1.2. Foreign Trade

The European Union is Lebanon’s primary trading partner (source of 40 percent of imports and destination for 9 percent of exports in 2005). Lebanon’s main suppliers are Italy (9.4 percent), France (7.8 percent), Germany (7.8 percent), China (7.6 percent) and the United States (5.9 percent). Its main customers are Arab countries, notably Iraq (14.6 percent), United Arab Emirates (8.3 percent), Jordan (7.7 percent), Saudi Arabia (7.2 percent) and Turkey (7.3 percent). Thanks to a long tradition of an open market, Lebanon has maintained close links with the Arab world, the United States and Europe. A member of the League of Arab States, Lebanon benefits from massive financial transfers and capital inflows from the Diaspora of 15 million Lebanese living abroad. Aside from large-scale infrastructure projects, the government has always taken care not to intervene in the private sector, which accounts for 90 percent of GDP.

An interim agreement on trade and trade-related provisions signed in July 2002 and in force since March 2003 governed trade relations until the Association Agreement took effect on 1 April 2006. The Association Agreement establishes the conditions required for progressive and reciprocal liberalisation of trade in goods, with a view to establishing a bilateral free trade area. It includes relevant provisions on customs cooperation, competition, protection of intellectual, industrial, and commercial property, and services.

As a result, since 1 March 2003, Lebanese industrial and most agricultural products enjoy free access to the EU market (within the limits of tariff quotas), while the progressive elimination of tariffs on imports to Lebanon are scheduled to kick in between 2007 and 2015. These products include minerals, chemicals, wooden and leather products, textiles, jewellery, low-value metals, machinery and electrical components and transport facilities. Imports of certain agricultural and agrofood products (protocols 2 and 3) are limited in terms of volume and weight in order to protect national agriculture. Lebanon’s exports of agricultural goods and fishery products cannot freely enter European markets. Negotiations on the liberalisation of agricultural, processed food and fishery products will begin in due course in the context of the Rabat roadmap and the Euromed liberalisation work programme, leading to establishment of a free trade area in 2010. More specifically, the products included in chapters 1 to 24 of the Lebanese Tariff Charter benefit from progressive tariff dismantling.

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