Belgium’s prosperity is based partly on its ability to trade with the rest of the world. In view of recent developments, with an upsurge in uncertainties and international trade tensions, it is important to be able to analyse how Belgium has fared in that context and whether it was adequately prepared.

Since the crisis, fundamental changes have disrupted the dynamism of international trade. In particular, the intensification of production value chains seems to have come to a halt. Rather than reflecting any move towards deglobalisation, it would seem to indicate a transformation in the way in which trade is organised (re-shoring/near-shoring). Moreover, a new configuration of the main players in international trade has caused a shift in trade’s geographical centre of gravity towards new emerging Asian markets. The general trend towards tariff reductions has also been suspended in favour of the adoption of protectionist policies. Since 2018, two main facts have been symptomatic of such a shift: first, the trade war started by the Trump Administration, with China as the principal target, and then the future - as yet indeterminate - repercussions of the UK’s departure from the EU. Adverse effects have already been apparent at global level, with the decline in world trade flows and a climate of uncertainty which has affected markets and investment plans. Thus, it has become harder for exporters to form any clear anticipation about the likely profitability of their activities.

In this context, given the relatively small size of its domestic economy and its limited natural resources, which force Belgium to trade with the rest of the world, it is important to analyse its export performance. However, since the start of the decade, they appeared to lag behind the average achieved in three of its neighbouring countries and main trading partners. In addition, losses of export market shares are continuing, and the wage moderation policy introduced in recent years to boost Belgium’s cost competitiveness has only been partially successful in moderating that tendency.

The analysis of microeconomic data allows to break down export growth at the level of firms’ commercial transactions. That exercise shows that, over the most recent period (2015-2018), the intensification of existing relationships has remained a vital basis for exports, but at the same time the Belgian export structure seems to have been renewed. More specifically in regard to the US market, established relationships have been the main factor influencing exports to that destination, reflecting the difficulty of penetrating and serving geographically more distant economies. As regards the British market, despite the uncertainties generated by the vote in favour of Brexit, there has not so far been any sign of a mass exodus by Belgian exporters.

In order to ensure their resilience in the current and future circumstances, it will be vital for Belgian economic players to be able to adapt. The reversion to protectionism is not in fact an issue solely affecting the foreign trade sector, because a large part of the domestic economic fabric leans against it. Firms active in other countries will need to ensure that they can adjust their costs in response to any shocks. But they will also have to position themselves on buoyant markets and in niche segments with a high technology content in order to maintain and increase their share of foreign markets. The Belgian government can assist them in that, for instance via a supportive regulatory framework, flexible allocation of resources, more initiatives to encourage the entrepreneurial culture and risk-taking, and by guaranteeing good quality infrastructures in order to preserve Belgium’s attractiveness as a leading commercial centre on the European continent.