The challenge for Palestinian policy-makers is how best to re-orientate Palestinian trade to allow for restructuring the economy towards a greater specialization in high value-added products, and more balanced relations with Israel. UNCTAD´s technical assistance projects under this programme cluster provide tangible contributions to addressing this challenge.
The Palestinian trade sector has historically been characterized by:
- poor export capacity, with exports concentrated in a limited range of labour-intensive products;
- unrestrained import growth;
- widening trade deficit; and
- heavy concentration of trade with Israel.
Notwithstanding the lack of political stability, this performance is attributed to the Palestinian trade regime under occupation, as defined under the terms of the 1994 Protocol on Economic Relations between Israel and the Palestinian Liberation Organization (also known as the Paris Protocol).
The protocol provides a narrow base for Palestinian sustained economic growth, and entails measures that effectively limit the Palestinian Authority´s policy-making space.
While these measures impose on the war-torn Palestinian economy trade policies identical to those of the more advanced Israeli economy, they expose the economy to all the costs of trade liberalization inherent in Israel´s World Trade Organization (WTO) membership with no access for the Palestinian Authority to the benefits of WTO accession.