Friday, February 26, 2010

An emerging state

Here's a common interpretation of the the European Court of Justice ruling that the EU-Israel trade agreement does not provide a customs exemption for products made in the West Bank. Evelyn Gordon at Commentary's blog Contentions --

Many Israeli firms moved to the West Bank because they could export to the EU duty-free while also benefiting from cheaper Palestinian labor. Thus, if the new import taxes lower these firms’ profits, hundreds of Palestinians could lose their jobs ... Moreover, European efforts to tax these companies have already persuaded some to move back to Israel, and yesterday’s ruling is likely to accelerate the trend. That would throw thousands of Palestinians out of work — while benefiting the unemployed Israelis such firms would have to hire instead ... Europeans are obviously entitled to put principle above the consequences for Palestinian employment; countries make such decisions all the time. But the fact remains that once again, the biggest victims of efforts to advance the “peace process” will be ordinary Palestinians.

The short-term impact may indeed be disruptive but the court ruling is more complicated than portrayed above. The court said that exports from the occupied territories to the EU are governed by a separate EU-Palestine trade agreement, and thus their customs status would have to be negotiated by the Palestine authorities and the EU, and the status of Israeli exports via the territories to the EU would require 3 way negotiation: the EU and Israel can't agree them without the Palestinians.

Thus the underlying issue is not the "peace process". It's the ability of the Palestinian government to negotiate its own external agreements. Isn't that what "two-state solution", which everyone says they want, is supposed to be about?

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