published in: Journal of Economic Integration, 2003, 18 (1), 60 - 104
This paper considers the policy options of the West Bank and Gaza (WBG) with respect to
trade and the exports of labor services. It concludes that i) a non-discriminatory trade policy
(NDTP) is unambiguously superior to an FTA with Israel; ii) the WBG should pursue a NDTP
with all its neighbors, but only under the condition that the trade policy be open, transparent,
and enforced by a credible lock-in mechanism; otherwise, a CU with Israel may be
preferable; iii) the PA should establish a system of fee-based permits for Palestinian labor
working in Israel, and iv) the PA should consider allowing access by Jordanian workers to the
WBG labor market.
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