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FTA, Customs Union or Unilateral Trade Policy? Final Status Options for “the West Bank and Gaza”

Author

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  • Schiff, Maurice

    (The World Bank)

Abstract

This paper considers regional and unilateral trade policy options for the West Bank and Gaza (WBG). It examines the welfare implications of a free trade agreement (FTA) with Israel, a customs union (CU) with Israel, and a nondiscriminatory trade policy (NDTP). The analysis captures the fact that the WBG is landlocked, that it has a large trade deficit with Israel, and that smuggling takes place between them. The paper concludes that i) a NDTP is unambiguously superior to a FTA with Israel; but ii) the WBG should only pursue a NDTP if the policy is open, transparent, and enforced by a credible lock-in mechanism; otherwise, a CU with Israel may be preferable, especially if trade and other taxes are shared more equitably.

Suggested Citation

  • Schiff, Maurice, 2003. "FTA, Customs Union or Unilateral Trade Policy? Final Status Options for “the West Bank and Gaza”," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 18, pages 17-41.
    • Handle: RePEc:ris:integr:0224
    as

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    More about this item

    Keywords

    West Bank-Gaza; Customs union; FTA; Unilateral liberalization;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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