* Belgium

Too many cooks spoil the trade broth

To the dismay of business, federalism has forced a split in trade representation, says Elizabeth Pisani

Belgium's slow march to federalism has fragmented foreign trade support to the extent that even a country such as Vietnam - to which Belgium sold just $58m worth of goods and services in 1995 - now has three Belgian trade representatives. Each of the economic regions - Dutch-speaking Flanders, Francophone Wallonia and the capital Brussels - now has its own trade promotion board and budget, its own trade missions and its own network of overseas representatives.

Since 1994, when the trade representatives ceased to represent Belgium and began supporting their regional trademark instead, the regions have had a co-operation pact obliging them to help Belgian companies if no regional assistance is available.

In reality, fierce regional rivalry often works to the detriment of national trade. Officials from all regional trade boards as well as the national co-ordinating board agree on this, but nerves are so raw that they will not say so publicly. "In the end, it comes down to a question of loyalty," says one regional official. "You are there to sell your bread, and your bread is your region."

Everyone has stories of non-co-operation - this Flemish trade representative told a prospective client he had no information on billiard balls, although one of the world's leading exporters is from Wallonia; that Wallonian official directed a port construction sub-contract to the Netherlands rather than Flanders.

This attitude is bruising exporters and baffling trading partners. "It doesn't go down well to have separate representations - many countries see it as a sort of tribalism," says a senior official in the federal Belgian Foreign Trade Office (OBCE or, to Flemish speakers, BDBH).

Although merchandise exports are equivalent to 60% of gross domestic product, four-fifths of that goes to Europe and nearly 70% to neighbours France, Germany and the Netherlands. In the rest of the world, Belgian products are not well known. "And now here we are at a trade fair trying to sell the idea not even of Belgium but of Wallonia or Flanders. You have to face it, we're just dwarves," says a regional trade official.

Businesses, too, are unhappy with the split, so why was it allowed to happen?

"No-one wanted to speak out too loudly against it because they were afraid their companies would lose contracts in Belgium if they offended the regional governments," says a member of the Flanders government. Sensitivities run so high that the Federation of Belgian Enterprises did not reply to written questions about the private sector's response to the split.

Their discomfort is recognised by the trade boards. "Most companies don't understand why we have done this. For the guy at the forge or the mill, it goes straight over his head," says one official, who justifies the fragmentation of foreign trade as the only possible extension of the country's new federalism.

"On the other hand," she muses, "the Germans have a successful federation, but when they go on trade missions abroad, they are Die Deutsche. Full stop."

The OBCE, which has a monopoly on maintaining trade databases and other information, does try to co-ordinate the activities of the regions. It organises high-profile trade missions, led by the board's honorary president, Belgium's Prince Philippe, and tries to maintain some coherence in visits by regional boards. "If Flanders has a mission to Poland in February, we try to see that Wallonia doesn't plan one for March, otherwise our trading partners just get too confused," says OBCE's Simone Lambert.

Regionalism does have its advantages. "It allows us to pay far more attention to smaller companies, the ones that really need the help," says Ludwig 't Jampens of the Flemish Foreign Trade Board. The Flemish board, with a budget of about BFr 1bnfrancs ($33m), provides financial and logistic help to some 7,000 Flanders-based companies.

That has helped Flanders, with 60% of gross domestic product, to sell 65% of the country's exports. Wallonia, with a slightly bigger budget but a less aggressive approach to turning the corporate gaze outwards, has further to go. Although it accounts for a quarter of domestic production, it exports just 15% of Belgium's total, with the balance coming from Brussels.

Copyright Financial Times Limited 1996. All Rights Reserved.