Among the countries in the so-called Southern Neighbourhood region – comprising Algeria, Egypt, Israel, Jordan, Lebanon, Libya, Morocco, Palestine, Syria and Tunisia – Libya is the only one yet to conclude an association agreement with the EU. This is attributable to the security and stability concerns of recent years.
Libya ranked 47th among the EU’s trade partners in 2020. However, as Libya’s largest trading partner, the EU accounted for 51% of the country’s global trade in goods during the same period, with trade in goods reaching €7.8bn. Imports from Libya to the EU amounted to €4bn, the majority being fuel and mining products, specifically petroleum and petroleum derivatives, which accounted for some €3.9bn (97%). Conversely, EU exports to Libya were valued at €3.8bn, and primarily consisted of fuel and mining products at €1.5bn (39.5%), followed by agricultural and raw materials at €900m (23.7%), and machinery and transport equipment at €700m (18.4%).
In the realm of services, the bilateral trade between the EU and Libya reached €900m in 2019, with EU imports of services at €300m and exports at €600m. Negotiations for a framework agreement on trade commenced in 2008, but were suspended in February 2011 due to the prevailing political crisis. Although the EU actively supports Libya’s transition towards stability and prosperity, trade discussions are currently hampered by the absence of a political settlement. While bilateral trade negotiations may resume in the future, further progress will likely require improvements to the current situation.
Libya has also yet to join the World Trade Organisation (WTO). Although accession negotiations with the WTO commenced in July 2004 via the establishment of a working party, the negotiation process has since stalled.
In terms of financial support, the European Neighbourhood Instrument played a pivotal role in facilitating bilateral cooperation between the EU and Libya between the years 2014 and 2020. During this time the EU provided €98m in financial assistance to Libya, focusing on priority areas such as governance, economic development – particularly for small enterprises, health, civil society support and youth initiatives.
Looking ahead, the EU has adopted a new financial cooperation instrument – the Neighbourhood, Development and International Cooperation Instrument – under its Multiannual Financial Framework for 2021-27. Furthermore, given Libya’s political situation, the EU has implemented yearly special measures instead of a multiannual programming process, allowing flexibility in responding to the rapidly changing environment.
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