EU-Palestinian Trade Relation towards a Viable Palestinian State

Abstract

The European Union (EU) is keen to have a trade agreement with Occupied Palestinian Territory, despite the fact that; "occupied Palestinian Territory is not yet a fully independent and sovereign state". The EU’s trade relations with the Palestinian Authority (PA) started in the context of the Barcelona process of 1995 , whereby the EC and the Mediterranean countries sought to establish a common area of economic and political stability, a zone of shared prosperity through an economic, financial, social and cultural partnership.5 Moreover, the Euro-Mediterranean Interim Association Agreement on trade and cooperation (IAA) between the European Community and the Palestinian Liberation Organization (PLO) for the benefit of the Palestinian Authority of the West Bank and Gaza Strip (WBGS) was signed in February 1997.6 The IAA aimed to provide a suitable framework for cooperation and development of relations between European countries and Palestine in terms of liberalization of trade. Furthermore, the agreement has encouraged regional cooperation to encourage political and peaceful coexistence. In this context, the paper uses Putnam's two-level game theory in order to "analyses the interaction between domestic and international factors on international bargaining", in particular the IAA negotiation process between the EU and the PLO. It is necessary to adapt this approach into a three-level game, comprising the international level (level I), the EU level (level II) and the level of the EU Member States (level III). Furthermore, the paper illustrates the win-sets of both parties, the EU and the PLO. In addition, the paper explains the role of the EU’s trade relation toward Palestinian state-building process.