ECONOMIC POLICY PROGRAMME TOWARDS AN ECONOMICALLY-VIABLE PALESTINIAN STATE

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

Introduction to the Day Valerie Yorke London School of Economics May 2005 Economic Policy Programme 2

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 3

Purpose of Presentation • To provide overview of EPP work • To present: – Main results – Interconnectedness of parts – Relevance and operational applicability – Contribution to requirements for workable WTO-compatible sovereign trade framework for statehood and beyond • To introduce EPP Overview “Planning for Statehood: – What has been achieved? What remains to be done? – Matrices of trade-related activities - suggested priorities – Work-plan with sequencing & timescales to statehood & beyond May 2005 Economic Policy Programme 4

What is the EPP? Who are the stakeholders? • Collaborative venture • Coordinated by MNE and LSE • Guided by MNE; Palestinian public and private sectors • Supported by multi-disciplinary team of senior international and regional lawyers, economists, technical experts • Funded by DFID; formerly by EU May 2005 Economic Policy Programme 5

Overall Purpose – 1 To Support an Economically-Viable Palestinian State Programme of policy support : • Providing PA with policy analysis and advice, policy options, proposals for legal texts and strategies - across four interrelated tracks May 2005 Economic Policy Programme 6

Overall Purpose -2 To Support an Economically-Viable Palestinian State EPP Mandate • Economic permanent status negotiations and transition • Development of trade and tariff options • WTO-compatible sovereign frame for trade • WTO accession May 2005 Economic Policy Programme 7

How is EPP implemented ? • • • PA horizontal guidelines and assumptions Drawing up of detailed TORs Co-ordinating and strategy sessions Missions to Palestine (fieldwork and interviews) Roundtables (Ramallah /London /Geneva) E-mail communications Studies, opinions, options, strategies Palestinian and consultant feedback Peer Review, Editing, Submission May 2005 Economic Policy Programme 8

PA Political and Economic Assumptions - 1 • Foundation of an independent, sovereign, viable Palestinian state • Separate customs territory • Political boundaries, territorial continuity, contiguity, one geographical unit • East Jerusalem as capital of Palestinian state Jerusalem an Open City or Divided • No Israeli settlement on territory • Open economic relations with Israel based on WTO rules May 2005 Economic Policy Programme 9

PA Political and Economic Assumptions -2 • Application for WTO observership leading to membership as soon as possible • Economic relations with Israel based either on NDTP or, as (as fall back), on FTA; • No formation of a CU this stage • No continued reliance on Paris Protocol • Continuation of Free trade arrangements with EU and US • Recognition of legitimate security interests only May 2005 Economic Policy Programme 10

What has Been Achieved? Legal / economic analysis and advice, options papers, proposals for draft legislation, strategies • Complementing each other • Within an overall coherent approach • Providing building blocks for – – – May 2005 negotiations development of trade policy options WTO – compatible domestic legislation and development of institutions to implement laws Economic Policy Programme 11

Diagram • Capturing / bringing together – PA assumptions – EPP mandate – Choice of options • Demonstrating flexibility of work in planning alternative outcomes • Sequencing the above for WTO accession May 2005 Economic Policy Programme 12

DAY ONE TRANSITION TO STATEHOOD = Path based on assumptions provided by PA for EPPIII D NDTP + FTA MINUS FTA Blocks `C` NDTP + SECTORAL AGREEMENTS Blocks `A` NDTP + SECTORAL AGREEMENTS = Decision Point PARIS PROTOCOL D NDTP ONLY TRANSITION TO DECISION PHASE May 2005 POST STATEHOOD D NDTP ONLY D CRITICAL PATH Economic Policy Programme TRANSITION TO WTO MEMBERSHIP AND BEYOND MEMBERSHIP 13

Session One -1 Preparations for Negotiations on Economic Permanent Status and Transitional Arrangements on the Way Presentation of alternative forms of agreement with Israel (building blocks) • To meet economic / trade requirements of transition (including through a planned withdrawal from Gaza) • Which may accompany NDTP (MFN) and also constitute steps toward an eventual FTA with Israel later on May 2005 Economic Policy Programme 14

Session One - 2 Preparations for Negotiations on Economic Permanent Status and Transitional Arrangements on the Way • Twenty Points Framework (2000) - reflecting Palestinian interests & principles • Legal studies (2000) • Transitional Arrangements (2000) • Options (legal texts) for trade arrangements with Israel (2003) May 2005 Economic Policy Programme 15

Session Two -1 Future Trade Policy Options: NDTP and keeping options open for an FTA with Israel Irrespective of shape of Palestine-Israel trade relations at statehood, Palestine will need a trade policy and tariff structure of its own, if it is to break out of the Paris Protocol May 2005 Economic Policy Programme 16

Session Two -2 Future Trade Policy Options: NDTP and keeping options open for an FTA with Israel • Options for Tariff Policy for Palestine - 4 scenarios – low and uniform - maintain FTAs with EU and US • NDTP: Risks and Challenges May 2005 Economic Policy Programme 17

Session Three -1 Towards a sovereign trade framework: main components, domestic legislation, reform and WTO accession To conduct international trade relations and taking into account aspiration to accede to WTO Palestine will require: • Indispensable WTO-compatible domestic legislation • Institutions to implement that legislation. May 2005 Economic Policy Programme 18

Session Three - 2 Towards a sovereign trade framework Presentation of key features for Day One of Statehood, how they interrelate : • Foreign Trade Act • Border Control and transit • TBT and SPS issues including Food Safety Act and Technical Normative Infrastructure Law • Competition and Procurement Laws • [Tariff Act] Other areas to be addressed later on : foreign direct investment, IP May 2005 Economic Policy Programme 19

Session Three - 3 Towards a Sovereign Trade Framework Progress in developing WTO-compatible legislation in line with best practice But challenge remains: To create infrastructure for Palestine to benefit from WTO agreements May 2005 Economic Policy Programme 20

Session Four Planning for Statehood: Next Steps for Palestine • How can EPP results be used in short, medium & long term? • What has been achieved? What remains to be done? Open discussion May 2005 Economic Policy Programme 21

Chart: Timescales, Sequencing and Countdown to Statehood May 2005 Economic Policy Programme 22

Timescales, sequencing and countdown to statehood May 2005 Economic Policy Programme 23

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 24