economic policy programme

May 2005 Economic Policy Programme 1

ECONOMIC POLICY PROGRAMME

TOWARDS AN ECONOMICALLY-VIABLE PALESTINIAN STATE:

The Regulation of External Trade

Monday May 23, 2005Grand Park Hotel, Ramallah


Preparation of Negotiations on Economic Permanent Status and

Transitional Arrangements

Professor Thomas Cottier and Daniel Crosby


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.


Background

• Two States• Close economic interdependence of the

Region• Vital importance of workable economic

relations between Palestine and Israel for lasting peace

• The Twenty Points Framework (2000)• Legacy of Oslo Accords and Paris

Protocol


Key Assumptions

• Viable independent and autonomous State of Palestine

• No settlements and contiguity in and between territories

• Principles of open-market economy

• Respect of WTO rules and other international agreements


The Context

• Total fluidity of current situation (Gaza, West Bank and Jerusalem)

• Uncertainty of political planning

• Economic relations essential part of Permanent Status agreement


Final Goals

• Stable legal framework for the conduct of foreign trade compatible with WTO rules

• Optimal treaty relations with Israel

• Participation in multilateral and potential regional trading system

• Development of suitable, flexible, workable and adaptable transitional arrangements


Options

• Under WTO rules, the following long-term options are available: – Unilateral trade regime based upon MFN

(NDTP)– Sectoral Agreements compatible with WTO– Trade Agreements based upon NDTP

including tariffs– Free Trade Agreement (no tariffs and QRs,

services)


Concept of Building Blocks

• Composite texts of fully drafted trade agreements with Israel (and possibly in part with other partners): – Option A: Self-standing sectoral agreements on

specific issues

– Option B: Comprehensive Trade Agreement

– Option C: Comprehensive Free Trade Agreement, including services

• Building Blocks allow for different combinations (tool kit)


Building Blocks Relationshipto Overall Programme

• Building Blocks are part of overall Programme of support for Palestinian trade policy decisions

• Complement EPP papers and output:– Foreign Trade Act– Competition Law– Food Safety Law– Technical Normative Infrastructure Law– Intellectual Property


Option A

• Sectoral Agreements from Day One– Self-Standing– Ensure critical trade infrastructure with

Israel– May subsequently be incorporated in

comprehensive agreements


Sectoral Agreements Prepared (Option A)

• Border Controls, Jerusalem and Customs Cooperation Agreement

• Transit Agreement

• TBTs and SPS Agreement

• Labour Agreement


Labour Agreement

• Access to labour markets and status of workers• Preferential access to labour market (minimum

quotas) • National Treatment and MFN • Professional Qualifications • Border Controls • Taxation and Social Security • Labour Unions • Access to Courts and International Dispute

Settlement


Option B

• Trade Agreement– Based upon MFN and NDTP– Less extensive coverage – Foresees combination of various

sectoral agreements– Preparing for further economic

integration, if and when desired


Option C

• Free Trade Agreement– Comprehensive Agreement according

to Article XXIV GATT and Article V GATS (services)

– Abolition of all trade barriers in goods and services

– Comprehensive economic integration


Contents – 1

• Preamble and General Principles

• General and Security Exceptions

• Safeguards and Subsidies

• Anti-dumping and subsidies

• TBT and SPS

• Border Control and Customs

• Transit


Contents – 2

• Services• Intellectual Property Rights• Competition and Government

Procurement• Protection of Investment• Labour• Dispute Settlement• Institutional and Final Provisions


Horizontal Rules to Limit Abuse of Exceptions (B/C)

• Foresee potential problems

• Detailed security exceptions

• Integrate problem avoidance and mitigation provisions in agreements


Rules on Dispute Settlement (B/C)

• Effective and rapid dispute settlement by Joint Committee arbitration panels (B) and third party (Quartet) participation in Joint Trade Committee (C) and fast track Dispute Settlement Tribunal (C)

• Mandatory time limits• National treatment in commercial arbitration• Importance of WTO Membership to back up

dispute settlement


ECONOMIC POLICY PROGRAMME

TOWARDS AN ECONOMICALLY-VIABLE PALESTINIAN STATE:

The Regulation of External Trade

Monday May 23, 2005Grand Park Hotel, Ramallah

economic policy programme

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