Trade – A Catalyst for Peace?

The trade regime agreed in the Paris Protocol was determined by political rather than economic considerations. It failed to create a level playing-field between Israeli and Palestinian producers, because of Israeli non-tariff barriers and the lack of provision for external arbitration of disputes between parties with unequal powers. The novel element in the agreement of the three lists of specified goods generated uncertainties and conflicts, as well as some side benefits for the Palestinian Authority. The arrangements for the clearance of import and other taxes to the PA were complex and conflict-generating. Recommendations are made for improvements in future agreements.