The export data for 2003 is in, and it’s up nicely. At $1.52 billion, Lebanese exports increased by a substantial 31.4% on 2002, which in itself was a good year. Sector leaders have pounded their fists ad nauseam that exporting is where it’s at for Lebanese industries and industrial exports in particular can pump new lifeblood into the economy, as well as help manufacturers sustain themselves in the lows of the domestic consumption cycle. Nearly a quarter of all 2003 exports, $379 million worth of goods, found their way to Switzerland. This result matches the leading export product category, jewelry, which was valued at $464 million and to a large portion was bound for Switzerland. With this notable exception, three Arab countries – the UAE, Saudi Arabia and Syria – ranked as the top export destinations, with respective shares of 6.6 to 6.8 %. Arab markets are the primary and logical targets for Lebanese manufacturers, but in recent years, industrialists had also taken to look at European Union markets for long-term perspectives. With its proximity and purchase power, the EU is a prize worth going after for any country on the southern and eastern edges of the Mediterranean, and the 2002 signing of the Interim Association Agreement for Lebanon’s accession to the Euro-Med Agreement reassured industrialists that export opportunities to the EU are theirs to compete for. What is in this context more important than near elimination of European tariff barriers for Lebanese goods with coming-in-force of the Interim Agreement last year, is the support that the European Union is giving to make Lebanese suppliers fit for Europe, confirmed Albert Nasr, head of the Center for Economic Research at the Federation of the Chambers of Commerce in Lebanon.
For the past few years, initiatives such as the Euro Info Correspondence Centre (EICC) and the Euro-Lebanese Center for Industrial Modernization (ELCIM) have provided services aimed at developing trade links and helping Lebanese companies improve their performance.
The three-year ELCIM project, which received a budget of $6.4 million euro, is slated to expire in August of 2004. Its activities included institutional support for professional organizations, an example being an agreement with the Association of the Lebanese Software Industry (ALSI) in funding ISO-certification for ALSI member companies, as well as subsidizing Lebanese exhibitors in European trade fairs and exhibitions. Another focus of ELCIM was in advising and assisting small and medium enterprises (SMEs).
According to the EU delegation office to Lebanon, the work of ELCIM is currently being evaluated for its success, and until this process is completed, the office declined to discuss the program’s performance and future plans. However, discussions for an ELCIM 2 successor project are reportedly ongoing, and at time of this writing insider expectations were for a new phase to be announced in the near future. On first impression, the 2003 Lebanese trade data support that promotion of better performance of Lebanese manufacturers on European markets deserves more time. “I have seen no blatant success stories yet,” Nasr told Executive.
Contrary to overall increases in outbound trade over the past two years, Lebanese industrial exports to the European Union – not including Switzerland – decreased by more than 10% from 2001 to 2002 and around 5% last year. Taking into account the appreciation of the euro against the dollar, the downward trend in Lebanese industrial exports to EU and euro zone becomes even more pronounced. Seen from the perspective of European importers, the amounts they spend on purchasing goods from Lebanese manufacturers dropped by over one third from 2001 to 2003. Based on the official exchange rates of euro 1.11 to one dollar in 2001, and euro 0.9 to one dollar in 2003, euro zone importers would have spent euro 167.6 million on Lebanese goods in 2001 and only euro 108.9 million in 2003. In consequence of this and of the overall up trend in outbound trade, the EU share in all Lebanese exports dropped below 10% in 2003, less than half of what it had been in 2001. From the mid-90s until spring of 2002, Lebanon was fated to bear the burden of high dollar values. On the face of things, the exchange factors that since then have meant higher costs for Lebanon in importing goods from the main supplier nations in the EU, should have offered manufacturers here a better competitive position for exporting their wares to Europe – because on the fundamental seesaw of bilateral trade, what is tough on imports is sweet for exporters. The recent disparity between possibility and reality in Lebanese exports may warrant some analysis by local trade experts who thus far had concentrated their attention on the negative effects of the euro appreciation on the purchasing power of the Lebanese lira.
Regional trade relations being sometimes less rational than participants might wish for, Lebanese trade has seen both explicable and less explicable fluctuations. The big hope in national exports, development of trade with Iraq, remains burdened by question marks, depending as it does on security improvements and political stabilization in Baghdad. Despite the importance of regional markets and Lebanon’s position in Middle Eastern trade, the national needs to increase exports and integrate more into the global economy are strong incentives for local industries to accept the challenges of meeting the standards and requirements of EU markets. Seen country-by-country, Lebanese exports to three main euro zone economies – Italy, France, Germany – all increased in 2003. Moreover, one finds encouraging examples of Lebanese manufacturers that recently succeeded in gaining new export successes in Europe, from foodstuff producers and our leading wineries to construction materials company Uniceramic.
On the issue of development support, some observers suggested that local industrialists approached programs such as ELCIM with expectations of encountering readily available financing and more assistance than was available. But while EU budget allocations for assistance to Mediterranean countries certainly are dwarfed by the funds Brussels provided to its Eastern European neighbors and accession candidate nations, the prospects of any sponsored assistance for Lebanese companies are more than what most industrialists here have come to expect from their government. For those companies that do not find what they need in the publicly sponsored programs, private sector initiatives, both non-profit and commercial, are eager to offer their services. Only this month, a new organization will launch its operations with a membership drive aiming to attract Lebanese companies interested in international trade. The Beirut World Trade Center is a for-profit member of the global World Trade Center network of New York fame. As a service provider, the organization plans to attract members from the industrial and trade sectors. For the first year, organizing trade missions to Johannesburg, Prague, Shanghai, and Barcelona are on its agenda, along with provision of trade education programs and the establishment of an office center before the end of the year. “In the first stage, our services will be available to member and non-member companies,” promised Chadi Abou Daher, the Beirut WTC’s general manager. The center is operated under a WTC license held by the NEST group that already runs or plans to run such centers in seven countries in the Middle East and North Africa. “The group didn’t do a specific feasibility study before initiating the center in Beirut,” Abou Daher said. “Based on the importance of Beirut and its past role as regional trade hub, they believed that it could be one of the most successful World Trade Centers in the region.”