as well as hundreds of international institutions, associations and multinational corporations. Antwerp is the second-largest port in Europe and Belgium's second-largest city. An outstanding network of roads, rails and inland waterways enable goods shipped into Antwerp to be moved quickly and cheaply to European manufacturing and distributions centers. Geographically, Belgium is within a 600-kilometer radius of 70 percent of the EU market. Equally important, Belgium has strong competitive advantages such as an excellent transportation infrastructure, high-quality industrial sites, and a skilled and productive workforce.

Belgium is home to over 1,200 U.S. companies that play an active and important role in the economy. Traditionally, Belgium has maintained an excellent investment climate including a number of recently implemented tax incentive packages. However, a recent foreign investment study commissioned by the American Chamber of Commerce (AmCham) in Belgium indicates a growing concern that a number of factors are eroding Belgium's attractiveness for new investment. In response to this study, the AmCham has drawn up a "Foreign Investor's Agenda". The key issues include high labor costs and social contributions, inflexible labor regulations, high taxation levels, costly work hiring practices and a perceived lack of consistency in the government's tax policies. Problems encountered by specific sectors, such as telecommunications and pharmaceuticals, are discussed in Chapter VII: Investment Climate in this CCG.

As a member of the European Union (EU), Belgium must comply with all EU directives. Belgium is also one of the 11 European countries that introduced the euro as its currency in 1999. While the exchange rate of the Belgian franc into the euro is now permanently fixed, the Euro currency will not begin circulating before January 1, 2002. For more information regarding the European Union, its directives, and the European Monetary Union, please reference the CCG for the European Union.

With regard to the import/export figures reported in this Country Commercial Guide, please note that EU export statistics are no longer collected by customs officials at the border, but by the companies themselves on a voluntary basis. There is no penalty if they fail to report correct figures and therefore, this can lead to inexplicable differences in trade statistics between countries.

The Commercial Service in the U.S. Embassy in Brussels is part of a European-wide initiative called Showcase Europe (SCE). Showcase Europe is a collective effort of all the Commercial Service offices throughout Europe to assist U.S. companies in the European market. It includes coordinated programs for market research, trade shows, advocacy, etc. Additional information on Showcase Europe (SCE) can be accessed through the Internet at www.sce.doc.gov.

The Commercial Service offers many services to assist U.S. companies in Belgium. Whether it is finding an agent/distributor, researching market information, or providing advocacy support, the Commercial Service can help you. For complete details of services offered to American companies, visit the Commercial Service website at www.us-embassy.be or contact your local Export Assistance Center at www.ita.doc.gov.

Country Commercial Guides (CCGs) are available for U.S. exporters from the National Trade Data Bank's CD-ROM or via the Internet. Please contact STAT-USA at 1-800-STAT-USA for more information. CCG can be accessed via the World Wide Web at http://www.stat-usa.gov; http://1997-2001.state.gov/; and http://www.mac.doc.gov. They can also be ordered in hard copy or on diskette from the National Technical Information Service (NTIS) at 1-800-553-NTIS. U.S. exporters seeking general export information/assistance and country-specific commercial information should contact the U.S. Department of Commerce, Trade Information Center by phone at 1-800-USA-TRADE or by fax at (202) 482-4434.