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Economic diplomacy

Bilateral Economic Relations

Economic relations between Italy and Lebanon are traditionally focused on Italian exports to the Lebanese market, characterized by a high degree of openness in sectors with high added value. This is also thanks to the role of the Lebanese diaspora, spread throughout the world.

Italy is firmly among Lebanon’s top suppliers. The range of Italian products exported to the Lebanese market, through distribution and franchising agreements, is widely diversified and mainly includes refined petroleum products, machinery, chemical products, jewelry and gold smithery, furniture and design, textiles and clothing, metals, plastic products, in addition to agri-food products.

The severity of the economic crisis that hit Lebanon and the general decline in imports have also repercussions on the trend of bilateral trade. In recent years, Italian exports to Lebanon have decreased in volume, as for all other supplying countries. However, Italy still manages to preserve its relative market share compared to the competitors.

The crisis of the Lebanese economic system highlights the need for a transition from a model based predominantly on imports and services (equal to 83% of GDP, mainly relying on banking, real estate and tourism sectors) towards a more sustainable model grounded on the productive sectors. In this perspective, the framework of Italian exports will increasingly be able to place capital and intermediate goods alongside traditional consumer goods, to support the opportunities for creating productive partnerships between Italian and Lebanese companies, i.e. in agri-food and low environmental impact technology sectors. Other possible opportunities are linked to development cooperation projects financed by Italy and the European Union.

Since 2017, Lebanon has begun the process of exploiting offshore energy resources, starting energy exploration in some blocks of its territorial waters in 2020, with the participation of Italian companies. Geographically, the area is part of the so-called “Levant Basin”, which includes the neighboring countries where numerous initiatives for the extraction and marketing of oil and natural gas resources are taking place. Lebanon has not joined yet the Eastern Mediterranean Gas Forum.


Lebanon: Multilateral Agreements and international markets

Lebanon has free trade agreements with Arab countries, being part of the ‘Greater Arab Free Trade Area’ (GAFTA), and with the European Free Trade Association (EFTA). It also concluded a Euro-Mediterranean Association Agreement with the European Union nel 2006.

In 2019, the Lebanese Government imposed a 3-year horizontal tariff of 3% on imports of all goods subject to VAT, except fuel, machinery, agricultural and industrial raw materials. Measures to safeguard the national industry were also adopted by increasing existing customs tariffs on the import of certain products by 7-20% for five years.

In 1999, Lebanon applied for membership in the World Trade Organization (WTO), where it has an observer status. The process of adapting to WTO rules still requires several steps, especially as to legislations on the protection of intellectual property and compliance with the TRIPs Agreement (Agreement on Trade Related Aspects of Intellectual property rights).

The Arab countries represent the main outlet market for Lebanese exports, of which they absorb around 41% of the overall export volume, followed by the EU with a share of around 9%. The EU insures almost 40% of Lebanese imports. Other main suppliers include Turkey, China and Russia.