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Trade

Palestine*

EU trade relations with Palestine. Facts, figures and latest developments.

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Palestine
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An Interim Association Agreement on Trade and Cooperation was concluded between the European Economic Community (the EEC; the EU’s predecessor) and the Palestine Liberation Organisation (PLO) on behalf of the Palestinian Authority (PA) in 1997. The agreement provides for duty-free access to EU markets for Palestinian industrial goods, and a phase-out of tariffs on EU exports to Palestine* over five years. An agreement for further liberalisation of agricultural products, processed agricultural products and fish and fishery products entered into force on 1 January 2012.

Trade picture

  • Due to the difficult economic situation and restrictions on movement and access to Palestine*, trade with the EU is very limited (Palestine* was the EU’s 151st biggest trade partner in 2020).
  • Total trade in goods between the EU and Palestine* in 2020 amounted to €244 million.
  • The EU’s imports from Palestine* are generally very low. In 2020, they were worth only €26 million and mainly consisted of agricultural products and raw materials (€22.8 million, 87.7%).
  • The EU’s exports to Palestine* amounted to €218 million. They were led by machinery and transport equipment (€78 million, 35.8%), agricultural products and raw materials (€61 million, 28.0%) and chemicals (€40 million, 18.3%), which consisted mainly of pharmaceuticals.

The EU and Palestine*

The European Neighbourhood Policy is part of the European Union’s response to the Palestinian Authority’s political and economic reform agenda. Palestinian participation in the European Neighbourhood Policy takes place in the context of the overall political situation in the region, which affects the scope of feasible action. There are a number of constraints and limitations resulting from the on-going Israeli-Palestinian conflict and the continuing occupation, including settlement activity, and restrictions to movement resulting from the closure policy and the separation barrier.

The EU works closely with Israel and other Southern Mediterranean partners to improve Palestinian* access to European and international markets.

Palestine in the Southern Neighbourhood

Palestine* is one of the partners of the EU’s Southern Neighbourhood (Algeria, Egypt, Israel, Jordan, Lebanon, Libya, Morocco, Palestine*, Syria and Tunisia). The EU established its privileged partnership with the countries of the Eastern and Southern shores of the Mediterranean back in 1995 with the launch of the Euro-Mediterranean Partnership at the Barcelona Conference, aiming to establish an area of peace, stability and economic prosperity that upholds democratic values and human rights.

The 25th anniversary of the Barcelona Process in November 2020 was an opportunity to reflect on the strategic partnership with the region in light of the political, socioeconomic, financial and environmental challenges exacerbated by the Covid-19 pandemic, and to reassess the EU’s partnership with Palestine* and other Southern Neighbourhood partner countries. Following consultations with partners, this reflection resulted in the Joint Communication by the European Commission and the High Representative of the Union for Foreign Affairs and Security Policy on ‘A renewed partnership with the Southern Neighbourhood - A new Agenda for the Mediterranean‘ and the annexed ’Economic and Investment Plan for the Southern Neighbours‘ in February 2021.

The EU-Palestinian Authority Action Plan, which was approved in 2013 and prolonged in December 2018 for a period of three years, sets the agenda for economic and political EU-Palestine* cooperation.

More information on the Southern Neighbourhood

Economic relations between the Palestinian Authority and Israel are formally managed according to the Paris Protocol (1994), which allows the Palestinian Authority to establish trade relations with third countries, provided that such agreements do not deviate from Israel's import policy.

Financial support

  • The European Union is the biggest provider of external assistance to the Palestinians.
  • The EU committed €1.28 billion to bilateral assistance for Palestine* for the period 2017-2020, under the European Neighbourhood Instrument (ENI). The EU’s bilateral assistance under the ENI focused on the following priority sectors: (i) governance reform, fiscal consolidation and policy; (ii) rule of law, justice, citizens’ safety and human rights; (iii) sustainable service delivery; (iv) access to self-sufficient water and energy services; and; (v) sustainable economic development.
  • More information on EU support is available from the Directorate-General for Neighbourhood and Enlargement Negotiations.

The pan-Euro-Mediterranean cumulation and the PEM Convention on rules of origin 

The pan-Euro-Mediterranean cumulation system of origin was created in 2005. It brings together the EU, Palestine*, and other partners in Europe and the Mediterranean to support regional integration by creating a common system of rules of origin. Rules of origin are technical criteria which determine whether a specific product qualifies for duty-free or other preferential access under a given trade agreement.

Cumulation of origin means a product coming from one partner country can be processed or added to a product of a second partner country and still be considered an ‘originating product’ of that second partner country for the purposes of a particular trade agreement.

The pan-Euro-Mediterranean system allows for diagonal cumulation (i.e. cumulation between two or more countries) between the EU, EFTA countries, Turkey, the Western Balkans, the Faroe Islands, Ukraine, Moldova and any country that signed the Barcelona Declaration of 1995. The system was originally based on a network of Free Trade Agreements with identical origin protocols.

These individual origin protocols are being progressively replaced by a reference to the Regional Convention on pan-Euro-Mediterranean preferential rules of origin (PEM Convention), which was established in 2011 to provide a more unified framework for origin protocols. Palestine acceded to the PEM Convention on 1 July 2014. Products originating in the Israeli settlements in Palestine* (the West Bank, Gaza Strip, East Jerusalem and the Golan Heights) are not entitled to benefit from the preferential tariff treatment under the EU-Israel Association Agreement.

More information on Mediterranean preferential Rules of Origin

Committees and Dialogues

The EU and Palestine* meet regularly to discuss issues and best practices and oversee the proper functioning of the Agreement.

Technical committee meetings - agendas and reports

Trading with Palestine*

* This designation shall not be construed as recognition of a State of Palestine and is without prejudice to the individual positions of EU Member States on this issue