any gains for the lebanese industrial sector

TOKTEN

Agadir & The Pan-Euro-Med Protocol:

Any Gains for the Lebanese Industrial Sector?

By Souraya El Yaman, PhD

TOKTEN

October 15, 2008

Government of Lebanon Ministry of Industry

Agadir & The Pan-Euro-Med Protocol: Any Gains for the Lebanese Industrial Sector?

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CONTENTS

Page

1. INTRODUCTION ............................................................................................... 3

2. THE PAN-EUR-MED VERUS PROTOCOL 4 .................................................... 3

2.1. SIMILARITIES .................................................................................................... 3

2.2. DIFFERENCES .................................................................................................... 5

3. TRADE TRENDS & STATISTICS ................................................................... 11

3.1. LEBANESE EXPORTS........................................................................................ 11

3.2. LEBANESE IMPORTS ........................................................................................ 14

3.3. THE AGADIR EXPERIENCE ............................................................................ 17

4. MAPPING FINAL INDUSTRIAL EXPORTS TO CORRESPONDING MANUFACTURING INPUTS ...................................................................................... 18

4.1. USING IRI STUDIES ......................................................................................... 18

4.2. USING THE 322 CODE TABLE ........................................................................... 20

5. IDENTIFYING PROFITABLE ALLIANCES ................................................... 21

5.1. DIAGONAL CUMULATION: AGADIR-LEBANON-EU27/EFTA ............................ 21

5.2. DIAGONAL CUMULATION: LEBANON-AGDIR-EU27/EFTA ............................... 26

5.3. DIAGONAL CUMULATION: EU27/EFTA-LEBANON-AGADIR............................ 30

6. CONCLUSIONS ............................................................................................... 30

7. LIMITATIONS ................................................................................................. 31

8. RECOMMENDATIONS ................................................................................... 32

9. ACKNOWLEDGEMENTS ............................................................................... 32

10. ANNEX ............................................................................................................. 33


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1. Introduction

The Agadir Agreement (thereafter referred to as the “Agreement”) between Jordan, Egypt, Tunisia and Morocco presented itself as a tool to reinforce South-South trade integration between these countries, on the one hand, and South-North integration between each of them and Europe, on the other. It evolved from the bilateral association agreements (AA) that the EU (+ EFTA) had devised with its Southern Mediterranean partners in the ultimate aim of creating a Free Trade Area (FTA) where MFN duties on industrial goods are completely abolished. The incentives behind the establishment of the Agadir Agreement mainly originated from the southern extension of the Pan-European Cumulation System to include those Mediterranean economies that are linked with the EU via an AA. The new protocol was dubbed the “Pan-Euro-Med Protocol” on Rules of Origin. In this context, the Agadir Agreement would horizontally bring those southern Mediterranean economies together under an FTA while stipulating that signatory countries adopt a Rules of Origin system that is identical to the Pan-European Protocol already in place between the EU27, EFTA and Turkey. The objective is to take the preferential treatment on RoO that is extended by the EU27 to its Mediterranean partners beyond the simple bilateral cumulation process and to a more complex web of possible diagonal trade alliances.

This report provides an assessment of the benefits that Lebanon could reap from joining the Agadir Agreement while ratifying the Pan-Euro-Med protocol on Rules of Origin (RoO). It specifically identifies those industrial sectors that could potentially gain from diagonal cumulation upon Lebanon’s endorsement of the Pan-Euro-Med protocol in the context of its possible accession to the Agadir club. It, further, pins down potentially beneficial trade links that could provide the Lebanese industrial sector with comparative advantage that could be translated into growth in associated exports.

2. Pan-Euro-Med VS. Protocol 4

2.1. Similarities The features commonly characterizing Protocol 4 and the Pan-Euro-Med Protocol mainly reside in the nature of the Rules of Origin used to grant Lebanese originating status and the possibility of performing bilateral and full cumulation. Both protocols adopt product-specific rules upon which Lebanese origin and preferential access are conferred to products that are either:


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1. wholly obtained in Lebanon – i.e. all raw materials, components, parts, or ingredients used in the manufacturing process are locally sourced1.

OR 2. sufficiently worked and processed – from non-originating (or non-wholly

obtained Lebanese) materials. Products are considered to be “sufficiently worked and processed” if

i- They fulfil the conditions set out in Annex II of the Pan-Euro-Med Protocol.

AND

ii- The nature of the working and processing carried out in Lebanon goes beyond the minimal operations described in Article 7 of the Pan-Euro-Med Protocol.

OR

3. (For the purposes of performing bilateral cumulation with the EU27 or the EFTA states ONLY) incorporating, in addition to wholly obtained materials, materials that are exclusively originating in the EU27 and/or the EFTA states, provided that:

i- The working or processing carried out in Lebanon goes beyond the minimal operations referred to in Article 7 of the Pan-Euro-Med Protocol.

OR

ii- Lebanese value-added is greater than the value of the materials used originating in the EU27 and/or the EFTA states.

Both protocols allow for bilateral cumulation which primarily increases the scope of products that could be granted Lebanese originating status. It is possible that the criteria of sufficient processing do not need to be respected in the determination of origin if materials are imported from a country with which bilateral cumulation is applicable (like the EU27 and EFTA for the case of Lebanon) as materials imported from these countries are considered as “originating”. Condition 3 above is therefore sufficient to confer Lebanese origin if met. Full cumulation in the area formed by Lebanon, the Community and the EFTA states remains outside the scope of the new protocol like was the case in Protocol 4. This means that workings carried out on non-originating materials in Switzerland, for example, could not be “carried forward” to those in Lebanon for the determination of whether the final product should be granted Lebanese originating status based on the “Sufficiently Worked or Processed” criteria. It is noteworthy to mention that full cumulation is in operation

1 For a list of products that are considered to be wholly obtained, reference should be made to Article 5 of the Pan-Euro-Med Protocol.


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between the Community, on the one hand and the EEA countries, Morocco and Tunisia, on the other.

2.2. Differences

Provisions on Diagonal Cumulation

Diagonal Cumulation (or Variable Geometry) is newly introduced to the Pan-Euro-Med cumulation system and can only be applied if the countries of final manufacture (Lebanon, in this case) and of final destination have concluded Free Trade Agreements (FTAs) with all the countries of cumulation which have supplied originating materials, components or parts on the condition that these FTAs contain identical rules of origin. Although more than two countries can be involved in the manufacture of a product, it will have the origin of the country where the last working or processing operation took place, provided that it was more than a minimal operation.

Diagonal Cumulation expands the possibilities for products to acquire Lebanese originating status by adding one more condition to the above provisions conferring origin:

4. (For the purposes of performing diagonal cumulation ONLY) incorporating, in addition to wholly obtained materials, materials that are exclusively originating in the EU27, EFTA states, Turkey, the Faroe Islands or in any country which is participant to the Euro-Med partnership (the Agadir countries evidently included) provided that:

i- The working or processing carried out in Lebanon goes beyond the operations referred to in Article 7 of the Pan-Euro-Med Protocol.

OR

ii- Lebanese value-added is greater than the value of the materials used originating in any of the above countries.

Note that for (4.i) and (4.ii) to apply; Lebanon needs to have concluded Free Trade Agreements with all the countries involved in the cumulation process while endorsing the Pan-Euro-Med protocol on Rules of Origin with all parties to these agreements. The state of play signals increased South-South integration that is mainly triggered by the institution of the Agadir Agreement - between Morocco, Tunisia, Egypt and Jordan - and the Egypt-Turkey; Tunisia-Turkey; and Morocco-Turkey bilateral FTAs. In addition to trade liberalization, these agreements target the harmonization of rules of origin to conform to the Palermo Model that characterizes the FTAs linking the members of the Pan Euro-Mediterranean Cumulation System (EMCS).


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Lebanon has existing FTA links with the countries of Agadir through the Greater Arab Free Trade Agreement (GAFTA), the RoO of which are not similar to those of the Pan-Euro-Med Protocol which are based on the Palermo model. The criterion of origin under GAFTA traditionally relied on a simple rule requiring that 40% of the value of the product must be added in the exporting country. Negotiations are now in place to bring GAFTA’s system of origin determination closer to the product-specific rules adopted in the EMCS. Members of the GAFTA have reached consensus on a set of 145 specific rules pertaining to 145 products classified according to the Harmonized System. Talks are ongoing with respect to the remaining 75 which are expected to be completed over the course of the coming year. It is therefore the case that Lebanon’s current trade position does not allow for diagonal cumulation with a southern Mediterranean country. For Lebanon, diagonal cumulation can only be applied with the EU27 and EFTA, leaving unexploited opportunities of potential trade creation with other southern Mediterranean countries.

Table 1. Signed an FTA? - Ratified Palermo Rules of Origin?

Lebanon Agadir

Members EU27 EFTA Turkey

Lebanon -

Agadir Members

Yes - No -

EU27 Yes - No Yes -Yes -

EFTA Yes - No Yes - Yes Yes - Yes -

Turkey No - No Yes - Yes

(Except for Jordan)

Yes - Yes Yes - No -

With the recent inclusion of agricultural products originating in Turkey in the system of Pan-Euro-Med protocol, potential South-South integration is further expanded. Turkey hasn’t yet concluded a Free Trade Agreement with Lebanon and talks about a move forward in this direction remains very much debatable on the Lebanese front.


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Provisions on “No-Drawback”

The prohibition of drawback - or exemption from custom duties - is a common characteristic of most preference agreements that the EU27 has granted to its European trade partners and it will be included in Pan-Euro-Med system of cumulation. This means that where such a restriction applies, all customs duties and equivalent charges must be paid on any materials, components or parts imported to manufacture a finished product on which preference will be claimed.

The objective of imposing the “no-drawback” rule is to create a level playing field between the different economic operators throughout the Pan-Euro-Med cumulation zone. In addition, the prohibition of drawback on originating materials offers equal treatment between products imported from countries granted preferential treatment via an FTA and products produced locally.

“No drawback” is currently a feature in the agreements between the EC, EFTA and Israel. It is not, however, a requirement in the current bilateral Association Agreements (AAs) between the EC and the other Pan-Euro- Med countries non-members of the Agadir Agreement.

The presently used Protocol allows for a full repayment (full drawback) of custom duties on non-originating materials entering the production of final products that are to be exported and are not to be retained for local Lebanese use. This provision will only apply until December 31st 2009, after which the Lebanese government should retain a 5% rate of customs on products falling within Chapters 25 to 49 and 64 to 97 of the Harmonised System (HS), or such lower rate as is in force in Lebanon. Alternatively, a 10% rate of customs must be retained on products falling within Chapters 50 to 63 of the Harmonised System (textile products), or such lower rate as is in force in Lebanon. Products falling within Chapters 1 through 24 are exempted from any application of drawback and therefore must submit to full custom duties upon importation to Lebanon. By contrast, The Pan-Euro-Med Protocol prohibits the possibility of claiming any drawback on non-originating materials used in the manufacture of products granted Lebanese origin based on diagonal cumulation with other members of the Pan-Euro-Med cumulation zone (condition 4 above). Nonetheless, this provision is relaxed to accommodate for those products conferred Lebanese origin based on their fulfillment of conditions 1 and 2 above. Hence, if a product is wholly obtained or sufficiently worked or processed, then the government should only retain a 5% rate if it falls within Chapters 25 to 49 and 64 to 97 of the Harmonised System (HS), or such lower rate as is in force in Lebanon. Alternatively, a 10% rate of customs must be retained on products falling within Chapters 50 to 63 of the Harmonised System (textiles), or such lower rate as is in force in Lebanon. The “No-Drawback” rule will only be waived for these products until December 31st 2009, after which the underlying provision will be reviewed by common accord between Lebanon and the EU27.


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Note that products falling within Chapters 1 through 24 (animal products, vegetable products and foodstuffs) remain exempted from any application of drawback under the new protocol and therefore must submit to full custom duties upon importation to Lebanon. Lebanese products exclusively manufactured from wholly obtained, EU27 and/or EFTA originating materials are conferred origin on the basis of condition 3 above. Materials used in the production of these goods are not subject to custom duties because of the AA signed between Lebanon and the EU27, on the one hand, and the FTA signed between Lebanon and EFTA, on the other. In this case, the “No-Drawback” rule does not apply.

The “No-Drawback” rule could potentially have an impact on Lebanese industrialists’ ability to use Pan-Euro-Med cumulation as final products incorporating materials on which drawback has been claimed must be treated as non-originating and they cannot be exported under the cumulation arrangements to another country in the Pan-Euro-Med zone. The disadvantages of the “No-Drawback” rule should be weighed against the benefits reaped from diagonal cumulation to assess whether Lebanese manufacturers’ could gain from Lebanon’s membership in Agadir. This is normally done by evaluating the level of dependence of Lebanese industrial exports on originating Pan-Euro-Med materials as opposed to non-originating materials form third countries.

Provisions on the Certification of Origin: the standard EUR Certificate (C1299) vs. the new EUR-MED Certificate (C1300)

The new EUR-MED certificate can only be issued where a product has met all conditions for acquiring preferential origin under the Pan-Euro-Med cumulation arrangements. It follows that the product must not include materials which have been subject to drawback or which have originated in a country within the Pan-Euro-Med zone that does not have a Free Trade Agreement with the final country of manufacture (Lebanon, in this case) or country of destination.

• If the product obtained Lebanese originating status without the use of any cumulation arrangement, then either certificate - EUR1 or EUR-MED with the checked statement “No Cumulation Applied” - may be issued depending on whether drawback was granted on non-originating materials and whether further cumulation and/or re-exportation to other Pan-Euro-Med partners is envisaged to take place in the destination country. Hence,

o A certificate EUR1 must be used if drawback on non-originating materials has been claimed by the Lebanese producer and/or if the product will not be re-exported to another country of the Pan-Euro-Med zone or used as materials in a potential further application of cumulation in the destination country.


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o Certificate EUR-MED with the checked statement “No Cumulation Applied” can be used if no drawback has been claimed by the Lebanese producer on non-originating materials and/or if the product will be re-exported to another country of the Pan-Euro-Med zone or used as materials in a potential further application of cumulation in the destination country. In some cases the ultimate destination of a product within the Pan-Euro-Med zone will not be known at the time of the initial export. A Lebanese industrialist, for example, might export a product to a customer in Norway who subsequently decides to sell it on to a customer in Morocco. In this case, a EUR-MED certificate with the checked statement “No Cumulation Applied” can be used provided that the above condition on cumulation and drawback are fulfilled.

OR

• If the product was processed or worked in Lebanon, yet it was considered as originating in another Pan-Euro-Med country with which 1) Lebanon has signed an FTA & 2) cumulation may be applicable without it being actually applied with either this country or any other Pan-Euro-Med partner, then a EUR1 certificate must be issued provided that a certificate EUR-MED has been issued in the country of origin.2

OR

• If the product obtained Lebanese originating status on the basis of Pan-Euro-Med cumulation and, at the same time, it did not include materials on which drawback has been granted, then a EUR-MED certificate with the checked statement “Cumulation applied with …” must be issued. In this case, the exported Lebanese product may be used as materials for the purpose of further cumulation in the destination country and, at the same time, may be re-exported from the country of destination to one of the other countries in the Pan-Euro-Med zone.

2 This applies to the case where the Lebanese producer is re-exporting the Pan-Euro-Med originating product.


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Table 2. Protocol 4 vs. the Pan-Euro-Med Protocol: Implications for Lebanon Protocol 4 Pan-Euro-Med Protocol

Movement Certificates

EUR.1 - EUR.1 - EUR-MED

Bilateral Cumulation (with EU27 or EFTA)

Yes Requirement: AA signed between Lebanon and EU27

Yes Requirement: AA signed between Lebanon and EU27

Diagonal Cumulation Currently allowed between Lebanon, EU27 and EFTA only.

Yes Requirement: FTAs should be signed between Lebanon and the country of export destination, on the one hand, and between Lebanon and each of the countries in which cumulation was applied, on the other. These FTAs should apply rules of origin identical to the ones laid out in the Pan-Euro-Med Protocol. The Lebanese government should further notify the public of these FTAs through a publication in the Official Journal.

Full Cumulation No3 No4

Drawback - Full Drawback is allowed on non-originating materials until 31/12/2009

- After 31/12/2009, Gov retains

5% on non-originating materials & 10% if textile until 2009

If product was conferred Lebanese origin based on diagonal cumulation (condition 4 above), then drawback is prohibited on non-originating materials. If product acquired Lebanese origin based on above conditions 1 & 2, then: - Gov retains 5% on non-originating materials & 10% if textile until 31/12/2009. - After 31/12/2009, review of drawback rule.

Product-Specific Rules

Yes Yes

3 Full cumulation is permitted between the EU27, EFTA, Morocco and Tunisia.

4 Full cumulation is permitted between the EU27, EFTA, Morocco and Tunisia


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3. Trade Trends & statistics

3.1. Lebanese Exports

Lebanese exports have been on an upward trend from 1997 till 2004 (Figure 1). The increase in general exports was more pronounced in the second part of this period as they more than doubled in 2004 compared to their 2000 level. Although generally experiencing an increase in their dollar value throughout that period, Lebanon’s combined exports to the EU27 and EFTA states did not exhibit the same momentum as total exports and grew at a relatively slower rate especially as of the year 2000. On the other hand, horizontal trade links with the Agadir countries was not subject to major evolution and stayed way below the $200 million level in 2004. This indicates that the initiative carried out by the Arab countries under the GAFTA in the aim of promoting further market integration did not fully meet its objectives.

Figure 1.

The EU27 and EFTA possess the lion’s share in the distribution of Lebanese exports among world markets (Figure 2): more than 26% of Lebanese exports target the EU27 and EFTA compared to a mere 6.4% directed toward the Agadir members.


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Figure 2.

6.4%

26.2%

67.4%

Lebanon Export Distribution by Country of Destination (2007)

Agadir

EU27+EFTA

Rest of the World

Source: UN, COMTRADE DATABASE

Among the Agadir partners, Jordan by itself receives more than half (56%) of total Lebanese exports to the region (Figure 3). Egypt is Lebanon’s second best trading partner as its share in total Lebanon-Agadir exports is 36%. Morocco and Tunisia have very weak trade links with Lebanon attracting only 5% and 3% of Lebanese exports to Agadir, respectively.

Figure 3.

56%36%

5% 3%

Distribution of LEB-AGADIR Exportsby country (2007)

Jordan

Egypt

Morocco

Tunisia


In 2007, 11.8% of Lebanese exports to the EU27 consisted of “Nuclear Reactors, Boilers and Mechanical Appliances” (HS chapter 84), 15% of which targeted the United Kingdom (Figure 4). In addition, “Aluminium and Articles thereof” (HS 76) accounted


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for 8.8% of Lebanese exports to the EU275. Other major exports to the EU27 included: “Precious Stones, Metals and Imitation Jewellery” (HS 71)6; “Electrical Machinery and Equipment” (HS 85); “Paper and Paperboard” (HS 48); “Articles of Iron or Steel” (HS 73); “Plastics and Articles thereof” (HS 39); “Copper and Articles thereof” (HS 74), “Tobacco and Manufactured Tobacco Substitutes” (HS 24).

Figure 4.


In 2007, 36% of Lebanese exports to the Agadir countries consisted of “Printed Books and Newspapers” (HS 49) (Figure 5). “Lead and Articles of Lead” (HS 78), “Plastics and articles thereof” (HS 39), and “Articles of Iron or Steel” (HS 73) accounted for 25%, 12%, and 11% of Lebanon-Agadir Exports, respectively. Other major exports to the Agadir members included: “articles of Paper Pulp, of Paper or of Paperboard” (HS 48) and “Aluminium and Articles thereof” (HS 76) and “Photographic and Cinematographic Apparatus” (HS 90).

5 In 2007, the bulk of Lebanon’s exports of “Aluminium and Aluminium Articles” (HS 76) to the EU27 was in the form of “Aluminium Waste and Scrap” (HS 76.02) heading to the Netherlands (4% of total Lebanese exports to Netherlands), Greece (2%), Romania (2%) and Germany (1%). The rest comprised of “Aluminium Bars and Rods” (HS 76.04) targeting France (9% of total exports to France), the Netherlands (6%), and Belgium (2%).

6 In 2007, Lebanon’s exports of “Precious Stones, Metals and Imitation Jewellery” (HS 71) was mainly in “Unwrought Gold” (HS 71.08) targeting Switzerland which constituted 61% of Lebanon’s total exports to Switzerland. The rest (6%) was in Diamonds (HS 71.02) targeting Belgium.


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Figure 5.

32%

25%12%

11%

7%

5% 4%5%

Distribution of LEB-AGADIR Exports By Sector (2007)

Printed books, newspapers, pictures and other products of the printing industry

Lead and articles thereof

Plastics and articles thereof

Articles of iron or steel

Paper, paperboard and articles thereof

Aluminum and articles thereof

Optical, photographic, cinematographic, and medical instruments and apparatus

Other


3.2. Lebanese Imports

While Lebanese imports from world markets followed a cyclical trend, imports from the EU27 and EFTA states increased by a whopping 3000% between 1998 and 2006 (Figure 6) 7. This came primarily as a result of the unilateral Lebanese initiative, in December 2000, of substantially cutting down tariffs vis-à-vis European imports prior to the conclusion of the Association Agreement with the EU. Alternatively, imports from the Agadir countries remained below $400 million in 2004, increasing by only $296 million from their 1997 level (corresponding to a 235% growth rate).

7 Imports from the EU27 and EFTA states increased from $143 million in 1998 to reach as high as $4.4 billion in 2006.


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Figure 6.

Imports from the EU27 and EFTA states represented around 47% of total Lebanese imports in 2007 while the share of Agadir countries in total imports stood at 4% (Figure 7). These figures suggest that Agadir’s principle objective of consolidating South-South trade among member countries is more likely to occur as a result of diagonal cumulation beginning in the EU27 and heading southward (such as the following cumulation route: EU27-Agadir-Agadir) rather than a cumulation having its origin in an Agadir member (such as the following cumulation route: Agadir-Agadir-EU27). Furthermore, these statistics propose that Agadir is more likely to stir increased South-North trade (through diagonal cumulation routes like the following: Agadir-EU27/EFTA-Agadir or EU27/EFTA-Agadir-EU27/EFTA) rather than meet its declared objective of South-South trade creation.


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Figure 7.

Imports from Egypt represented 77% of Lebanon’s imports from Agadir, signalling the stark uneven distribution of import dependence on these countries (Figure 8). Remaining imports are distributed among Jordan, Morocco and Tunisia in the respective proportions: 15%, 7% and 2%.

Figure 8.

77%

15%

7% 2%

Distribution of Lebanese Imports from AGADIR (2007)

Egypt

Jordan

Morocco

Tunisia



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3.3. The Agadir Experience

More interesting is the trade pattern between the EU27 and the 4 Agadir countries which took a dramatic upturn in 2003, two years before the Agadir Agreement between Jordan, Egypt, Tunisia and Morocco was put in force (Figure 9). This fact signals an immediate and efficient impact of Agadir in consolidating trade ties with the EU27 based not only on the actual application of diagonal cumulation but also on expectations of increased South-North integration from expanded trade opportunities.

Figure 9.

Conversely, Intra-Agadir trade flows was not subject to the same positive shock from the application of diagonal cumulation within the Agadir region, on one hand, and across Agadir, EU27, EFTA and Turkey, on the other8 (Figure 10). While constantly positive, growth in the dollar value of intra-Agadir trade reached a six-year low (26%) over 2005-2006 only to slightly pick up again over 2006-2007 and reach the 2003-2004 growth level of 39%.

8 Since Morocco, Tunisia and Egypt have all signed FTAs with Turkey, including the ratification of a system of rules of origin (RoO) that is identical to the Palermo model.


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Figure 10.

$0

$500,000,000

$1,000,000,000

$1,500,000,000

$2,000,000,000

$2,500,000,000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

in U

SD

Intra-Agadir Trade (1998-2007)Source: UN, COMTRADE DATABASE

4. Mapping Final Industrial Exports to Corresponding Inputs

Because of the unavailability of input-output tables for Lebanon, two methods were used to map final goods to raw and intermediate products used in the manufacturing process. These relied on: 1) the studies conducted by the Institute for Industrial Research (IRI) on select companies across several industrial sectors and 2) data collected on sectors benefiting from full tariff exemption on specific raw materials and intermediate products via customs code 322.

4.1. Using IRI studies

IRI carried out studies on select industrial companies to identify whether they contributed in at least 40% of the value of the product when finished. These studies were either the product of a trade conflict between an industrial Lebanese exporter and the customs agency of a GAFTA party state or were performed upon the request of a Lebanese exporting company aiming to prove that its products acquired originating status under GAFTA provisions and therefore enjoy preferential access in member markets.


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To compute the value added, Rule 3 of the GAFTA was applied which necessitates the application of either 1) the ad-valorem principle or 2) the method of subtracting imported materials from the ex-factory final value of the product. These studies applied the first method to calculate ad-valorem value added. For this purpose, data on different types of costs, including the costs of inputs, incurred by the producer were summed up and then divided by the final value of the product from the plant. Therefore, reference was made to the array of basic and intermediate materials used in the manufacturing process for each company so as to distinguish between materials of national or Arab origin and those that were imported from third countries.

The IRI studies covered a total of 182 companies pertaining to only 12 industrial sectors. 31 companies were involved in the manufacturing of “products of the chemical or allied industries” (HS section 6) including pharmaceuticals and fertilisers9. Table 3 illustrates the distribution of these companies across the different sectors.

Table 3. Distribution of IRI Studies across Industrial Sectors

عدد الشركات القطاع الصناعي

٣١ة دات واألس�مدة العض��و قطاع صناعات المب

�ة � ات والمنتجات الطب ماو والك

٨ �ة � فة المختلف قطاع الصناعات الخف

٥ �ات � قطاع صناعة الزجاج

٥٠ �ة � ل فة قطاع صناعة المعادن الثق والخف

١٧�ورق والك�رتون قطاع صناعة وإعادة صناعة ال

وطباعة الورق

٨ �ات � ة والقطن قطاع صناعة األلبسة واألحذ

٩�ة � �ة والغاز � قطاع صناعة المشروبات الروح

ة والمعدن

٨ �ات قطاع صناعة المفروش�

٣١ ��ة �ة المختلف � قطاع صناعة المواد الغذائ

٩ ة ك �ت قطاع الصناعات البالس�

٣ �ت � قطاع صناعات الرخام والجران

٣�اس � �عة باأللم قطاع صناعة األدوات المرص�

�رات � ªات و علب المجو والفض

١٨٢ المجموع

Source: IRI, CCIB

9 When drafting this report, access was restricted to only a subset of 75 studies with the corresponding statistics tabulated in Table 4.


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Table 4. Breakdown of the Subset Studies (used in this report) by Industrial Sector

Sectors Number of Studies

Document Printing 1

Ovens 1

Jewellery 2

Pharmaceuticals 2

Roasting Coffee and Nuts 2

electrical products 2

Towels 3

Women Wear 3

Furniture 3

Cosmetics 4

Aluminum + Steel 5

Painting Products 5

Packaging 6

Halva, Chocolate Confectionaries and other food Products 14

Remaining Sectors 22

TOTAL 75Source: IRI, CCIB

4.2. Using the 322 Code Table

Under customs code 322, Lebanon extends the privilege of full tariff exemption on certain raw materials if they are to be used in select manufacturing processes and if they meet other specified conditions. The raw materials are represented by their equivalent HS codes while their end-use is specified by a description of the manufacturing activity to be performed. These activities are classified according to a national nomenclature and are not assigned a corresponding code (Table 5).

Table 5. Snapshot from the Custom Code “322” Table

ة code الغـــــا

حية ل با 1803.1 لمش

تثقيبها يحها تش قيقها ت ل لقسا 7209.17 لإلفا م صناعة

تثقيبها يحها تش قيقها ت ل لقسا 7208.39 لإلفا م صناعة

يحها تش قيقها ل مع ت لقسا لمبس ي لح نية لمع يا ل 7208.38 لإلفا م صناعة


ي تش قيقها ل مع ت لقسا لمبس ي لح نية لمع يا ل 7208.26 حهالإلفا م صناعة


لغا فئ 6914.90.10 لالستعمال في صناعة م

لنباتية ي ل با لمش ة لمحف ال نية للمأك لمع لعب لعل ية 8309.90.90 لالستعمال في تغ

مبي لالستعمال ف لتجميل ية لت م لكيميائية كالع لصناعا ي تعبئة محض

لضغ يقة ، ب ل(لحش س 7612.90.10 )ي


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5. Identifying Profitable Alliances

From the two previous data sources, an input-output matrix was put together to identify potential trade alliances that could benefit industrial sectors in the event Lebanon joins Agadir. These trade alliances could emerge as a result of three different diagonal cumulation routes as illustrated below:

Below is an exposition of the industrial sectors in which Lebanon may or may not enjoy comparative advantage (i.e. those with high export shares to the EU27 and EFTA (or to Agadir) but that make use of raw and intermediate materials sourced from the Agadir partners (or the EU27 and EFTA). Also analyzed are those Lebanese sectors that supply raw and intermediate materials to the Agadir states where they become subject to further working and processing and are later exported to the EU27 and EFTA.

5.1. Diagonal Cumulation: Agadir - Lebanon - U27/EFTA10

9% of Lebanon’s exports to the EU27 and EFTA fall under HS chapter 72 pertaining to “Iron and Steel”. Among the inputs used in this sector are “Surface-active, Washing and Cleaning Preparations, nes” (HS 3402.90.90) of which 6% is imported from Egypt and 6% from Jordan. According to the Pan-Euro-Med protocol on RoO, products of Chapter 72 could be conferred originating status if they are manufactured from materials of any heading except that of their own11. This indicates that Lebanese manufactures of iron and steel products could benefit from diagonally cumulating with Jordan and Egypt upon Lebanon’s accession to Agadir.

10 See Table 6 below for a summary of the findings.

11 Special rules apply to products classified under HS headings: 7301, 7302, 7304-7308, and 7315.


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“Electrical Machinery and Equipment” (HS 85) make up 5% of total Lebanon-EU27/EFTA exports. In this sector, inputs such as “video Recording or Reproducing Apparatus” (HS 8521.9) and “Electric Sound Amplifier Sets” (HS 8518.5) are used in the manufacturing process. The share of HS 8521.9 and HS 8518.5 imports from Jordan, in total imports, is 1% each. The Pan-Euro-Med Protocol on RoO stipulates that, in order to acquire originating status, products under HS chapter 85 should be produced:

- from materials of any heading, except that of the product,

and

- in which the value of all the non-originating materials used does not exceed 40% of the ex-works price of the product12

With these conditions simultaneously fulfilled, positive prospects are in store for Lebanese manufacturers of Electrical Machinery and Equipment who use Jordanian inputs of subheading 8521.9 as this would help them meet a minimum value-added of 60%.

Next in export importance are “Articles of Apparel and Clothing Accessories, Whether or Not Knitted or Crocheted” (HS 61-62). These constitute 4% of Lebanese total exports to the EU27 and EFTA states and make use of “clothing accessories, of textile materials, not knitted or crocheted” of HS 6217.1 as inputs. Tunisia’s share in Lebanon’s total imports of HS 621731 materials is 4%. Palermo rules of origin stipulate that originating status could be granted to products classified under HS 61 on the basis that they are manufactured:

- from yarn if the product was obtained by sewing together or otherwise assembling, two or more pieces of knitted or crocheted fabric which have been either cut to form or obtained directly to form

otherwise

- from natural fibres,

- from man-made staple fibres, not carded or combed or otherwise processed for pinning, or

- from chemical materials or textile pulp13.

12 Other conditions apply to certain HS 85 headings.

13 The meaning of the terms “natural fibres”, “textile pulp” and “paper-making materials” is explained in note 4 of Annex I of the Pan-Euro-Med Protocol. They are also summarized in Annex I of this report.


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Lebanese final products fulfilling these conditions on non-originating materials while made from Tunisian clothing accessories of HS sub-heading 6217.1 could profit from diagonal cumulation.

“Inorganic Chemicals” (HS 28) - including aerosols, cosmetics and perfumes - make up 3% of total Lebanese exports to the EU27 and EFTA states. These products use, among other, “Cans which are to be closed by soldering or crimping” (HS 7310.21.20) of which imports from Jordan represent 6% of total world imports.

The originating criteria as per the Pan-Euro-Med rules associated to products classified under Chapter 28 require that they be:

- Manufactures from materials of any heading, except that of the product. However, materials of the same heading as the product may be used, provided that their total value does not exceed 20% of the ex-works price of the product

or

- Manufactures in which the value of all the non-originating materials used does not exceed 40% of the ex-works price of the product.

If either of the above conditions is met and the Lebanese producer is using HS 7310.21.20 in the production of Inorganic Chemicals than potential trade creation could arise as a result of diagonal cumulation with Jordan.

“Furniture, Bedding and Mattresses” of chapter 94 represent 1% of total Lebanese exports to the EU27 and EFTA states. “Products of iron or non-alloy steel” of HS 7210.30.30 enter the manufacturing process of such products. The only Agadir country with significant exports of HS 7210.30.30 to Lebanon is Egypt, whose exports of HS 7210.30.30 products to Lebanon represent around 4% of total world exports.

For originating status to be granted and preferential status to the EU27/EFTA states allowed, the final Lebanese products should be:

- Manufactures from non-originating materials of any heading, except that of the product

or

- Manufactures in which the value of all the non-originating materials used does not exceed 40% of the ex-works price of the product

If either rule was satisfied on materials sourced beyond the Pan-Euro-Med Zone of exchange, Lebanon is likely to benefit from joining Agadir in that diagonal cumulation with Egypt could be performed in the sector for furniture, bedding and mattresses.

While accounting for only 1% of total Lebanese Exports to the EU27 and EFTA, “Pharmaceutical Products” of chapter 30 rely on materials such as the formulated


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medicaments of subheading 3003.9 that are sold in bulk. Jordan’s exports to Lebanon of HS 3003.9 materials represent 14% of total world exports, while the corresponding share for Egypt’s amounts to 2%.

The applicable Pan-Euro-Med rule for obtaining originating status requires that the final Lebanese products are:

Manufacture from materials of any heading, except that of the product. However, materials of the same heading as the product may be used, provided that their total value does not exceed 20% of the ex-works price of the product.14

In the event Lebanon joins Agadir, materials sourced from Jordan and Egypt would be considered as originating and, hence, diagonal cumulation with these two countries could expand the range of exported pharmaceuticals that are granted Lebanese originating status.

“Footwear” of chapter 64 account for only 1% of Lebanon-EU27/EFTA exports. Among other materials, “Adhesives” of HS 3506.91.10 are used in the manufacturing of footwear and 3% of Lebanon’s imports in this type of adhesive material originate from Egypt.

To be granted originating status, exported footwear needs to be produced from materials of any heading, except from assemblies of uppers affixed to inner soles or to other sole components of heading 6406.

14 Special conditions apply to products of headings 3002-3004 and 3006.


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Table 6. LEB Final Product Exports to EU27 & Share of Agadir in Material Imports

FINAL PRODUCT HS CODE: DESCRIPTION

WEIGHT IN TOTAL EXPORTS

RAW MATERIAL HS CODE: DESCRIPTION

IMPORT COUNTRY

1 SHARE

IMPORT COUNTRY

2 SHARE

2: IRON AND STEEL 9% 3402.90.90: Surface-active preparations, washing and cleaning preparations, nes

Egypt 6% Jordan 6%

85: ELECTRICAL MACHINERY AND EQUIPMENT AND PARTS THEREOF; SOUND RECORDERS AND REPRODUCERS, TELEVISION IMAGE AND SOUND RECORDERS AND REPRODUCERS, AND PARTS AND ACCESSORIES OF SUCH ARTICLES

5% 8521.9: Video recording or reproducing apparatus nes

Jordan 1%


5% 8518.5: Electric sound amplifier sets

Jordan 1%

61-62: ARTICLES OF APPAREL AND CLOTHING ACCESSORIES, WHETHER OR NOT KNITTED OR CROCHETED

4%

6217.1: Clothing accessories, of textile materials, not knitted or crocheted, not elsewhere specified (nes)

Tunisia 4%

28: INORGANIC CHEMICALS; ORGANIC OR INORGANIC COMPOUNDS OF PRECIOUS METALS, OF RARE-EARTH METALS, OF RADIOACTIVE ELEMENTS OR OF ISOTOPES

3% 7310.21.20: Cans which are to be closed by soldering or crimping

Jordan 6%

94: FURNITURE; BEDDING, MATTRESSES, MATTRESS SUPPORTS, CUSHIONS AND SIMILAR STUFFED FURNISHINGS; LAMPS AND LIGHTING FITTINGS, NOT ELSEWHERE SPECIFIED OR INCLUDED; ILLUMINATED SIGNS, ILLUMINATED NAME-PLATES AND THE LIKE; PREFABRICATED BUILDINGS

1%

7210.30.30: products of iron or non-alloy steel, of a width of 600 mm or more, plated or coated with lead, flat, of rectangular (including square) shape, and of a thickness less than 0.5 mm

Egypt 4%

30: PHARMACEUTICAL PRODUCTS 1%

2933.49:Heterocycle compounds containing a quinoline or isoquinoline ring-system, not further fused, nes

Egypt 6%

30: PHARMACEUTICAL PRODUCTS 1% 3003.9: Medicaments nes, formulated, in bulk

Jordan 14% Egypt 2%

64: FOOTWEAR, GAITERS AND THE LIKE; PARTS OF SUCH ARTICLES

1% 3506.91.10: Adhesives based on rubber

Egypt 3%


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5.2. Diagonal Cumulation: Lebanon – Agadir - EU27/EFTA15

A substantial part (25%) of Agadir’s exports to the EU27 and EFTA countries lie in the form of “Articles of Apparel and Clothing Accessories” which are classified under chapters 61 through 63 of the Harmonized System. These products use different raw and intermediate materials. Among these are “ink” of HS 3215.90.90; “parts of clothing accessories” of HS 6217.9; and “clothing accessories” of HS 6217.1. Almost all of Lebanon’s exports of HS 3215.90.90 ink go to Jordan (92%) and Egypt (5%). Egypt’s shares in total Lebanese exports of HS 6217.9 and HS 6217.1 are 11% and 66%, respectively. 16

“Electrical Machinery and Equipment” of chapter 85 are also among Agadir’s major exports to the EU27 and EFTA states. These products include sound and image recorders and reproducers along with their parts and accessories. Various materials enter the production of these products, some of which are sourced from the Agadir region like the following:

• “video recording or reproducing apparatus” of HS 8521.1. Egypt’s share in total Lebanese exports of HS 8521.1 materials amounts to 10%.

• “electronic micro-assemblies” of HS 8543.90.10. Egypt and Jordan’s contributions to the world demand of Lebanese HS 8543.90.10 materials are 34% and 4%, respectively.

• “electric fence energisers” of HS 8543.70.10, of which 4% of total Lebanese exports are directed to Egypt and 48% to Jordan.

• “parts of microphones, loudspeakers, headphones, earphones & electric sound amplifiers” of HS 8518.90.90 with 9% of Lebanon’s total exports in these materials go to Egypt.

• “audio-frequency electric amplifiers” of HS 8518.4, of which Lebanese exports of Egyptian and Jordanian destination constitute 1% and 2% of total Lebanese exports in HS 851834, respectively.

• “Loudspeakers” of HS 8518.29, 1% of the exports of which go to Jordan.

• “Single loudspeakers that are mounted in the same enclosure” of HS 8518.21. Jordan’s share of Lebanon’s total HS 8518.21 imports is equal to 4%.17

15 See Table 7 for a summary of the findings below.

16 Pan-Euro-Med Rules applicable to products of chapter 62 are described in the previous section.

17 Palermo rules conferring originating status products belonging to chapter 85 are laid out in the previous section.


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Products of “Iron and Steel” that are classified under chapter 72 represent 3% of Agadir’s exports to the EU27 and EFTA. Among the materials employed in the production of iron and steel products are “surface-active, washing and cleaning preparations” of HS 3402.90.90. The bulk - 45% - of Lebanon’s exports of HS 4008.21.90 is directed to the Jordanian market.

The Pan-Euro-Med rule conferring originating status for products pertaining to chapter 72 requires that they must be manufactured from non-originating materials of any heading, except that of the product in question.18

“Footwear, Gaiters and Parts thereof” of chapter 64 also represent a modest share of Agadir’s exports to the EU27and EFTA countries (3%). “Plates, sheets and strip of non cellular rubber, other than hard rubber” of HS 4008.21.90 are among the inputs used in the manufacturing process of chapter 64’s footwear. 18% of Lebanon’s exports of HS 4008.21.90 materials are directed to Jordan and 8% to Egypt.

With the exception of subheading 6406, footwear of chapter 64 are granted originating status as per the Pan-Euro-Med list rule that they be manufactured from materials of any heading, except from assemblies of uppers affixed to inner soles or to other sole components of heading 6406. The corresponding rule for “footwear parts, removable in-soles, heel cushions, gaiters, leggings and similar articles” of HS 6406 is that they should be produced from non-originating materials of any heading, except that of the product. Chapter 76 products which comprise “Aluminum and Products thereof” form 2% of Agadir’s exports to the EU27 and EFTA states. Final products classified under this chapter make use of “surface-active, washing and cleaning preparations” of HS 3402.90.90 in the manufacturing process. The greater part (45%) of Lebanon’s total exports of HS 3402.90.90 materials targets the Jordanian market. To acquire Lebanese originating status, final products of chapter 76 that are worked and processed in Lebanon should simultaneously fulfill the two following Pan-Euro-Med rules of origin:19 They should be manufactures:

- from materials of any heading, except that of the product, and - in which the value of all the materials used does not exceed 50% of the ex-works price of the product.

18 Special conditions apply to products classified under certain HS 72 subheadings.

19 Special requirements apply to products classified under headings: 7601, 7602, and 7616.


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Table 7. Agadir Final Product Exports to EU27 & Share of Lebanon in Material Exports

FINAL PRODUCT HS CODE: DESCRIPTION

WEIGHT IN TOTAL

EXPORTS

RAW MATERIAL HS CODE: DESCRIPTION

EXPORT COUNTRY

1 SHARE

EXPORT COUNTRY

2 SHARE

61-62-63: ARTICLES OF APPAREL AND CLOTHING ACCESSORIES, WHETHER OR NOT KNITTED OR CROCHETED

25% 3215.90.90: Ink, nes Jordan 92% Egypt 5%


25%

6217.9: Parts of garments/clothing accessories, of textile material ,not knitted or crocheted, nes

Egypt 11%


25%

6217.1: Clothing accessories, of textile materials, not knitted or crocheted, nes

Egypt 66%


13% 8521.1: Video recording or reproducing apparatus magnetic tape-type

Egypt 10%


13% 8543.90.10: Electronic microassemblies

Egypt 34% Jordan 4%


13% 8543.70.10: Electric fence energisers

Jordan 48% Egypt 4%


13%

8518.90.90: Parts of microphones, loudspeakers, headphones, earphones & electric sound amplifiers

Egypt 9%


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13% 8518.4: Audio-frequency electric amplifiers

Jordan 3% Egypt 1%


13% 8518.29: Loudspeakers, nes

Jordan 1%


13% 8518.21: Single loudspeakers, mounted in the same enclosure

Jordan 4%

72: IRON AND STEEL 3% 3402.90.90: Surface-active preparations, washing and cleaning preparations, nes

Jordan 45%

64: FOOTWEAR, GAITERS AND THE LIKE; PARTS OF SUCH ARTICLES

3%

4008.21.90: Plates, sheets and strip of non cellular rubber, other than hard rubber

Jordan 18% Egypt 8%

76: ALUMINUM AND ARTICLES THEREOF

2% 3402.90.90: Surface-active preparations, washing and cleaning preparations, nes

Jordan 45%

74: COPPER AND ARTICLES THEREOF 1%

4804.39.10: Uncoated paper, kraft, rolls or sheets, weighing <=150g/m², nes

Jordan 2%


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5.3. Diagonal Cumulation: EU27/EFTA - Lebanon – Agadir

Since 47% of Lebanon’s total imports of final, raw and intermediate products are sourced from the EU27 and EFTA states (see Figure 7), Lebanese industries that export to the Agadir market are most likely to profit from the diagonal cumulation route: EU27/EFTA- Lebanon-Agadir.

As Figure 5 in Annex II indicates Lebanon’s major exports (32%) to Agadir countries are in printed books, newspapers and other products of chapter 49. Lead of chapter 78 such as unwrought lead and other articles of lead are also important exports forming 25% of exports. Plastics and articles thereof - particularly containers, bobbins and packages, of plastics – represent around 12% of Lebanese exports to the Agadir region. Articles of Iron or Steel of chapter 73, specifically, kitchen and household items of iron or steel, make up 11% of Lebanon-Agadir table export flows. The share of paper, paperboard and articles thereof of chapter 48 including bobbins, spools, and cops of paper pulp, paper and paperboard, is 7%. Articles of aluminum - mostly aluminum structures - of chapter 76 and optical, photographic, cinematographic, and medical instruments and apparatus of chapter 90 represent 5% and 4% Lebanon’s export flows to the Agadir partners, respectively.

Other major exports comprise: man-made staple fibres of chapter 55 (4% of exports), particularly woven fabric of synthetic staple fibres; machinery and mechanical appliances and parts thereof of chapter 84 (1%), specifically machinery, apparatus, and equipment for print preparation; articles of apparel and clothing accessories that are neither knitted nor crocheted of chapter 62 (1%) which particularly include brassieres, girdles, corsets, braces, and suspenders; chemical products of chapter 38 (1%), specifically rubber or plastic accelerators, and plasticisers and stabilisers for rubber; and lastly, television image and sound recorders and reproducers of chapter 85 (1%) mainly including sound recordings other than photographic equipment.

6. Conclusions

The Agadir agreement has opened an opportunity for the southern Mediterranean countries to solidify the preferential trade links they set the foundations for under GAFTA. In addition, the Agreement was set to extend a wider access for Agadir-originating products to enter the European market through the expanded application of the Pan-European rules of origin (AA) and the possibility for diagonal cumulation across the countries of the Pan-Euro-Med area.

Three years after it was put in force, statistical results show that the Agadir experience did create trade across the Mediterranean basin but not so much around it, thereby failing to meet its primary objective of bringing closer the economies of the southern shore. This


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might be due to the fact that trade in these countries is more dependent on historical incidence (the custom of trading with particular partners) than on real comparative advantage. Another reason might be linked to the lack of awareness on behalf of producers operating in the industrial sector about the provisions and potential benefits of the Agreement. Agadir might have offered new South-South opportunities through potential diagonal cumulation but it could well be the inherent nature of traded products and the lack of complementary operations that is keeping members from taking full advantage of them.

Electro-mechanical machineries; furniture; chemicals; pharmaceuticals; footwear; and apparel are expected to be the “winning” sectors in an Agadir-Lebanon-EU27/EFTA diagonal cumulation on the basis that non-originating items used in their production satisfy the applicable Pan-Euro-Med rules of origin.

From matched output-input data, the sectors for apparel, electrical machinery; footwear; aluminium; copper; and iron and steel in the Agadir members are expected to drag in flows of associated raw and intermediate materials sourced from Lebanon. Such materials include- but are not restricted to- ink; apparel; clothing accessories; electrical equipment20; cleaning preparations; and plates, sheets or strips of non-cellular rubber.

7. Limitations In addition to the unavailability of sector-specific value added data for Lebanon- exclusive of the Arabic component under Rule 3 of GAFTA- one major limitation of this study is the inexistence of a Lebanese Input-Output (IO) table from which interdependence across and between different sectors could be assessed. Mapping raw materials to sectors of final use by resorting to the “322” code table and the IRI survey limited the number of identified materials used in final products to a few.

Since an IO table for most sectors in Agadir is not available the input-output mapping established for products exported from Lebanon to the EU27 had to be projected to the Agadir sectors for comparable use.

Albeit the reporting of Tariff Exemption Code 322 refers to the end use of raw and intermediate materials by economic activity, final use could only be interpreted by sector disaggregation at the 2-digit HS heading as economic activities were not classified by ISIC or some national classification code. IRI studies on economic activities of firms also lacked an explicit ISIC classification.

20 For instance, video and reproducing apparatus, parts of microphones and loudspeakers, electric fence energizers, and audio-frequency electric amplifiers.


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8. Recommendations

• Awareness should be raised in terms of notifying the “winning” sectors of their prospective gains under Agadir though workshops, site visits..etc.

• Training should be offered to industrialists on the practical application of the Pan-Euro-Med Protocol.

• Investment should be encouraged and facilitated in the “winning” sectors so as to promote outward trade as well as the creation of job opportunities.

• The infrastructure for competitiveness should be reinforced in the sectors that may face increased competition from Agadir products in the Euro-Market.

9. Acknowledgments I am indebted to a number of people. Without them, this project could not have been completed.

UNDP - TOKTEN

Firstly, I wish to thank Ms. Ariane Elmas, TOKTEN Project Manager, for the enormous efforts she has put into making my visit and this project as successful as I had hoped them to be. Her stimulating support and absolute dedication to the work served to alleviate all hurdles encountered in the process. For this, I am ever grateful. Special thanks go to Mr. Hassan Krayem, Manager of the Governance Program, and Mrs. Jihane Haidar, National Project Manager of CDR, for sponsoring this study and providing the financial assistance.

The Ministry of Industry

I would like to extend my thanks to Mr. Ghazi Zaayter, the Minister of Industry, for backing up this project which was initially proposed by Mr. Georges Khoury, the General Director of the Ministry of Industry, whom I am grateful to for the kind reception. Also, I would like to acknowledge the much appreciated support provided by Dr. Ali Yaacoub, LCPC Director, in facilitating meetings within IRI and supervising the progress of the mission and on the advice he offered and the logistics he supplied.

The Chamber of Commerce and Industry of Beirut (CCIB)

Lastly, I wish to express my profound and heartfelt gratitude to Mr. Rabih Sabra, Head of the Agricultural Department, Mrs. Nassima Ghanem, Head of the Library and Documentation Department, and Miss. Rania Bizri, Economist, for their warm and family-like welcome; their support on all fronts and for allowing me to use confidential documentation and to access the trade database which was needed to prepare the statistical results. Without you, this project couldn’t have been accomplished.


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10. Annex – Glossary of Acronyms and Terms In the context of this report the following abbreviations and acronyms have the meaning indicated.

Agadir Agreement Agreement for the Establishment of a Free Trade Zone between the Arabic Mediterranean Nations, 2004 – Jordan, Egypt, Tunisia and Morocco. Came into force 1 January, 2005.

Criteria (of origin) Rules defining working or processing required for products incorporating materials or components imported from countries outside a PTA to acquire origin for the purposes of the agreement

Cumulation Cumulation allows products to be regarded as originating if they incorporate materials or components which also originate within a zone of cumulation. Cumulation can be 'bilateral', between the exporting and the importing country or 'diagonal' between the exporting, the importing countries and any third country

Diagonal Cumulation Diagonal cumulation operates between more than two countries provided they have Free Trade Agreements containing identical origin rules and provision for cumulation between them. As with bilateral cumulation, only originating products or materials can benefit from diagonal cumulation.

EFTA European Free Trade Area – Iceland, Norway, Lichtenstein and Switzerland)

EMCS Pan Euro-Mediterranean Cumulation System.

EMFTA Euro-Mediterranean Free Trade Area. (Announced in the Barcelona Declaration of 1995: targeted for achievement 2010).

EU European Union (the 27 member-states)

EU-Lebanon Association Agreement

Euro-Mediterranean Agreement establishing an association between the EU and its member-states, of the one part, and the Republic of the Lebanon, of the other part, of 2002.

FTA Free trade agreement


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Full Cumulation Full Cumulation allows for any working/processing carried out in one country to be “carried forward” to the country where the final product is manufactured – and effectively for that 2nd country to count the processing as if it was performed there.

IRI Institute for Industrial Research

Man-Made Staple Fibres Synthetic or artificial filament tow, staple fibres or waste, of headings 5501 to 5507.

Natural Fibres Fibres other than artificial or synthetic fibres. The term is restricted to the stages before spinning takes place, including waste, and, unless otherwise specified, includes fibres which have been carded, combed or otherwise processed, but not spun.

They include horsehair of heading 0503, silk of headings 5002 and 5003, as well as wool fibres and fine or coarse animal hair of headings 5101 to 5105, cotton fibres of headings 5201 to 5203, and other vegetable fibres of headings 5301 to 5305.

nes Not elsewhere specified.

Palermo model The characteristics of the Rules of Origin regime in the FTAs linking the members of the EMCS. These were set out in a report by an EU Working Group and agreed at the Euro-Mediterranean Trade Ministerial Conference held in Palermo, Sicily, in 2003.

RoO Rules of Origin.

Rules of Origin regime A system for determining the origin of goods traded under a PTA and the associated regulatory framework.

Textile Pulp Materials. Not classified in Chapters 50 to 63, which can be used to manufacture artificial, synthetic or paper fibres or yarns.

Supplying Markets of Lebanese Imports, 2004

Source: ITC calculations based on COMTRADE statistics


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Importing Markets of Lebanese Exports, 2004

Source: ITC calculations based on COMTRADE statistics

any gains for the lebanese industrial sector

Documents

agadir agreement

tokten agadir

agadir experience

lebanese industrial

med protocol

lebanese exports

med verus protocol

industrial goods