Brexit negotiations failure could cost Belgian businesses €1.6 billion

Belgian businesses could face a price tag of €1.6 billion if negotiations over Brexit – the UK’s exit from the European Union – prove difficult, forcing the two sides to apply World Trade Organisation (WTO) rules. That is the conclusion of the first report published by the Brexit High Level Group set up by the federal government and chaired by Flemish industrialist Paul Buysse.

This week the British parliament voted to trigger Article 50 of the Lisbon Treaty, which would mark the start of negotiations on a new relationship between the UK and the EU. The direction those negotiations might take, however, is unclear.

A large majority of trade between the UK and Belgium happens in Flanders. At present, trade with the UK still falls under the single European market, where no trade tariffs are applied. In future, a set of mutually agreed tariffs will, if things go well, be put in place.

Should the transition from one system to the other be held up in any way, WTO rules would automatically come into force; that could be bad news for some sectors of industry, according to the High Level Group.

The WTO operates a variety of tariffs for different types of goods and services, some of which – such as those on processed and frozen food – would be blow to Flemish companies that are very strong in the sector.

The UK is Belgium’s fourth-largest export market, with trade of €31 billion in 2015. Chemicals and cars take the most in absolute terms, but the food and textiles sectors are highly dependent on the British market, which represents 30% of sales in some case, according to the report.

The report calls for a “comprehensive and ambitious” trade accord allowing a five-year transition period to avoid uncertainty and to allow businesses time to reorient themselves. “What counts is predictability,” prime minister Charles Michel said on receiving the report. “We have to guarantee that as far as we can.”

Photo: Lies Willaert / IPV-IFP