BEIRUT: The Association of Lebanese Industrialists (ALI) plans to file a lawsuit against the government for failing to protect local industry against unfair foreign competition, the head of the group said on Monday. "We have had enough. The government must understand that local industry can no longer stay in business if the free trade agreements are not respected by Arab countries," Fadi Abboud told The Daily Star.Lebanese industrialists argue that most Arab states that have signed free trade agreements with Lebanon subsidize the cost of energy, which is essential for the manufacturing sector.

In addition, the industrialists say that the government is not overly keen to press Arab states to remove the subsidies on manufactured goods that are exported to Lebanon. Abboud said that the association is very serious about the lawsuit, after having exhausted all means to solve the issues of unfair competition."Our lawyers will send these charges to the Shura Council, which in turn will issue a final verdict on this matter," Abboud told The Daily Star.

Economy and Trade Minister Sami Haddad could not be reached for comment. Several Lebanese factories which rely heavily on fuel oil and gas have been forced to close their business and relocate to other countries, while others laid off most of their staff and reduced production. The Lebanese industrial sector, which employs a large number of people, incurred heavy losses after Lebanon inked free trade agreements with Syria, Jordan, Egypt and other Arab countries which provide full support to their local industries.

The government claims that it can’t afford to subsidize the cost of fuel oil and gas oil due to the size of the public debt.

"We want the government to respect the law for the protection of local industries which was issued by the Cabinet in 2006," Abboud said.

According to this law, the government is suppose to combat the dumping of cheap products coming to Lebanon by slapping duties on these items.

But the government gradually removed these levies on the grounds that Lebanon will join the World Trade Organization.

"This is absolutely, absolutely incredible. On one hand the government promises to protect local industry and on the other hand it takes no action to fulfill its pledges," Abboud said.

Citing an example, he said that a ton of fuel oil in Saudi Arabia cost $50 while in Lebanon the price is $900.

"When we raise this issue to the government it argues that it does not want to upset Arab countries," Abboud said.

The ALI sent an open letter to the Arab League on Monday detailing the plight of the Lebanese industrial sector as a result of the unfair competition from the Arab states.

"Arab countries must either remove subsides on their local industries or allow Lebanon to slap duties on Arab-made goods exported to our country," the association said in the letter.

It also urged Arab countries to create a special fund which will subsidize the cost of energy for nonoil-producing countries, such as Lebanon.

The association warned that if the Arab League refuses to help Lebanese industry then the latter will be forced to lay off their workers and move the business somewhere else.

"There are dozens of plastic industries in Lebanon that are threatened by the high cost of energy," Abboud said.

Article originally published by The Daily Star 04-Mar-08