Government Role in the Economy

The Palestine National Authority (PNA) has a considerable responsibility towards encouraging Palestine’s economic development with other members of the international community. As a product of high level diplomacy and joint economic cooperation with the International Community, Palestine now enjoys several international trade agreements with the world:

  • An economic protocol signed with Israel made it possible for Palestinians to benefit from border crossings at land, sea, and airports, promoting free trade with Israel and access for Palestinian goods to outside markets.
  • The USA extends preferential status on Palestinian products entering its land, in all quantities and of all types of goods. Likewise, all imports from the US are duty free. This kind of agreement is the first of its kind between the US government and an Arab country.
  • Canada and the Palestinian Authority signed a joint framework for economic cooperation and trade in order to expand and encourage trade relations, and facilitate enhanced market access on a reciprocal basis
  • An agreement with the EU grants free trade on all Palestinian goods into the European markets and promotes joint projects between the Palestinian and the European Private business sector
  • An agreement with the EFTA countries (Switzerland, Liechtenstein, Iceland, and Norway) allows for free trade on all imports and exports
  • The PNA is party to bilateral commercial agreements with both Jordan and Egypt, granting preferential treatment to some Palestinian products.
  • Unilateral custom-free entry of Palestinian products is allowed into Saudi Arabia, Qatar, United Arab Emirates, Bahrain, Tunisia, and Morocco.
  • All imports from other countries enjoy an average tariff rate of 7-10%(MFN)
  • Exports from Palestine are not subject to export tax and do not require licensing

The PNA has embarked on an extensive program of legal reform, in order to establish a healthy business environment. The policy makers are leaning towards a free market economy, where businesses are privately owned. With the assistance of the IFC, international legal experts and their local counterparts, the legislative Council was able to pass the Investment bill, a new Taxation bill, and a bill regarding industrial estates and free zones. Preparation is underway for an intellectual property law, which will allow registration of patents, trademarks, and trade names.

The establishment of an independent Palestinian authority on recognized land has enabled the WBGS to build trade links with a number of external markets under favorable terms, to set up a functioning civil service, and to remove many of the bottlenecks which previously hampered the development of its productive base. These developments, along with others such as the strong growth in the financial sector, will set the stage for a speedy economic recovery once a political settlement is finally in place.