72663 v1 World Trade Indicators 2009/10 Libya Trade Brief Trade Policy External Environment In line with its WTO accession process, Libya has Libya’s exports face an average rest of the world tariff implemented numerous trade liberalization reforms, (including preferences) of 5.6 percent in 2006. When such as reducing the number of state importing weighted by its actual exports, Libya’s exports have monopolies, limiting the number of import bans, very good access to international markets with a abolishing licenses for most goods, and reducing weighted rest of the world tariff (including subsidies.1 In 2005, the government abolished duties preferences) of 0.1 percent, much lower than the on 3,500 products, and subjected around 80 remaining averages for its regional and income group products to duties between 5 and 50 percent. Today, comparators of 1.3 and 1.8 percent, respectively. Libya Libya’s simple average of the MFN applied tariff is 0 mainly exports hydrocarbons, which accounts for the percent. Consequently, Libya appears to have the most low rest of the world tariff for non-agricultural goods liberal trading regime in the Middle East and North of 0.1 percent. The Libyan dinar, which is pegged to Africa (MNA) region and within the upper-middle- the SDR, depreciated by 2.3 percent in nominal terms income countries. Indeed, based on its latest MFN against the U.S. dollar in 2008.5 applied tariff, it is ranked the least restrictive country out of 181 countries in the ranking, along with Hong Libya is a member of the Common Market for Eastern Kong, China, and Macao, China. However, the and Southern Africa (COMESA), which established a country still has several non-tariff barriers to trade. customs union in June 2009 and plans to fully For example, a service fee of 4 percent is imposed on implement it by 2012. Also, at the end of 2008, Libya all imported goods and the government maintains a has started negotiations with the EU on a framework monopoly over some imports.2 Moreover, imported agreement which would also provide for a free trade and domestic goods face different levels of the area.6 This would be of particular importance consumption tax. considering that over two thirds of Libya’s exports go to EU countries. Moreover, Libya is a member of the In the context of the global recession, at the beginning Greater Arab Free Trade Area (GAFTA) through of 2009, Libya imposed a new consumption tax on which it receives full exemption of customs duties to imported finished goods that does not apply to the 16 other member countries since January 2005. same goods produced domestically.3 According to reports in the Egyptian press, in June 2009, Libya has imposed a 10 percent import duty on imports of food Behind the Border Constraints from Egypt.4 Libya lags noticeably behind its regional and upper�middle�income comparators on several governance indicators. Its performance is poorest on regulatory quality. Access to information and communications technology (ICT) portrays a mixed picture. In 2006, 73 percent of the population had telephone and mobile connections, compared to the Unless otherwise indicated, all data are as of August 2009 regional average of 56.8 percent, while only 4.3 percent and are drawn from the World Trade Indicators 2009/10 had access to Internet, about half of the regional Database. The database, Country Trade Briefs and average. However, Libya’s secondary school enrollment Trade-at-a-Glance Tables, are available at rate is significantly higher than that of its comparators. http://www.worldbank.org/wti. If using information from this brief, please provide the Trade Outcomes following source citation: World Bank. 2010. “Libya Trade Brief.� World Trade Indicators 2009/10: Country Trade An exporter of hydrocarbons (which generated 98 Briefs. Washington, DC: World Bank. Available at percent of export revenues in 2007) Libya’s trade http://www.worldbank.org/wti. flows are vulnerable to changes in commodity prices.7 World Trade Indicators 2009/10 Libya Trade Brief As such, it benefited from the high oil prices for most References of 2008 and, in nominal U.S. dollar terms, its exports grew by 49.9 percent compared to 2007.8 However, COMESA. 2009. “COMESA Launches its Customs the export growth trend reversed in the fourth quarter Union.� COMESA. July 24, 2009. . in 20079) cooled, and oil prices declined from their Development Solutions. May 2009. Trade Sustainability peak of US$147 per barrel in July 2008 to around Impact Assessment (SIA) of the EU�Libya Free Trade US$40 in early 2009. Exports fell by 14.4 percent in Agreement: Draft Interim Technical Report. July 22, 2009. the fourth quarter of 2008 year-on-year, and then . 2009 compared to the same period in 2008. Similarly, European Commission. November 12, 2008. “EU-Libya: as the economy contracted, import demand slowed in Negotiations on Future Framework Agreement Start the last quarter of 2008 to 21.8 percent10 year-on-year (Press Release).� Europa. July 22, 2009. (compared to an average growth rate of 48.5 percent . of 2009 to only 6.9 percent on a year on year basis.11 Economist Intelligence Unit (EIU). March 2009. Country Foreign direct investment inflows accounted for 8 Report: Libya. EIU. percent of the GDP in 2007. ———. July 2009. Country Report: Libya. EIU. ———. August 2009. Country Report: Libya. EIU. International Monetary Fund (IMF). June 1, 2009. The Notes Socialist People’s Libyan Arab Jamahiriya —2009 Article 1. Development Solutions, May 2009, p. 12. IV Consultation Preliminary Conclusions of the IMF 2. Development Solutions, May 2009, p. 12. Mission. IMF. July 22, 2009. . 4. EIU, July 2009, p. 13. Oanda.com. FXHistory®: Historical Currency Exchange 5. Oanda.com. Rates. August 12, 2009. . 7. World Bank, April 2009. World Bank. April 2009. Country Brief 2009: Libya. World 8. EIU, March 2009, p. 16; August 2009, p. 17. Bank. July 22, 2009. . 10. Import data does not include defense imports. World Trade Organization. July 15, 2009. “Report to the 11. EIU, March 2009, p. 16; August 2009, p. 18 TPRB from the Director-General on the Financial and Economic Crisis and Trade-Related Developments.� WTO, Geneva.