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ECONOMIC POLICY
PROGRAMME
TOWARDS AN ECONOMICALLY-VIABLE
PALESTINIAN STATE:
The Regulation of External Trade
Monday May 23, 2005
Grand Park Hotel, Ramallah
May 2005
Economic Policy Programme
1
From NDTP to Free Trade:
Challenges Ahead
Professor Thomas Cottier
May 2005
Economic Policy Programme
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This document is an output from a project
funded by the UK Department for
International Development (DFID) for the
benefit of developing countries. The views
expressed are not necessarily those of
DFID.
May 2005
Economic Policy Programme
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Overall Interest of Palestine
• Palestine must be able to conduct a
sovereign trade policy in the
interest of its national
independence, and its economic
development and diversification
• Palestine and Israel have a
common interest in co-operating to
maximise economic benefits
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Economic Policy Programme
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Future Trade Policy Options
• NDTP is a sound basis of unilateral
trade policy, with a view to join
WTO
• NDTP and MFN low tariff policy
should not prevent preferential
agreements with Israel
• Trade relations should offer mutual
incentives to enter into specific
agreements
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Economic Policy Programme
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NDTP Environment
• Economic relations with Israel could
suffer in key areas without close cooperation in key sectors:
– Customs Cooperation
– Labour
– Security measures
– Transit
– Water resources
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NDTP Risks
• Application of trade barriers on 96% of
Palestinian export trade GDP:
– Israel’s WTO-MFN tariffs on Palestinian exports (e.g.
20.6% on agricultural goods)
– Israeli’s Non-tariff measures on Palestinian exports
• Low-tariff NDTP
– Neutralises Israel’s incentive to negotiate FTA
– Exposes Palestinian industry to import competition
• Israel could make FTA with Palestine
conditional on conclusion of regional FTA
• Less co-operation = more distrust and
increased risk of security measures
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Building Blocks
from NDTP to FTA
• Sectoral building blocks for FTA:
– Customs co-operation
– Mutual recognition
– Transit
– Labour
– Trade in Jerusalem
– Trade in water
– Dispute settlement
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FTA Benefits
• Preserves main source of national
income
• Maintains preferential access to
Israel’s market
• Avoids an increase in trade
transaction costs
• Establishes permanent basis for
co-operation, especially on traderelated security measures
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Challenges
• How to shape NDTP policy with a view to
create incentives for further negotiations in
a process of dialogue and continuing
mutual efforts?
• Implications for initial tariff structure and
non-tariff barriers to trade?
• Implications vis-à-vis joining WTO
(bilateral negotiations in goods and
services? )
May 2005
Economic Policy Programme
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ECONOMIC POLICY
PROGRAMME
TOWARDS AN ECONOMICALLY-VIABLE
PALESTINIAN STATE:
The Regulation of External Trade
Monday May 23, 2005
Grand Park Hotel, Ramallah
May 2005
Economic Policy Programme
11