The Protocol on Economic Relations, also called the Paris Protocol, was an agreement between
Israel
Israel (; he, יִשְׂרָאֵל, ; ar, إِسْرَائِيل, ), officially the State of Israel ( he, מְדִינַת יִשְׂרָאֵל, label=none, translit=Medīnat Yīsrāʾēl; ), is a country in Western Asia. It is situated ...
and the
PLO, signed on 29 April 1994, and incorporated with minor amendations into the
Oslo II Accord
The Interim Agreement on the West Bank and the Gaza Strip commonly known as Oslo II or Oslo 2, was a key and complex agreement in the Israeli–Palestinian peace process. Because Oslo II was signed in Taba, it is sometimes called the Taba Agreem ...
of September 1995.
Position in the agreements
The Protocol, itself signed on 29 April 1994, was part of the
Gaza–Jericho Agreement, which was signed in Paris five days later on 4 May 1994. The Gaza–Jericho Agreement simultaneously established the
Palestinian Authority
The Palestinian National Authority (PA or PNA; ar, السلطة الوطنية الفلسطينية '), commonly known as the Palestinian Authority and officially the State of Palestine, (PA), which is responsible for the Palestinian obligations concerning the Paris Protocol. The Protocol is mentioned in Article XIII of the Gaza–Jericho Agreement and attached to it as Annex IV with the full name "Protocol on Economic Relations between the Government of the State of Israel and the P.L.O., representing the Palestinian people". It was incorporated with minor amendations into the
Oslo II Accord
The Interim Agreement on the West Bank and the Gaza Strip commonly known as Oslo II or Oslo 2, was a key and complex agreement in the Israeli–Palestinian peace process. Because Oslo II was signed in Taba, it is sometimes called the Taba Agreem ...
of September 1995.
[''Main Points of the Israeli-Palestinian Interim Agreement on the West Bank and the Gaza Strip'']
see last paragraphs. Israel MFA, 28 September 1995.
"The Economic Annex of the Gaza-Jericho Agreement,...has been incorporated into the Interim Agreement,...and its provisions, including the establishment of a single economic unit for the purpose of customs and import policy, now apply to the whole of the West Bank and the Gaza Strip."
In the Oslo II Accord, the ''Paris Protocol'' is incorporated in Article XXIV. The amendments to the Protocol (''Supplement to the Protocol on Economic Relations'') were annexed as Annex V of the Oslo II Accord and contain only some changes on the clearance of revenues and some technical changes on the taxes issue. While the Protocol initially applied to the Gaza Strip and the Jericho Area, its jurisdiction was extended to all of the
Palestinian territories
The Palestinian territories are the two regions of the former British Mandate for Palestine that have been militarily occupied by Israel since the Six-Day War of 1967, namely: the West Bank (including East Jerusalem) and the Gaza Strip. The ...
in the Oslo II Accord.
[
]
Consequences
Originally, the Paris Protocol was to remain in force for an interim period of five years. As of 2016, however, the Protocol was still applicable. The limited time the agreement was supposed to be operative helped encourage Palestinian negotiators to sign it, to be the first step to make progress.[''Will we always have Paris?'']
Gisha – Legal Center for Freedom of Movement, 13 September 2012
Archived on 2015-09-30
/ref> More importantly, Israel made acceptance of the Protocol a condition for Israel's continuing to allow the tens of thousands of Palestinians to work in Israel.[''Paris Protocol'']
B'Tselem, 19 September 2012
Essentially, the Protocol integrated the Palestinian economy into the Israeli one through a customs union
A customs union is generally defined as a type of trade bloc which is composed of a free trade area with a common external tariff.GATTArticle 24 s. 8 (a)
Customs unions are established through trade pacts where the participant countries set up ...
, with Israel to control all borders, both its own and those of the Palestinian Authority. Palestine remains without independent gates to the world economy. The Protocol regulates the relationship and interaction between Israel and the Palestinian Authority in six major areas: customs, taxes, labor, agriculture, industry and tourism.
Since Hamas’ takeover of the Gaza Strip, and the Israeli blockade of the Gaza Strip, the Protocol cannot be fully applied to the Strip. However, Gaza importers still pay Israel customs, VAT and purchase taxes on goods that they import via Israel.[
The Protocol determines that Israeli currency, the ]New Israeli Shekel
The new Israeli shekel ( he, שֶׁקֶל חָדָשׁ '; ar, شيكل جديد ; sign: ₪; ISO code: ILS; abbreviation: NIS), also known as simply the Israeli shekel ( he, שקל ישראלי, ar, شيكل إسرائيلي), is the curr ...
(NIS), is used in the Palestinian territories as a circulating currency which legally serves there as means of payment for all purposes and to be accepted by the Palestinian Authority and by all its institutions, local authorities and banks. The Palestinians are not allowed to independently introduce a separate Palestinian currency.[Article IV of the Protocol on Economic Relations] Imports from and exports to third countries, including quantitative restrictions are subject to Israeli supervision[''The Paris Protocol—Historical classification'']
. Konrad-Adenauer-Stiftung, 2012. Accessed March 2016 and the Protocol gave Israel sole control over the external borders and collection of import taxes and VAT. According to the agreement, Palestinian trade with other countries would continue to be handled through Israeli sea and air ports, or through border crossings between the Palestinian Authority and Jordan and Egypt, which at the time were both controlled by Israel.[ As of 2016, the ]Rafah Border Crossing
The Rafah Border Crossing ( ar, معبر رفح, Ma`bar Rafaḥ) or Rafah Crossing Point is the sole crossing point between Egypt and the Gaza Strip. It is located on the Gaza–Egypt border, which was recognized by the 1979 Egypt–Israel peace ...
is controlled by Egypt, but Egypt has largely supported blockading the Gaza Strip since Hamas
Hamas (, ; , ; an acronym of , "Islamic Resistance Movement") is a Palestinian Sunni- Islamic fundamentalist, militant, and nationalist organization. It has a social service wing, Dawah, and a military wing, the Izz ad-Din al-Qas ...
's rise to power in the Battle of Gaza (2007)
The Battle of Gaza, also referred to as Hamas's takeover of Gaza, was a military conflict between Fatah and Hamas, that took place in the Gaza Strip between June 10 and 15, 2007. It was a prominent event in the Fatah–Hamas conflict, centered ...
.
Tax system
A major part of the 1994 Paris Protocol is the tax system, the backbone of the customs union. Israel collects and transfers to the Palestinian Authority the import taxes on goods that were intended for the Palestinian territories. Israel may unilaterally establish and change the taxes imposed on imported goods.[ If Israel raises its VAT, Palestine has to follow it.
Israel transfers the collected tax revenue for goods and services sold in Israel and intended for consumption in the Palestinian territories.][ Israel also collects income taxes from Palestinians employed in Israel and the ]Israeli settlement
Israeli settlements, or Israeli colonies, are civilian communities inhabited by Israeli citizens, overwhelmingly of Jewish ethnicity, built on lands occupied by Israel in the 1967 Six-Day War. The international community considers Israeli se ...
s. Pursuant to the Protocol, Israel withholds 25% of these income taxes by default (not from Palestinians employed in settlements). Additionally, 3% of the total revenue is levied as collection and processing fees.[''Report on UNCTAD assistance to the Palestinian people: Developments in the economy of the Occupied Palestinian Territory'']
para 9-24. United Nations Conference on Trade and Development, 6 July 2015 (doc.nr. TD/B/62/3)
Source
/ref>
Tax clearance system as means of pressure
Tax clearance is the largest source of Palestinian public income. In 2014, it accounted for 75% of the total revenue. Israel collects taxes on Palestinian imports, and national insurance and income taxes from labor on behalf of the PA and transfers the results on a monthly basis. This makes the PA vulnerable to unilateral suspension of clearance revenue transfers by Israel. In 2014-2015, the revenue was about $160 million per month.[
As early as 1997, Israel began to unilaterally settle bills unpaid by Palestinians, not the PA itself, including fines and interests. Political reasons for suspension varied from Palestinian violence to the election of Hamas into PA, reconciliation between Fatah and Hamas and the demand for international recognition.][
]
See also
* Oslo Accords
The Oslo Accords are a pair of agreements between Israel and the Palestine Liberation Organization (PLO): the Oslo I Accord, signed in Washington, D.C., in 1993;
* Taxation in the Palestinian territories
* Israeli–Palestinian conflict
The Israeli–Palestinian conflict is one of the world's most enduring conflicts, beginning in the mid-20th century. Various attempts have been made to resolve the conflict as part of the Israeli–Palestinian peace process, alongside other ef ...
* Middle East economic integration
Policies advocating Middle East economic integration aim to bring about peace, stability, and prosperity in the Middle East, which they believe can only be sustained over the long run via regional economic cooperation.
Background
Former U.S.&nb ...
References
{{reflist
External links
''Text of the Protocol, including the 1995 Supplement''
NAD-PLO
Israeli–Palestinian peace process
Israeli–Palestinian joint economic efforts
Taxation in the State of Palestine