Historically, trade-in Lebanon has been unrestricted and unhindered. EU, WTO, and Arab countries have been key areas of focus for trade liberalization efforts.
EU AND LEBANON
In June 2002, Lebanon signed an Association Agreement with the EU, which went into effect in April 2006. As a result, most industrial and agricultural products from Lebanon have unfettered access to the EU market.
The EU-Lebanon Association Agreement gradually liberalized goods trade between the two countries. Between 2008 and 2014, it was gradually adopted. To build a bilateral Unfettered Trade Area, Lebanese industrial and agricultural products have free access to the EU market.
In November 2010, the EU and Lebanon agreed to a protocol establishing a dispute resolution system for disputes arising under the Association Agreement’s trade provisions.
The EU-Lebanon Association Agreement’s Free Trade Area (FTA) gives Lebanese products to the EU special status. The EU changed its Generalized Scheme of Preferences (GSP) in January 2014, removing import taxes on products from vulnerable developing nations entering the EU.
As a result, countries that already enjoyed preferential market access to the EU, such as Lebanon, were no longer eligible for GSP treatment in 2014.
In 2021, the EU will offer a new sustainable investment initiative to partners in the Southern Neighbourhood and Africa who are interested, as part of the forthcoming EU Trade Policy Review. Fostering strategic interdependencies and strengthening EU-Southern Neighbourhood relations and economic integration is a strategic imperative for long-term stability.
When the Working Party was created on April 14, 1999, Lebanon began negotiating its WTO membership. As long as the negotiations are underway, the EU will continue to support Lebanon’s efforts.
The economy of Lebanon is characterized by a high level of imports and large trade imbalances. Foreign revenue earnings, such as capital inflows and remittances from the Lebanese diaspora, as well as the tourism, banking, and insurance sectors, help to cover the deficits.
The pan-Euro-Mediterranean integration process and the PEM Convention on origin norms
In 2005, the pan-Euro-Mediterranean origin system was established. It brings together the EU, Lebanon, and other European and Mediterranean partners to boost regional integration by establishing a shared set of origin regulations. Technical criteria that determine whether a product qualifies for duty-free or other preferential access under a trade agreement are known as rules of origin.
For a trade agreement, the cumulation of origin means that a product from one partner nation can be processed or added to a product from a second partner country and still be deemed an ‘originating product’ of that second partner country.
The pan-Euro-Mediterranean system permits diagonal cumulation (that is, cumulation between two or more nations) between the EU, EFTA countries, Turkey, the Western Balkans, the Faroe Islands, Ukraine, Moldova, Georgia, and any other signatory to the 1995 Barcelona Declaration. Originally, the system was based on a network of Free Trade Agreements with the same origin procedures.
Individual origin protocols are gradually being replaced by a reference to the Pan-Euro-Mediterranean Preferential Rules of Origin (PEM Convention), which was formed in 2011 to provide a more consistent framework for origin protocols. On October 22, 2014, Lebanon ratified the Regional Convention. The internal ratification procedure is still in progress.
In April 2006, Lebanon’s Euro-Mediterranean Partnership agreement went into effect. For the majority of industrial commodities, the agreement allows for reciprocal free trade. It also liberalizes trade in a wide range of agricultural and agriculturally processed items. The Euro-Med Partnership aspires to create a free trade zone for the Mediterranean region, and efforts to do so are still underway.
Lebanon also signed the Greater Arab Free Trade Agreement, which would progressively replace bilateral free trade agreements with Arab countries such as Tunisia, Morocco, Egypt, Iraq, Jordan, Syria, Sudan, and the Gulf Cooperation Council.
