Ramallah trade adviser: Addtional $5b. would be come from duty-free exports.
By TOVAH LAZAROFFhaifa port 298 88 (photo credit: Ariel Jerozolimski)
From cell phone technology to packaged foods, Israel could generate $12 billion in annual trade with its Arab neighbors, including the Palestinian Authority and, through it, the Arab Free Trade Area, according to the Palestine Trade Center in Ramallah.
While Israel has worked hard to expand its trade options with the United States, Europe and China, it should not forget that one of its most lucrative partners is right next door, argued the center's trade policy adviser, Saad Khatib.
In spite of the hostilities between the two groups, the second largest country to which Israel exported goods in 2005, excluding diamonds, was the Palestinian territories, Khatib told The Jerusalem Post on Wednesday. He spoke to the Post following a Jerusalem event hosted by the Peres Center for Peace designed to publicize a report by the Palestine Trade Center on economic relations between Israel and Palestine.
Khatib said that economic relations between Israel and Palestine could be so financially beneficial to both parties that it would be a mistake to cut off economic ties between the two groups. In 2005, overall Israeli exports to the Palestinian Authority, including petroleum and telephone services, were worth $2.5b.
If one considers just the export of goods, excluding diamonds, then the Palestinians in 2005 bought $1.8b. in goods from Israel, said Khatib.
That is the second largest number of Israeli goods sold to another country except for the United States, which imports $7.5b. in Israeli goods, according to Khatib.
That's followed by $1.4 billion in sales of Israeli goods to the United Kingdom and $1.3b. to Germany, he said.
If relations between Israel and the Palestinians were to become "friendly" rather then "hostile," the value of Israeli exports to the Palestinians could grow to $7b. annually within the next five to 10 years, Khatib said.
But that number could be augmented by another $5b. within that same time frame because Israel could export its products duty-free to the Arab Free Trade Area countries with the help of the Palestinians. That would includes duty-free sales of products to Yemen, Oman, the United Arab Emirates, Qatar, Bahrain, Kuwait, Saudi Arabia, Iraq, Jordan, Syria, Lebanon, Tunis, Morocco, Libya, Egypt, Sudan, Mauritania and Somalia.
Yitzhak Gal, an economic adviser to the Israeli-Jordan Chamber of Commerce, said that Israeli companies were already looking to tap into the Arab Free Trade bloc through their relations with countries such as Jordan and Egypt.
But it would be simpler if these companies could enter the larger Arab market with the help of Palestinian businesses, Gal said. The rules for the Arab Free Trade bloc are not that restrictive, so all that would need to happen is for some part of the production process to occur within the Palestinian territories, and the products could be sold to the larger Arab market, said Gal.
That would be lucrative for Israel because the Gulf countries and Saudi Arabia, which are part of the bloc, were among the fastest growing markets in the world, Gal said. According to the Palestine Trade Center, the total overall merchandise imports to Saudi Arabia and the Arab Gulf countries tripled from 1990 to 2005. They are projected to increase by an additional 100 percent in the next 10 years.
"By 2015, the overall volume of merchandise imports to the Arab Free Trade Area countries is projected to reach well over $500b.," according to the center.
Given that it is cheaper to export goods to the Arab countries than to the United States, that opens small businesses up to larger affordable markets, said Khatib. That's true too for moshavim that want to sell dairy products or other agricultural produce, Khatib said. He added that the Arab countries in turn are particularly interested in Israel's technological products.
In addition, Khatib said, if one calculates the benefits of a joint tourism industry, economic ties between Israel and the Palestinians could generate $17b. annually within the next five to 10 years, Khatib said.•
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