economic policy programme

May 2005 Economic Policy Programme 1

ECONOMIC POLICY PROGRAMME

TOWARDS AN ECONOMICALLY-VIABLE PALESTINIAN STATE:

The Regulation of External Trade

Monday May 23, 2005Grand Park Hotel, Ramallah

May 2005 Economic Policy Programme 2

Introduction to the Day

Valerie Yorke

London School of Economics

May 2005 Economic Policy Programme 3

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 4

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 5

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 6

Overall Purpose – 1To 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 7

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 8

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 9

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 10

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 11

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

– negotiations– development of trade policy options– WTO – compatible domestic legislation and

development of institutions to implement laws

May 2005 Economic Policy Programme 12

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 13

NDTP + SECTORAL

AGREEMENTSBlocks `A`

NDTP + SECTORAL

AGREEMENTS

FTABlocks `C`

NDTP ONLY

D

NDTP ONLY

NDTP + FTA MINUS

TRANSITION TO STATEHOOD

POST STATEHOODDAY ONE

= Path based on assumptions provided by PA for EPPIII = Decision Point

CRITICAL PATH

TRANSITION TO DECISION PHASE

TRANSITION TO WTO MEMBERSHIP AND BEYOND

MEMBERSHIP

PARIS PROTOCOL D

D

D

May 2005 Economic Policy Programme 14

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 15

• Twenty Points Framework (2000)

- reflecting Palestinian interests & principles• Legal studies (2000)• Transitional Arrangements (2000)• Options (legal texts) for trade arrangements

with Israel (2003)

Session One - 2

Preparations for Negotiations on Economic Permanent Status and Transitional

Arrangements on the Way

May 2005 Economic Policy Programme 16

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 17

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 18

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 19

Session Three - 2Towards 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 20

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

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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 22

Chart:

Timescales, Sequencing and Countdown to Statehood

May 2005 Economic Policy Programme 23

PLANNING FOR STATEHOOD

I TRADE POLICY OPTIONS DAY 1 STATEHOOD NDTP PLUS (A)

WTO ACCESSION (B)

DAY 1 FTA (C)

TIMESCALE TASK

COMPLETED

PHASE 1 30 MONTHS

A PHASE 2 24 MONTHS

B PHASE 3 18 MONTHS

C PHASE 4 FUTURE

1 1 UNILATERALLY ADOPTED NDTP

1.1 to 1.2 2 1 TRADE POLICY

TOWARDS ISRAEL

2.1 to 2.2 3 1 TRANSITIONAL

ARRANGEMENTS

3.1 to 3.2 4 1 WORK PLAN

SEQUENCING

4.1

II SOVEREIGN TRADE REGIME: KEY DOMESTIC POLICY

- FIRST PRIORITY ISSUES DAY 1 STATEHOOD

NDTP PLUS (A) WTO ACCESSION

(B) DAY 1

FTA (C)

TIMESCALE TASK

COMPLETED

PHASE 1 30 MONTHS

A PHASE 2 24 MONTHS

B PHASE 3 18 MONTHS

C PHASE 4 FUTURE

5 1 FRAMEWORK FOR TRADE POLICY

5.1 6 1 FOREIGN TRADE

ACT

6.1 to 6.4 6.5 6

6.6to 6.7 6 6 A 6.8 to 6.9 9

6.10 to 6.15 9 6.16 to 6.17 9 6.18 to 6.20 3 A 3

6.21 6 6.22 9

Timescales, sequencing and countdown to statehood

May 2005 Economic Policy Programme 24

ECONOMIC POLICY PROGRAMME

TOWARDS AN ECONOMICALLY-VIABLE PALESTINIAN STATE:

The Regulation of External Trade

Monday May 23, 2005Grand Park Hotel, Ramallah