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

Maurice Schiff

Journal of Economic Integration, 2003, vol. 18, 17-41

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.

Keywords: West Bank-Gaza; Customs union; FTA; Unilateral liberalization (search for similar items in EconPapers)
JEL-codes: F13 F15 O53 (search for similar items in EconPapers)
Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:ris:integr:0224

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