Economic Agreement with Israel (Paris Economic Protocol)
The Paris Protocol (PP) is an economic trade agreement concluded on April 9th, 1994 in Paris between the Palestinian Liberation Organization (PLO) and the government of the state of Israel stating the basic principles of free trade between the two parties.
This agreement resembles a joint customs envelope built on three basic principles:
- Free exchange of goods between both parties with no tariff or non-tariff barriers whatsoever.
- Adoption of a unified tariff by both parties with the exception that Palestine has the right of customs determination on a limited list of strategic goods (A1+A2+B) and has the right to determine specifications for lists (A1+A2).
- A1: Goods Imported must be locally produced in Jordan, Egypt or in other Arab Countries.
- A2 Goods Imported can be imported from Arab, Islamic or other countries.
- B Goods Imported are not subject to quantitative restrictions but are subject to Israeli standards.
- Sharing revenues in customs clearance, where the Israeli customs are responsible for clearing the Palestinian imports on behalf of Palestinian customs (based on the customs envelop) and then transfer the revenues to Palestine
The agreement includes 11 separate articles on trade including but not limited to those on labor, agriculture, tourism, industrial food, insurance and taxes. Importing and exporting products to and from the Palestinian market and foreign markets is executed through Israeli ports where Israel is in full control over trade movement in addition to the Israeli control over internal Palestinian trade. Additional advantage Paris Protocol provided is possibility for the PA to sign free trade agreements and diversification of Palestinian trade.
It should be noted that Paris Protocol, when it was first envisaged, was built on reciprocity between the Israelis and the Palestinians. It is obvious that this spirit of Paris Protocol no longer exists simply because it is not functioning as agreed. Thus, there is an urgent need to figure out a new formula that best serves the interests of the Israelis and the Palestinians where reciprocity is the fundamental basis.
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LINK to the A1, A2, and B lists
Greater Arab Free Trade Area (GAFTA)
GAFTA is a multilateral trade agreement between 18 out of the 22 Arab League states aiming to fully liberate the trade of goods between Arab Nations. The trade agreement adopts the method of gradual reduction on taxes and customs (10% per annum) eliminating customs and non-tariff barriers on goods traded amongst the 18 Arab countries which are: Algeria, Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Palestine, Qatar, Saudi Arabia, Sudan, Syria, Tunisia, United Arab Emirates and Yemen.
The agreement was signed in 1997, brought into force in 1998 aiming to reach zero tariffs on 31/12/2007, and then it was amended to be on 31/12/2004. Note that Palestine is treated as a less developed country and began to apply the reductions of tariffs starting in 2005 by 16% for a period of five years and 20% in 2011. The FTA applies to all agricultural and animal products, from Chapters 1 to 24, whether in their raw or processed form. During the liberalization process member countries were able to exclude from tariff reductions certain agricultural products depending on the production season, and they were also able, as per agreement during the implementation process, to schedule certain commodities for immediate liberalization.
As of January1st, 2005, the agreement reached full trade liberalization of goods through the full exemption of customs duties and charges having equivalent effect between all Arab countries members of the GAFTA. Accordingly, since 2005 Palestinian exports enjoy duty free quota free treatment in all Arab countries that are members of GAFTA.
Within GAFTA, Palestine is treated as least developed country and began to apply the reductions of tariffs starting in 2005 by 16% for a period of five years and 20% in the last year. Recently, Palestinian customs started to refund the value of customs duties paid by Palestinian importers for goods subject to customs exemption under this Agreement, as an obligation of the membership of Palestine in the Arab Free Trade Area. Thus, Palestinian traders enjoy duty free quota free access for all goods to and from all Arab countries in GAFTA.
GAFTA has many beneficial returns on the involved countries including the expansion of their market, increase of investment opportunities, regulation of fair competition, and enhancement of research and development. It is one of the most important economic achievements in the area of Arab common work. It contributes to efforts towards establishing the Arab Common Market.
To further contribute to economic integration among Arab countries through liberalizing trade in both goods and services, Arab countries are currently engaged in negotiations to liberalize services and investments among them. This free trade area is only a first step towards achieving a customs union by 2015 on the way to a common market by 2020.
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Interim Agreement on Trade and Cooperation with the European Union (IAA)
The Interim Association Agreement was signed on February 17, 1997 between the Palestine Liberation Organization (PLO) and the European Commission to the benefit of Palestine. This agreement came as an outcome of the Barcelona Process that was launched by Euro-Mediterranean of Foreign Ministers in November 1995 to strengthen the relation between Europe and other Mediterranean countries. This process formed an innovative alliance based on the principles of joint ownership, dialogue and cooperation.
The IAA started with an immediate duty free treatment of bilateral industrial trade, and duty free quotas for agricultural, agri-business and fishery products. In January, 2012, the agreement between the European Commission and Palestine came into effect, creating a duty free, quota free regime for the import of Palestinian agricultural, processed foods, and fish products to the European markets.
Based on IAA, Palestine was amongst the first partner countries to be included in the European Neighborhood Policy (ENP) in 2004. ENP provides an opportunity to Palestine to start the process of state building including buidling all the necessary infrastructure institutions and human resources development utilizing the EU technical and financial support. This relation is not only limited to plain cooperation but also involves economic integration and deepening political cooperation.
In May 2005, the European Union and Palestine agreed on an ENP Action Plan setting out jointly agreed priorities for economic integration and political cooperation. This Action Plan was updated and adopted in March 2013
A package of measures to facilitate trade of Palestinian products with other Euro Mediterranean partners on a bilateral and regional basis was adopted in the 9th Union for the Mediterranean Trade Ministerial Conference, Brussels 11 November 2010, where Ministers endorsed a package of measures to facilitate trade of Palestinian products with other Euro‐Mediterranean partners on a bilateral and regional basis Palestinian trade in the Euro-Mediterranean region shall be facilitated in a comprehensive way, through removal of restrictions on access to markets and enhanced technical support. This should involve the implementation of a package of measures to facilitate trade of Palestinian products with other Euro-Mediterranean partners on a bilateral, regional and multilateral basis.
The package constitutes three major measures:
- Facilitating access for Palestinian exports to Euro-Mediterranean markets.
- Integration of the Palestinian economy in the multilateral trading system.
- Strengthening the administrative capacity to enhance trade of Palestinian products to Euro-Mediterranean markets.
The scope of the IAA can be summarized as follows:
- Gradual trade liberalization.
- Sustainable economic and social development in Palestine
- Create balanced economic and social relations between the two parties.
- Regional cooperation.
- Comprehensive dialogue between the two parties.
- Formation of the Union for the Mediterranean in July2008 as a relaunched Euro-Med partnership (The Barcelona Process).
- Adoption of the Palermo Protocol for harmonized rules of origin as a means to diagonal cumulation of origin with Partners within the Euro-Mediterranean zone for export to Europe.
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The Agadir Agreement (AA)
Agadir Agreement (AA) is a free trade agreement aiming to establish free trade between Arab-Mediterranean counties, it was signed in 2004 by Egypt, Jordan, Morocco and Tunisia. The agreement aims to develop economic activities and improve living standards within the member countries, and to create an opportunity for economic integration between them. Agadir is in harmony with the Greater Arab Free Trade Area (GAFTA), the Barcelona Process (Euro-Mediterranean Free Trade Area).
AA is open for Arab Mediterranean Countries who are in association agreement with EU and Members of the Arab League. Palestine decided to join Agadir Agreement in 2009, and eventually the representatives of Palestine announced the PA’s induction to the agreement in 2011 to fulfill the potential of having free trade with the countries associated with Agadir Agreement.
Interim Agreement with EFTA States
This agreement was signed between the EFTA States (Iceland, Liechtenstein, Norway, and Switzerland) and the Palestine Liberation Organization (PLO) for the benefit of Palestineon November 30, 1998 and entered into force on July 1, 1999. It gives duty-free treatment for industrial product, fish and marine products. With reduced tariffs on processed agricultural products. Note that the EFTA Rule of Origin is the same as the Rule of Origin applied by the European Union.
The scope of the agreement with the EFTA States can be summarized in the following points:
- Elimination of all trade tariffs for industrial goods between both parties since July 1, 1999.
- Elimination of non-tariff barriers, as well as other trade related issues such as competition rules, intellectual property protection, public procurement, monopolies, aid, and payment sand transfers.
However, Palestine signed separate bilateral agreements on agricultural processed products with EFTA countries because the four EFTA countries do not share the same agricultural policy. These agreements are considered a vital part of the tools required to create free trade zone.
Interim Agreement on Trade with Turkey
This trade agreement between Turkey and the Palestinian Liberation Organization (PLO) was signed in July 2004 in Istanbul to establish a free trading area between the two parties eliminating tariff and non-tariff barriers in the trade between the two Parties.
The agreement includes the following objectives:
- To increase and enhance the economic cooperation and to raise the living standards of the Parties.
- To gradually eliminate difficulties and restrictions on trade in goods, including also the agricultural products.
- To promote, through the expansion of reciprocal trade, the harmonious development of the economic relations between the Parties.
- To provide fair conditions of competition in trade between the Parties;
- To contribute by the removal of barriers to trade, to the harmonious development and expansion of world trade.
- To create conditions for further encouragement of investments particularly for the development of joint investments in both countries;
- To promote trade and cooperation between the Parties in third country markets.
This agreement regulates numerous subjects such as sanitary measures, payments and transfers, and safeguard measures. Both Parties decided on having a Joint Committee to determine trade of agricultural products and fisheries. For instance, the first meeting in December 2010 decided the Palestinian dates will be granted 1000 tons of tariff rate quota with duty free access to turkey, and this decision was implemented in November 2012 [1].
After this trade agreement was implemented, trade volumes changed as follows:
•Palestinian exports to Turkey were 833 thousand USD in 2012, compared to 420 thousand USD in 2011, and 1.2 million USD in 2005.
•Palestinian imports from Turkey were 233.8 million USD both in 2011 and 2012, compared to 120.7 million USD in 2005 (Source: PCBS).
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[1] http://www.economy.gov.tr/
The Declaration of Free Trade between the US and WB and Gaza Strip
This declaration was signed in 1996 to potentially open the door for Palestinian exports to enter a larger market. It was intended to provide duty free treatment to all Palestinian products entering the United States and vice versa. Traded products must meet the American Rule of Origin. However, the Israeli impediments on movement of goods and discrimination against Palestinian products in the Israeli ports along with the lack of capacity of local producers resulted in a minimal utilization of this important agreement.
Thus, this declaration is merely an extension of the free trade agreement between US and Israel (1985) that allows the entrance of goods of both parties to their respective markets exempted from tariffs, which facilitates the entrance of Palestinian products to the US market.
Framework on Economic Cooperation and Trade between Palestine and Canada
This framework was signed in 1999 between Canada and the Palestinian Liberation Organization (PLO) to give Palestinian products the potential to enter a larger market. The arrangement states that Canada will support a program of economic development in the Palestinian areas, and it focuses on reciprocity in liberalization of markets for products of both sides taking into consideration that Palestine needs to protect its newly established industries. The agreement aims to eliminate and reduce tariffs on industrial products, agricultural products and processed food pursuant to a Quota system, as long as the products meet the Canadian Rule of Origin.
The Israeli impediments on movement of goods and discrimination against Palestinian products in the Israeli ports on the one hand, and the lack of capacity of local producers on the other hand resulted in a minimal utilization of this arrangement. This arrangement is considered an extension of the Canadian-Israeli trade agreement. Therefore, Canadian applied tariffs on imports from Palestine are the same as applied for Israel
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Free Trade Agreement with MERCOSUR
This Free Trade Agreement was signed in 2011 between Palestine and the Southern Common Market (MERCOSUR), whose Members are Argentina, Brazil, Paraguay, Uruguay and Venezuela, To date, the agreement has not entered into force yet.
Note that this agreement is consistent with Article XXIV of The General Agreement on Tariffs and Trade (GATT 1994) and the Decision on Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries (1979).
The objectives of this Agreement, as elaborated more specifically in its provisions are to:
- Eliminate barriers to trade in, and facilitate the movement of goods between the territories of the Parties;
- Promote conditions of fair competition in the free trade area;
- Increase substantially investment opportunities in the territories of the Parties, and increase cooperation in areas which are of mutual interest to the Parties;
- Create effective procedures for the implementation, application and compliance with this Agreement, and its joint administration;
- Establish a framework for further bilateral and multilateral cooperation to expand and enhance the benefits of this Agreement.
Customs duty includes any duty and charge of any kind imposed in connection with the importation of a good, including any form of surtax or surcharge in connection with such importation, but does not include any: internal taxes or other internal charges imposed in accordance with Article III of the General Agreement on Tariffs and Trade (GATT) 1994. Other fees or charges imposed in accordance with Article VIII of GATT 1994 and the Understanding on the Interpretation of Article II:1 (b) of the GATT 1994.
Free Trade Agreement with Egypt
The Palestinian-Egyptian Trade Agreement was signed in 1994 granting duty free entrance of Palestinian products to Egypt as long as they meet the Egyptian Rule of Origin (the production cost of industrial products of national origin should consist of a minimum of 40% of local input) and Egyptian products of lists A1, A2 and B of the Paris Protocol are exempted from customs when entering Palatine.
Note that list A1, A2 and B of the Paris Protocol are:
- A1: Goods Imported must be locally produced in Jordan, Egypt or in other Arab Countries.
- A2 Goods Imported can be imported from Arab, Islamic or other countries.
- B Goods Imported are not subject to quantitative restrictions but are subject to Israeli standards.
Agreement on Commercial Cooperation between the Palestine Liberation Organization and Russia
Russia and Palestine extend to one another the status of the Most Favored Nation in regard to trade. Imports and exports between the two parties are duty free for the following goods:
- Instruments and items specified for montage and repair.
- Equipment and instruments specified for undertaking experiments and scientific research.
- Articles for demonstration during fairs and exhibitions.
- Containers and similar packages utilized in international trade on a return basis.
Free Trade Agreement with Jordan
The Agreement between Jordan and the Palestinian Liberation Organization was signed in July 1998. It provides preferential tariffs for goods traded between Palestine and Jordan. Goods in Lists A1, A2, and B entering the WBGS and the agreed upon products entering Jordan are duty free, provided that the import volume does not exceed the pre-determined quota. Products exported to Jordan must meet the Jordanian Rule of Origin (a product should be wholly obtained -grown, produced or manufactured- If not wholly obtained, the product should at least have 35% of the value added produced locally either in WBGS or Jordan).
Note that list A1, A2 and B of the Paris Protocol are:
- A1: Goods Imported must be locally produced in Jordan, Egypt or in other Arab Countries.
- A2 Goods Imported can be imported from Arab, Islamic or other countries.
- B Goods Imported are not subject to quantitative restrictions but are subject to Israeli standards.
DOWNLOAD the meeting minutes of the Joint Palestinian-Jordanian economic committee