How to Export to Palestinian Territories
Trade Regulations and Standards
Import and export procedures for WB/G remain tied in large part to Israeli regulations. Ostensibly, the PA has primary control over imports into WB/G, with Israel retaining quantitative control over some imports in key industries such as dairy products. Most WB/G-bound products pass through Israeli ports and so are subject to Israeli customs and security inspection. U.S. companies should work with Palestinian agents and/or the U.S. Embassy in Tel Aviv and U.S. Consulate General in Jerusalem to determine specific import and export requirements for their goods. Due to the current unrest in the area, transporting goods from Israeli ports to PA areas has been extremely difficult because of the tight blockade imposed by Israel. Exporters should be aware that delays are inevitable and should work out this problem with their customers before shipments are made.
Trade Barriers: Tariffs, Non-Tariff Barriers, and Import Taxes
In accordance with duty-free arrangements between the United States and the PA, the PA theoretically should not impose tariffs on U.S. products. However, as the PA and Israel are a customs union, and Israel does impose duties and quotas on some U.S. goods, the same conditions apply to U.S. goods destined for WB/G. The 1994 Paris Protocol provides that the PA not impose tariffs on goods of Israeli origin, but it does impose purchase taxes on many durable goods imported from other countries, generally at Israeli rates. Like Israel, the PA imposes a Value-added Tax (VAT) of 18% on all goods sold in WB/G, whether imported or locally made. By the terms of Palestinian-Israeli agreements, VAT paid to Israel on WB/G-bound goods is rebated to the PA.
The PA does not impose customs tax on U.S. imports, which are, however, taxed as they enter Israeli ports. Exporters should consult with Palestinian or Israeli freight forwarders who have access to the list of goods that are liable to purchase tax.
Import Licenses for WB/G, when required, are issued by the PA. The importer must be a trader registered with the PA and must present a pro-forma invoice and certificate of origin. The Paris Agreement mandates that the PA must inform the Israeli Ministry of Industry of each import request. While the PA may import some items freely, other items are subject to quantitative restrictions set forth in the Paris Agreement. The importer is required to submit an application for an import license issued by the Ministry of Economy available through offices of the Chamber of Commerce. Upon approval, and after the application is stamped and signed, it becomes the import license. Each import shipment must also be authorized by the Ministry and so is subject to quota controls and labeling requirements. Depending on the product, it may also be subject to testing by the Standards Institute of Israel. In some instances of differing standards, Israeli standards authorities will defer to their Palestinian counterparts on the condition that the importer provides satisfactory assurance that the product(s) in question will remain inside WB/G. Israel imposes licensing requirements and quantitative restrictions on a wide range of foods and agricultural products. Items subject to quotas Ò mainly agricultural produce and processed foods Ò are negotiated annually. The Palestinian share is determined on the basis of estimated consumption requirements and past quota utilization. All health-related imports, such as food and pharmaceuticals, require approval by both the Israeli Ministry of Health and the Palestinian Ministry of Health, whose standards are the same.
Temporary Entry of Goods
The PA has not yet established specific provisions for temporary entry of goods. It is currently using Israeli regulations.
Import/Export Controls and Documentation
Some specific items entering WB/G, totaling approximately 15% of total imports, must be accompanied by a pro-forma invoice, packing list, certificate of origin, and import license request. The remaining 85% of imported items may be imported directly with a permit from the relevant PA ministry. U.S. exporters should check with relevant personnel at the U.S. Embassy in Tel Aviv or the U.S. Consulate General in Jerusalem regarding specific items. For exports, the PA requires an invoice and certificate of origin signed by the local Chamber of Commerce and the Ministry of Economy. Permission to export is virtually automatic. However, Israeli security controls apply to Palestinian goods. No further documentation is required to transit the Allenby Bridge into Jordan and the Rafah Crossing into Egypt, but security checks are conducted. Goods transiting Israeli ports require Israeli port documentation.
Labeling and Marking Requirements
Goods entering WB/G may be subject to marking and labeling requirements in order to prevent leakage back into Israel. Some goods such as cigarettes and laundry powders now have Arabic or Arabic/English stamps labeled "Only for sale in the West Bank and Gaza." U.S. businesses should check with a Palestinian importer for exact specifications. As of January 1, 1997, all products imported or brought into WB/G must carry labels in Arabic in addition to the original labels. The labels must carry information on the product ingredients, production and expiry dates, and consumer warnings for hazardous products such as cigarettes and inflammable materials.
Although the PA has no published import prohibitions, U.S. companies should check with local Palestinian distributors to see if restrictions apply in certain cases (e.g., food products, firearms, etc.).
The PA has pledged to apply international standards requirements (e.g., ISO 9000 usage) to all imports. Currently, the PA uses Israeli standards codes for the import of all products that could affect health (e.g., food, especially meat, and pharmaceuticals). Most standards testing is conducted in Israeli labs, although the Palestinian Ministry of Health has begun to institute some testing procedures of its own. Concrete and construction materials as well as some food products are being tested at Bir Zeit University.
Free Trade Zones/Warehouses
The PA, Israel, and the international donor community are establishing industrial zones in WB/G to stimulate local economic activity and employment. Efforts are focused on a pilot zone, the Gaza Industrial Estate (GIE) at Qarni/Al Muntar. The GIE, which was inaugurated in November 1998, will initially house export-oriented industries. However as a result of the current crisis many companies located there have closed shop due to violence in the vicinity of the GIE and road closures that have prevented the transport of goods and people. In the future, and with the help of donor countries, several additional zones may be established containing 200,000-600,000 square meters of industrial and commercial construction space and, when fully developed, employing 5,000 to 10,000 workers. The management of the zones will probably offer investment-incentive and tax-relief packages. In Tulkarem, the USG developed plans to support the creation of a High Technology Development Park that would develop links with the nearby Israeli high technology sector. However, all these projects have been put on hold due to the current crisis.
Special Import Provisions
The PA has no special import provisions.
Membership in Free Trade Arrangements
In October 1996, President Clinton signed a proclamation granting duty-free import status to items produced in or imported from WB/G. The European Union has a preferential trade agreement with WB/G similar to that of the U.S. Generalized System of Preferences program. The PA has more restrictive trade agreements with Jordan and Egypt. Under the terms of the Paris Protocol, there are no restrictions on trade between WB/G and Israel. However, WB/G exports entering Israel face significant barriers, principally as a result of Israeli security measures.