Palestine Trade

Subchapters:

  • Business Relationships
  • Foreign direct investment
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Trade relations with the EU

2017 2018 2019 2020 2021
Exports from the EU (million EUR) 255 235.2 262.5 218 355.3
Imports into the EU (million EUR) 12.3 13.8 21.1 25.7 29.2
Balance with the EU (million EUR) -242.7 -221.3 -241.4 -192.3 -326.1

Source: European Commission

The EU as a whole is Palestine’s 2nd largest trading partner after Israel. The balance reflects an overall significantly negative balance of Palestinian foreign trade. Palestine’s largest trading partner from the EU states is Germany (in 4th to 5th place overall), which represents 25% of EU exports, followed by Italy, France and Spain. The EU exports machinery and means of transport, agricultural products, raw materials and pharmaceutical products to Palestine, imports include mainly agricultural products.

Trade relations with the Czech Republic

2017 2018 2019 2020 2021
Exports from the Czech Republic (billion CZK) 0.3 0.1 0.3 0.1 0.6
Imports to the Czech Republic (billion CZK) 0 0 0 0 0
Balance with the Czech Republic (billion CZK) -0.3 -0.1 -0.3 -0.1 -0.6

Source: CZSO

In 2021, Palestine was ranked 103rd in the ranking of countries by the volume of mutual trade, a significant improvement over previous years. Exports to Palestine greatly exceed imports. The largest part of exports has long been passenger cars, in 2021 it was almost 96%, if we include spare parts, this share is even higher. Czech cars are among the most sold at PAÚ, exports include not only new but also used cars. Small electrical equipment and devices for medical purposes were also used. Imports are marginal, reaching 7.4 million CZK in the same year and including polyamides, dates and other agricultural products, spices, salt and footwear.

Trade relations with countries outside the EU

2017 2018 2019 2020 2021
Exports from countries outside the EU (million EUR) 4,831 5435 5545 5125 ON
Imports to countries outside the EU (million EUR) 1002 1092 1040 990 ON
Balance with non-EU countries (million EUR) -3829 4,343 -4505 -4135 ON

Source: intracen.org

Palestine has a significantly negative trade balance with most of its partners. Israel accounts for 55% of Palestinian imports and up to 85% of exports, the bulk of which are re-exports – many traders find it easier to import into Palestine via Israel, especially if they also trade with Israel. Another important importer to Palestine is Turkey, followed by China and Jordan. In addition to Israel, Palestinian exports go mainly to Jordan, the USA, Turkey and the Arab states of the Gulf. Palestine exports building and facing stone, furniture and plastics, imports mainly include food, fuel, machinery, means of transport, etc.

Foreign direct investment

Foreign direct investment in Palestine is relatively low, with a cumulative amount of USD 2.976 billion at the end of 2021, representing a year-on-year increase of 9.6% (USD 260 million). Almost 65% of investments went to the financial sector, followed by services, transport and internal trade. Over 80% of direct foreign investment in Palestine comes from Jordan, other investments come mainly from Arab countries: from Qatar, Saudi Arabia, Egypt and the UAE, in addition to this, only Cyprus appears in the statistics. According to the OECD, foreign investment in Palestine is hampered by a politically unstable environment, the lack of a coherent legal framework and outdated legislation, which in some cases dates back to the British Mandate, and a large number of internal restrictions, as well as the instability of public finances and their dependence on external budget support. Restrictions on the part of Israel, fragmentation of the territory and market and restrictions on the movement of people, goods and capital, limited control of the PNS over economic policy, trade and customs also play a role. All this creates an environment in which investment confidence is low. On the other hand, in cooperation with foreign donors, efforts are being made to improve at least some of these problems, especially regarding the setting of a new legal framework. Palestine also has an active private sector and a relatively educated workforce, which could help increase foreign investment in the future.

SÚ Ramallah has no information on direct foreign investments from the Czech Republic. Opportunities are offered, for example, in energy (especially in the area of ​​renewable energy sources), in IT, from more traditional fields such as food or tourism. The opportunity can also be provided by the industrial zones that are gradually emerging in various places, especially in the West Bank.

FTAs and treaties

Treaties with the EU

The “Occupied Palestinian Territories” (oPt) are participants in the Euro-Mediterranean Partnership and, since 2004, in the European Neighborhood Policy (ENP). The framework for trade relations between the EU and the Palestinian Autonomous Territories (PAT) is the Interim Association Agreement on Trade and Cooperation from 1997. This agreement provides duty-free access (within set quotas) for Palestinian industrial products to the EU’s single market and the same conditions for access of products originating in the EU to the Palestinian market. In 2012, an agreement was concluded that further liberalizes trade in agricultural products and fish. The Palestinian National Authority (PNA) is seeking to start negotiations on a standard association agreement with the EU to replace the interim agreement.

Contracts with the Czech Republic

The Czech Republic has no bilateral agreements with Palestine.

Developmental cooperation

Palestine is a net recipient of development aid and humanitarian aid. Aid is directed both to the West Bank and especially to Gaza, where up to 80% of the population is dependent on some form of aid. A number of UN agencies (mainly UNRWA, then WFP, UNDP, WHO, UNOPS and others), other international organizations (IMF, World Bank, ICRC) and international non-governmental organizations operate in Palestine. Part of the international aid goes directly to the PNS in the form of direct budget support or project support.

The largest funder is the EU and its member states. The EU provides funding through the NDICI (Neighbourhood, Development and International Cooperation Instrument). Priorities are set by the European Joint Strategy in Support of Palestine for the years 2017-2020, the strategy for the years 2021-2024 is in the process of approval. Priorities include public administration reform, tax policy, justice and human rights, public services, access to water and electricity, and sustainable economic development. In total, the EU contributes approx. EUR 300 million per year, mainly in the form of direct budget support within the PEGASE mechanism, it also provides a contribution to UNRWA (approx. EUR 100 million) and implements its own development programs aimed primarily at Gaza and Type C territories. V as part of the Team Europe project, the EU and its member states provide 200 million USD to support the economy,

Development cooperation with the Czech Republic took place in the years 1996-2019, during which time 40 development projects with a total value of CZK 360 million were implemented, mainly in the field of renewable energy sources. Currently, the Czech Republic implements so-called small local projects in Palestine (two projects in the healthcare sector are being implemented in 2022) and projects within the framework of the development partnership program for the private sector (B2B Program) of the Czech Development Agency. Palestine is now one of the program countries of the Reconstruction Program of the Czech Republic in the Middle East region in the period 2022-2024.

Prospective fields of study (MOP)

Agricultural and food industry

Palestinian agricultural production is far from covering local consumption, and the Palestinian food market is thus largely dependent on imports. Agricultural and food products account for more than 30% of the total volume of Palestinian imports. Practically all types of food are imported, as well as, for example, animal feed. Opportunities are also offered in technologies and equipment in the field of agriculture and food processing in connection with efforts to develop local production capacities.

Water management and waste industry

Palestine has been struggling with water shortage for a long time, which is caused not only by the lack of resources, but also by their inefficient use. The Palestinian Authority is working to restore the water and sewage systems in order to prevent losses. Another priority is the construction of wastewater treatment plants in a situation where less than 25% of wastewater is processed in the West Bank. The solid waste processing and recycling sector is not very developed, almost 100% of the waste ends up in landfills, but recently efforts have been made to change this situation with regard to environmental risks.

Energy industry

The demand for electricity in Palestine is constantly growing, and at the same time there is a noticeable effort to increase self-sufficiency and diversify imports. More than 90% of the electricity consumed in the West Bank is imported from Israel and other neighboring countries, in Gaza, insufficient coverage means that electricity only works for part of the day. Renewable energy sources have great potential, especially solar power plants due to the available sources. The plan is also to restore the electricity transmission infrastructure and increase its capacity.

Engineering industry

One of the priorities in Palestine is the increase of domestic production and the associated reduction of the significant trade deficit. Industrial production currently accounts for 13% of GDP. Due to the development of industrial zones in the West Bank, the demand for machinery and technologies that can be used in other industrial fields is growing. Apart from the main sector of Palestinian production, which is quarrying and stone processing, it is primarily a consumer industry.

Automotive

Passenger cars have long been the largest item of Czech exports to Palestine, accounting for more than 95% of its total volume. Due to the lack of local production and the inadequacy of public transport, cars will continue to be the main means of transport. Commercial and special vehicles may also apply. There is interest in new, but to a large extent also in used cars.

Construction industry

Construction is one of the most important and dynamic economic sectors, with 15% of all employees working in this sector in the West Bank. After a short-term slump during the pandemic, the construction industry has already surpassed its original level. Due to population growth, it can be assumed that interest in residential and commercial construction will not decrease in the future either. The sector is heavily dependent on the import of building materials, there is interest in equipment and technology.

Healthcare and pharmaceutical industry

About USD 95 million worth of medical equipment is imported to Palestine annually. Funding from donors plays an important role in the purchase of medical equipment, but at the same time there is an interest in quality products. Pharmaceutical products also represent a significant item of imports – approx. 290 million USD. At the same time, there is a significant pharmaceutical industry in Palestine that is interested in importing raw materials and equipment.

Palestine Trade