Lebanon

Lebanon signed an Association Agreement with the EU in June 2002, which entered into force in April 2006. As a result, Lebanese industrial as well as most agricultural products benefit from free access to the EU market.

Trade picture

• Lebanon is the EU’s 61^st biggest trade partner (2022).
• The EU is Lebanon’s biggest trade partner, accounting for 28.4% of its total trade in goods in 2022: 32% of Lebanon’s imports came from the EU and 12.4% of Lebanon’s exports went to the EU.
• Total trade in goods between the EU and Lebanon in 2022 amounted to €6.26 billion. The EU’s imports from Lebanon amounted to €0.6 billion and consisted mainly of crude materials (€0.2 billion, 33.8%), manufactured goods (€0.12 billion, 19.8%), and machinery and transport equipment (€0.12 billion, 12.2%). The EU’s exports to Lebanon were worth €5.66 billion and were dominated by fuel and mineral fuels (€2.82 billion, 50%), machinery and transport equipment (€0.61 billion, 10.9%), food and live animals (€0.58 billion, 10.2%) and chemicals (€0.56 billion, 9.9%).
• The Lebanese economy is based primarily on the service sector, which accounted for 76% of the country’s GDP in 2019, according to World Bank data. Two-way trade in services totalled €1.6 billion in 2021, with EU imports of services representing €0.6 billion and exports €1 billion. Construction, tourism, and financial services are the most prominent sectors among Lebanon's exports and imports of commercial services.

The EU and Lebanon

The EU-Lebanon Association Agreement progressively liberalised trade in goods between the EU and Lebanon. It was implemented gradually between 2008 and 2014. Lebanese industrial and most agricultural products benefit from free access to the EU market, with a view to creating a bilateral Free Trade Area.

In November 2010, the EU and Lebanon signed a protocol establishing a dispute settlement mechanism applicable to disputes under the trade provisions of the Association Agreement.

The Free Trade Area (FTA) of the EU-Lebanon Association Agreement grants preferential treatment for Lebanese exports to the EU. In January 2014, the EU implemented changes to its Generalised Scheme of Preferences (GSP), which removes import duties from products coming into the EU from vulnerable developing countries. As a result, countries that already had preferential market access to the EU, like Lebanon due to its FTA, stopped benefiting from the GSP treatment in 2014.

In 2021, under the new EU Trade Policy Review, the EU will propose a new sustainable investment initiative to partners in the Southern Neighbourhood and Africa interested in doing so. Fostering strategic interdependencies and enhancing EU’s relations and economic integration with the Southern Neighbourhood is a strategic necessity for long-term stability.

Lebanon started to negotiate its accession to the WTO when the Working Party was established on 14 April 1999. The EU continues to support Lebanon’s efforts, as the negotiations are still ongoing.

Lebanon's economy is characterised by a high level of imports and by substantial trade deficits. The deficits are largely offset by foreign income earnings, including capital inflows and remittances from the Lebanese diaspora, as well as the tourism, banking and insurance sectors.

Financial support

• The European Neighbourhood Policy provides political and financial assistance to Lebanon. The EU committed €402.3 million to bilateral assistance for Lebanon for the period 2014-2020, under the European Neighbourhood Instrument (ENI). The funding supported cooperation priorities agreed with Lebanon, namely: (i) promoting growth and job creation; (ii) fostering local governance and socio-economic development, and; (iii) promoting the rule of law and enhancing security.
• Under the EU’s Multiannual Financial Framework for the period 2021-2027, the EU will adopt a broad new financial cooperation instrument: the Neighbourhood, Development and International Cooperation Instrument (NDICI). The NDICI will be the basis of future EU-Lebanon cooperation.
• More information on EU support is available from the Directorate-General for Neighbourhood and Enlargement Negotiations.

Lebanon in the Southern Neighbourhood

Lebanon is one of the partners of the EU’s Southern Neighbourhood (Algeria, Egypt, Israel, Jordan, Lebanon, Libya, Morocco, Palestine*, Syria and Tunisia). The EU established its privileged partnership with the Eastern and Southern shores of the Mediterranean back in 1995 with the launch of the Euro-Mediterranean Partnership at the Barcelona Conference, aiming to establish an area of peace, stability and economic prosperity that upholds democratic values and human rights.

The 25th anniversary of the Barcelona Process in November 2020 was an opportunity to reflect on the strategic partnership with the region in light of the political, socioeconomic, financial and environmental challenges exacerbated by the Covid-19 pandemic, and to reassess the EU’s partnership with Lebanon and the other Southern Neighbourhood partner countries. Following consultations with partners, this reflection resulted in the Joint Communication by the European Commission and the High Representative of the Union for Foreign Affairs and Security Policy on ‘A renewed partnership with the Southern Neighbourhood - A new Agenda for the Mediterranean‘ and the annexed ’Economic and Investment Plan for the Southern Neighbours‘ in February 2021.

More information on the Southern Neighbourhood

In 2020, Lebanon (together with Palestine) joined the Agadir Agreement, which was originally established among Egypt, Jordan, Morocco and Tunisia and entered into force in July 2006. The agreement committed all parties to removing all tariffs on trade between one another and to harmonising their legislation on standards and customs procedures. An Agadir Technical Unit in Amman ensures the implementation of the Agadir Agreement.

More information on the Agadir Agreement

The impact of trade component of the EU’s Euro-Mediterranean Association Agreement with Lebanon was assessed in the Ex-Post Evaluation of Trade Chapters of the Six Euro-Mediterranean Association Agreements with the EU’s Southern Neighbours (Algeria, Egypt, Jordan, Lebanon, Morocco and Tunisia), which was published by the European Commission in 2021.

The pan-Euro-Mediterranean cumulation and the PEM Convention on rules of origin

The pan-Euro-Mediterranean cumulation system of origin was created in 2005. It brings together the EU, Lebanon, and other partners in Europe and the Mediterranean to support regional integration by creating a common system of rules of origin. Rules of origin are  technical criteria which determine whether a specific product qualifies for duty-free or other preferential access under a given trade agreement.

Cumulation of origin means that a product coming from one partner country can be processed or added to a product of a second partner country and still be considered as an ‘originating product’ of that second partner country for the purposes of a particular trade agreement.

The pan-Euro-Mediterranean system allows for diagonal cumulation (i.e. cumulation between two or more countries) between the EU, EFTA countries, Turkey, the Western Balkans, the Faroe Islands, Ukraine, Moldova, Georgia and any country that signed the Barcelona Declaration of 1995. The system was originally based on a network of Free Trade Agreements with identical origin protocols.

These individual origin protocols are being progressively replaced by a reference to the Regional Convention on pan-Euro-Mediterranean preferential rules of origin (PEM Convention), which was established in 2011 to provide a more unified framework for origin protocols. Lebanon signed the Regional Convention on 22 October 2014. The internal ratification process is ongoing.

More information on Mediterranean preferential Rules of Origin

Trading with Lebanon

• Importing into the EU from Lebanon
  • EU trade defence measures on imports from Lebanon
• Exporting from the EU to Lebanon
  • Trade defence measures in force in Lebanon
• Trade relations are part of the EU's overall political and economic relations with Lebanon
• Lebanon is a member of the World Trade Organization

 *This designation shall not be construed as recognition of a State of Palestine and is without prejudice to the individual positions of the Member States on this issue.