May 2005Economic Policy Programme1 ECONOMIC POLICY PROGRAMME TOWARDS AN ECONOMICALLY-VIABLE PALESTINIAN STATE: The Regulation of External Trade Monday May 23, 2005 Grand Park Hotel, Ramallah

May 2005Economic Policy Programme2 Introduction to the Day Valerie Yorke London School of Economics

May 2005Economic Policy Programme3 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 2005Economic Policy Programme4 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 2005Economic Policy Programme5 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 2005Economic Policy Programme6 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 2005Economic Policy Programme7 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 2005Economic Policy Programme8 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) communications Studies, opinions, options, strategies Palestinian and consultant feedback Peer Review, Editing, Submission

May 2005Economic Policy Programme9 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 2005Economic Policy Programme10 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 2005Economic Policy Programme11 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 2005Economic Policy Programme12 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 2005Economic Policy Programme13 NDTP + SECTORAL AGREEMENTS Blocks `A` NDTP + SECTORAL AGREEMENTS FTA Blocks `C` NDTP ONLY D NDTP ONLY NDTP + FTA MINUS TRANSITION TO STATEHOOD POST STATEHOOD DAY 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 2005Economic Policy Programme14 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 2005Economic Policy Programme15 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 2005Economic Policy Programme16 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 2005Economic Policy Programme17 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 2005Economic Policy Programme18 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 2005Economic Policy Programme19 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 2005Economic Policy Programme20 Session Three - 3 T owards 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 2005Economic Policy Programme21 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 2005Economic Policy Programme22 Chart: Timescales, Sequencing and Countdown to Statehood

May 2005Economic Policy Programme23 Timescales, sequencing and countdown to statehood

May 2005Economic Policy Programme24 ECONOMIC POLICY PROGRAMME TOWARDS AN ECONOMICALLY-VIABLE PALESTINIAN STATE: The Regulation of External Trade Monday May 23, 2005 Grand Park Hotel, Ramallah