Israel and PLO agree economic framework

PARIS - Israel and the Palestine Liberation Organisation signed a landmark agreement yesterday, laying the framework for economic ties between Israel and the future self-governing Palestinian areas. The Israeli Finance Minister, Avraham Shohat, and the PLO negotiator, Abu Ala, (Ahmed Korei) signed the accord at a ceremony presided over by the French Foreign Minister, Alain Juppe, in Paris.

The main points were:

The two sides will have similar import policies. The nascent Palestinian Authority will be able to import mutually agreed goods at customs rates differing from those prevailing in Israel.

The Palestinian Authority will establish a monetary authority that will regulate banks in areas evacuated by Israel. It will manage foreign currency reserves and oversee foreign exchange transactions.

The two sides will continue to discuss the possibility of a Palestinian currency. Until an accord is reached, the Israeli shekel will remain legal tender in the self-governing areas.

A Palestinian tax authority will conduct its own direct tax policy, including income tax on individuals and corporations, property taxes and municipal rates and fees.

Israel will transfer to the Palestinian Authority 75 per cent of the revenues from income tax collected from Palestinians employed in Israel.

The Palestinian Authority will establish a VAT system similar to that of Israel, which will be set at between 15 and 16 per cent, instead of 17 per cent, as in Israel.

The agreement stipulates that work in Israel is essential for the Palestinians expanding their employment opportunities.

Agricultural produce from the self-governing Palestinian areas will enter Israel freely except for tomatoes, cucumbers, potatoes, eggs and broiler chickens, on which agreed import quotas will exist for five years.

There will be free movement of goods manufactured in the self-governing areas.

The Israeli Foreign Minister, Shimon Peres, said that the period of Palestinian autonomy would be only three years, not five, as scheduled, before a permanent settlement is applied in the occupied territories.

(Photograph omitted)