The Paris Protocol (PP), concluded in April 1994 and the Washington Agreement signed between the Palestine Liberation Organization (PLO) and Israel in September 1995 set the procedures and regulations governing economic relations between the WBGS and Israel for the interim period.

Bilaterally, the economic agreement states the basic principle of free trade with Israel

As for third party trade, the Paris Protocol regulates the relations between the WBGS and the rest of the world as follows:

• Palestinian products are not subject to any export restrictions.
• Trade to and from the WBGS has full access to Israeli ports of entry and exit.
• Palestinian imports and exports are granted equal treatment at the Israeli ports of entry and exit except from security measures.
• As for the import policy, the Israeli regulations on customs, purchase tax and standards apply to Palestinian imports with the exception of goods listed in list A1, A2 and B. The Palestinian National Authority (PNA) has the right to apply, within pre-defined quotas, its customs rates, purchase tax and other import charges on those imports. In addition, the PNA has the autonomy in importing goods listed in A1 and A2 regardless Israeli standard requirements.

Lists A1, A2 and B Lists A1, A2 and B are included in the Paris Protocol. Goods imported under List A1 must be locally produced in Jordan , Egypt or in other Arab countries. Goods imported under List A2 can be imported from Arab, Islamic or other countries. Goods imported under List B are not subject to quantitative restrictions but are subject to Israeli standards.

• A result of applying the Israeli import policy is that bilateral trade agreements between Israel and other parties are considered valid in the WBGS. Currently, Palestinian traders can benefit from free trade agreements with the following countries: Czech Republic , Hungary , Turkey and Slovakia .
• Israeli import policy prohibits trade with several countries, mainly those that do not have diplomatic relations with Israel , including a number of Arab states. The only exception to the WBGS is represented by imports in list A1, A2 and B.
• The PLO has the freedom to negotiate and conclude trade agreements, for the benefit of the PNA, as long as the same import policy is applied in Israel and the WBGS.

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Rules of Origin Rules of Origin are a set of rules intended to facilitate the determination of the country of origin of a certain product. Identifying the country of origin is needed to benefit from preferential tax and customs duty exemptions. The rules of origin of a certain product are determined by three main criteria: 1. Product tariff shift. The processing undertaken in a particular country must change the input materials into a product according to a pre-defined conversion list. 2. Ad valorem percentage. A certain minimum percentage of value addition must be produced in a particular country, in order to be the country of origin (minimum domestic content or maximum import content is prescribed). 3. Specific operation. Specific operations in the operational chain of manufacturing must be undertaken in a country, in order to be the country of origin. For example, netting could be a key operation in determining the country of origin of the textile industry.

 

2. Declaration of Free Trade – WBGS and the United States of America

Under the Palestinian – United States Free Trade arrangement, duty free treatment is granted to all Palestinian products entering the United States and vice versa. In order to benefit from the duty free treatment, a certificate of origin – called Form A – must accompany the goods.

The American Rule of Origin The American definition for the rule of origin states that the product must be wholly obtained (grown, produced or manufactured) in the WBGS. If not wholly obtained in the country of origin, the product should meet one of the following rules: The direct cost of production in the WBGS or in the WBGS and Israel , must not be less than 35% of the value of the product. If products from the United States are used in processing, the costs for these products can contribute to calculate the 35% (in a portion not superior to 15%). For textiles, the country of origin is determined based on the product tariff shift. Therefore, the country of origin is considered where the product is wholly assembled.

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3. Free Trade Arrangement between the Palestine Liberation Organization and Canada

According to the arrangement signed between the two parties, tariffs were eliminated on industrial products. For agricultural products and processed food, tariffs were reduced or eliminated in accordance with quotas. The Free Trade Arrangement between the PLO and Canada is available at the Ministry of Economy and Trade – General Directorate of International Relations.

The Canadian Rule of Origin A product is originating in the WBGS/Canada if it is wholly obtained or produced entirely in the territory of one or both countries. If not wholly obtained, because of the use of non-originating materials, the qualification for “Made in …” for a certain product or raw material is the transformation level from one product to another according to one of the following methods: The product would undergo a change in the tariff classification, according to pre-defined conversion lists. The product would undergo a specific operation carried out in the WBGS/Canada. The producer should refer to the first four digits of the Harmonized System code for the product in question when making inquiries about the specific rule to apply.

 

4. Interim Association Agreement on Trade & Cooperation between the European Union and the Palestine Liberation Organization

The Interim Association Agreement on Trade & Cooperation grants reciprocal duty free treatment to industrial products complying with the rule of origin. Concerning agricultural items, the European Union (EU) grants duty free or reduced tariff treatment on the products exported to the EU within quotas. The same applies to agricultural imports from the EU to the WBGS. The certificate of origin, which grants duty free access, is called EUR.1.

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The European Rule of Origin According to the European rule of origin, the product must be wholly obtained (extracted and harvested) in the WBGS. If not wholly obtained (coming from third parties), non originating materials must have undergone sufficient working or processing which is defined according to one of the following methods: The product would undergo a change in the tariff classification according to pre-defined conversion lists. The product would undergo a specific operation carried out in the WBGS/EU. As a rule, it can be said that washing, cutting up, packaging and simple assembly of parts are considered to be insufficient working/processing operations using non-originating materials or products. The use of non-originating materials is limited to a specific percentage. If used in the WBGS, materials originating in the EU are considered as originating as input materials to make a new product. The same applies to Palestinian products used in the EU as input materials. In order to find out the rule applying to a specific product when using non-originating materials, the producer should refer to the six-digit code of the Harmonized System for the product in question when making inquiries. The Interim Association Agreement is available at the Ministry of Economy and Trade – General Directorate of International Relations.

 

5. Interim Agreement between the EFTA States and the Palestine Liberation Organization

The following European Free Trade Association (EFTA) countries signed an interim agreement with the PLO: Iceland , Liechtenstein , Norway and Switzerland . The Agreement provides duty free treatment to most Palestinian and EFTA industrial products. Moreover, duty free is granted to some Palestinian and EFTA processed agricultural products, while the majority of processed agricultural products are granted a reduced tariff. A duty free treatment is also granted to fish and other marine products.

The PLO has signed separate protocols with the four EFTA countries to identify the agricultural duty free products, as EFTA countries do not share a common agricultural policy.

The Interim Agreement between the EFTA states and the PLO, as well as the four agricultural protocols, are available at the Ministry of Economy and Trade – General Directorate of International Relations.

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EFTA Rule of Origin The EFTA rule of origin is the same applied by the European Union.

 

6. Agreement on Commercial Cooperation between the Palestine Liberation Organization and Russia

Both parties extend to one another the status of the Most Favored Nation (MFN) in regard to trade.

The WTO and the Most Favored Nation Treatment The World Trade Organization deals with the rules of trade between nations through agreements that oblige signatories to keep their trade policies within the agreed upon rules and limitations. Under the WTO agreements, members should not behave in a discriminatory way towards WTO trading partners. Therefore, every lowering in trade barriers towards a trading partner should apply to all trading partners, as all should be treated as the “most favored nation”.

Imports and exports between the two parties are duty free for the following goods:

1. Instruments and items specified for montage and repair;
2. Equipment and instruments specified for undertaking experiments and scientific research;
3. Articles for demonstration during fairs and exhibitions;
4. Containers and similar packages utilized in international trade on a return basis.

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7. Preferential Treatment: Trading with the Arab World

Palestinian importers can deal with all Arab countries when importing goods listed in list A1 and A2, within pre-defined quotas. Moreover, economic agreements and arrangements regulate preferential trade relations between the WBGS and the Arab world ( Jordan , Egypt and Saudi Arabia ).

8. Economic Agreement between the Palestine Liberation Organization and Jordan

The Agreement provides preferential tariffs for goods traded between the WBGS and Jordan. Goods in Lists A1, A2, and B entering the WBGS and the agreed upon products entering Jordan are duty free, provided that the import volume does not exceed the pre-determined quota.

The Jordanian Rule of Origin The rule of origin states that a product should be wholly obtained (grown, produced or manufactured). If not wholly obtained, the product should at least have 35% of the value added produced locally (either WBGS or Jordan). A certificate of origin is required for exemption.

 

9. Economic Agreement between the Palestine Liberation Organization and Egypt

The Palestinian-Egyptian Trade Agreement states that Egyptian products of national origin are exempt from customs and related duties if in Lists A1 A2 and B. Palestinian products are granted duty free entrance to Egypt according to a defined list.

The Egyptian Rule of Origin The Egyptian rule of origin states that the production cost of industrial products of national origin should consist of a minimum of 40% of local input. A certificate of origin is required for exemption

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10. Trade with Saudi Arabia

Palestinians can export all types of products to Saudi Arabia , but in the mean time, the government of Saudi Arabia grants duty free treatment to the following Palestinian products: agricultural products, livestock, metallic and non-metallic raw materials.

In order to benefit from the preferential arrangement, the rule of origin for Arab countries applies. Moreover, an official certificate of origin is required, stamped accordingly by the Saudi Embassy in Jordan or Egypt , together with the official invoice. The name of the producer, country of citizenship and the rule of origin should be clearly indicated on the product. At the same time import from Saudi Arabia is limited to items listed in A1 and A2.

The Rule of Origin for Arab Countries A certain product will be considered as originating in a country if the following requirements are fulfilled: The product is wholly grown, produced, or manufactured and substantially transformed in that country; The value of the raw materials (produced in that country) and the direct costs of production is at least 40% of the export value; The product has been imported directly from that country. If used in the WBGS, materials originating in the Arab countries are considered as originating as input materials to make a new product. The same applies to Palestinian products used in the Arab countries as input materials. An official certificate of origin must accompany the product

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