Lebanon Trade

Subchapters:

  • Business Relationships
  • Foreign direct investment
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Lebanon’s trade balance is negative, the country imports more than 80% of all products. The total volume of imports reached USD 1 billion and exports USD billion in 2021.

  • Allcountrylist: Overview of major industries in Lebanon, including mining, construction, transportation, tourism, and foreign trade.

Trade relations with the EU

Lebanon is the EU’s 54th largest trading partner (2021). The EU is Lebanon’s largest trading partner, accounting for 30.3% of its total merchandise trade in 2021: 38.0% of Lebanon’s imports came from the EU and 9.7% of Lebanon’s exports went to the EU. Total trade in goods between the EU and Lebanon in 2021 reached €4.66 billion. EU imports from Lebanon amounted to €0.45 billion and consisted mainly of fuels and mining products (€0.16 billion, 35.6%), agriculture and raw materials (€0.11 billion, 24.4%) and chemicals (0.05 billion EUR, 11.1%). EU exports to Lebanon were worth €4.14 billion and were dominated by fuels and mining products (31.4%), machinery and transport equipment (19.1%), chemicals (18.4%) and agriculture and raw materials (16, 2%). Lebanon’s economy is primarily based on the service sector, which, according to World Bank data, accounted for 76% of the country’s GDP in 2019. Two-way trade in services totaled €billion in 2019, with EU imports of services accounting for €1.0 billion and exports of € billion. Construction, tourism and financial services were the most important sectors among Lebanon’s exports and imports of commercial services until the beginning of the crisis in autumn 2019.

The top EU exporters to Lebanon in 2021 were Greece (€billion), Italy (€616 million), Germany (€589 million), France (€329 million) and Cyprus (€324 million). Lebanon exported the most to Greece (EUR 90 million), France (EUR 79 million), Spain (EUR 63 million), Italy (EUR 4million) and Germany (EUR 37 million).

2017 2018 2019 2020 2021
Imports from the EU to Lebanon (million EUR) 6,841.50 6,842.10 5,776.30 4,078.30 4,145.30
Exports from Lebanon to the EU (million EUR) 410.9 477.4 435.5 448.7 522.7
Balance with the EU (million EUR) -6,430.5 -6,364.7 -5,340.8 -3,629.7 -3,622.6

Source: European Commission

Trade relations with the Czech Republic

The trade balance between the Czech Republic and Lebanon has long been positive for the Czech Republic. Since the autumn of 2019, due to the political, economic and financial crisis in Lebanon and subsequently due to the COVID-19 pandemic, mutual trade has also suffered (restriction of financial transfers from Lebanese banks – the inability of Lebanese traders to pay for imported goods, severe restrictions on the retail sector, which has become dominated by the black market ).

Among the most important Czech export items are: milk powder and milk products, slaughter and utility cattle, engineering products and products of the defense industry. We import from Lebanon: tobacco and tobacco products, clothing accessories, food and snacks.

2017 2018 2019 2020 2021
Imports from the Czech Republic to Lebanon (billion CZK) 1.7 1.9 1.59 0.94 0.92
Exports from Lebanon to the Czech Republic (billion CZK) 0.01 0.01 0.008 0.0078 0.008
Balance with the Czech Republic (billion CZK) -1.69 -1.89 -1.582 -0.9322 -0.912

Source: CZSO

Trade relations with countries outside the EU

The main destinations of Lebanese exports to countries outside the EU in 2021 include: United Arab Emirates, Switzerland, Cameroon, Qatar, Egypt, United States of America, Saudi Arabia, Iraq and Syria. Lebanon mainly exports pearls, gems, precious metals; products from vegetables, fruits, nuts; base metals and products thereof; food, beverages and tobacco; chemical products; machines and electrical appliances; plastics and plastic products.

The largest non-EU importers to Lebanon in 2021 were: Turkey, China, the United States of America and the United Arab Emirates. The commodity structure of Lebanese imports from these countries in 2021 was as follows: fuels, oils and their products; live animals; dairy products, eggs, honey; pharmaceutical products; means of transport; pearls, gems, precious metals, costume jewelry; reactors, boilers; iron, steel; plastics and plastic products.

2017 2018 2019 2020 2021
Imports from non-EU countries to Lebanon (billion USD) 12.7 13.2 13.5 7.05 9.46
Exports to non-EU countries (billion USD) 3.58 3.3 4.34 3.54 4.05
Balance with non-EU countries (billion USD) -9,12 -9.9 -9.16 -3.51 -5.41

Source: Customs Office of Lebanon

Foreign direct investment

Since the fall of 2019, Lebanon has been going through a global economic, financial, political and social crisis, which has implications for Lebanon’s potential as a destination for foreign investment. Much depends on how Lebanon implements overdue economic and governance reforms and attracts international aid and foreign investment. If the country can implement the necessary reforms, attract foreign capital, stabilize the exchange rate and recapitalize its financial sector, opportunities for foreign investment remain. Lebanon still has the legal underpinnings of a free market economy, a highly educated workforce and limited restrictions on investors. The most attractive sector is the energy sector, especially for electricity generation, renewable energy and oil and gas extraction. Information and communication technology, healthcare, safety and security sectors, waste management and franchises have historically attracted investment from abroad. However, corruption and lack of transparency continue to cause frustration among local and foreign businessmen. Other concerns include over-regulation, arbitrary licensing, outdated legislation, ineffective courts, high taxes and fees, poor economic infrastructure, and fragmented and opaque tendering and procurement procedures. Social unrest caused by declining public services and growing food insecurity may further hamper the investment climate. high taxes and fees, poor economic infrastructure and fragmented and opaque tendering and procurement procedures. Social unrest caused by declining public services and growing food insecurity may further hamper the investment climate. high taxes and fees, poor economic infrastructure and fragmented and opaque tendering and procurement procedures. Social unrest caused by declining public services and growing food insecurity may further hamper the investment climate.

Lebanon is open to foreign direct investment (FDI). The government’s Investment Development Agency of Lebanon (IDAL) is the national body responsible for promoting local and foreign investment in Lebanon, covering eight priority sectors: industry, media, technology, telecommunications, tourism, agriculture and agro-industry. IDAL has the authority to grant licenses and permits for new investments in specific sectors. It also provides special incentives and tax exemptions for projects implemented by local and foreign investors based on the geographic location of the investment, the industry and the number of jobs created (Investment Law No. 360). IDAL publishes its investment incentives online by sector at http://investinlebanon.gov.lb/en/sectors_in_focus. The Lebanese government provides domestic and foreign investors with a number of benefits, tax reliefs or tax exemptions if certain conditions are met (e.g. if the investment falls under defined areas of activity, listed zones or if the intended investment varies from a pre-determined minimum invested amount).

FDI into Lebanon reached US$2.88 billion (5% of GDP) in 2018 (before the crisis), an increase of more than 14% from 2017, a result of long-term investor confidence in the Lebanese economy.

Much like Lebanon’s reliance on remittances, FDI into the country is very often driven by the vast Lebanese diaspora (which is larger than the national population of million). For example, in 2018 a whopping 50% of all foreign direct investment into the country was in real estate acquisitions from the Lebanese diaspora. Another 29% of investment that year went into real estate, which shows the country’s huge lack of diversification – a huge waste of a highly educated, tech-savvy and English/French-speaking population. Similarly, about 95% of all FDI into the country was in the form of mergers and acquisitions, meaning very little greenfield FDI (5.6%), the most productive form of job-creating FDI. Cross-border mergers and acquisitions accounted for 14.6% of total foreign direct investment, with major acquisitions concentrated in the tourism and financial sectors (e.g. Saudi Arabia’s Kingdom Holding sold its stake in the Four Seasons Hotel in Beirut for US$120 million to a group of Lebanese and Arab investors). The rest of FDI took the form of reinvested profit (1.7%) and intra-company loans (0.1%).

Lebanon announced 55 new foreign projects and partnerships in 2018, most of which focused on upcoming reconstruction and infrastructure development efforts in Syria. In addition, there was growing interest in the ICT sector and serving the nascent oil and gas industry in the country. The trade sector attracted the largest share of projects, driven by high consumption rates and the continued appeal of foreign products. The second largest share of projects was attracted by the real estate sector. This was mainly due to the high appeal of the quality of life in Lebanon, the focus on infrastructure development, as well as projects aimed at the reconstruction efforts in Syria. The ICT sector has witnessed Arab investors’ interest in developing technology solutions for the region, leveraging Lebanon’s strong creative and marketing talent.

Europe accounted for 51% of foreign companies in Lebanon, with the largest share in 2018. French investment ranked first (22% of total European investment), followed by Germany (13%), the United Kingdom (9%) and the Netherlands (9%) ). European projects were concentrated in the agri-food, oil and gas sector and trade. Middle Eastern and North African countries followed with 29% of foreign investment in Lebanon. The United Arab Emirates took the lead (32%), followed by Jordan, Egypt, Qatar, Algeria and Saudi Arabia (11% each). MENA countries’ investments have been concentrated in technology development projects, real estate and trade. The remaining 20% ​​came from North America, primarily the US (83%) and Canada (17%), followed by Asia (7%) and Oceania (2%).

FTAs and treaties

Lebanon is a country with a free and open trade regime. All efforts towards trade liberalization have always focused on the European Union (EU), the WTO and the Arab world. Lebanon does not have a signed free trade agreement with the US. In 2006, the two countries signed a Trade and Investment Framework Agreement (TIFA), which has not yet entered into force.

WTO – Lebanon gained WTO observer status in 1999, but the accession process stalled and has not yet resumed.

Lebanon’s Euro-Mediterranean Partnership Agreement entered into force in 2006. The agreement provides for mutual free trade in most industrial goods. It also liberalizes trade in agricultural crops and food. The aim of the Euro-Mediterranean partnership was to create a free trade zone for the Mediterranean region; negotiations for complete liberalization are still ongoing.

Lebanon and the European Free Trade Association (EFTA) signed a free trade agreement (FTA) in 2004. In 2010, Lebanon and Turkey signed an association agreement to create a free trade area and reduce barriers to the free movement of goods, services, capital and people between the two countries in the next ten years. The agreement is still not ratified.

Lebanon has been a member of the Greater Arab Free Trade Area (GAFTA) since 2005.

In 2016, Lebanon began negotiations for a free trade agreement with MERCOSUR countries .

Lebanon has signed bilateral investment agreements with the following countries: Armenia, Austria, Azerbaijan, Bahrain, Belarus, Belgium / Luxembourg, Benin, Bulgaria, Canada, Chad, Chile, China, Cuba, Cyprus, Czech Republic, Egypt, Finland, France, Gabon, Germany, Greece, Guinea, Hungary, Iceland, Iran, Italy, Jordan, South Korea, Kuwait, Malaysia, Mauritania, Morocco, Netherlands, Pakistan, Qatar, Romania, Russia, Slovak Republic, Spain, Sudan, Sultanate of Oman, Sweden, Switzerland, Syria, Tunisia, Turkey, United Arab Emirates, Ukraine, United Kingdom and Yemen.

Treaties with the EU

The legal basis for Lebanon’s trade relations with the EU is the 2002 Association Agreement, which entered into force in April 2006 and allowed for reciprocal free exchange of industrial and most agricultural products. For Lebanon, the Association Agreement, in addition to opening the door to the single European market, also means access to European financial aid and technology transfer. As the goal of the Agreement is at the same time the overall financial, economic and administrative modernization of Lebanon, its implementation strengthens Lebanon’s position in the negotiations on joining the World Trade Organization (WTO), which the EU supports. Since 2010, commercial disputes falling under the scope of the Agreement have been resolved according to a protocol creating a mechanism for settling commercial disputes.

Contracts with the Czech Republic

The following agreements exist between the Czech Republic and Lebanon:

  • Agreement between the Czech Republic and the Republic of Lebanon on succession to bilateral treaties negotiated by exchange of notes (Beirut 1996).
  • Trade Agreement between the Government of the Czech Republic and the Government of the Republic of Lebanon (Beirut 1994, No. 178/1996 Coll.); as of the date of the Czech Republic’s entry into the EU on 1 May 2004, the bilateral trade relationship is currently governed by the rules contained in the Association Agreement between the EU and Lebanon (signed in the summer of 2002), especially its Trade Protocol (the so-called Interim Agreement), which entered into force on 1 March 2003.
  • Agreement between the Czech Republic and the Republic of Lebanon on the avoidance of double taxation and the prevention of tax evasion in the field of income and property taxes (Prague 1997).
  • Agreement on mutual support and protection of investments (Beirut, 19 September 1997) and Protocol between the Czech Republic and the Republic of Lebanon amending the Agreement between the Czech Republic and the Republic of Lebanon on the support and mutual protection of investments, signed on September 19, 1997 in Beirut (Note The Protocol was signed in Beirut on March 20, 2010. The ratification process was completed in the Czech Republic in February 2011, which was subsequently notified to the Lebanese side. To date, the ratification process on the Lebanese side has not been completed, so the Protocol has not yet entered into force).
  • Agreement on Cooperation in Civil Aviation (Beirut 2003): update of the 1961 treaty
  • Agreement on cooperation in the field of culture, education and science (Beirut 2004). The implementing documents for the cultural agreement have not been negotiated, despite the recommendation of the Ministry of Foreign Affairs, the responsible Ministry of Education and Culture of the Czech Republic cannot guarantee the fulfillment of these protocols for budgetary reasons, and therefore postpone their signing.
  • Agreement on cooperation in the field of tourism (Prague, 24 February 2006).

In addition to the mentioned bilateral international agreements, there are also the following agreements between the economic entities of the two countries:

  • Memorandum of Understanding between the Association of Lebanese Industrialists and the Union of Industry and Transport of the Czech Republic (April 2003)
  • Memorandum of understanding between the Lebanese investment agency IDAL and the Czech Invest agency (April 2003)
  • Agreements on cooperation between the Chamber of Commerce of the Czech Republic and the Lebanese Federation of Chambers of Commerce, Industry and Agriculture (May 2004). Following this agreement, the Mixed Czech-Lebanese Committee of both chambers was created in the fall of 2005; ICT, electronics, food, electrical appliances, chemical products, woodworking machinery, furniture and food and packaging machinery have been singled out as the main areas of common business interest.

Developmental cooperation

Lebanon is a net recipient of development aid, which is largely tied to the presence of Syrian and Palestinian refugees in the country. Since the outbreak of the COVID-19 pandemic, development and humanitarian aid from foreign donors has also been oriented towards helping to eliminate the consequences of the pandemic in the country and helping with vaccination. As a result of the explosion in the port of Beirut in August 2020, immediate humanitarian aid was implemented – both bilaterally (the Czech Republic allocated CZK 10 million for this aid from the budget of the Ministry of Foreign Affairs) and multilaterally (at the EU level, implemented through DG ECHO of the European Commission).

Lebanon is not one of the priority countries for foreign development cooperation of the Czech Republic, however, due to the effects of the Syrian crisis, it is a humanitarian priority (MFA and MV). In the area of ​​development, small local projects (max. up to 500,000 Czech crowns) are implemented in the country and development scholarships were provided until 2018. In the humanitarian field, since 2013, humanitarian projects have been implemented every year to support Syrian refugees and local host communities. Since 2016, the MEDEVAC program of the Ministry of the Interior of the Czech Republic. In 2019, a mission of the MEDEVAC ophthalmology team took place at the Rafík Harírí University Hospital (UNRH), in 2021 two more missions took place. From autumn 2022, missions in the field of traumatology and reconstructive surgery will also be implemented as part of the MEDEVAC program.

From the Czech government’s “Humanitarian response to COVID-19” program, a tied cash donation was implemented in Lebanon at the turn of 2020/2021 for UNRH in Beirut in the form of the delivery of maternity beds and newborn beds from the Czech manufacturer LINET, s.r.o. worth million crowns. Multilateral cooperation is important, in 2015 and 2016 the Czech Republic became the main contributor to the MADAD EU Trust Fund for Syria (a total of EUR 5 million/CZK 136 million), from which it supports the implementation of infrastructure projects in Lebanon; from 2018, the Danish RDPP EU program for Lebanon is also co-financed from the Ministry of the Interior (CZK 5 million per year).

In 2021, ZÚ Beirut successfully implemented two small local projects. In cooperation with the local NGO Himaya Daeem Aata, a project was implemented to restore a public garden in the Karantina part of Beirut, which was almost completely destroyed by an explosion in the port of Beirut in August 2020. The second project was implemented in the Saint Joseph Orphanage in the city of Ajaltoun, which is part of a school for more than 500 children from the socially weak strata of the local and refugee community. The leaky roof was repaired and the electricity and water distribution systems were repaired with ZRS funds. In 2022, a small local project to support the voluntary rescue service is implemented – equipping an ambulance with a defibrillator and a ventilator.

In 2021, 2 humanitarian projects were also implemented in Lebanon – the DIACONIE ČCE project through the Tahhadi community center: Comprehensive support for the most vulnerable Syrian and host communities in the Hay el Gharbeh area in southern Beirut, the implementation of which will continue in 2022, and the project of the non-governmental organization ADRA ops implemented in the municipality of Baalbek in the Bekaa Valley: Access to water for Lebanese communities with Syrian refugees III.

In the fall of 2021, the first phase of material aid from the Army of the Czech Republic to the Lebanese army was implemented in a total volume of more than 22 tons of food and tons of medical supplies. The aid continues with the second phase in the spring of 2022.

In November 2021, a project to support economic diplomacy (PROPED) was successfully implemented: Incoming mission of leading Lebanese producers of soft and alcoholic beverages to the Czech Republic with the aim of purchasing technological equipment and packaging glass materials.

In April 2022, a project to support economic diplomacy (PROPED) was successfully implemented: Incoming mission of importers of Lebanese importers of medical and pharmaceutical manufacturers to the Czech Republic with the aim of presenting Czech possibilities in the health sector to Lebanese entrepreneurs and establishing new business partnerships both for the import of medical products and technology, and in areas of the pharmaceutical industry,

In November 2021, the government of the Czech Republic approved the program “Reconstruction program of the Czech Republic in the Middle East region in the period 2022-2024 with an annual budget of CZK 100 million and a focus on Syria, Iraq, Lebanon, PAÚ, Jordan and Yemen. The main goal is humanitarian-reconstruction activities leading to the reduction of the root causes of conflicts, the prevention of illegal migration and forced displacement, and the stabilization and restoration of the region, which is one of the main migration hotspots. The reconstruction program seeks to transition from humanitarian activities to stabilization projects and the subsequent post-conflict reconstruction of the target countries. It brings the provision of assistance in the places of origin and course of migration flows. Positive impacts are expected for the Czech Republic and the entire European Union, especially in the areas of internal security and external aspects of the fight against terrorism and illegal migration. For Lebanon, in 2022, the implementation of 2 tied monetary donation projects was approved from this program – the delivery of medical equipment for the neonatal intensive care unit for the State Hospital in Ballbek (CZK 5 million) and the delivery of medical equipment for the neonatal intensive care unit and the equipment needed for implementation operations in the field of traumatology and reconstructive surgery as part of MEDEVAC missions for the Rafík Harírí University Hospital in Beirut (CZK 5 million).

Prospective fields of study (MOP)

Prospective areas of mutual business cooperation include the healthcare and pharmaceutical industry, due to the need to improve the quality of healthcare in state healthcare facilities, as well as engineering and equipment for energy, small and medium-sized generators, electrical equipment, substations, supplies of materials and products usable in the construction industry, ecological technologies, wastewater treatment plants, waste incinerators. We also see a perspective in the field of transport infrastructure – the need to modernize the airport, roads and ports. Perspectives in the area of ​​the arms industry are mainly in the import of personal and hunting weapons and ammunition, equipment for government security forces. There are also opportunities in the supply of equipment for the food industry, food, dairy products, paper, glass and consumer goods. In the medium term, opportunities for participation in the modernization of local infrastructure are emerging. In the field of food industry, it is possible to apply the know-how of Czech companies, which could penetrate the market in this way. Tourism (currently limited by the COVID-19 pandemic) is an important area of ​​economic cooperation.

Healthcare and pharmaceutical industry

The ongoing economic crisis, the ongoing Covid-19 pandemic and the August 2020 Beirut port explosion accentuate the urgent need to improve the quality of healthcare in the country. There is a shortage of medicines in the country (from December 2021, the import of pharmaceuticals into the country will be significantly facilitated), there is a need to modernize medical facilities, including the professional training of medical personnel and the exchange of professional knowledge not at the international level.

Agricultural and food industry

As a result of the economic crisis and the lack of finance for imports in general, Lebanon is beginning to look for ways to maximize the local potential in agriculture. Lebanon has a favorable climate for two annual harvests of most agricultural crops, but the country lacks a modern processing industry including modern technologies (packaging standards, hygiene, certification).

Energy industry

The government’s priority is to rehabilitate and modernize the existing energy network in Lebanon, including the privatization of key state-owned enterprises. The international community fully supports the Lebanese government’s efforts to diversify energy sources – a shift away from fossil fuels to so-called green energy sources. The construction of renewable energy sources is planned in the country, including the installation of new transmission systems and the construction of water sources of electricity.

Defense industry

The continuing state of war with Israel and worsening security tensions in the country provide an opportunity for Czech manufacturers of high-end special equipment to establish cooperation with all forces in Lebanon (police, army, special forces). Demand continues for security scanners, vehicles, explosive detectors, ammunition. Given the traditional cooperation between arms companies from the Czech Republic and the USA, opportunities for mutual cooperation on the Lebanese market are opening up.

Transport industry and infrastructure

Lebanon’s transport infrastructure requires extensive modernization in practically all areas – land (rehabilitation and modernization of roads), airport (expansion of the international airport in Beirut, modernization of the airport’s signaling equipment and energy sources) and sea transport (modernization of the ports of Beirut, Tripoli, Saida) – after The main commercial activity of the Beirut port, which was destroyed by the explosion, is taken over by the port in Tripoli, which needs to be expanded in order to increase the capacity of transported shipments.

Water management and waste industry

Ensuring access to safe drinking water is a priority for both the Lebanese government and all international organizations operating in the country. The construction of wastewater treatment plants throughout Lebanon, the construction of municipal waste landfills, the rehabilitation of water and sewage systems in Beirut, and the desalination of seawater for further commercial use are being planned. Opportunities for Czech companies are mainly in the area of ​​supplies of equipment for the disposal and processing of municipal waste, including recycling.

Lebanon Trade