4 mei 1994
Annex 4 bij de Gaza-Jericho Overeenkomst - Protocol van Parijs over economische samenwerking (1994)
Protocol on Economic Relations between the Government of the State of
Israel and the P.L.O., representing the Palestinian people
Paris, April 29, 1994
The two parties view the economic domain as one of the cornerstone in
their mutual relations with a view to enhance their interest in the
achievement of a just, lasting and comprehensive peace. Both parties
shall cooperate in this field in order to establish a sound economic
base for these relations, which will be governed in various economic
spheres by the principles of mutual respect of each other's
economic interests, reciprocity, equity and fairness.
This protocol lays the groundwork for strengthening the economic base
of the Palestinian side and for exercising its right of economic
decision making in accordance with its own development plan and
priorities. The two parties recognise each other's economic ties
with other markets and the need to create a better economic
environment for their peoples and individuals.
FRAMEWORK AND SCOPE OF THIS PROTOCOL
- This protocol establishes the contractual agreement that will
govern the economic relations between the two sides and will cover
the West Bank and the Gaza Strip during the interim period. The
implementation will be according to the stages envisaged in the
Declaration of Principles on Interim Self Government Arrangements
signed in Washington D.C. on September 13, 1993 and the Agreed
Minutes thereto. It will therefore begin in the Gaza Strip and the
Jericho Area and at a later stage will also apply to the rest of
the West Bank, according to the provisions of the Interim Agreement
and to any other agreed arrangements between the two sides.
- This Protocol, including its Appendixes, will be incorporated into
the Agreement on the Gaza Strip and the Jericho Area (in this
Protocol - the Agreement), will be an integral part thereof and
interpreted accordingly. This paragraph refers solely to the Gaza
Strip and the Jericho Area.
- This Protocol will come into force upon the signing of the
- For the purpose of this Protocol, the term "Areas" means
the areas under the jurisdiction of the Palestinian Authority,
according to the provisions of the Agreement regarding territorial
jurisdiction. The Palestinian Jurisdiction in the subsequent
agreements could cover areas, spheres or functions according to the
Interim Agreement. Therefore, for the purpose of this Protocol,
whenever applied, the term "Areas" shall be interpreted
to mean functions and spheres also, as the case may be, with the
THE JOINT ECONOMIC COMMITTEE
- Both parties will establish a Palestinian-Israeli Joint Economic
Committee (hereinafter - the JEC) to follow up the implementation
of this Protocol and to decide on problems related to it that may
arise from time to time. Each side may request the review of any
issue related to this Agreement by the JEC.
- The JEC will serve as the continuing committee for economic
cooperation envisaged in Annex III of the Declaration of
- The JEC will consist of an equal number of members from each side
and may establish sub-committees specified in this Protocol.
A sub-committee may include experts as necessary.
- The JEC and its sub-committees shall reach their decisions by
agreement and shall determine their rules of procedure and
operation, including the frequency and place or places of their
IMPORT TAXES AND IMPORT POLICY
- The import and customs policies of both sides will be according to
the principles and arrangements detailed in this Article.
- The Palestinian Authority will have all powers and
responsibilities in the sphere of import and customs policy
and procedures with regard to the following:
- Goods on List Al, attached hereto as Appendix I
locally-produced in Jordan and in Egypt particularly
and in the other Arab countries, which the Palestinians
will be able to import in quantities agreed upon by the
two sides up to the Palestinian market needs as
estimated according to para 3 below.
- Goods on List A2, attached hereto as Appendix II, from
the Arab, Islamic and other countries, which the
Palestinians will be able to import in quantities
agreed upon by the two sides up to the Palestinian
market needs as estimated according to para 3 below.
- The import policy of the Palestinian Authority for Lists Al
and A2 will include independently determining and changing
from time to time the rates of customs, purchase tax, levies,
excises and other charges, the regulation of licensing
requirements and procedures and of standard requirements. The
valuation for custom purposes will be based upon the GATT
1994 agreement as of the date it will be introduced in
Israel, and until then - on the Brussels Definition of
Valuation (BDV) system. The classification of goods will be
based on the principles of "the Harmonized Commodity
Description and Coding System". Concerning imports
referred to in Article VII of this Protocol (Agriculture),
the provisions of that Article will apply.
- For the purposes of para 2(a) above, the Palestinian market needs
for 1994 will be estimated by a sub-committee of experts. These
estimates will be based on the best available data regarding past
consumption, production, investment and external trade of the
Areas. The sub-committee will submit its estimate within three
months from the signing of the Agreement. These estimates will be
reviewed and updated every six months by the sub-committee, on the
basis of the best data available regarding the latest period for
which relevant data are available, taking into consideration all
relevant economic and social indicators. Pending an agreement on
the Palestinian market needs, the previous period's estimates
adjusted for population growth and rise in per-capita GNP in the
previous period, will serve as provisional estimate.
- The Palestinian Authority will have all powers and responsibilities
to independently determine and change from time to time the rates
of customs, purchase taxes; levies, excises and other charges on
the goods on List B, attached hereto as Appendix III, of basic food
items and other goods for the Palestinian economic development
program, imported by the Palestinians to the Areas.
- With respect to all goods not specified in Lists Al, A2 and
B, and with respect to quantities exceeding those determined
in accordance with paras 2(a) & 3 above (hereinafter -
the Quantities), the Israeli rates of customs, purchase tax,
levies, excises and other charges, prevailing at the date of
signing of the Agreement , as changed from time to time,
shall serve as the minimum basis for the Palestinian
Authority. The Palestinian Authority may decide on any upward
changes in the rates on these goods and exceeding quantities
when imported by the Palestinians to the Areas.
- With respect to all goods not specified in Lists A1 and A2,
and with respect to quantities exceeding the Quantities,
Israel and the Palestinian Authority will employ for all
imports the same system of importation, as stipulated in para
10 below, including inter alia standards, licensing, country
of origin, valuation for customs purposes etc.
- Each side will notify the other side immediately of changes made in
rates and in other matters of import policy, regulations and
procedures, determined by it within its respective powers and
responsibilities as detailed in this Article. With regard to
changes which do not require immediate application upon decision,
there will be a process of advance notifications and mutual
consultations which will take into consideration all aspects and
- The Palestinian Authority will levy VAT at one rate on both locally
produced goods and services and on imports by the Palestinians
(whether covered by the three Lists mentioned above or not), and
may fix it at the level of 15% to 16%.
- Goods imported from Jordan, Egypt and other Arab countries
according to para 2(a)(1) above (List Al) will comply with rules of
origin agreed upon by a joint sub-committee within three months of
the date of the signing of the Agreement. Pending an agreement,
goods will be considered to have been "locally produced"
in any of those countries if they conform with all the
- They have been wholly grown, produced, or manufactured in
that country, or have been substantially transformed there
into new or different goods, having a new name, character, or
use, distinct from the goods or materials from which they
were so transformed;
- They have been imported directly from the said country;
- The value or the costs of the materials produced in that
country, plus the direct processing costs in it, do not fall
short of 30 percent of the export value of the goods. This
rate may be reviewed by the joint committee mentioned in para
16 a year after the signing of the Agreement.
- The goods are accompanied by an internationally recognized
certificate of origin;
- No goods will be deemed as substantially new or different
goods, and no material will be eligible for inclusion as
domestic content, by virtue of having merely undergone simple
combining or packaging, or dilution with water or other
substances, which do not materially alter the characteristics
of the said goods.
- Each side will issue import licences to its own importers, subject
to the principles of this Article and will be responsible for the
implementation of the licensing requirements and procedures
prevailing at the time of the issuance of the licenses. Mutual
arrangements will be made for the exchange of information relevant
to licensing matters.
- Except for the goods on Lists Al and A2 and their Quantities - in
which the Palestinian Authority has all powers and
responsibilities, both sides will maintain the same import policy
(except for rates of import taxes and other charges for goods in
List B) and regulations including classification, valuation and
other customs procedures, which are based on the principles
governing international codes, and the same policies of import
licensing and of standards for imported goods, all as applied by
Israel with respect to its importation. Israel may from time to
time introduce changes in any of the above, provided that changes
in standard requirements will not constitute a non-tariff-barrier
and will be based on considerations of health, safety and the
protection of the environment in conformity with Article 2.2. of
the Agreement on Technical Barriers to trade of the Final Act of
the Uruguay Round of Trade Negotiations. Israel will give the
Palestinian Authority prior notice of any such changes, and the
provisions of para 6 above will apply.
- The Palestinian Authority will determine its own rates of
customs and purchase tax on motor vehicles imported as such,
to be registered with the Palestinian Authority. The vehicle
standards will be those applied at the date of the signing of
the Agreement as changed according to para 10 above. However,
the Palestinian Authority may request, through the
sub-committee on transportation, that in special cases
different standards will apply. Used motor vehicles will be
imported only if they are passenger cars or dual-purpose
passenger cars of a model of no more than three years prior
to the importation year. The sub-committee on transportation
will determine the procedures for testing and confirming that
such used cars comply with the standards' requirements
for that model year. The issue of importing commercial
vehicles of a model prior to the importation year will be
discussed in the joint sub-committee mentioned in para 16
- Each side may determine the terms and conditions for the
transfer of motor vehicles registered in the other side to
the ownership or use of a resident of its own side, including
the payment of the difference of import taxes, if any, and
the vehicle having been tested and found compatible with the
standards required at that time by its own registration
administration, and may prohibit transfer of vehicles.
- Jordanian standards, as specified in the attached Appendix I,
will be acceptable in importing petroleum products into the
Areas, once they meet the average of the standards existing
in the European Union countries, or the USA standards, which
parameters have been set at the values prescribed for the
geographical conditions of Israel, the Gaza Strip and the
West Bank. Cases of petroleum products which do not meet
these specifications will be referred to a joint experts'
committee for a suitable solution. The committee may mutually
decide to accept different standards for the importation of
gasoline which meet the Jordanian standards even though, in
some of their parameters, they do not meet the European
Community or USA standards. The committee will give its
decision within six months. Pending the committee's
decision, and for not longer than six months of the signing
of the Agreement, the Palestinian Authority may import to the
Areas, gasoline for the Palestinian market in the Areas,
according to the needs of this market, provided that:
- this gasoline is marked in a distinctive colour to
differentiate it from the gasoline marketed in Israel;
- the Palestinian Authority will take all the necessary
steps to ensure that this gasoline is not marketed in
- The difference in the final price of gasoline to consumers in
Israel and to consumers in the Areas, will not exceed 15% of
the official final consumer price in Israel. The Palestinian
Authority has the right to determine the prices of petroleum
products, other than gasoline, for consumption in the
- If Egyptian gasoline standards will comply with the
conditions of sub-para (a) above, the importation of Egyptian
gasoline will also be allowed.
- In addition to the points of exit and entry designated according to
the Article regarding Passages in Annex I of the Agreement for the
purpose of export and import of goods, the Palestinian side has the
right to use all points of exit and entry in Israel designated for
that purpose. The import and export of the Palestinians through the
points of exit and entry in Israel will be given equal trade and
- In the entry points of the Jordan River and the Gaza Strip:
- Freight shipment
The Palestinian Authority will have full responsibility and
powers in the Palestinian customs points (freight-area) for
the implementation of the agreed upon customs and importation
policy as specified in this protocol, including the
inspection and the collection of taxes and other charges,
Israeli customs officials will be present and will receive
from the Palestinian customs officials a copy of the
necessary relevant documents related to the specific shipment
and will be entitled to ask for inspection in their presence
of both goods and tax collection.
The Palestinian customs officials will be responsible for the
handling of the customs procedure including the inspection
and collection of due taxes.
In case of disagreement on the clearance of any shipment
according to this Article, the shipment will be delayed for
inspection for a maximum period of 48 hours during which a
joint sub-committee will resolve the issue on the basis of
the relevant provisions of this Article. The shipment will be
released only upon the sub-committee's decision.
- Passengers customs lane
Each side will administer its own passengers customs
procedures, including inspection and tax collection. The
inspection and collection of taxes due in the Palestinian
customs lane will be conducted by customs officials of the
Israeli customs officials will be invisibly present in the
Palestinian customs lane and entitled to request
inspection of goods and collection of taxes when due. In
the case of suspicion, the inspection will be carried out
by the Palestinian official in a separate room in the
presence of the Israeli customs official.
- The clearance of revenues from all import taxes and levies, between
Israel and the Palestinian Authority, will be based on the
principle of the place of final destination. In addition, these tax
revenues will be allocated to the Palestinian Authority even if the
importation was carried out by Israeli importers when the final
destination explicitly stated in the import documentation is a
corporation registered by the Palestinian Authority and conducting
business activity in the Areas. This revenue clearance will be
effected within six working days from the day of collection of the
said taxes and levies.
- The Joint Economic Committee or a sub-committee established by it
for the purposes of this Article will deal inter alia with the
- Palestinian proposals for addition of items to Lists Al, A2
and B. Proposals for changes in rates and in import
procedures, classification, standards and licensing
requirements for all other imports;
- Estimate the Palestinian market needs, as mentioned in para 3
- Receive notifications of changes and conduct consultations,
as mentioned in para 6 above;
- Agree upon the rules of origin as mentioned in para 8 above,
and review their implementation;
- Coordinate the exchange of information relevant to licensing
matters as mentioned in para 9 above;
- Discuss and review any other matters concerning the
implementation of this Article and resolve problems arising
- The Palestinian Authority will have the right to exempt the
Palestinian returnees who will be granted permanent residency in
the Areas from import taxes on personal belongings including house
appliances and passenger cars as long as they are for personal
- The Palestinian Authority will develop its system for temporary
entry of needed machines and vehicles used for the Palestinian
Authority and the Palestinian economic development plan.
Concerning other machines and equipment, not included in Lists Al,
A2 and B, the temporary entry will be part of the import policy as
agreed in para 10 above, until the joint sub-committee mentioned in
para 16 decides upon a new system proposed by the Palestinian
Authority. The temporary entry will be coordinated through the
- Donations in kind to the Palestinian Authority will be exempted
from customs and other import taxes if destined and used for
defined development projects or non-commercial humanitarian
purposes. The Palestinian Authority will be responsible exclusively
for planning and management of the donors' assistance to the
Palestinian people. The Joint Economic Committee will discuss
issues pertaining to the relations between the provisions in this
Article and the implementation of the principles in the above
MONETARY AND FINANCIAL ISSUES
- The Palestinian Authority will establish a Monetary Authority (PMA)
in the Areas. The PMA will have the powers and responsibilities for
the regulation and implementation of the monetary policies within
the functions described in this Article.
- The PMA will act as the Palestinian Authority's official
economic and financial advisor.
- The PMA will act as the Palestinian Authority's and the public
sector entities' sole financial agent, locally and
- The foreign currency reserves (including gold) of the Palestinian
Authority and all Palestinian public sector entities will be
deposited solely with the PMA and managed by it.
- The PMA will act as the lender of last resort for the banking
system in the Areas.
- The PMA will authorize foreign exchange dealers in the Areas and
will exercise control (regulation and supervision) over foreign
exchange transactions within the Areas and with the rest of the
- The PMA will have a banking supervision department that will
be responsible for the proper functioning, stability,
solvency and liquidity of the banks operating in the
- The banking supervision department will predicate its
supervision on the international principles and standards
reflected in international conventions and especially on the
principles of the "Basle Committee".
- The supervision department will be charged with the general
supervision of every such bank, including:
- The regulation of all kinds of banking activities,
including their foreign activities;
- The licensing of banks formed locally and of branches,
subsidiaries, joint ventures and representative offices
of foreign banks and the approval of controlling
- The supervision and inspection of banks.
- The PMA will relicense each of the five branches of the Israeli
banks operating at present in the Gaza Strip and the West Bank, as
soon as its location or the authorities regarding it come under the
jurisdiction of the Palestinian Authority. These branches will be
required to comply with the general rules and regulations of the
PMA concerning foreign banks, based on the "Basle
Concordat". Para I0 d, e, and f below will apply to these
- Any other Israeli bank wishing to open a branch or a subsidiary in
the Areas will apply for a license to the PMA and will be treated
equally to other foreign banks, provided that the same will apply
to the Palestinian banks wishing to open a branch or a subsidiary
- Granting of a license by both authorities will be subject to the
following arrangements based on the "Basle Concordat"
valid on the date of signing of the Agreement and to the host
authority's prevailing general rules and regulations concerning
opening of branches and subsidiaries of foreign banks.
In this para 10 "host authority" and "home
authority" apply only to the Bank of Israel (BOI) and the
- A bank wishing to open a branch or establish a subsidiary will
apply to the host authority, having first obtained the approval of
its home authority. The host authority will notify the home
authority of the terms of the license, and will give its final
approval unless the home authority objects.
- The home authority will be responsible for the consolidated and
comprehensive supervision of banks, inclusive of branches and
subsidiaries in the area under the jurisdiction of the host
authority. However, the distribution of supervision
responsibilities between the home and the host authorities
concerning subsidiaries will be according to the "Basle
- The host authority will regularly examine the activities of
branches and subsidiaries in the area under its jurisdiction. The
home authority will have the right to conduct on site examinations
in the branches and subsidiaries in the host area. However, the
supervision responsibilities of the home authority concerning
subsidiaries will be according to the "Basle
Accordingly, each authority will transfer to the other authority
copies of its examination reports and any information relevant to
the solvency, stability and soundness of the banks, their branches
- The BOI and the PMA will establish a mechanism for cooperation and
for the exchange of information on issues of mutual interest.
- The New Israeli Sheqel (NIS) will be one of the circulating
currencies in the Areas and will legally serve there as means of
payment for all purposes including official transactions. Any
circulating currency, including the NIS, will be accepted by the
Palestinian Authority and by all its institutions, local
authorities and banks, when offered as a means of payment for any
- Both sides will continue to discuss, through the JEC, the
possibility of introducing mutually agreed Palestinian currency or
temporary alternative currency arrangements for the Palestinian
- The liquidity requirements on all deposits in banks operating in
the Areas will be determined and announced by the PMA.
- Banks in the Areas will accept NIS deposits. The liquidity
requirements on the various kinds of NIS deposits (or deposit
linked to the NIS) in banks operating in the Areas will not be less
than 4% to 8%, according to the type of deposits. Changes of over
1% in the liquidity requirements on NIS deposits (or deposits
linked to the NIS) in Israel will call for corresponding changes in
the above mentioned rates.
- The supervision and inspection of the implementation of all
liquidity requirements will be carried out by the PMA.
- The reserves and the liquid assets required according to this
paragraph will be deposited at the PMA according to rules and
regulations determined by it. Penalties for non compliance with the
liquidity requirements will be determined by the PMA.
- The PMA will regulate and administer a discount window system and
the supply of temporary finance for banks operating in the Areas.
- The PMA will establish or license a clearing house in order to
clear money orders between the banks operating in the Areas, and
with other clearing houses.
- The clearing of money orders and transactions between banks
operating in the Areas and banks operating in Israel will be done
between the Israeli and the Palestinian clearing houses on same
working day basis, according to agreed arrangements.
- Both sides will allow correspondential relations between each
- The PMA will have the right to convert at the BOI excess NIS
received from banks operating in the Areas into foreign currency,
in which the BOI trades in the domestic inter-bank market, up to
the amounts determined per period, according to the arrangements
detailed in para 16 below.
- The excess amount of NIS, due to balance of payments flows, that
the PMA will have the right to convert into foreign currency, will
be equal to:
- Estimates of all Israeli "imports" of goods and
services from the Areas, valued at market prices (inclusive
of taxes), which were paid for in NIS, less:
- the taxes collected by the Palestinian Authority on all
Israeli "imports" from the Areas and rebated
to Israel in NIS, and
- the taxes collected by Israel on all Israeli
"imports" from the Areas and included in
their market value, and not rebated to the Palestinian
- Estimates of all Israeli "exports" of goods and
services to the Areas, valued at market prices (inclusive of
taxes), which were paid for in NIS, less
- the taxes collected by Israel on such
"exports" and rebated to the Palestinian
- the taxes collected by the Palestinian Authority on
such "exports" and included in their market
value, and not rebated to Israel;
- The accumulated net amounts of foreign currency converted
previously into NIS by the PMA, as recorded in the BOI
- The said flows and amounts will be calculated as of the date of the
signing of the Agreement.
Notes to para 16:
- The estimates of the said "exports and imports" of goods
and services will include inter alia labor services, NIS
expenditure of tourists and Israelis in the Areas and NIS
expenditure of Palestinians of the Areas in Israel.
- Taxes and pension contributions on "imports" of labor
services, paid to "importing" side and rebated to the
"exporting" one, will not be included in the estimates of
the sums to be converted, as the "exports'" earnings
of labor services are recorded in the statistics inclusive of them,
although they do not accrue to the individuals supplying them.
The PMA and the BOI will meet annually to discuss and determine the
annual amount of convertible NIS during the following calendar year
and will meet semi-annually to adjust the said amount. The amounts
determined annually and adjusted semi-annually will be based on
data and estimates regarding the past and on forecasts for the wi
following period, according to the formula mentioned in para 16.
The first meeting will be as soon as possible within three months
after the date of the signing of the Agreement.
- The exchange of foreign currency for NIS and vice-versa by the PMA
will be carried out through the BOI Dealing Room, at the market
- The BOI will not be obliged to convert in any single month more
than 1/5 of the semi-annual amount, as mentioned in para 17.
- There will be no ceiling on the annual foreign currency conversions
by the PMA into NIS. However, in order to avoid undesirable
fluctuations in the foreign exchange market, monthly ceilings of
such conversions will be agreed upon in the annual and semi-annual
meetings referred to in para 17.
- Banks in the Areas will convert NIS into other circulating
currencies and vice-versa.
- The Palestinian Authority will have the authorities, powers and
responsibilities regarding the regulation and supervision of
capital activities in the Areas, including the licensing of capital
market institutions, finance companies and investment funds.
- Israel and the Palestinian Authority will each determine and
regulate independently its own tax policy in matters of direct
taxation, including income tax on individuals and corporations,
property taxes, municipal taxes and fees.
- Each tax administration will have the right to levy the direct
taxes generated by economic activities within its area.
- Each tax administration may impose additional taxes on residents
within its area on (individuals and corporations) who conduct
economic activities in the other side's area.
- Israel will transfer to the Palestinian Authority a sum equal
- 75% of the income taxes collected from Palestinians from the
Gaza Strip and the Jericho Area employed in Israel.
- The full amount of income taxes collected from Palestinians
from the Gaza Strip and Jericho Area employed in the
- The two sides will agree on a set of procedures that will address
all issues concerning double taxation.
INDIRECT TAXES ON LOCAL PRODUCTION
- The Israel and the Palestinian tax administrations will levy and
collect VAT and purchase taxes on local production, as well as any
other indirect taxes, in their respective areas.
- The purchase tax rates within the jurisdiction of each tax
administration will be identical as regards locally produced and
- The present Israeli VAT rate is 17%. The Palestinian VAT rate will
be 15% to 16%.
- The Palestinian Authority will decide on the maximum annual
turnover for businesses under its jurisdiction to be exempt from
VAT, within an upper limit of 12,000 US $.
- The VAT on purchases by businesses registered for VAT purposes will
accrue to the tax administration with which the respective business
Businesses will register for VAT purposes with the tax
administration of the side of their residence, or on the side of
their ongoing operation.
There will be clearance of VAT revenues between the Israeli and
Palestinian VAT administrations on the following conditions:
- The VAT clearance will apply to VAT on transactions between
businesses registered with the VAT administration of the side
in which they reside.
- The following procedures will apply to clearance of VAT
revenues accruing from transactions by businesses registered
for VAT purposes:
- To be acceptable for clearance purposes, special
invoices, clearly marked for this purpose, will be used
for transactions between businesses registered with the
- The invoices will be worded either in both Hebrew and
Arabic or in English and will be filled out in any of
these three languages, provided that the figures are
written in "Arabic" (not Hindi) numerals.
- For the purpose of tax rebates, such invoices will be
valid for six months from their date of issue.
- Representatives of the two sides will meet once a
month, on the 20th day of the month, to present each
other with a list of invoices submitted to them for tax
rebate, for VAT clearance. This list will include the
following details regarding each invoice:
- The number of the registered business issuing it;
- The name of the registered business issuing it;
- The number of the invoice;
- The date of issue;
- The amount of the invoice;
- The name of the recipient of the invoice.
- The clearance claims will be settled within 6 days from
the meeting, through a payment by the side with the net
balance of claims against it, to the other side.
- Each side will provide the other side, upon demand,
with invoices for verification purposes. Each tax
administration will be responsible for providing
invoices for verification purposes for 6 months after
- Each side will take the necessary measure to verify the
authenticity of the invoices presented to it for
clearance by the other side.
- Claims for VAT clearance which will not be found valid
will be deducted from the next clearance payment.
- Once an inter-connected computer system for tax rebates
to businesses and for VAT clearance between the two
sides is operational, it will replace the clearance
procedures specified in sub-paras (4) - (8).
- The two tax administrations will exchange lists of the
businesses registered with them and will provide each
other with the necessary documentation, if required,
for the verification of transactions.
- The two sides will establish a sub-committee which will
deal with the implementation arrangements regarding the
clearance of VAT revenues set above.
- VAT paid by not-for-profit Palestinian organizations and
institutions, registered by the Palestinian Authority, on
transactions in Israel, will accrue to the Palestinian tax
administration. The clearance system set out in para 5 will apply
to these organizations and institutions.
- Both sides will attempt to maintain the normality of movement of
labor between them, subject to each side's right to determine
from time to time the extent and conditions of the labor movement
into its area. If the normal movement is suspended temporarily by
either side, it will give the other side immediate notification,
and the other side may request that the matter be discussed in the
Joint Economic Committee.
The placement and employment of workers from one side in the area
of the other side will be through the employment service of the
other side and in accordance with the other sides' legislation.
The Palestinian side has the right to regulate the employment of
Palestinian labor in Israel through the Palestinian employment
service, and the Israeli Employment Service will cooperate and
coordinate in this regard.
- Palestinians employed in Israel will be insured in the
Israeli social insurance system according to the National
Insurance Law for employment injuries that occur in Israel,
bankruptcy of employers and maternity leave allowance.
- The National Insurance fees deducted from the wages for
maternity insurance will be reduced according to the reduced
scope of maternity insurance, and the equalization deductions
transferred to the Palestinian Authority, if levied, will be
- Implementation procedures relating thereto will be agreed
upon between the Israeli National Insurance Institute and the
Palestinian Authority or the appropriate Palestinian social
- Israel will transfer to the Palestinian Authority, on a
monthly basis, the equalization deductions as defined by
Israeli legislation, if imposed and to the extent levied by
Israel. The sums so transferred will be used for social
benefits and health services, decided upon by the Palestinian
Authority, for Palestinians employed in Israel and for their
The equalization deductions to be so transferred will be
those collected after the date of the signing of the
Agreement from wages of Palestinians employed in Israel and
from their employers.
These sums will not include
- Payments for health services in places of employment.
- 2/3 of the actual administrative costs in handling the
matters related to the Palestinians employed in Israel
by the Payments Section of the Israeli Employment
- Israel will transfer, on a monthly basis, to a relevant pension
insurance institution to be established by the Palestinian
Authority, pension insurance deductions collected after the
establishment of the above institution and the completion of the
documents mentioned in para 6.
These deductions will be collected from wages of Palestinians
employed in Israel and their employers, according to the relevant
rates set out in the applicable Israeli collective agreements. 2/3
of the actual administrative costs in handling these deductions by
the Israeli Employment Service will be deducted from the sums
transferred. The sums so transferred will be used for providing
pension insurance for these workers. Israel will continue to be
liable for pension rights of the Palestinian employees in Israel,
to the extent accumulated by Israel before the entry into force of
this para 4.
- Upon the receipt of the deductions, the Palestinian Authority and
its relevant social institutions will assume full responsibility in
accordance with the Palestinian legislation and arrangements, for
pension rights and other social benefits of Palestinians employed
in Israel, that accrue from the transferred deductions related to
these rights and benefits. Consequently, Israel and its relevant
social institutions and the Israeli employers will be released
from, and will not be held liable for any obligations and
responsibilities concerning personal claims, rights and benefits
arising from these transferred deductions, or from the provisions
of paras 2-4 above.
- Prior to the said transfers, the Palestinian Authority or its
relevant institutions, as the case may be, will provide Israel with
the documents required to give legal effect to their aforesaid
obligations, including mutually agreed implementation procedures of
the principles agreed upon in paras 3-5 above.
- The above arrangements concerning equalization deductions and/or
pension deductions may be reviewed and changed by Israel if an
authorized court in Israel will determine that the deductions or
any part thereof must be paid to individuals, or used for
individual social benefits or insurance in Israel, or that it is
otherwise unlawful. In such a case the liability of the Palestinian
side will not exceed the actual transferred deductions related to
- Israel will respect any agreement reached between the Palestinian
Authority, or an organization or trade-union representing the
Palestinians employed in Israel, and a representative organization
of employees or employers in Israel, concerning contributions to
such organization according to any collective agreement.
- The Palestinian Authority may integrate the existing health
insurance scheme for Palestinians employed in Israel and
their families in its health insurance services. As long as
this scheme continues, whether integrated or separately,
Israel will deduct from their wages the health insurance fees
("health stamp") and will transfer them to the
Palestinian Authority for this purpose.
- The Palestinian Authority may integrate the existing health
insurance scheme for Palestinians who were employed in Israel
and are receiving pension payments through the Israeli
Employment Service, in its health insurance services. As long
as this scheme continues, whether integrated or separately,
Israel will deduct the necessary sum of health insurance fees
("health stamp") from the equalization payments and
will transfer them to the Palestinian Authority for this
- The JEC will meet upon the request of either side and review the
implementation of this Article and other issues concerning labor,
social insurance and social rights.
- Other deductions not mentioned above, if any, will be jointly
reviewed by the JEC. Any agreement between the two sides concerning
these deductions will be in addition to the above provisions.
- Palestinians employed in Israel will have the right to bring
disputes arising out of employee - employer relationships and other
issues before the Israeli Labor Courts, within these courts'
- This Article governs the future labor relations between the two
sides and will not impair any labor rights prior to the date of
signing of the Agreement.
- There will be free movement of agricultural produce, free of
customs and import taxes, between the two sides, subject to the
following exceptions and arrangements.
- The official veterinary and plant protection services of each side
will be responsible, within the limits of their respective
jurisdiction, for controlling animal health, animal products and
biological products, and plants and parts thereof, as well as their
importation and exportation.
- The relations between the official veterinary and plant protection
services of both sides will be based on mutuality in accordance
with the following principles, which will be applied in all the
areas under their respective jurisdiction:
- Israel and the Palestinian Authority will do their utmost to
preserve and improve the veterinary standards.
- Israel and the Palestinian Authority will take all measures
to reach equivalent and compatible standards regarding animal
disease control, including mass vaccination of animals and
avians, quarantines, "stamping out" measures and
residue control standards.
- Mutual arrangements will be made to prevent the introduction
and spread of plant pests and diseases, for their eradication
and concerning residue control standards in plant products.
- The official veterinary and plant protection services of
Israel and the Palestinian Authority will coordinate and
regularly exchange information regarding animal diseases, as
well as plant pests and diseases, and will establish a
mechanism for immediate notification of the outbreak of such
- Trade between the two sides in animals, animal products and
biological products will be in keeping with the principles and
definitions set out in the current edition of the OIE National
Animal Health Code as updated from time to time (hereinafter -
- Transit of livestock, animal products and biological products from
one side through the area under the jurisdiction of the other side,
should be conducted in a manner aimed at the prevention of diseases
spreading to or from the consignment during its movement. For such
a transit to be permitted, it is a prerequisite that the veterinary
conditions agreed upon by both sides will be met in regard to
importation of animals, their products and biological products from
external markets. Therefore the parties agree to the following
- The official veterinary services of each side have the authority to
issue veterinary import permits for import of animals, animal
products and biological products to the areas under its
jurisdiction. In order to prevent the introduction of animal
diseases from third parties, the following procedures will be
- The import permits will strictly follow the professional
veterinary conditions for similar imports to Israel as
prevailing at the time of their issuance. The permits will
specify the country of origin and the required conditions to
be included in the official veterinary certificates which
should be issued by the veterinary authorities in the
countries of origin and which should accompany each
Each side may propose a change in these conditions. The
change will come into force 10 days after notice to the other
side, unless the other side requested that the matter be
brought before the Veterinary Sub-Committee specified in para
14 (hereinafter - VSC). If it is more stringent than the
prevailing conditions - it will come into force 20 days after
the request, unless both sides decide otherwise through the
VSC, and if more lenient - it will come into force only if
agreed upon by both sides through the VSC. However, if the
change is urgent and needed for the protection of animal and
public health, it will come into force immediately after
notice by the other side and will remain in force unless and
until both sides agree otherwise through the VSC.
- The official veterinary certificates will include the
provisions regarding OIE Lists A & B Diseases as
specified in the I.A.H.C. When the I.A.H.C. allows
alternative requirements regarding the same disease, the most
stringent one will be adopted unless otherwise agreed upon by
- When infectious diseases which are not included in Lists A
& B of the I.A.H.C. exist or are suspected, on scientific
grounds, to exist in the exporting country, the necessary
veterinary import conditions that will be required and
included in the official veterinary certificates, will be
discussed in the VSC, and in the case of different
professional opinions, the most stringent ones will be
- The import of live vaccines will be permitted only if so
decided by the VSC.
- Both sides will exchange, through the VSC, information
pertaining to import licensing, including the evaluation of
the disease situation and zoosanitary capability of exporting
countries, which will be based upon official information as
well as upon other available data.
- Consignments which do not conform with the above mentioned
requirements will not be permitted to enter the areas under
the jurisdiction of either side.
- Transportation of livestock and poultry and of animal products and
biological products between areas under the jurisdiction of one
side through areas under the jurisdiction of the other side, will
be subject to the following technical rules:
- The transportation will be by vehicles which will be sealed
with a seal of the official veterinary services of the place
of origin and marked with a visible sign "Animal
Transportation" or "Products of Animal Origin"
in Arabic and Hebrew, in coloured and clearly visible letters
on white background;
- Each consignment will be accompanied by a veterinary
certificate issued by the official veterinary services of the
place of origin, certifying that the animals or their
products were examined and are free of infectious diseases
and originate from a place which is not under quarantine or
under animal movement restrictions.
- Transportation of livestock and poultry, animal products and
biological products destined for Israel from the Areas and vice
versa will be subject to veterinary permits issued by the official
veterinary services of the recipient side, in keeping with the OIE
standards used in international traffic in this field. Each such
consignment will be transported by a suitable and marked vehicle,
accompanied by a veterinary certificate in the form agreed upon
between the official veterinary services of both sides. Such
certificates will be issued only if permits of the recipient side
- In order to prevent the introduction of plant pests and diseases to
the region, the following procedures will be adopted:
- The transportation between the Areas and Israel, of plants
and parts thereof (including fruits and vegetables), the
control of pesticide residues in them and the transportation
of plant propagation material and of animal feed, may be
inspected without delay or damage by the plant protection
services of the recipient side.
- The transportation between the Areas through Israel of plants
and parts thereof (including fruits and vegetables) as well
as of pesticides, may be required to pass a phytosanitary
inspection without delay or damage.
- The official Palestinian plant protection services have the
authority to issue permits for the import of plants and parts
thereof as well as of pesticides from external markets. The
permits will be based on the prevailing standards and
The permits will specify the required conditions to be
included in the official Phytosanitary Certificates (hence
P.C.) based upon the standards and the requirements of the
International Plant Protection Convention (I.P.P.C.)and those
of the European and Mediterranean Plant Protection
Organization (E.P.P.O.) which should accompany each
consignment. The P.C.'s will be issued by the plant
protection services in the countries of origin. Dubious or
controversial cases will be brought before the sub-committee
on plant protection.
- The agricultural produce of both sides will have free and
unrestricted access to each others' markets, with the temporary
exception of sales from one side to the other side of the following
items only: poultry, eggs, potatoes, cucumbers, tomatoes and
melons. The temporary restrictions on these items will be gradually
removed on an increasing scale until they are finally eliminated by
1998, as listed below:
Note: The above figures refer to the combined quantities marketed
from the West Bank and Gaza Strip to Israel and vice-versa. The
Palestinian Authority will notify Israel the apportioning of these
quantities between these areas concerning the quantities pertaining
to the Palestinian produce.
- The Palestinians will have the right to export their agricultural
produce to external markets without restrictions, on the basis of
certificates of origin issued by the Palestinian Authority.
- Without prejudice to obligations arising out of existing
international agreements, the two sides will refrain from importing
agricultural products from third parties which may adversely affect
the interests of each other's farmers.
- Each side will take the necessary measures in the area under its
jurisdiction to prevent damage which may be caused by its
agriculture to the environment of the other side.
- The two sides will establish sub-committees of their respective
official veterinary and plant protection services, which will
update the information and review issues, policies and procedures
in these fields. Any changes in the provisions of this Article will
be agreed upon by both sides.
- The two sides will establish a sub-committee of experts in the
dairy sector in order to exchange information, discuss and
coordinate their production in this sector so as to protect the
interests of both sides. In principle, each side will produce
according to its domestic consumption.
- There will be free movement of industrial goods free of any
restrictions including customs and import taxes between the two
sides, subject to each side's legislation.
- The Palestinian side has the right to employ various methods
in encouraging and promoting the development of the
Palestinian industry by way of providing grants, loans,
research and development assistance and direct-tax benefits.
The Palestinian side has also the right to employ other
methods of encouraging industry resorted to in Israel.
- Both sides will exchange information about the methods
employed by them in the encouragement of their respective
- Indirect tax rebates or benefits and other subsidies to sales
shall not be allowed in trade between the two sides.
- Each side will do its best to avoid damage to the industry of the
other side and will take into consideration the concerns of the
other side in its industrial policy.
- Both sides will cooperate in the prevention of deceptive practices,
trade in goods which may endanger health, safety and the
environment and in goods of expired validity.
- Each side will take the necessary measures in the area under its
jurisdiction to prevent damage which may be caused by its industry
to the environment of the other side.
- The Palestinians will have the right to export their industrial
produce to external markets without restrictions, on the basis of
certificates of origin issued by the Palestinian Authority.
- The JEC will meet and review issues pertaining to this Article.
- The Palestinian Authority will establish a Palestinian Tourism
Authority which will exercise, inter alia, the following powers in
- Regulating, licensing, classifying and supervising tourist
services, sites and industries.
- Promoting foreign and domestic tourism and developing the
Palestinian tourist resources and sites.
- Supervising the marketing, promotion and information
activities related to foreign and domestic tourism.
- Each side shall, under its respective jurisdiction, protect, guard
and ensure the maintenance and good upkeep of historical,
archaeological, cultural and religious sites and all other tourist
sites, to fit their status as well as their purpose as a
destination for visitors.
- Each side will determine reasonable visiting hours and days for all
tourist sites in order to facilitate visits at a wide variety of
days and hours, taking into consideration religious and national
holidays. Each side shall publicize such opening times. Meaningful
changes in the opening times will take into consideration tourist
programs already committed to.
- Tourist buses or any other form of tourist transport authorized by
either side, and operated by companies registered and licensed by
it, will be allowed to enter and proceed on their tour within the
area under the jurisdiction of the other side, provided that such
buses or other vehicles conform with the EEC technical
specifications [I. currently adopted.] All such vehicles will be
clearly marked as tourist vehicles.
- Each side will protect the environment and the ecology around the
tourist sites under its jurisdiction. In view of the importance of
beaches and maritime activities for tourism, each side will do its
best efforts to ensure that development and construction on the
Mediterranean coast, and especially at ports (such as Ashqelon or
Gaza), will be planned and carried out in a manner that will not
adversely affect the ecology, environment or the functions of the
coastline and beaches of the other side.
- Tourism companies and agencies licensed by either side shall enjoy
equal access to tourism - related facilities and amenities in
border points of exit and entry according to the regulations of the
authority operating them.
- Each side will license, according to its own rules and
regulations, travel agents, tour companies, tour guides and
other tourism businesses (hereinafter - tourism entities)
within its jurisdiction.
- Tourism entities authorized by either side, will be allowed
to conduct tours that include the area under the jurisdiction
of the other side, provided that their authorization as well
as their operation will be in accordance with rules,
professional requirements and standards agreed upon by both
sides in the sub-committee mentioned in para 9.
Pending that agreement, existing tourism entities in the
Areas which are currently allowed to conduct tours that
include Israel, will be allowed to continue to do so, and
Israeli authorized tourism entities will continue to be
allowed to conduct tours that include the Areas.
In addition, any tourism entity of one side that the tourism
authorities of the other side will certify as fulfilling all
its rules, professional requirements and standards, will be
allowed to conduct tours that include that other side.
- Each side will make its own arrangement for compensation of
tourists for bodily injury and property damages caused by political
violence in the areas under its respective jurisdiction.
- The JEC or a tourism sub-committee established by it shall meet
upon the request of either side in order to discuss the
implementation of the provisions of this Article and resolve
problems that may arise. The sub-committee will also discuss and
consider tourist issues of benefit to both sides, and will promote
educational programs for tourism entities of both sides in order to
further their professional standards and their ethics. Complaints
of one side against the behaviour of tourism entities of the other
side will be channelled through the committee.
Note: It is agreed that the final wording in the last sentence
in para 4 will be adopted according to the final wording in the
relevant provisions of the Agreement.
- The authorities, powers and responsibilities in the insurance
sphere in the Areas, including inter alia the licensing of
insurers, insurance agents and the supervision of their activities,
will be transferred to the Palestinian Authority.
- The Palestinian Authority will maintain a compulsory absolute
liability system for road accident victims with a ceiling on
the amount of compensation based upon the following
- Absolute liability for death or bodily injury to road
accident victims, it being immaterial whether or not
there was fault on the part of the driver and whether
or not there was fault or contributory fault on the
part of others, each driver being responsible for
persons travelling in his vehicle and for pedestrians
hit by his vehicle.
- Compulsory insurance for all motor vehicles, covering
death or bodily injury to all road accident victims,
- No cause of action in tort for death or bodily injury
resulting from road accidents.
- The maintenance of a statutory fund (hereinafter - the
Fund) for compensation of road accident victims who are
unable to claim compensation from an insurer for the
- the driver liable for compensation is unknown;
- the driver is not insured or his insurance does
not cover the liability involved; or
- the insurer is unable to meet his liabilities.
- Terms in this Article will have the same meaning as in
the legislation prevailing at the date of signing of
the Agreement concerning compulsory motor vehicle
insurance and compensation of road accident victims.
- Any change by either side in the rules and regulations
regarding the implementation of the above mentioned
principles will require prior notice to the other side.
A change which might substantially affect the other
side will require prior notice of at least three
- Upon the signing of the Agreement the Palestinian Authority
will establish a Fund for the Areas (hereinafter - the
Palestinian Fund) for the purposes detailed in para 2(a)(4)
above and for the purposes detailed below. The Palestinian
Fund will assume the responsibilities of the statutory Road
Accident Victims Compensation Fund in the West Bank and the
Gaza Strip (hereinafter - the Existing Fund) regarding the
Areas, according to the prevailing law at that time.
Accordingly, the Existing Fund will cease to be responsible
for any liability regarding accidents occurring in the Areas
from the date of signing of the Agreement.
- The Existing Fund will transfer to the Palestinian Fund,
after the assumption of the above mentioned responsibilities
by it, the premiums paid to the Existing Fund by the insurers
for vehicles registered in the Areas, pro-rata to the
unexpired period of each insurance policy.
- Compulsory motor vehicle insurance policies issued by
insurers licensed by either side will be valid in the
territories of both sides. Accordingly, a vehicle registered
in one side covered by such a policy will not be required to
have an additional insurance coverage for travel in the areas
under the other side's jurisdiction. These insurance
policies will cover all the liabilities according to the
legislation of the place of the accident.
- In order to cover part of the liabilities which may incur due
to road accidents in Israel by uninsured vehicles registered
in the Palestinian Authority, the Palestinian Fund will
transfer to the Israeli Fund, on a monthly basis, for each
insured vehicle, an amount equal to 30% of the amount paid to
the Israeli Fund by an insurer registered in Israel, for the
sat-ne type of vehicle, for the same period of insurance
(which will not be less than 90 days).
- In cases where a victim of a road accident wishes to claim
compensation from an insurer registered by the other side or from
the Fund of the other side or in cases where a driver or an owner
of a car is sued by a victim, by an insurer or by the Fund of the
other side, he may nominate the Fund of his side as his proxy for
this purpose. The Fund so nominated may address any relevant party
from the other side directly or through the other sides'
- In the case of a road accident in which neither the registration
number of the vehicle nor the identity of the driver are known, the
Fund of the side which has jurisdiction over the place of the
accident will compensate the victim, according to its own
- The Fund of each side will be responsible towards the victims of
the other side for any liability of the insurers of its side
regarding the compulsory insurance and will guarantee their
- Each side will guarantee its Fund's liabilities according to
- The two sides will negotiate within three months from the date of
the signing of the Agreement a cut-off agreement between the
Existing Fund and the Palestinian Fund concerning accidents which
occurred in the Areas prior to the date of the signing of the
Agreement, whether claims have been reported or not. The cut-off
agreement will not include compensation for Israeli victims
involved in accidents which occurred in the Areas prior to the date
of the signing of the Agreement.
- The two sides will establish immediately upon the signing of
the Agreement, a sub-committee of experts (hereinafter - the
Sub-Committee) which will deal with issues regarding the
implementation of this Article, including:
- Procedures concerning the handling of claims of victims
of the one side from insurers or from the Fund of the
- Procedures concerning the transfer of the amounts
between the Funds of both sides as mentioned in para
- The details of the cut-off agreement between the
Existing Fund and the Palestinian Fund, as set out in
para 9 above;
- Any other relevant issue raised by either side.
- The Sub-Committee will act as a continuous committee for
issues regarding this Article.
- The two sides will exchange, through the Sub-Committee, the
relevant information regarding the implementation of this
Article, including police reports, medical information,
relevant statistics, premiums, etc. The two sides will
provide each other with any other assistance required in this
- Each side may require the re-examination of the arrangements set
out in this Article a year after the date of the signing of the
- Insurers from both sides may apply for a license to the relevant
authorities of the other side, according to the rules and
regulations regarding foreign insurers in the latter side. The two
sides agree not to discriminate against such applicants.
Done in Paris, this twenty ninth day of April, 1994
For the Government of Israel
Finance Minister Avraham Shohat
For the PLO
Abu Ala (Ahmed Korei)