The Palestinian business community has called for changes in Israeli-Palestinian economic relations, in the wake of the launch of the Road Map and possible resumption of the peace process. The Palestinians claim that the Paris Accord, which stipulates a common customs envelope for Israel and the Palestinian Authority (PA), does not properly protect Palestinian interests, and should be replaced.
PECDAR (Palestinian Economic Council for Development and Reconstruction) managing director Dr. Mohammad Shtayyeh says the customs envelope agreement was not suitable for current conditions, and a free trade agreement between Israel and the PA would be better.
“A free trade agreement would give greater independence to each party in its economic relations with third parties,” said Shtayyeh. For instance, the Palestinians could sign economic agreements with Arab countries.
Palestinian economists believe that physical borders, such as the one resulting from the construction of the separation fence, will contribute toward a free trade agreement, since they would determine place of origin rules for goods, which cannot be done now, because the PA lacks a defined territory.
The Palestinians claim that the single customs envelope prevents them from managing an independent foreign trade policy, and has led to their market being flooded by cheap imports that have destroyed Palestinian industry.
They said the Palestinian economy was still largely based on labor-intensive industries like textiles. Exposure to imports, which might be suitable for a developed, modern economy like Israel’s, is devastating to the PA’s underdeveloped economy.
On the other hand, the Palestinians admit that the single customs envelope enables them to benefit from Israel’s free trade agreements with the US, EU, and other countries.
“It’s hard to separate the Israeli and Palestinian economies, and it’s important to strengthen collaboration between the two. However, the standing of the Palestinian economic relations must simultaneously be strengthened, said PalTrade CEO Iyad Joudeh. PalTrade (Palestine Trade Center) is equivalent to the Israel Export Institute.
Published by Globes [online] - www.globes.co.il - on May 25, 2003