Lebanon has signed an association agreement with the European Union, becoming the eighth player to join a jigsaw the EU hopes will eventually become a Mediterranean free-trade area.

The agreement was originally due to be signed in late April at the EU-Mediterranean summit in Spain, but Lebanon boycotted that event in protest at Israel's attacks on Palestinian areas.

Lebanon's foreign minister pledged to "enhance regional co-operation" at Monday's signing ceremony in Luxembourg.

The accord creates a framework for regular political discussions between Lebanon and the EU.

Peace dividend

The commercial aspects of the deal include talks on economic co-operation aimed at cuts in tariffs and quotas and free trade in industrial goods by 2010.

Lebanon, whose once-glamorous capital of Beirut was devastated by civil war in the 1980s, has a huge trade deficit with the EU.

In 2000, Lebanon imported goods worth 3.23bn euros ($3bn; �2bn) from the EU, but its trade in the opposite direction was worth only 193m euros.

Greater stability in recent years has led to the rebuilding of parts of Beirut and a stronger economy.

Long-term plan

The EU hopes to create a free-trade area with partner countries from the Mediterranean.

The Barcelona process, as the talks are called, began in 1995.

Since then, the EU has signed association agreements with Morocco, Algeria, Tunisia, Israel, the Palestinian Authority, Jordan and Egypt.

The pacts pledge both sides to respect international rules on anti-terrorism measures, money laundering and drug smuggling.