Prospects of Trade Relations Between Jordan, Palestine and Israel After Peace

Abstract Currently, Jordan and Palestine are negotiating separately peace with Israel in accordance with the Declaration of Principles that was signed by the PLO and Israel on September 13, 1993 and the agenda of issues that was signed by Jordan and Israel on September 14, 1993. Economic cooperation among Jordan, Palestine and Israel is a major issue being negotiated. This study discusses one area of potential economic cooperation among the three countries, i.e. trade relations. The study reveals that the Israeli industrial economy is far advanced in comparison with the services and agricultural Jordanian and Palestinian economies. After the achievement of peace in the Middle East, trade relations among Jordan, Palestine and Israel would be regulated through economic/trade agreements that would determine the products which would be traded among them. This is to protect Jordanian and Palestinian production from Israeli competition as Israel is more advanced than Jordan and Palestine. In addition, tariff protection for some domestically produced goods would be required to counteract potential Israeli competition. Alternatively, it is proposed that Jordanian products should be granted preferential treatment in Israel for a transitional period of 5-10 years until Jordan attains a level of development whereby it can compete with Israeli production in the local market.