Belgian city worker used to be contracted north of Portugal (7)
I believe the answer is:
antwerp
'belgian city' is the definition.
(Antwerp is a city in Belgium)
'worker used to be contracted north of portugal' is the wordplay.
'worker' becomes 'ant' (worker is a type of ant).
'used to be' becomes 'were' (eg 'you were...' means 'you used to be...').
'contracted' means to remove the last letter (to contract is to shorten).
'north of' is a charade indicator (letters next to each other) (in a down clue, some letters go above others).
'portugal' becomes 'p' (common abbreviation eg on car number plates).
'were' with its final letter taken away is 'wer'.
'ant'+'wer'+'p'='ANTWERP'
(Other definitions for antwerp that I've seen before include "Major European port" , "Rent paw out in Belgium" , "foreign city" , "Busy Belgian port" , "harbour" .)