The reintegration of the former occupied zone is under way, with state services gradually returning after an absence of nearly 20 years. The 1977 Co-operation Agreement and subsequent protocols regulate the current trade relationship between the European Union and Lebanon. Lebanon is not required to apply reciprocal or any preferential treatment to EU exports. The deficit with the EU in 1998 was 2.58 billion. It dropped to 2.36 billion in 1999 due to the effects of recession, a fall in imports, and an increase in customs tariffs.
Lebanese exports are modest, targeted mainly at Gulf countries and Saudi Arabia.
In addition, Lebanon has received 30 million in grants as humanitarian assistance and for rehabilitation actions, and 20 million as interest subsidies for EIB environment loans. The European Investment Bank has set aside over 200 million as loans to Lebanon. MEDA priorities for 2000-2006 will continue support for reform measures underpinning economic transition and stabilisation, for the productive sectors and privatisation of infrastructure, and for balanced social development. After a gap of two years, formal negotiations on the Association Agreement resumed during a 5 th round in September 2000 in Beirut. Talks were first held in November 1995.