TECHNICAL ASSISTANCE

IV. PA subregional cooperation with Egypt and Jordan

Context and rationale

The Middle East peace process has created new opportunities for the reconstruction and development of the Palestinian economy. In addition to providing a basis for correcting imbalances in Palestinian-Israeli trade relations, the new policy environment has paved the way for reintegrating the economy with regional and global economies. The PA was quick to exploit these opportunities, signing trade agreements with regional and international partners, with a view to rationalizing and facilitating trade flows with those markets, while expanding the capacity of the Palestinian export sector and improving its performance. The PA is in the process of creating an enabling environment for translating signed agreements into expanded trade and investments, be it through formulating new laws or strengthening its institutional capacity to take up the challenges generated by such an openness to global markets. In doing so, the PA has accorded priority treatment to consolidating and concretizing accords with Jordan and Egypt, the closest partners with which it can expect to improve trade relations in the immediate future.

At present, a range of physical, procedural and institutional weaknesses, as well as security considerations, continue to bear upon prospects for realizing mutual trade potentials. There is a need to streamline, rationalize and coordinate trade policies and procedures, as signified by the low levels of trade among the subregion. Transport facilities in the Palestinian territory and at the subregional level need to be developed to ensure the smooth and efficient flow of trade. The development of trade-related services is also pertinent and should complement the broad thrust of trade policy implicit in the accords between the PA and its partners.

As the PA develops its own trade policy, procedures and support services, it needs to ensure compatibility with subregional trade policies. This can be achieved through pooling resources, and defining common interests between the Palestinian private and public sectors, and their counterparts in Jordan and Egypt. Joint efforts in this direction could help provide a framework for guiding trade policy in the subregion and removing common obstacles to expanded trade.

In 1997, the PA requested UNCTAD's assistance in this area, prompting a field mission that resulted in a project proposal (totalling US$ 110,000) which was later endorsed by the PA's Ministry of Economy and Trade, and implemented by UNCTAD and UNDP in 1998-1999.

Objectives

To assist the PA in developing regulatory, procedural and institutional modalities and the related human resources required for enhanced trade flows with Jordan and Egypt.

Major activities

Project activities focused on capacity-building in three priority areas of trade facilitation - trade efficiency and information, customs rules and procedures, and overland transport. For this purpose:

• First, an assessment of major impediments to efficient trade-related services in Palestine was conducted. Transport arrangements, customs procedures and trade support services within the subregion were examined and reflected in background technical reports that were used to guide discussion efforts in this area.
  

• Second, a tripartite meeting of Egyptian, Jordanian and Palestinian experts deliberated on the reported findings and proposed technical recommendations.
  

• Third, a study tour by a tripartite group of experts to the PA, Egypt and Jordan was organized to examine existing trade-related services.
  

• Fourth, a tripartite governmental meeting, attended by representatives of Jordan, Egypt and the PA, will be convened to examine possible follow-up action.

Status

Several follow-up missions were conducted in 2000 to pursue the national-level- related actions included in the Agreed Conclusions. They focused on trade facilitation matters, including the creation of a trade facilitation committee, and identification of a work programme on trade facilitation measures (legal and documentary) and training.

In the light of the successful implementation of the project, the PA, supported by Egypt and Jordan, requested UNCTAD to pursue its technical assistance proposals in this area. Guided by the findings of the national team and the results of the workshop, the secretariat designed a second phase that will proceed along three simultaneous substantive tracks, with a view to implementing the recommendations emerging from the first phase and widening the subregional framework for developing and diversifying Palestinian external trade. Proposed activities include:

• Organizing workshops in each country bringing together private sector representatives to disseminate and discuss conclusions and recommendations suggested by the national team of experts. The workshops are expected to help expand the scope of the project by identifying key problem areas in the logistical and distribution networks in the subregion, and suggest feasible mechanisms for further expanding the scope of subregional cooperation to include other potential Arab trade partners;

• Providing expert and advisory services to the PA on optimal means for improving trade efficiency, including an action-oriented study aimed at facilitating the development of trade logistics and distribution networks in the subregion;

• Undertaking complementary studies covering customs, transport and trade information and logistics/distribution networks in target regional markets;

• Organizing two workshops bringing together relevant Egyptian, Jordanian and PA governmental institutions to coordinate activities and suggest appropriate cooperation mechanisms at the subregional level;

• Organizing a workshop bringing together governmental focal points from the PA, Egypt, Jordan and other interested Arab States to suggest follow-up measures and actions needed to facilitate and promote trade with the PA.

Proposed activities under Phase II, costing US$ 102,000, have been approved by the PA, and a proposal has been prepared by UNCTAD in the light of the suggestions outlined by the PA and has been presented to UNDP for consideration under future funding cycles.