Free Trade Agreements
The Palestinian Authority benefits from free trade arrangements with the United States, Canada, the European Union (EU) and the European Free Trade Association (EFTA). A trade agreement signed with Russia grants a reciprocal Most Favored Nation treatment for Russian products in the Palestinian market and vice versa. Both Egypt and Jordan have signed trade agreements stating bilateral duty-free status and reduced duties on certain products, while Saudi Arabia has granted some Palestinian products preferential treatment.
The majority of Palestine's foreign trade is with Israel, followed by some of the Arab countries, the European Union, Turkey, South and East Asia and the United States. Like all countries that have a high trade dependence on one particular country, Palestine's dependence on Israel has both positive and negative consequences. On one hand, exporters know their markets very well and benefit from their advanced technology, but adversely, any shock to the Israeli economy can have strong effects on the Palestinian markets. Therefore, the Palestinian Authority and the private sector are cooperating to increase the rate of direct trade transactions with less dependency on Israeli intermediation.