Accueil  »  2017 - Octobre  »  Conférence à la Chambre de Commerce britannique: attractivité et perspectives économiques pour notre pays
oct 18, 2017

Conférence à la Chambre de Commerce britannique: attractivité et perspectives économiques pour notre pays

J’ai pris aujourd’hui la parole à la Chambre de Commerce britannique en présence de l’Ambassadrice Alison Rose. J’ai abordé trois grands thèmes.

- Les efforts du Gouvernement fédéral pour encourager l’attractivité de la Belgique pour des investissements étrangers: la réussite économique et sociale de la Belgique dépend fortement de sa capacité à maintenir l’ouverture de ses frontières économiques. Depuis 2014, le Gouvernement fédéral a pris d’importantes mesures en matière d’attractivité: stabilité politique, tax shift, investissements publics, réforme du marché du travail vers plus de flexibilité…

- Les perspectives économiques de notre pays: la croissance du PIB pour 2017 est passée de 1,2% à 1,6% et devrait poursuivre sur ce rythme en 2018 et 2019; le désavantage compétitif de la Belgique par rapport à ses voisins concernant les coûts du travail a complètement disparu; le taux d’emploi national a augmenté de 1,3% l’année dernière…

- Les perspectives du commerce international:  la question des traités internationaux est importante pour les échanges économiques de notre pays. Le récent débat autour du CETA a mis en avant certaines préoccupations légitimes auxquelles il faut également répondre…

Mon discours prononcé ce 18/10/17 devant la British Chamber of Commerce:

Dear Mrs. Ambassador,
Dear Mr. de Pougnadoresse,
Dear Ladies and Gentlemen,

Let me first warmly welcome you at this lunch.

I would like to thank you for your kind introductory words.

I would also like to thank the British Chamber of Commerce for hosting me here today, and providing me with the opportunity to discuss a number of important issues with you.

I was asked by the Chamber to discuss:

-          the way Belgium works to attract foreign investment,

-          the economic outlook of Belgium, and

-          the future of international trade

I intend to provide you with some preliminary remarks first, while giving you the time to enjoy your lunch. I will then be looking forward to having a discussion with you on these issues.

I. The way Belgium works to attract foreign investment

We build on our strengths !

According to the renowned KOF index of globalization (University of Zürich), and for a number of consecutive years now, Belgium is among the world’s top 3 most globalized economies in the world.

This position reflects Belgium’s :

- openness to trade, investment and capital flows

- openness to exchange of technology and ideas, but also labour movements and cultural integration; and

- openness to the international political and diplomatic institutions

This provides a strong basis to attract investments.

Belgium has impressive educated, skilled human capital and great linguistic diversity.

It is the location of choice for many creativity-based centres of excellence.

Our international rail, air and shipping infrastructure make us one of the best locations for industry and logistics.

Our private-enterprise economy offers proximity to numerous European markets and cultures, in an environment characterized by legal certainty.

As the KOF index suggests, Belgium has a highly open economy: we export more than 80% worth of our GDP; 4 out of 5 people in Belgium directly or indirectly depend on international trade.

Our economic and social success heavily depends on our ability to preserve open economic borders, and to remain attractive to foreign investment.

In this context, foreign investment has played – and continues to play – a vital role in the Belgian economy. Foreign corporations account for about one-third of the top 3,000 corporations in Belgium.

It is self-evident that foreign investment remains critical to sustain economic growth, to warrant maximum employment and to ensure the welfare of our citizens.

In short, we cannot become complacent in our ambition to attract foreign investment.

Today, as you know, attracting foreign investment is primarily a responsibility of our regions.

But the federal government regulates important elements of foreign direct investment such as fiscal and regulatory policies, wages and labour policy.

These are absolutely critical tools.

It should therefore not be a surprise that attracting foreign investment constitutes an essential part of the federal government’s top ambition: job creation.

Since 2014, the federal government has taken important decisions and has started the implementation of important measures in this regard.

Let me cite you a few measures which underpin our ambition to ensure an attractive business environment to local businesses, in particular SMEs, and foreign investors alike.

Political stability in a friendly business environment

This is a critical starting point.

At times of political and economic uncertainty in a number of Western countries, the importance of political stability cannot be overstated.

It allows us to strengthen and stabilize the business friendly environment, also to foreign investors – I will come to this in a second.

But equally critical : political stability constitutes the basis to portray a positive and credible international image of one’s country. In particular after the horrible events of 22 March 2016, this has been a high priority for the government, and for me personally.

Tax shift

The federal government is taking firm action to alleviate the high levels of taxation on labour. Until 2018, 7.2 billion EUR will be made available to reduce taxation on labour. This will lower employers’ social contributions from 33% to 25%.

This bold measure will benefit workers by increasing their purchasing power, but it will also allow to make Belgian labour costs competitive vis-à-vis our neighbouring countries.

Corporate taxation

The federal government is structurally reforming corporate taxation. While this is a very ambitious goal, we are committed to making real progress.

The reform will take place in two phases:

In 2018, the nominal corporate taxation base for SMEs will drop from 25 to 20%, and for large enterprises from 34 to 29%.

In 2020, the nominal corporate taxation base for large companies will be further reduced to 25%.

The notional interest deduction will be maintained, yet reformed.

Despite the criticism that we, and I personally, endured regarding the latter measure, since its introduction in 2005, this innovate instrument has been detrimental in maintaining, and strengthening, the attractiveness of Belgium to foreign investors.

It has laid the basis for an intelligent and competitive tax regime, making the Belgian corporate tax system into an essential asset to attract foreign investment and businesses.

Public investments

The federal government continues to work on an ambitious public investment pact. It focuses on strengthening an investment-friendly  climate, that supports SMEs and is focused on job creation.

It will also allow to invest in public infrastructure such as the digital agenda, energy, mobility, security and health.

With its Beliris fund, the federal government maintains dedicated funding to strengthen public investment in the Brussels region.

Labour market reform

The government is taking a series of actions to reform the labour market.

These reforms are aimed at providing more flexibility to workers to organize their own working time, provides further incentives for education and training, and it creates flexibility to plan and organize careers throughout time.

With these steps, we wish to contribute to maintaining educated, motivated, skilled human capital which remains one of are key assets in attracting foreign investment.

Despite these significant steps to improve the attractiveness of Belgium for foreign investors, we should not be blind for some major challenges that remain – at both the federal and regional level, to cite a few important areas :

Innovation policy, and the need to continue to invest in research and development

Mobility , or the lack of it …

Energy policy, where the costs, despite market liberalisation, remain often too high in comparison with neighbouring countries.

II. Let me now turn to the economic outlook of Belgium.

The economic outlook of Belgium looks promising, and reflects the positive effects of the measures that have been taken over the past few years.

Compared to the forecasts of last year, the growth of the European economy for 2017 has been revised slightly upwards. Belgian GDP growth for 2017 is raised from 1.2 % to 1.6 %, and is expected to continue at the same pace in 2018 and 2019.

The competitive disadvantage of Belgium to its neighbouring countries in relation to labour costs has disappeared entirely. This is an important achievement, and reverses a trend that had started in 1996. This is critical for the competitiveness of the Belgian economy.

At the same time, the first time since 2009, the purchasing power of citizens has increased. The recent agreement between social partners and the federal government will allow to further strengthen the purchasing power of our citizens.

Total domestic employment grew by 1.3 % last year and is expected to rise further by 1.1 % in 2017, resulting in a net creation of 59 000 in 2016 and 43 000 jobs in 2017.

Due to the further increase in the labour force, the number of unemployed (including wholly unemployed non-job-seekers receiving benefits) is expected to decrease by 58 000 people in total over the 2016-2017 period. The unemployment rate (Eurostat definition) is expected to go down from 8.5 % in 2015 to 7.6 % in 2017, and to reach about 7% in 2019.

In short, the key indicators show that the prospects of the Belgian economy look promising.

With the continued efforts of this government to reform the labor market and corporate taxation, and the finalization of the implementation of the tax shift, we expect growth to be further stimulated, driven by domestic demand and private job creation.

Given the open nature of the Belgian economy, the government measures may of course be impacted by the general European and international economic and political climate. Some uncertainty remains, especially if trade disputes would be triggered and adversely impact world trade.

In Europe, the start of the Brexit talks and the ensuing political and economic uncertainty that may come with it, may  dampen economic growth.

III. The future of international trade

In recent years, we have observed a sentiment increasingly critical of free trade, at times tilting towards protectionist tendencies.

For some, free trade, and more generally globalisation, incites feelings of frustration and even resentment. Free trade, it is argued by some, favours primarily large multinational companies rather than SMEs, workers or consumers. It is said to undermine the ability of States to regulate in the public interest.

These feelings have fuelled legitimate concerns about the implications of trade agreements in many countries, including in Belgium. While trade has brought overwhelming benefits to our societies as a whole, it is true that free trade can cause negative effects. Some communities and sectors indeed risk losing out in the face of international competition and open markets.

Today, international trade is navigating unchartered waters. Think of the discussions leading to BREXIT, and the discussions that we witness in the US about NAFTA, WTO, etc.

In times of uncertainty, the importance of a continued strong commitment to a rule-based global trade system cannot be over-stated.

It is, however, equally essential that these legitimate concerns among public opinion about the possible negative effects of free trade are taken seriously, and are adequately addressed. In a highly interdependent and globalised world economy, the stakes to ensure our populations’ support to open economic borders are tremendous.

Let me briefly pause here – and add a few points on last year’s CETA discussions.

As we have seen in recent electoral campaigns, besides migration, the topic of international trade has attracted a lot of attention.

In Belgium, this trend crystalized around CETA.

The closing down of Caterpillar’s plant in Charleroi has fueled a negative attitude towards multinational enterprises, and their perceived power, also in the context of trade agreements. The fact that Caterpillar has had a major positive socio-economic impact and has assured thousands of jobs over the past decades is being overshadowed in public debate by the outrage over the important social implications of the closure.

During the CETA discussions, it can of course not be denied that a particular political dynamic in Wallonia has also played its part.

But apart from these two elements, a number of legitimate concerns were effectively raised. Today, these need to be responded to.

So, this begs the question:

How can these legitimate concerns be addressed?

I see four major elements.

First, it is essential to maximize transparency of trade negotiations and agreements. Recent discussions in Belgium in relation to CETA have underlined the need to distinguish facts from populist rhetoric in public debate. Maximal transparency is an essential precondition to be able to make such a distinction, and to support an informed and rational public debate.

Second, it is critical to make the positive effects of trade agreements real and tangible to our citizens. One of the most effective ways of achieving such an impact is by ensuring that trade agreements benefit SMEs. In Belgium, as in many countries around the world, SMEs constitute the first source of stable job creation.

Third, it is important to ensure a level playing field that allows for fair international competition. Unfair trade practices, such as dumping, disrupt local industries and their workers, and are a major source of resentment.

And last but not least, a fourth major element is the need for trade on the one hand, and social, fiscal and environmental policies on the other hand to be pursued within well-functioning and properly regulated markets. Belgium is a strong proponent to introduce sustainable development clauses in trade agreements. These include trade-related labour provisions which can ensure economic growth while minimising socio-economic costs and tackling inequalities.

It is now time to make these objectives a reality.

There is, first of all, the multilateral level. The WTO continues to offer the most appropriate platform to advance ambitious and balanced trade agreements. Further progress depends on the ability of the WTO to monitor and implement existing agreements, but also upon its capacity to produce new ones.

In this context, Belgium is looking with great interest at the ongoing debates across the Atlantic. We understand some of the concerns that are voiced in the US about the impact of globalization.

But these negative effects should also be contextualized, if we want to address them effectively.

Overall, free trade remains a strong force of job growth and welfare creation to our societies as a whole. That is why we are supporting the Commission to start new negotiations with Australia, New Zeeland, and Chili. After the success of the Japan agreement, we are now hopeful to conclude a balanced, political agreement with Mercosur in the coming months.

In the wider context of the public debate, it also needs to be noted that the impact of technological evolutions, and in particular automation, has a much larger, often disruptive, impact on the structure of labour, than free trade.

OECD studies suggest that around 80 per cent of job losses in advanced economies are due to technology and innovation. Almost 50 per cent of existing jobs in some developed countries are at high risk of automation today.

Like trade, technological progress is indispensable for sustained growth and development. So the answer is not to reject these forces – and fall back into a protectionist illusion. We must embrace them and learn to adapt.

Earlier this year, I had the honour to debate this issue with Director-General Azevêdo of the World Trade Organization and Director-General Ryder of the International Labour Organization. It was a meaningful discussion, and it reconfirmed the importance to work towards a strong multilateral framework, including upholding core labour standards, in which free trade is promoted. There lies a great potential in this area.

But while the inclusion of sustainable development provisions in trade agreements is important, it is not sufficient: we should also work towards their effective implementation.

The discussion on the effectiveness of environment and labour provisions should not be reduced to a simplistic discussion on sanction mechanisms. Linking sanctions to a lack of implementation of such provisions may seem like a promising approach. However, in reality, sanctions often fail to effectively support the ongoing process to achieve and enforce multilateral environment and labour standards. This is also the point of view of, for instance, Mr. Ryder and the ILO.

To conclude, ladies and gentlemen, I would like to reiterate Belgium’s strong belief in the need for an ambitious trade agenda, while enhancing the inclusiveness of our trade agreements. For Belgium, this agenda needs to respond directly to citizens’ legitimate concerns about the possible negative effects of trade agreements.

Today, more than ever, I am convinced that an effective multilateral, rule-based trading system that ensures fair competition contributes to reducing economic uncertainty.

It remains a powerful incentive to achieve inclusive growth, sustained job creation and attract foreign investment.

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