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**WEST BANK AND GAZA**

# COMMERCIAL GUIDE

**July 2004**

**Prepared by The U.S. Commercial Service**

Embassy of the United States in Tel Aviv and U.S. Consulate General in
Jerusalem

This Commercial Guide for the West Bank and Gaza presents a
comprehensive look at the commercial environment of the Palestinian
markets. American firms with specific questions on the current business
climate and business opportunities in the West Bank and Gaza should
contact the U.S. Commercial Service in Jerusalem, email:
<Jerusalem.Office.Box@mail.doc.gov> or fax: 972-2-623-5132. Please refer
to the websites of the Commercial Service in Jerusalem and at the
Embassy in Tel Aviv for details about our programs and services:
[www.buyusa.gov/westbank](http://www.buyusa.gov/westbank) and
[www.buyusa/gov/israel](http://www.buyusa/gov/israel)

Country Commercial Guides (CCGs), established by recommendation of the
multi-agency task force Trade Promotion Coordination Committee, include
information from various reports prepared at U.S. Embassies and
Consulates for the U.S. business community. Copies of this CCG, as well
as information presented in other Commercial Service Market Research are
available by contacting the U.S. Commercial Service in Jerusalem.

Country Commercial Guides can be ordered in hard copy or on diskette
from the National Technical Information Service (NTIS) at
1-800-553-NTIS. U.S. exporters seeking general export information and
assistance or country-specific commercial information should consult
with their nearest Export Assistance Center in the United States (see
[www.export.gov/cs](http://www.export.gov/cs) to locate the nearest
office). Questions may also be directed to the Department of Commerce's
Trade Information Center at (800) USA-TRADE (872-8723)

International Copyright: U.S. & Foreign Commercial Service, the U.S.
Department of State, and the USDA Foreign Agricultural Service, 2004.
All rights reserved outside of the United States.

*\* Travelers may wish to obtain the most recent copy of the travel
advisory from the U.S. Department of State at
[http://www.state.gov](http://www.state.gov/)*

**[TABLE OF CONTENTS]{.underline}**

**CHAPTER 1. EXECUTIVE SUMMARY 4**

#### CHAPTER 2. ECONOMIC TRENDS AND OUTLOOK 6 

Major Trends and Outlook

Principal Growth Sectors

Government Role in the Economy

Balance of Payments

Infrastructure

#### CHAPTER 3. POLITICAL ENVIRONMENT 10 

Nature of the Political Relationship with the United States

Major Political Issues Affecting Business Climate

Brief Synopsis of Political System

#### CHAPTER 4. MARKETING U.S. PRODUCTS AND SERVICES 12 

Distribution and Sales Channels

Use of Agents and Distributors; Finding a Partner

Franchising

Direct Marketing

Joint Ventures/Licensing

Steps in Establishing an Office

Selling Factors/Techniques

Advertising and Trade Promotion

Pricing Product

Sales Service/Customer Support

Selling to the Government

Protecting Your Product from IPR Infringement

Need for a Local Attorney

#### CHAPTER 5. LEADING SECTORS FOR U.S. EXPORTS AND INVESTMENT 16 

Best Prospects for Non-Agricultural Goods and Services

Best Prospects for Agricultural Goods and Services

Major Investment Opportunities

#### CHAPTER 6. STANDARDS AND TRADE REGULATIONS 21 

Technical Standards

Trade Barriers: Tariffs, Non-Tariff Barriers, and Import Taxes

Customs Regulations

Import Licenses

Temporary Entry of Goods

Import/Export Controls and Documentation

Prohibited Imports

Free Trade Zones/Warehouses

Special Import Provisions

Membership in Free Trade Arrangements

#### CHAPTER 7. INVESTMENT CLIMATE 25 

Openness to Foreign Investment

Right to Private Ownership

Protection of Property Rights

Performance Requirements/Incentives

Transparency of the Regulatory System

Corruption

Labor

Efficiency of Capital Markets and Portfolio Investment

Palestinian Securities Exchange

Conversion and Transfer Policies

Expropriation and Compensation

Dispute Settlement

Political Violence

Bilateral Investment Agreements

OPIC and Other Investment Insurance Programs

Foreign Direct Investment Statistics

#### CHAPTER 8. TRADE AND PROJECT FINANCING 30 

Brief Description of the Banking System

Foreign Exchange Controls

General Financing Availability

How to Finance Exports/Methods of Payment

Project Financing

List of Banks with Correspondent U.S. Banking Arrangements

#### CHAPTER 9. BUSINESS TRAVEL 33 

Business Customs

Travel Information and Visas

Holidays

Business Infrastructure (incl. list of hospitals)

#### CHAPTER 10. ECONOMIC AND TRADE STATISTICS 39 

Appendix A. Country Data

Appendix B. Domestic Economy

Appendix C. Trade Statistics

#### CHAPTER 11. USEFUL CONTACTS 40

#### CHAPTER 12. MARKET RESEARCH 49 

### CHAPTER 13. TRADE EVENT SCHEDULE 50 

**1: EXECUTIVE SUMMARY**

The West Bank and Gaza are home to approximately 3.64 million
Palestinians and population growth is estimated to be 3.5%. Despite
relatively low incomes, there is a sizeable middle/upper-middle class.
The influence of Palestinians familiar with American commercial culture
opens the door to numerous opportunities for U.S. companies in
establishing agents, distributors and partners to sell U.S. goods and
services. There has, of course, been a drop in consumer demand due to
income loss resulting from ongoing violence. (See Ch. 5 for Best
Prospects for U.S. Exports).

Despite current travel warnings related to the current level of violence
in the Israeli-Palestinian conflict, the U.S. government (USG)
encourages U.S. companies to explore commercial opportunities in the
WB/G and supports the development of bilateral commercial relations. The
USG allows duty-free entry of items produced in or imported from the
West Bank and Gaza. Correspondingly, the Palestinian government welcomes
U.S. companies and has pledged to the USG that it will provide, to the
extent of its authority, duty-free entry for all U.S. products into
WB/G. An exchange of letters between the USG and the government of
Israel has affirmed Israeli support for these duty-free arrangements.
U.S. products entering the WB/G via Israel are subject to Israel's
Valued Added Tax (VAT) of 17%, which must be paid at port of entry and
is usually paid by the importer and absorbed into retail price.

The civil unrest that began in the fall of 2000 has significantly
damaged the economic and commercial situation in the West Bank and Gaza.
Movement of goods has been heavily restricted and the volume of trade
within the areas themselves, and with the outside world, has dropped
significantly. These shocks have pushed the WB/G into severe economic
crisis. According to the International Monetary Fund, real Gross
Domestic Product fell by 14.5% in 2002 after falling 15% in 2001 and
5.4% in 2000. From its peak in 1999, real per-capita Gross National
Income (Palestinian GNI takes into account the significant share of
Palestinians' wages earned in Israel) had contracted by over 40% by the
end of 2002. (See Ch. 10.)

As the political relationship between Israelis and Palestinians evolves,
so too will the commercial and economic environment in the WB/G. U.S.
firms should be aware that various Israeli and Palestinian
responsibilities are likely to change, based on ongoing bilateral
discussions at both the political and technical levels. U.S. companies
interested in establishing or expanding business relationships in the
WB/G should contact the [U.S. Commercial
Service](http://www.buyusa.gov/israel) in Tel Aviv or the Consulate
General in Jerusalem (see Chapter 11 for contact info.) for the latest
information on Palestinian commercial regulations and assistance.

U.S. companies such as Checkers, Coca-Cola, Culligan, Hewlett Packard,
Intercontinental Hotel, Microsoft, Motorola, Oracle, Pepsi, Procter and
Gamble, and Xerox have been operating in WB/G since before the latest
events either by opening franchises or setting up operations. Some
American companies have suffered physical damage from Israeli military
activities. The Israeli government has not compensated American
companies for this damage. Most American companies continue to operate
but at substantially reduced levels. The Intercontinental Hotel in
Bethlehem closed down, while the Intercontinental Hotel in Jericho is
partially open and guests are mostly Palestinians traveling to Jordan
who get stuck when unexpected closures are imposed on the city by the
Israeli army. Both hotels were damaged during the course of the current
Intifada.

The Palestinian Authority (PA) has encouraged commercial activity in the
WB/G through regulations that require foreign companies to establish
local agents and distributors in the WB/G. Major issues, such as
conflicting import standards and the movement of goods through Israeli
ports, continue to inhibit foreign trade.

Certain industry sectors have weathered the economic distress better
than others. The relatively robust Palestinian information technology
sector not only serves an inelastic core local market demand but also
has begun diversifying outside its traditional export market of Israel
to the Gulf States. Despite transportation difficulties, Palestinian
stone and marble exports have remained strong, in particular to Italy
and the United States. The handicraft market, though very severely
impacted by the collapse of the tourism sector, has begun to expand into
export markets for a range of products.

International donor investment in basic and social infrastructure in
WB/G will continue to present opportunities for U.S. contractors and
amount to several billion dollars over the next five years. For example,
the U.S. Agency for International Development (USAID), which administers
the United States' foreign assistance program, has provided more than
\$1.3 billion to benefit Palestinians living in the West Bank and Gaza
since 1993. Much of this investment has focused on infrastructure
development, including investments in water, wastewater treatment and
road infrastructure.

**2: ECONOMIC TRENDS AND OUTLOOK**

[Major Trends and Outlook]{.underline}

With the White House signing of the "Declaration of Principles on
Interim Self-Government Arrangements" in September 1993, Palestinians in
WB/G began a new era of increasing political and economic
responsibilities. Subsequent Israeli redeployment from most of Gaza and
the major urban areas of the West Bank including Jericho, Nablus, Jenin,
Tulkarem, Ramallah, Bethlehem, Qalqilya and most of Hebron extended PA
control over a majority of the Palestinian population in WB/G. In
democratic elections in January 1996, Yasser Arafat won 90% of the vote
for the position of *Ra'ees* (which is translated variously as
"chairman" or "president"). His political party, Fatah, won more than
80% of the vote for seats in the 88-member Council. In March 2003,
Arafat appointed a Prime Minister, Mahmoud Abbas, who was responsible
for implementing efforts to reform Palestinian governing institutions.
Abbas resigned in September 2003 and was replaced by Ahmed Qurie in
November 2003.

Under the terms of the Protocol on Economic Relations ("Paris Economic
Protocol" or "Paris Agreement") signed on April 29, 1994, the PA has
responsibility for key economic spheres. Within certain parameters, this
document gives the PA the lead on trade, investment, internal
transportation and infrastructure, banking, industry, taxation, and
other economic and commercial issues. The PA inherited a hodge-podge of
Jordanian, Egyptian, Turkish, and Israeli laws and various regulations,
some dating from the period of the British Mandate. The Palestinian
Authority has made progress in drafting and instituting a modern,
unified legal and regulatory structure to stimulate private-sector
activity and investment.

Despite the markedly enhanced responsibilities and capabilities of PA
ministries and other institutions, WB/G remain highly dependent on
Israeli supplies, labor markets and export opportunities. About 85% of
Palestinian annual imports are purchased from Israel and all Palestinian
exports must go through Israel or Israeli-controlled checkpoints.
Israeli currency (New Israeli Shekel-NIS) is used for most day-to-day
transactions, although the Jordanian dinar is also considered to be
legal tender and is frequently used for large purchases, such as real
estate (as are US dollars). Most savings are held in U.S. dollars.
Repatriated wages from Palestinian day laborers in Israel have
traditionally provided cash that sustains many local businesses, so the
Palestinian economy in WB/G is highly vulnerable to Israeli policies.
Since 1993, travel of Palestinians and their vehicles into Israel has
been limited to those able to obtain an Israeli permit or those willing
to skirt the checkpoints and enter Israel illegally. During periods of
heightened security concern, usually after terror attacks, even those
with permits are prevented from entering, and over the past year,
availability of such permits has been extremely limited. This latter
situation is known as "comprehensive closure." Given WB/G's overwhelming
dependence on Israel, closure -- particularly comprehensive closure ---
is devastating to the Palestinian economy.

The outbreak of the Intifada in September 2000 has had a profound impact
on the operations of the private sector in West Bank/Gaza (WB/G).
Although the State Department has urged in a travel warning that
Americans defer travel to the West Bank and Gaza Strip, terrorist
activity and violence has usually been directed specifically at Israeli
targets. However, terrorists killed three Americans working for the U.S.
Embassy in Tel Aviv in October 2003 when they detonated a bomb beneath a
convoy of Embassy vehicles in Gaza. Preliminary information suggests
that a U.S. diplomatic vehicle was specifically targeted in this attack.
The Israeli government has responded to the Intifada by imposing severe
external and internal closures on WB/G since the end of September 2000.
These measures have limited or obviated the movement of goods and
workers within WB/G, between the West Bank and Gaza, and into Israel;
the import and export of raw materials and finished products; and the
ability of Palestinians to leave and return to WB/G from abroad.

Political and economic conditions complicate the collection of reliable
statistical data. Gross Domestic Product (GDP) in WB/G was estimated at
\$3.4 billion in 2002, about 3% of Israel's nominal GDP. Compared to
real growth from the 1970's to the mid-1980s, GDP significantly declined
during the period of the first Intifada, which began in December 1987,
as well as from 1993 to 1997. Several factors came into play:
dislocations caused by the first Intifada, the loss of remittances from
the Gulf following expulsion of Palestinians after the Gulf War, a
reduction in work permits for Israel, and the economic impacts of
closures. The economy began to recover strongly in 1998, with GDP
growing an impressive 11.8%. This recovery continued in 1999 with GDP
growth of 9%, and through the first three quarters of 2000. According to
UN figures, unemployment in WB/G in 2000 fell to 10%.

Since September 2000, however the WB/G has faced an increasingly tight
state of "comprehensive closure". The flow of Palestinian people and
goods into, out of, and within the WB/G has been subjected to a
progressively restrictive set of criteria by the Israeli army. This has
severely disrupted the Palestinian economy and all commercial activities
and the Palestinian economy has been in steep decline for three years.
Per capita income fell by 20.4% in 2002; following a 20% drop in 2001
and 10.7% decline in 2000. Unemployment began to fall during 2003 and it
is now estimated at 30 percent by the Palestinian Central Bureau of
Statistics. Sixty percent of all Palestinians are living below the
poverty line. In general, unemployment and poverty levels tend to be
higher in the Gaza, a densely populated area about twice the size
geographically of the District of Columbia, where population density and
scarce resources exacerbate economic problems occasioned by closure.

According to the World Bank's West Bank and Gaza Update published in
March 2004, most recent economic data continues to provide evidence of a
modest economic recovery throughout 2003. However, the extent to which
this fragile growth can be sustained will depend on the political
situation and an easing of the movement restrictions of goods and people
imposed by Israel.

Affordable housing is a serious problem for lower middle-income and
working-class Palestinians, particularly in Gaza. Land prices in urban
areas of the West Bank have skyrocketed since September 1993 mainly
because only 5% of land is zoned for development. In Gaza, land prices
remain high because of the dense population and extreme land scarcity.
Virtual integration of Palestinian labor into the Israeli economy and a
legislated minimum wage in Israel makes wages in WB/G, while low
compared to Israel, relatively high for the region.

[Principal Growth Sectors]{.underline}

Resumption of the Israeli-Palestinian peace process and the gradual
restoration by Palestinians of greater control over their own economy
has begun to spark increased donor spending on institution building and
some major capital projects. Infrastructure development, both publicly
and privately financed, may be a major growth sector in WB/G over the
next five years. Projected major projects include a port in Gaza;
electric power generation; and the expansion of telecommunications
infrastructure, equipment, and services. Public and private investment
is needed for upgrading and expanding sanitation, waste disposal, and
water services, as well as upgrading WB/G roads. Private and public
contractors will be seeking suppliers of competitively priced equipment,
machinery, and raw materials for these major infrastructure projects.
There is also a substantial need to repair much of the damage inflicted
by the Israeli army on private and public Palestinian infrastructure
during its incursions into the WB/G.

Under improved political circumstances, private housing construction
would also rebound with the expected high demand for working class and
lower middle-income families. While local builders and engineers can
meet much of this demand at comparatively low prices, innovation in
low-cost, multi-family housing construction is needed from outside
sources. There is a growing trend, particularly in Gaza, toward building
large commercial and residential towers rather than one- or two-story
buildings. Companies that can produce low-cost construction inputs in
high volume should consider marketing and distribution options in WB/G.

Investment in productive assets is extremely low, only 1-4% of GDP. In
2002, manufacturing employment accounted for 11% of total employment in
WB/G. Capacity utilization averaged 56% prior to the Intifada, but has
been reduced substantially since then due to the poor economic
environment.

Companies in WB/G are small by world standards; 90% of all firms employ
fewer than eight people. The manufacturing sector will show increased
growth if Palestinians are able to assume greater control over their
political and economic lives. Widening regional cooperation should open
export markets for Palestinian goods having the best prospects for
regional sales.

Expansion could be expected in light industry and low-tech electrical
assembly, such as car dashboard and electronic goods assembly, as well
as in the manufacture and export of processed foods, pharmaceuticals,
textiles, shoes, hardware, wood and cane furniture, plastics, and house
wares. Construction inputs such as cement and steel products also would
be in heavy demand. The relatively high education level of the workforce
in comparison to that in Jordan and Egypt should give WB/G a competitive
advantage in industries requiring technical expertise.

The agricultural sector employed 14% of the WB/G workforce in 2002,
compared to 11% of WB/G GDP in 1999. It is estimated that the
agriculture sector's contribution to GDP has increased as high levels of
unemployment have forced some Palestinians to revert to subsistence
farming. The sector, though somewhat constrained by limited water
resources, has excellent growth potential, particularly for providing
inputs to the local food-processing industry.

Entrepreneurial talent, climatic conditions, and a sound technological
base are all relative strategic advantages in agriculture. However, the
ultimate growth potential for this sector depends in part upon the
willingness of Israel and neighboring countries to lower agricultural
trade barriers or, at least, to allow the transit of Palestinian
agricultural goods to Europe and the Gulf.

Penetration of the European market with out-of-season vegetables and
fruits such as strawberries will require producers to improve the
quality of their product. Unless exporters can reach IS-9002 standards,
their product will not be accepted in the EU. Among other factors, this
may require integrated pest management, reduction of quantities of
pesticide applied and special care in the choice of pesticides used.

Services including public administration, accounted for 40% of WB/G
employment in 2002. Tourism in WB/G, as in Israel, has potential as a
growth industry, but in both places it depends heavily on security
issues and, in the West Bank, on whether the PA can obtain land and
building permits from Israel. Franchising and distributorships are
becoming more popular, with the best prospects in hardware, computers,
electronics and office equipment, fast food, amusement and \"theme\"
parks, and small business services like copying and printing.

Some Arab and other foreign banks have set up WB/G offices, but the
financial services market remains relatively undeveloped. Correspondent
and other international banking relationships are on the rise, and some
observers believe that banking services in the WB/G will show especially
strong growth in the offshore sub-sector because the PA maintains no
restrictions on the holding of foreign currency accounts.

[Government Role in the Economy]{.underline}

The PA has pledged to promote the private sector, which accounts for
over 80% of WB/G GDP, and to allow private management of major
infrastructure systems, like power and telecommunications.

Unlike other developing regions, WB/G have no history of government
ownership of large sectors of the economy, although the PA has invested
in various private-sector ventures in the region and abroad. Those
investments are now almost exclusively under the purview of the
Palestinian Investment Fund as part of an ongoing process of economic
reform designed to bring public accountability and transparency to the
PA investment portfolio. With encouragement from foreign donors and
domestic private sector companies, the PA has begun to implement a
significant economic reform program.

The PA leadership plays a major role in the approval process for
large-scale private commercial projects. Often, several ministries
oversee the same major projects, so U.S businesses must be sure to talk
to all relevant ministries when competing for contracts.

Current investment law requires that new investments be registered with
the PA and approved by the relevant ministries. Prior approval by the PA
Council of Ministers is required for certain types of investments. There
is also an Investment Incentive Law to attract investment of over
\$100,000. A Palestinian Investment Promotion Agency (PIPA) has been
established as a "one-stop-shop" to serve investors. (See Chapter 7.)

[Balance of Payments]{.underline}

Statistical trade data is imprecise due to the nature of the
Israeli-Palestinian border, but clearly a large \-- and growing \-- WB/G
trade deficit exists, one estimated by the respected Palestinian Central
Bureau of Statistics (PCBS) at over 57% of GDP in 2000. PCBS estimates
that WB/G merchandise exports were \$401 million in 2000 while imports
were \$2.383 billion, leaving a trade deficit of nearly \$2 billion. One
particularly vexing problem is the growing difficulty of conducting
trade between the West Bank and Gaza Strip because of Israeli policies.
Prior to the Intifada, nearly 85% of all WB/G imports came from Israel;
3% came from other Arab countries, and about 9% came from the United
States and the EU. About 94% of WB/G exports went to Israel and only 5%
to Arab countries.

[Infrastructure]{.underline}

Infrastructure \-- especially water/power systems; and sanitation, road,
and telephone networks \-- needs substantial upgrading and expansion,
although a recent World Bank study indicated that the situation has
improved greatly over the past few years. Utilization of WB/G water
resources must be expanded to sustain private sector development. The
ratio of people to fixed and mobile telephones in 2001 was 5.95:1 in
WB/G compared to 3.4:1 in Jordan and 6.8:1 in Egypt. Lack of adequate
physical infrastructure for electric power and an insufficient power
supply cause work stoppages in most WB/G firms.

**3: POLITICAL ENVIRONMENT**

[Nature of the Political Relationship with the United
States]{.underline}

The United States and the Palestinians have an excellent working
relationship. Extensive contacts focus on the shared goal of a
negotiated settlement to the Arab-Israeli conflict and the establishment
of regional peace, security, and economic prosperity. While the United
States maintains a dialogue with key Palestinian Authority officials,
there has been no dialogue with PLO Chairman Arafat since June 2002, as
part of President Bush\'s initiative of trying to encourage the
emergence of a Palestinian leadership untainted by corruption and
terrorism that can move the Palestinians toward the President\'s vision
of a two-state solution to the Israeli-Palestinian conflict.

The United States has facilitated negotiations between Israelis and
Palestinians since the 1991 Madrid Middle East Peace Conference. On
September 13, 1993, the United States hosted PLO Chairman Arafat and
Israeli Prime Minister Rabin when they signed the Declaration of
Principles in Washington, D.C.

On September 28, 1995, the United States again hosted the parties when
they signed the Israeli-Palestinian Interim Agreement mandating the
gradual redeployment of Israeli forces from parts of the West Bank and
expanded Palestinian self-rule. The United States facilitated subsequent
negotiations that led to a January 17, 1997 agreement on redeploying
Israeli troops from most of Hebron.

After an eighteen-month hiatus in negotiations, the United States hosted
negotiations in October 1998 that led to the signing of the Wye River
Memorandum. This agreement called for further redeployments, prisoner
releases, the opening of a Palestinian airport and seaport, two
safe-passage crossings between the West Bank and the Gaza Strip, and
various Palestinian security measures. After implementing the first of
the Wye River Memorandum's three stages, the process was frozen by the
Israeli government. The process resumed again under a new Israeli
government. On September 4, 1999, Israel and the Palestine Liberation
Organization signed the Sharm el-Sheikh Memorandum. Steps forward
resulting from this agreement included further redeployments in the West
Bank, the opening of one safe passage route, agreement on commencement
of the construction of Gaza's seaport, and resumption of permanent
status negotiations.

In September 1994, a year after the Declaration of Principles was
signed; the United States hosted a Donors Conference, where
international donors pledged \$2.4 billion over a five-year period. As
this funding period entered its last year, the United States hosted
another Donors Conference in November 1998, following the signing of the
Wye River Memorandum. In which approximately \$3 billion in further aid
was pledged over a further five years.

Much of the progress achieved during the so-called \"Oslo years\"
(1993-2000) was halted or reversed by the outbreak of violence known as
the "al-Aqsa Intifada" that erupted in late 2000, and which has
continued in one form or another until the present. Nonetheless, the USG
has pledged to do everything it can to ensure the resumption and
eventual success of the peace process, firmly believing that a strong
Palestinian economy is key to that success. Hence, in addition to its
role as a facilitator in the negotiations, the United States has taken a
lead role in ensuring international donor support for WB/G, including
assistance in implementing a comprehensive program of political and
economic reform that was launched the summer of 2002.

[Major Political Issues Affecting the Business Climate]{.underline}

Three major political issues affect the business climate in WB/G: 1) the
rate of progress in reaching and implementing Israeli-Palestinian
agreements; 2) Israeli security measures; and 3) the potential for
clashes between Palestinian demonstrators and Israeli security forces.
These issues have a major effect on the willingness of businesses to
invest in WB/G. Of particular concern is the free flow of goods and
workers both within WB/G and between these areas and Israel.

The business environment is also negatively affected by the plethora of
laws that still apply in WB/G. The religious laws that govern personal
status issues such as marriage, divorce, and inheritance are not in
themselves necessarily economically disruptive. But other sectors are
governed by a combination of Ottoman, British Mandate, Egyptian,
pre-1967 Jordanian, and new PA laws as well as Israeli military orders.
While it is usually possible to determine what laws apply in particular
situations, the applicable law in a specific instance is often applied
differently in the West Bank than it may be in the Gaza Strip. The PA is
in the process of updating commercial laws, but many important pieces of
legislation remain in draft.

[Brief Synopsis of Political System]{.underline}

Yasser Arafat, who exercises executive power, heads the Palestinian
Authority. The Palestinian Legislative Council (PLC) exercises
legislative power. The PLC and the Chairman of the Executive Authority
assumed power in January 1996 in elections that saw voter turnout
surpass 80% in most areas, a figure that attests to the strong
grassroots tradition of democratic political participation inherent in
Palestinian society. (As noted above, the United States Government has
had no contact with Chairman Arafat since President Bush\'s June 2002
call for a new Palestinian leadership capable of carrying out the
comprehensive reforms and demonstrating the security performance needed
if the Palestinians are to achieve their dream of statehood alongside
Israel.) In April 2003, Chairman Arafat appointed Mahmoud Abbas to be
the first Prime Minister of the Palestinian Authority. The appointment
required amendments to the PA Basic Law. Yet, the powers that were given
to the Prime Minister were limited. Abbas submitted his resignation in
September 2004.

The PLC reflects a range of political perspectives represented by
distinct political groupings that include secular moderates, leftists,
and Islamists. Islamic extremists and rejectionist groups such as the
Palestinian Islamic Jihad and Hamas continue to oppose the peace process
and are not part of the Palestinian Authority or the PLC. The tight
closures and restrictions on Palestinian movement that accompanied the
Intifada have made it difficult for the PLC to meet and to conduct
business. In March 2004, Rawhi Fatouh was elected speaker.

The Declaration of Principles provided that the PLC and the Chairman of
the Executive Authority were to govern for a transitional period not
exceeding five years. In April 1999, the PLC affirmed a de facto
extension of the term of this transitional period.

In the PA's 100-day reform plan adopted by the cabinet in June 2002, the
PA committed itself to preparing for new legislative and executive
elections. In June 2004, Arafat decreed that voter registration for
these elections would take place in September 2004. In May 2004, the PA
cabinet announced that municipal elections would be held in 2004 on a
staggered basis throughout the West Bank and Gaza.

**4: MARKETING U.S. PRODUCTS AND SERVICES**

[Distribution and Sales Channels]{.underline}

The current events have greatly impacted the distribution and sales
channels in the PA because of the new facts on the ground created by the
Intifada. Gaza has become almost inaccessible for Palestinian
distributors based in the West Bank because movement of trucks and
people within and outside of the West Bank has been significantly
curtailed.

Palestinian businesses in the West Bank are using alternative unpaved
roads to access cities and villages and often distribution programs are
altered on a daily basis depending on the evolving facts on the ground.
Crossing points with Jordan and Egypt at Allenby Bridge and Rafah have
often been either closed or out of bound for Palestinian businesses for
the past thirty-four months. Also PA bound goods have been held up for
extended periods at Israeli ports for inspection or because there is no
access to West Bank and Gaza. Demand for goods and services in the PA
has generally dropped due to the significant decrease in income, which
forced Palestinian businesses to reduce their stock and put off new
orders. In general business activity is estimated to have dropped by 50%
compared to pre-October 2000 levels.

The WB/G population is heavily concentrated in or near the urban centers
of Gaza City and Khan Yunis in Gaza and four major towns of Nablus and
Ramallah in the northern part of the West Bank and Bethlehem and Hebron
in the southern part of the West Bank. The area has no indigenous ports
or freight-handling airport, so goods must transit Israeli, Jordanian,
or Egyptian ports. The PA, Israel, Jordan, and Egypt have concluded
agreements to allow goods through the Rafah Crossing from Egypt into
Gaza and across the Allenby Bridge from Jordan into West Bank markets.

Delays for products entering or exiting WB/G are common, due in large
part to Israeli security checks. Most products entering or exiting Gaza
transit the Erez/Beit Hanoun or Qarni/al Muntar checkpoints.
Time-consuming Israeli security checks cause delays. Both Israelis and
Palestinians recognize the need to move goods faster and in greater
quantities, while fully addressing Israeli security concerns. Several
options are under study.

Most goods are sold in small retail outlets in WB/G towns. Local
consumers are price-conscious, although American brand names are more
important than price for more westernized upper-middle class consumers.
Moreover, even with shipping costs, American-made consumer products are
sometimes cheaper than relatively high-priced comparable Israeli items
currently being sold in Palestinian stores. With disposable income
greatly reduced during the current Intifada, price has become a more
important factor in consumer decisions.

In 1997 the PA issued a regulation requiring that products intended for
sale in WB/G be labeled in Arabic. Wholesale channels and generic sales
are not well developed. We expect these channels to expand over the next
several years, as they have in the neighboring Israeli market.

U.S. companies are strongly advised to work with local clearing agents
to expedite goods through the customs-clearing process. Currently, only
Israeli firms are licensed as customs-clearing agents, a situation that
may change in the future.

[Use of Agents and Distributors; Finding a Partner]{.underline}

Given the complexity of the local economic and commercial environment,
U.S. exporters wishing to market their goods in WB/G are strongly
encouraged to use local agents and distributors to obtain maximum sales
exposure to the local market. From 1967 through 1995, Israeli companies
and Israeli affiliates and franchisees of foreign companies held almost
all rights for agencies and distributorships in WB/G.

The establishment of the PA and its increasing control over the
Palestinian economy caused many companies to begin reorienting their
marketing efforts and to acknowledge the Palestinian market as
culturally distinct from the Israeli one.

In 1997 the PA required that foreign companies selling goods in WB/G
operate through a PA-registered local direct importer, distributor, or
agent. While the USG broadly considers such agency/distributorship
decisions to be commercial arrangements best made by the respective
companies, it strongly supports Palestinian economic development and
encourages direct commercial arrangements between Palestinian and U.S.
companies when most practicable to the business parties concerned.

There are several small- and mid-sized WB/G distributorships available
for select U.S. food products, cigarettes, household products, computer
equipment, medical supplies, and pharmaceuticals. Local distributors now
import goods on their own, carry limited stocks sufficient to satisfy
immediate needs, and maintain their own sales organizations. When
concluding a representation agreement, U.S. companies should include the
following elements:

\--Contract duration;

\--Exclusivity (if applicable);

\--Compensatory amount as a function of contract duration, in case of
termination of exclusivity;

\--Promotional input by agent and volume of sales; and

\--Dispute settlement mechanisms, if possible.

The U.S. Commercial Service (CS) at the U.S. Embassy in Tel Aviv and the
U.S. Consulate General in Jerusalem offer company-to-company matchmaking
services and company background check services. These services are
described in detail at the Commercial Service/Jerusalem's website
[www.buyusa.gov/westbank](http://www.buyusa.gov/westbank).

[Franchising]{.underline}

The number of direct franchises is still very small, but two U.S. fast
food franchisers \-- Checkers and Pizza Inn \-- have opened in WB/G over
the last few years. Pepsi has had a bottling franchise in Gaza for many
years, and, more recently, Coca-Cola, too, has invested in its own WB/G
bottling franchise.

Although current conditions are not favorable because of the ongoing
violence in the area, there is potential for other franchises in sectors
including fast food restaurants, computer training, automotive supplies
and service, hardware, garments, retailing, and office supplies. As with
agency/distributorship arrangements, the USG supports the expansion of
the Palestinian economy in WB/G and the deepening of bilateral
commercial relations through direct franchise arrangements between
Palestinian and U.S. companies.

The key to successful franchising in WB/G will be cost competitiveness
in relation to comparable items, brand recognition, strong management
and marketing, and initial and ongoing training programs. Due to the
relatively small local population, the best franchising potential exists
in sectors where specific dietary, language, or usage patterns differ
from those in neighboring countries. U.S. companies that want to develop
local franchising arrangements should contact the U.S. Commercial
Service at the U.S. Embassy in Tel Aviv or the U.S. Consulate general in
Jerusalem. (See Chapter 5.)

[Direct Marketing]{.underline}

Direct marketing in WB/G has been recently introduced by the
Ramallah-based Coca-Cola bottling franchise and Unipal, a Palestinian
company that imports American-made products from major US companies like
Phillip Morris and Procter and Gamble. Other local companies are also
following this new trend.

[Joint Ventures/Licensing]{.underline}

Local Palestinian businesses are eager to develop joint-venture
arrangements. Larger local companies, particularly those with export
experience, will be reliable partners for U.S. companies. Several
small-scale joint ventures with U.S. companies currently operate in
WB/G, and discussions on a few larger collaborations are in progress.
The 1998 "Encouragement of Investment Law," which applies to both
foreign and local businesses, establishes certain tax breaks and
financial incentives for investments in specific industry sectors.

[Steps in Establishing an Office]{.underline}

Given the complexity of jurisdictional authority between the PA and
Israel, U.S. businesses should work both with local partners and the
U.S. Embassy in Tel Aviv and/or U.S. Consulate General in Jerusalem.
Foreign companies wishing to conduct business in WB/G have the same
registration requirements as locally established companies. They must
file copies of both their certificate of incorporation and memorandum
and articles of association, all authenticated by the registrar of
companies located where they are incorporated. These documents must be
translated into Arabic. Registration fees for foreign companies are not
the same as those for locally established companies. All new WB/G
commercial enterprises must register with the PA Ministry of Justice,
the Ministry of Economy and Trade, and the Customs Authority, as well as
open income tax and value-added tax (VAT) accounts.

[Selling Factors/Techniques]{.underline}

U.S. businesses should note the influence of a comparatively large
formerly U.S.-based Palestinian community that has transferred American
consumer preferences and buying habits to WB/G. These cultural and
consumption links are important factors in local Palestinian knowledge
of U.S. products. Although price is critical for successful sales in
WB/G, local purchasers increasingly seek American quality, particularly
for computers, electronic equipment, and consumer items.

[Advertising and Trade Promotion]{.underline}

U.S. products face stiff competition from European, Israeli, and locally
made goods. Competitively priced U.S. brand names are popular,
particularly with well-to-do Palestinian consumers. Most advertising is
done through local Arabic newspapers, although an expansion of
advertising through newly established Palestinian radio and television
stations is possible. A few companies have begun billboard advertising,
which should expand over the next few years. Advertising in WB/G is
comparatively cheap by world standards and prime-time Palestinian radio
time costs about \$35 per minute.

Major Newspapers and Business Journals:

\- Al Quds (Arabic daily) [www.alquds.com](http://www.alquds.com/)

\- Al Ayam (Arabic daily) [www.al-ayyam.com](http://www.al-ayyam.com/)

\- Al Hayat Al Jadida (Arabic daily)
[www.alhayat-j.com](http://www.alhayat-j.com/)

\- Jerusalem Times (English weekly)
[www.jerusalem-times.net](http://www.jerusalem-times.net/)

Local Television Stations:

\- PBC, (All PA)

##### USG Trade Promotion Events

The U.S. Commercial Service and Foreign Agricultural Service, sometimes
jointly, organize several trade events and catalog shows each year.
Please refer to the website of the U.S. Commercial Service for updated
information: [www.buyusa.gov/westbank](http://www.buyusa.gov/westbank)
and <http://www.buyusa.gov/israel/en/>

[Pricing Product]{.underline}

Price is a major factor affecting purchasing decisions by Palestinian
companies and consumers. U.S. companies may want to gain market share by
introducing products into the Palestinian market at locally competitive
prices.

[Sales Service/Customer Support]{.underline}

Both after-sales service and customer support are important in the WB/G
market. They are strong selling points for U.S. goods, as well. However,
competitive pricing will remain the key to building a customer base.

[Selling to the Government]{.underline}

The PA is developing a formal tendering and bid process for government
contracts. U.S. companies with questions about transparency in bidding
procedures for PA contracts or having additional concerns about doing
business in WB/G should contact one of the U.S. Commercial Service
officers or other Commercial Service personnel listed in Chapter 11.
When in doubt, please contact these USG employees and local national
employees at the U.S. Embassy in Tel Aviv or the U.S. Consulate General
in Jerusalem.

[Need for a Local Attorney]{.underline}

U.S. companies should seek professional legal and/or accountancy advice
whenever engaged in complicated contractual arrangements in WB/G. These
activities include establishing an office, investing, or applying for
IPR registration. Companies may also wish to seek legal assistance when
encountering trade or payment problems. A list of local law firms is
available from the U.S. Commercial Service in Jerusalem.

**5: LEADING SECTORS FOR U.S. EXPORTS AND INVESTMENTS**

###### Best Prospects for Non-Agricultural Goods and Services

[1 - Telecommunications Equipment (TEL)]{.underline}

In 1997 the PA issued regulations governing wire and radio
communications in WB/G, empowering the Ministry of Post and
Communications to establish, manage, and operate wire and radio
communications networks in WB/G. Under this law, all public wire and
radio communication networks are subject to licensure. The Cabinet has
the authority to grant a license by means of a franchise based on the
Minister of Communication's recommendation. Recognizing the need to
mobilize sufficient capital to build a modern telecommunication system,
Palestinian investment companies in 1997 joined with approximately 8,000
investors to launch the Palestinian Telecommunications Company (Paltel)
on the Palestinian Stock Exchange in Nablus. This development followed
the November 1996 PA decision to award Paltel an exclusive license to
develop telecommunications infrastructure and digital cellular telephone
services in WB/G. Paltel, which is committed to open competition for
service suppliers, seeks to offer value-added services like Internet and
telephony. To date, it has issued tenders for wired and digital cellular
telephone equipment and services in WB/G, signing supply and operating
agreements with Nortel, Motorola, MCI-Worldcom, and Startec Global
Communications. Interested U.S. telecommunications companies should
contact the U.S. Consulate, Commercial Section in Jerusalem. Paltel
cellular phone service "Jawal" currently has a client base of 250,000
and has been operational for the last two and a half years, creating
demand for cellular phone equipment. Opportunities for US companies in
this sector are in providing switches, transmission networks, microwave
networks, earth stations, optic fiber cables, cellular phones and public
payphones.

[2 - Processed Foods (FOD)]{.underline}

Although many food products in WB/G are imported from Israel, these are
relatively expensive. Palestinian consumers know American brands and
although spending has dropped during the current Intifada, they have
been traditionally willing to pay for good quality and internationally
recognized names. The potential for U.S. processed food exports is very
promising. Good opportunities exist in snack foods, cereals, condiments
and sauces, canned fruits and vegetables, cheese, dried fruits, tea and
instant coffee, frozen meat, vegetable oil, candy, vegetable oil, and
ghee. Excellent opportunities also exist for processed food products
that do not require refrigeration during shipment or in storage.

[3 -- Food Processing and Packaging Equipment (FPP)]{.underline}

## Food related industries form a great percentage of the industrial base in the PA areas. These industries include companies that produce, in particular, snack foods, chocolates and candies, dairy products, and pasta, as well as other food products. Demand for processing and packaging equipment for these food items is strong. Most processing and packaging equipment is purchased from Europe or Israel, where prices are generally more competitive. However, there is a significant niche market for U.S. equipment among producers of higher quality food products. 

[4 - Building Materials/Construction Equipment (BLD/CON)]{.underline}

The construction sector in the PA boomed when the Palestinian Authority
was established in 1994. Most of the construction was in the private
sector, both residential and commercial. Although the boom collapsed
after the Al-Aqsa Intifada broke out in September 2000, donor-funded
construction has continued in the West Bank and Gaza. When political
conditions improve, this will be one of the first sectors of the economy
to recover, boosted by pent-up demand, the need to repair and expand
infrastructure, and increased donor funding. The private sector is
expected to take the lead in the reconstruction effort. Building
materials like wood, white cement, steel, roofing materials, red brick
tiles will be in particularly high demand. There will also be demand for
equipment such as bulldozers, concrete-hauling trucks, and cranes.

[5 - Computers and Office Equipment (CPT)]{.underline}

PA and municipal offices, as well as expanding private companies, need a
full range of office equipment particularly computers, software,
copiers, faxes, and supplies. The local market, particularly banks and
other internationally oriented enterprises, values American expertise in
the computer and software field. Arabic software and keyboards should be
included in proposed sales.

[6 - Furniture (FUR)]{.underline}

Although only small quantities of American wood furniture have so far
been imported into WB/G, its competitive pricing and good reputation for
quality bode well for higher volume sales, especially for home
furniture. Good opportunities exist for sitting room and bedroom sets,
dining tables, recliners and sleepers, buffets, coffee tables, end
tables, and TV tables. Although American home furniture is relatively
more expensive than other imported or locally made furniture,
Palestinians appreciate its durability, classical appearance and
quality. They generally prefer oak, birch, or mahogany and prefer to pay
extra for quality furniture, which can be kept for a long time.

[7 - Textiles Fabrics (TXF)]{.underline}

There are good opportunities for textile fabrics such as denim and
cotton. A total of 1,650 large and small textile and apparel
establishments operate in WB/G and many work as subcontractors for
Israeli companies. Fabrics are mostly imported from Southeast Asia,
Turkey, Israel and the United States.

[8 - Medical Equipment (MED)]{.underline}

There are good opportunities for medical equipment in light of the
continuing unrest in the area. Funds are now available from
international donor agencies such as USAID and UNDP to Palestinian
hospitals and clinics to purchase and replace an array of medical
equipment and support improvements in water supply and sanitation.

[9-Cosmetics and Toiletries (COS)]{.underline}

There are good opportunities for cosmetics and toiletries, which are all
imported into the WB/G. Prices for American made products have become
more competitive in light of the falling value of the U.S. Dollar.
Cosmetics and toiletries are imported from Europe and the United States.

####### Major Investment Opportunities

The USG recognizes the major contribution that outward foreign direct
investment - increasingly viewed as a complement, or even a necessary
component, of trade - makes to the U.S. economy. U.S. firms with
overseas operations account for about 60% of total U.S. exports, so the
USG undertakes initiatives, such as Overseas Private Investment
Corporation (OPIC) programs, investment treaty negotiations, and
business facilitation programs that support U.S. export-promotion
activities. Until the present situation improves, however, many
businesses are postponing any investment. (See also Chapter 7,
"Investment Climate")

[1 - Food and Beverage Processing and Packaging]{.underline}

Local and foreign businesses report that this established sector
continues to show excellent growth prospects. While agricultural
products are plentiful in WB/G, local companies mostly manufacture
products such as sweets, cookies, and snack foods. Accordingly,
opportunities for U.S. companies exist over the full range of fruit and
vegetable canning and processing as well as frozen food preparation.
Other opportunities include joint ventures to manufacture snack foods,
cookies, and sauces. Gulf and European markets provide a natural
merchandising opportunity for U.S.-Palestinian joint-venture food
products.

[2 - Pharmaceutical Production]{.underline}

Four of the largest, best managed, and most successful West Bank
companies produce pharmaceuticals; they also have substantial ready
capital for expansion. Some multinationals are already working with
these and other companies under distributorship arrangements, which will
likely develop into joint manufacturing agreements. Some West Bank
pharmaceutical companies have shifted to cosmetic production, while
others are penetrating overseas markets in the Gulf, Eastern Europe, and
the former Soviet Union. Good joint-venture opportunities exist in this
sector: local firms can benefit from U.S. quality-control techniques and
new technologies, while offering relatively low wage structures.

[3 - Building Materials]{.underline}

The building and construction materials industry, including stone and
non-metallic minerals quarrying, employs 18% of all WB/G workers. A
survey of local and international businesspeople rates this sector as
having strong growth potential. Stonecutting also rates high in
international competitiveness and growth potential. Over 300 firms
annually produce 250,000 square meters of cut stone, much of which is
exported to Israel and Jordan, with an estimated value of \$160 million.
Housing and commercial construction should continue to grow along with
private and public capital inflow.

[4 - Light Assembly Technology]{.underline}

The relatively well-educated local Palestinian population should, with
appropriate specialty training, contribute to a solid labor force for a
wide variety of light assembly or electronics work. Many Palestinians
have excellent computer/software training, and small computer
programming firms already exist in Ramallah and Bethlehem. Two major
U.S. information technology companies set up offices in the West Bank
but both closed around two years ago. This field is developing fairly
fast and may expand over the next few years.

[5 - Hotel Construction and Upgrading]{.underline}

Tourism, particularly by Diaspora Palestinians, is projected to increase
over the next five years once the current level of violence subsides.
Before 1967, Ramallah was an important regional summer resort, and it
still has considerable potential for tourism development. Demand is
estimated at slightly over 1 million tourists annually, including
religious pilgrims, enough to maintain a viable industry. Visits to
Bethlehem, by far the most important WB/G tourist site, are pegged at
2-3 million when tourism picks up following the end of the current
crisis. Tourist expenditures in 1995 in the West Bank and East Jerusalem
were estimated at over \$150 million. A number of three-star hotels have
opened up in the West Bank cities of Bethlehem, Ramallah and Hebron to
cater to pilgrims and budget tourists while Jericho has a new three-star
resort hotel. Two five-star Intercontinental hotels in Jericho and
Bethlehem targeting business and upscale travelers opened several years
ago. Most existing hotels in the West Bank are in the three-star
category and need upgrading. Nablus and Gaza have two and four
three-star hotels respectively. They both could support a number of new
hotels, especially Gaza. The current crisis has had a significant impact
on the Palestinian Tourism industry. For instance, Bethlehem and
Jericho, which depend mainly on tourism, have sustained heavy losses.
Currently, the Oasis Casino in Jericho is closed while the
Intercontinental has partially reopened for business. At this time also,
the first 5-star Intercontinental Hotel in Bethlehem is closed.
According to a report that was published by the Palestinian Central
Bureau of Statistics (PCBS), the number of hotel guests who visited the
PA areas during the fourth quarter of 2000 dropped to 28,646 from
117,355 guests in the third quarter of the same year, a decline by over
75%. Also, since December 2000 most of the 116 hotels in the West Bank
have been closed for lack of guests.

[6 - Apparel and Textiles]{.underline}

The approximately 1,650 large and small textile and apparel
establishments in the PA areas mostly work as subcontractors for Israeli
textile companies; they employ 25,000 people. A few factories have made
agreements to manufacture apparel for major department stores and
apparel companies in the United States, such as Calvin Klein and JC
Penny's. Investors in this sector can take advantage of the Gaza
Industrial Estate. Opportunities for joint ventures in this sector are
good in light of the high level of experience that Palestinians have
doing subcontracting work.

[7 - Jewelry, Handicrafts, Ethnic Imports]{.underline}

WB/G are famous for olivewood, tiles and ceramics, mother-of-pearl, and
needlework products. With upgrading in design and quality, these
products can be successfully marketed internationally. Small joint
ventures with U.S. partners that focus on quality and developing ethnic
designs, along with appeal to Western tastes, offer good investment
opportunities.

*\* It should be noted that the ongoing violence in the area makes any
investment decision extremely risky and hardly any new investment has
been made during the past three years.*

####### Best Prospects for Agricultural Products

[1. Wheat and Feed Grains (HS Code: 1000.0000)]{.underline}

Only a small proportion of annual feed grain consumption is WB/G-based,
so U.S. grain exporters have ample opportunity to supply feed for local
poultry and livestock. Of the recently commissioned flourmills, two are
in Gaza and the other on the outskirts of Bir Zeit, near Ramallah on the
West Bank. In addition, a number of smaller mills, whose production does
not exceed 10,000 metric tons per year, operate in WB/G. These mills can
satisfy the entire 250-300,000 mt annual demand of the PA for wheat. By
the terms of the Paris Protocol, Palestinian grain and meal purchasers,
who generally seek low-cost sources, may import grain from anywhere. To
date, the major flourmills, which import on their own account, have
purchased only U.S. milling quality wheat. There are few importers of
animal feeds although the annual feed mixing and grinding capacity is
estimated at some 200,000 mt.

[2. Rice (HS Code: 1006.000)]{.underline}

WB/G import 20-30,000 metric tons of rice annually. Competitive pricing
by U.S. sources could make this an attractive market and might enable
U.S. exporters to capture a significant share of it from Asian
suppliers.

[3. Dried Legumes (HS Code: 0713.0000)]{.underline}

WB/G accounts for an estimated 40% of all Israeli imports of peas,
beans, chickpeas and other legumes. 1994 WB/G imports totaled: white
beans: \$1.4 million; lentils: \$920,000; dried peas: \$368,000; and
chickpeas: \$312,000.

[4. Processed Oils (HS Code: 1500.0000)]{.underline}

WB/G locally produce and use large quantities of olive oil, but not
other processed oils favored by Palestinian consumers, so moderate
prospects exist for importing soy, corn, sunflower, and rapeseed oils.
There are no crushing plants in WB/G but some crude vegetable oils are
imported from various sources and refined locally.

[5. Sugar (HS Code: 1701.0000)]{.underline}

WB/G sugar imports are up from around 30,000 mt in 1996. Up until two
years ago, sugar used to be transshipped to Jordan via Israeli ports to
avoid higher shipping and transportation costs via the Jordanian port of
Aqaba. Due to the ongoing unrest in the area and difficulty in moving
goods this practice has stopped but is expected to resume once calm is
restored. In recent years WB/G has been importing about 130,000 mt of
sugar via Israel.

[6. Frozen Fish (HS Code: 0303.0000)]{.underline}

Israel and the Palestinian Authority import the majority of their fish
requirements. They enjoy jointly a 4,000 mt duty-free import quota for
frozen salt-water fish from the United States In spite of this, only 5%
of all frozen salt-water fish imports are of U.S. origin. In recent
years the Pacific Whiting has found a favorable market in WB/G although
U.S. exporters have encountered difficulties in meeting the rigid
Palestinian standards. At present, most of this type of fish is being
imported from Argentina.

**6: TRADE REGULATIONS AND STANDARDS**

Import and export procedures for WB/G remain tied in large part to
Israeli regulations. Ostensibly, the PA has primary control over imports
into WB/G, with Israel retaining quantitative control over some imports
in key industries such as dairy products. Most WB/G-bound products pass
through Israeli ports and so are subject to Israeli customs and security
inspection. U.S. companies should work with Palestinian agents and/or
the U.S. Embassy in Tel Aviv and U.S. Consulate General in Jerusalem to
determine specific import and export requirements for their goods. Due
to the current unrest in the area, transporting goods from Israeli ports
to PA areas has been extremely difficult because of the tight blockade
imposed by Israel. Exporters should be aware that delays are inevitable
and should work out this problem with their customers before shipments
are made.

[Technical Standards]{.underline}

A- Overview

The Palestinian Authority has pledged to apply international standards
requirements (e.g., ISO 9000 usage) to all imports. The [Palestine
Standards Institution](http://psi.gov.ps/) (PSI), established in 1994,
has been working to develop Palestinian standards, but currently the PA
widely uses Israeli standards. PSI currently provides the following
services: standards purchasing, inspection, testing, industrial
calibration and training. PSI offers Palestinian exporters seminars on
market entry requirements and standards.

B- Standards

Currently, the PA uses Israeli standards and there is an alarming
tendency for Israeli authorities to adopt European standards. (A
detailed description of Israeli standards can be found in the Country
Commercial Guide for Israel.) The PSI has been mandated to develop
standards for the WB/G but it has been practically non-functional until
it was able to solicit international donor support two years ago. Since
that time it was able to develop its internal systems and provide the
limited number of services described above.

C- Conformity Assessment

Most standards testing is conducted in Israeli labs, although the
Palestinian Ministry of Health has begun to institute some testing
procedures of its own. PSI currently provides products testing and
standards certification to Palestinian companies in the sectors of
chemicals, construction materials, electronic equipment, elevators and
escalators, energy and hydraulic equipment and systems, furniture,
household electrical appliances, leather, processed food, paper,
plastics, pressurized vessels, central gas installations and textiles,
tourism and hospitality and toys. Concrete and construction materials as
well as some food products are also being tested at Bir Zeit University.

D-Product Certification

Since all WB/G bound goods enter through Israeli controlled ports,
products certification is made according to Israeli standards. There are
currently no mutual recognition agreements between the PA and U.S.
organizations.

E-Accreditation

Accreditation is being provided by the PSI at a limited scale. Until PSI
develops its systems, Palestinians will continue to rely on
accreditation from the Standards Institute of Israel.

F-Technical Regulations:

Currently there is no national gazette in WB/G and regulations are not
published.

G- Labeling/Marking

Goods entering WB/G may be subject to marking and labeling requirements
in order to prevent leakage back into Israel. Some goods such as
cigarettes and laundry powders now have Arabic or Arabic/English stamps
labeled \"Only for sale in the West Bank and Gaza.\" U.S. businesses
should check with a Palestinian importer for exact specifications. As of
January 1, 1997, all products imported or brought into WB/G must carry
labels in Arabic in addition to the original labels. The labels must
carry information on the product ingredients, production and expiry
dates, and consumer warnings for hazardous products such as cigarettes
and flammable materials.

H- Standards Contact Information

Palestinian Standards Institution

Mr. Mazen Abu Sharia, Director General

Ramallah, West Bank

Tel: 972-2-298-9650

Fax: 972-2-296-4433

E-mail: mabusharia@psi.gov.ps

Mr. Mohammad Al Sayyed, International Cooperation Manager

Ramallah, West Bank

Tel: 972-2-298-4144

Fax: 972-2-296-4433

E-mail: <malsayyed@psi.gov.ps>

Mr. Issa Noursi

Commercial Specialist

U.S. Commercial Service\
19 Keren Hayesod Street\
Jerusalem 91008\
Phone: 972-2-625-5201\
E-mail:
[issa.noursi@N0SPAM.mail.doc.gov](mailto:issa.noursi@mail.doc.gov)

[Trade Barriers: Tariffs, Non-Tariff Barriers, and Import
Taxes]{.underline}

In accordance with duty-free arrangements between the United States and
the PA, the PA theoretically should not impose tariffs on U.S. products.
However, as the PA and Israel are a customs union, and Israel does
impose duties and quotas on some U.S. goods, the same conditions apply
to U.S. goods destined for WB/G. The 1994 Paris Protocol provides that
the PA not impose tariffs on goods of Israeli origin, but it does impose
purchase taxes on many durable goods imported from other countries,
generally at Israeli rates. Like Israel, the PA imposes a Value-added
Tax (VAT) of 17% on all goods sold in WB/G, whether imported or locally
made. By the terms of Palestinian-Israeli agreements, VAT paid to Israel
on WB/G-bound goods is rebated to the PA.

[Customs Regulations]{.underline}

The PA does not impose customs tax on U.S. imports, which are, however,
taxed as they enter Israeli ports. Exporters should consult with
Palestinian or Israeli freight forwarders who have access to the list of
goods that are liable to purchase tax.

[Import Licenses]{.underline}

Import Licenses for WB/G, when required, are issued by the PA. The
importer must be a trader registered with the PA and must present a
pro-forma invoice and certificate of origin. The Paris Agreement
mandates that the PA must inform the Israeli Ministry of Industry of
each import request. While the PA may import some items freely, other
items are subject to quantitative restrictions set forth in the Paris
Agreement. The importer is required to submit an application for an
import license issued by the Ministry of Economy available through
offices of the Chamber of Commerce. Upon approval, and after the
application is stamped and signed, it becomes the import license. Each
import shipment must also be authorized by the Ministry and so is
subject to quota controls and labeling requirements. Depending on the
product, it may also be subject to testing by the Standards Institute of
Israel. In some instances of differing standards, Israeli standards
authorities will defer to their Palestinian counterparts on the
condition that the importer provides satisfactory assurance that the
product(s) in question will remain inside WB/G. Israel imposes licensing
requirements and quantitative restrictions on a wide range of foods and
agricultural products. Items subject to quotas -- mainly agricultural
produce and processed foods -- are negotiated annually. The Palestinian
share is determined on the basis of estimated consumption requirements
and past quota utilization. All health-related imports, such as food and
pharmaceuticals, require approval by both the Israeli Ministry of Health
and the Palestinian Ministry of Health, whose standards are the same.
However, the Pharmacy Department at the Israeli Ministry of Health has
informed the Palestinians that Palestinian pharmaceutical companies are
not allowed to import raw materials acting as active ingredients for
products that have a single registration in Israel unless the
Palestinian companies get approval of the party that registered the
related product.

[Temporary Entry of Goods]{.underline}

The PA has not yet established specific provisions for temporary entry
of goods. It is currently using Israeli regulations.

[Import/Export Controls and Documentation]{.underline}

Some specific items entering WB/G, totaling approximately 15% of total
imports, must be accompanied by a pro-forma invoice, packing list,
certificate of origin, and import license request. The remaining 85% of
imported items may be imported directly with a permit from the relevant
PA ministry. U.S. exporters should check with relevant personnel at the
U.S. Embassy in Tel Aviv or the U.S. Consulate General in Jerusalem
regarding specific items. For exports, the PA requires an invoice and
certificate of origin signed by the local Chamber of Commerce and the
Ministry of Economy. Permission to export is virtually automatic.
However, Israeli security controls apply to Palestinian goods. No
further documentation is required to transit the Allenby Bridge into
Jordan and the Rafah Crossing into Egypt, but security checks are
conducted. Goods transiting Israeli ports require Israeli port
documentation.

[Prohibited Imports]{.underline}

Although the PA has no published import prohibitions, U.S. companies
should check with local Palestinian distributors to see if restrictions
apply in certain cases (e.g., food products, firearms, etc.).

[Free Trade Zones/Warehouses]{.underline}

The PA, Israel, and the international donor community are establishing
industrial zones in WB/G to stimulate local economic activity and
employment. Efforts are focused on a pilot zone, the Gaza Industrial
Estate (GIE) at Qarni/Al Muntar. The GIE, which was inaugurated in
November 1998, will initially house export-oriented industries. However
as a result of the current crisis many companies located there have
closed shop due to violence in the vicinity of the GIE and road closures
that have prevented the transport of goods and people. In the future,
and with the help of donor countries, several additional zones may be
established containing 200,000-600,000 square meters of industrial and
commercial construction space and, when fully developed, employing 5,000
to 10,000 workers. The management of the zones will probably offer
investment-incentive and tax-relief packages. In Tulkarem, the USG
developed plans to support the creation of a High Technology Development
Park that would develop links with the nearby Israeli high technology
sector. However, all these projects have been put on hold due to the
current crisis.

[Special Import Provisions]{.underline}

The PA has no special import provisions.

[Membership in Free Trade Arrangements]{.underline}

In October 1996, President Clinton signed a proclamation granting
duty-free import status to items produced in or imported from WB/G. The
European Union has a preferential trade agreement with WB/G similar to
that of the U.S. Generalized System of Preferences program. The PA has
more restrictive trade agreements with Jordan and Egypt. Under the terms
of the Paris Protocol, there are no restrictions on trade between WB/G
and Israel. However, WB/G exports entering Israel face significant
barriers, principally as a result of Israeli security measures.

**7: INVESTMENT CLIMATE**

[Political Violence]{.underline}

The outbreak of the Intifada in September 2000 has had a profound impact
on the operation of the private sector in the WB/G. While terrorist
activity and violence has usually been directed at Israeli, not
international or Palestinian targets, the GOI has responded by imposing
severe external and internal closures on the WB/G since the end of
September 2000. These measures have limited or obviated the movement of
goods and workers within the WB/G, between the West Bank and Gaza, and
into Israel; the import and export of raw materials and finished
products; and the ability of Palestinians to leave and return to the
WB/G from abroad. While the GOI has in the past lifted many of these
measures when the threat of violence has subsided, the perceived
potential for additional civil strife in the face of Palestinian
economic and political frustration continues to cause concern among
prospective international investors. In the past GOI military incursions
into the WB/G, have caused substantial damage to private and public
sector infrastructure. Israeli forces withdrew from some areas in the
West Bank and Gaza in June 2003 in partial implementation of a
performance-based international plan designed, if both sides fulfill
their obligations in the plan, to lead to a Palestinian state in 2005.
It should also be noted that, because of the violence of the Intifada,
the State Department, in a travel warning that has been renewed
repeatedly over the last three years, urges American citizens to defer
travel to the West Bank and Gaza Strip.

[Openness to Foreign Investment]{.underline}

The PA places a high priority on encouraging foreign investment in WB/G
to promote growth, reduce unemployment, and support the reconstruction
efforts begun in 1994. The current PA Investment Encouragement Law
("1998 Investment Law" or "the Investment Law") guarantees the
repatriation of foreign capital and prohibits expropriation and
nationalization of approved foreign investments. No restrictions govern
foreign currency accounts or official currency transfer policies.

All new foreign investment in WB/G must be registered with the PA and
approved by the relevant ministry/ministries. PA corporate income tax
rates were reduced retroactively, effective from January 1, 1999, from
38.5% to 20% of net profit. PA personal income taxes have also been
reduced to four brackets with rates of 5, 10, 15, and 20%.

The 1998 Investment Law provides exemption from taxes and other
incentives for PA-approved domestic and foreign investment. To benefit
from these incentives, investors must apply to the Palestinian Agency
for Investment Promotion (PIPA) and present it with a completed
investment application and feasibility study. Approval is automatic if
the Agency does not issue a rejection within 30 days of submission.

Certain investment categories require PA Council of Ministers
pre-approval: weapons and ammunition, aviation products and airport
construction, electrical power generation/distribution, reprocessing of
petroleum and its derivatives, waste and solid waste reprocessing, wired
and wireless telecommunication, and radio and television.

PIPA, whose Board of Directors is headed by the Minister of National
Economy, is composed of 13 public- and private- sector members.
Interested U.S. investors should consult with the U.S Embassy and
Consulate General personnel in Tel Aviv and Jerusalem, respectively, as
well as relevant PA ministry officials regarding investment approval
requirements.

[Right to Private Ownership]{.underline}

The right to private ownership in Gaza is guaranteed by British Mandate
law, as amended by regulations issued by the PA. Jordanian law in the
West Bank, as amended by PA regulations, similarly guarantees the right
to private ownership. Foreigners must obtain permission from the PA
before purchasing property in areas under PA civil authority and from
the Israeli Matak (the former Israeli Civil Administration) before
purchasing property in West Bank areas under Israeli control.

[Protecting Intellectual Property]{.underline}

While WB/G do not have a modern intellectual property rights (IPR)
regime in place, the respective authorities are well aware of the
problem and are beginning to address the issues involved. The World Bank
and other international donor organizations have developed and are
conducting programs to promote awareness of the financial and trade
benefits to be derived from observing IPR standards. The legal regime
with regard to IPR can be expected to change in the future, as several
donor countries and the World Bank are currently assisting in the
development of a modern IPR law.

To date, 1967-era Jordanian laws concerning trademarks, patents, and
designs are applicable in the West Bank. In Gaza, the Palestinian
Trademark and Patent Laws of 1938, adopted during the British Mandate,
are applicable. Registration under the two laws is very similar, and,
despite different authorizing legislation, there are few substantive
differences between the West Bank and Gaza Strip laws.

Patent protection in WB/G is provided for a period of 16 years from the
date of filing the patent application. Furthermore, both systems allow
compulsory licensing of anything already patented to be ordered if the
"reasonable requirements" of the public under the applicable law have
not been met. In Gaza the novelty requirement for patenting may be met
if the invention has not been previously published or used. In contrast,
the novelty requirement in the West Bank is met if there has been no
prior publication, use, or sale in the West Bank.

Trademark protection is available for registered trademarks for a period
of seven years, which may be extended for additional periods of 14
years. Prevailing WB/G laws prohibit the registration of a trademark
that is contrary to public morals. Unpublished new and original designs
may be protected under WB/G laws. Both applicable legal systems prohibit
the registration of designs that are contrary to morality or public
order. In Gaza a registered design may be compulsorily licensed under
certain circumstances. Compulsory licensing of designs is not allowed in
the West Bank. U.S. firms should note that there is minimal enforcement
of IPR laws in WB/G.

[Performance Requirements/Incentives]{.underline}

Certain incentives apply to PA Investment Agency-approved investments:

-Investments whose value is between \$100,000 and \$1 million will be
exempt from income tax for five years and be subject to income tax on
their net profit at 10% for an additional eight years

-Investments whose value is between \$1 million and \$5 million will be
exempt from income tax for five years and be subject to income tax on
their net profit at 10% for an additional twelve years

-Investments whose value is \$5 million and above will be exempt from
income tax for five years and be subject to income tax on their net
profit at 10% for an additional 16 years; and

-Special projects recommended by PIPA and approved by the Council of
Ministers will be exempted from income tax for five years and be subject
to income tax on their net profit at 10% for an additional 20 years, and

\- Investments in information technology (IT) training may be
capitalized and depreciated for tax purposes.

[Transparency of the Regulatory System]{.underline}

The PA has not yet issued regulations on commercial investments, but
such regulations are now being drafted with World Bank assistance.

[Corruption]{.underline}

The U.S. Consulate General in Jerusalem and the U.S. Embassy in Tel Aviv
have received reports of potential foreign and domestic investors being
asked to provide inducement fees or to include well-connected persons in
their business arrangements to help secure a contract. We have no
reliable means of determining where or to what degree this kind of
activity occurs. A recent World Bank survey of Palestinian companies
indicated that very few had faced problems with petty bribery or
corruption in government procurement. The report noted, \"The frequency
of informal payments to officials in WB/G is of roughly the same order
of magnitude as is reported in... OECD countries.\" U.S. firms have not
identified corruption as a major obstacle to WB/G investment, which has
so far been limited mostly by concerns over regional political and
economic uncertainties. The current reform program of the PA is designed
to bring greater transparency and accountability to the PA\'s official
budget and commercial holdings.

[Labor]{.underline}

The relatively young and skilled Palestinian labor force in WB/G, of
which 15% is female, totaled 541,000 in 2003, down from 597,000 in 2000.
Many have trained in the West and are familiar with foreign business
practices. In 2002 most worked in services including public
administration, education and health care (40%); commerce, restaurants
and hotels (18%) construction (7%), manufacturing, quarrying and mining,
and agriculture, fishing and forestry (18%).

Prior to the outbreak of the Intifada in September 2000, some 125,000
Palestinians worked in Israel. In 2003 Palestinian workers in Israel
averaged 57,000. The unemployment rate is now around 30% .

WB/G wages reportedly are higher than wages in Jordan but only a
fraction of what Israelis earn. WB/G trade unions act more as political
organizations than as unions in the Western sense.

[Efficiency of Capital Markets and Portfolio Investment]{.underline}

Several foreign banks, mostly Jordanian, have established WB/G branches,
but financial services remain relatively undeveloped. Credit is limited
by concerns over uncertain political and economic conditions in WB/G and
limited availability of real estate collateral due to non-registration
of most West Bank land. Correspondence and other international banking
relationships are evolving. No Palestinian currency exists, and as a
result the PA places no restrictions on foreign currency accounts,
leading some observers to believe that WB/G will show strong growth in
offshore banking services. The Palestinian Monetary Authority (PMA) is
responsible for bank regulation.

[Palestinian Securities Exchange]{.underline}

In early 1997, the Palestinian Securities Exchange (PSE) started
operations on a limited scale in the West Bank city of Nablus. During
this trial period, while open for business only for a three-day trading
week, 23 Palestinian companies were listed for trading. The PSE, today
lists 24 companies although only a few trade actively. PSE operations
have been disrupted several times as a result of Israeli military
incursions into Nablus. The Al Quds index, which moves in relation to
local political developments more than international economic trends,
rose 27% during the first half of 2003, while market capitalization rose
6%. Even so, market capitalization was still 25% below its peak before
the Intifada of \$936 million, and the index was 35% below its all-time
high.

[Conversion and Transfer Policies]{.underline}

The 1998 Investment Law guarantees investors the repatriation of all
financial resources, including capital, profits, dividends, wages, and
salaries. There are no other PA restrictions governing foreign currency
accounts and currency transfer policies. U.S. investors should seek
up-to-date information with relevant U.S. Embassy and Consulate General
personnel in Tel Aviv and Jerusalem.

[Expropriation and Compensation]{.underline}

The 1998 Investment Law prohibits expropriation and nationalization of
approved foreign investments except for the pursuit of the public good,
which shall be in return for fair compensation based on market prices
and for losses suffered because of such expropriation.

[Dispute Settlement]{.underline}

The 1998 Investment Law provides for dispute resolution between the
investor and official agencies by binding independent arbitration or in
Palestinian courts. There are currently no outstanding disputes
involving American companies. It has been reported that some contracts
contain clauses referring dispute resolutions to the London Court of
Arbitration.

[Bilateral Investment Agreements]{.underline}

The PA does not yet have bilateral investment agreements.

[OPIC and Other Investment Insurance Programs]{.underline}

The Overseas Private Investment Corporation (OPIC) provides a variety of
services to qualified U.S. investors in emerging economies and
developing nations. During the early stages of investment planning, U.S.
investors may contact OPIC for insurance against political violence,
inconvertibility of currency, and expropriation in the form of an
insurance registration letter. OPIC insurance is not available after the
investment has been irrevocably committed.

The World Bank via a \$20 million fund administered by its Multilateral
Investment Guarantee Agency (MIGA), provides guarantees in the form of
insurance against political risk for private investments in the WB/G.
Under the terms of the Fund, investors who are nationals of or companies
incorporated in a MIGA member country, or who are Palestinian residents
of the WB/G, are eligible to obtain guarantees provided that investment
is brought in from outside the WB/G. The Fund currently has the capacity
to issue guarantees for up to \$5 million per project.

[Foreign Trade Zones/Free Ports]{.underline}

There are currently no foreign trade zones or free ports in the WB/G

[Foreign Direct Investment Statistics]{.underline}

The PA has not yet compiled a complete listing of foreign direct
investment statistics. Limited foreign investment flows began in
1994-95, with the majority of funds coming from regional Palestinian
investors. The largest foreign company in WB/G is the Palestine
Development and Investment Company (PADICO), which has invested over
\$500 million in WB/G. Key PADICO investors include Diaspora
Palestinians from Jordan, Great Britain, and the Gulf. PADICO has made
significant investments in telecommunications, housing, the (Gaza
Industrial Estate) GIE, and the establishment of the PSE in Nablus.
Another large Palestinian investment group active in WB/G with
authorized capital of over \$100 million is the Arab Palestinian
Investment Company (APIC), which is headquartered in the West Bank city
of Ramallah.

**8: TRADE AND PROJECT FINANCING**

[The U.S. Government Export Portal]{.underline}

A great deal of very useful information about export financing and
methods of payment is now available on the U.S. government's export
portal: <http://www.export.gov/finance.html>

[Banking System]{.underline}

The Palestinian Monetary Authority (PMA) has the power and
responsibility to regulate and implement monetary policies. It is sole
holder and manager of the PA's and Palestinian public-sector entities'
foreign currency reserves. With 22 commercial banks comprising over 135
branches now operating in WB/G, the local banking sector has undergone
rapid growth since the establishment of the PA in May 1994. One foreign
bank has returned to take up operations abandoned after the 1967 war,
and a number of new Palestinian banks have been established and begun
operating. Israeli banks do not operate in the West Bank and Gaza. The
Palestinian-owned Arab Bank, the largest in the Arab world, has 17
branches in WB/G. It handles accounts for most PA ministries and offers
extensive overdraft privileges to the PA. Arab Bank offers a wide array
of international banking privileges and is highly regarded among the
local and international business communities. Cairo Amman Bank is by far
the largest in the PA in terms of operating branches. It has 20 branches
and employs over 700 people.

West Bank and Gaza banks routinely deal in the Israeli shekel and
Jordanian dinar. Banks in WB/G may hold dollar accounts, and they are
beginning to develop some offshore banking services. Israeli shekels are
preferred for business dealings, while U.S. dollars and Jordanian dinars
are preferred for savings. To offer Israeli shekel accounts, local banks
must maintain correspondence relationships with Israeli banks. Most
local banks currently have a relatively conservative approach, primarily
because the lack of legal remedies and absence of a commercial
regulatory banking structure make it nearly impossible to recoup
non-paying loans. Local banks generally offer savings and checking
accounts; some do either personal or commercial lending or both. Most
commercial and private lending is done on a short-term basis, of one to
three years and one to four years, respectively, with shorter terms the
norm. Firms often must put up the full amount of the loan - or more - as
collateral. The lending to deposit ratio, however, remains low at 32.1
compared to regional standards.

[Foreign Exchange Controls]{.underline}

Under the Interim Agreement, the PMA authorizes foreign exchange
transactions within WB/G. West Bank banks must use the Bank of Israel
(shekels) and Central Bank of Jordan (dinars) for all foreign exchange
transactions.

[General Financing Availability]{.underline}

As noted above, local bank credit is scarce due to both the lack of a
legal code to enforce loan collection and generally conservative local
banking practices. Most local businesses use their own capital to
finance operations or else work with one of the European credit agencies
described below. Some firms seek out international joint-venture
partners.

[How to Finance Exports/Methods of Payment]{.underline}

*\* Please see <http://www.export.gov/finance.html> for a comprehensive
review of current project finance options and procedures*.

Most local importers use Letters of Credit. U.S. firms should use
contractual arrangements to ensure fulfillment of payment obligations,
particular when beginning a business relationship. The U.S.
Export-Import Bank (EXIM) offers insurance, loan, and guarantee programs
to facilitate export financing of U.S. goods and services. Export
financing through EXIM must be done with an obligor/guarantor from
outside WB/G in a country with which EXIM has an agreement (e.g.,
Jordan). EXIM is currently performing a rating of the WB/G as a first
step towards deciding whether to provide export financing without
requiring an outside obligor/guarantor in the future (should be
checked).

Export credit insurance programs can be obtained from the U.S.
Export-Import Bank\'s (EXIM BANK) Insurance Division. Two short-term
(maximum 180 days) policies are designed for small new-to-export
businesses. Each provide 95% of the commercial risk and 100% of the
political risk involved in extending credit to U.S. exporters\' overseas
customers. The pre-export working capital program is administered in
cooperation with the Small Business Administration (SBA). EXIM also
provides direct loans to foreign buyers of U.S. products and
intermediary loans to fund commercial lenders who extend loans to
creditworthy foreign buyers of U.S. capital goods and related services.
These guarantees cover 100% of principal and interest.

SBA loan guarantees enable small U.S. exporters to obtain financing
through commercial banks, usually short-term (i.e., 12-month) export
working-capital loans for single transactions. SBA\'s international
business trade loan program also offers small export trading and
export-management companies long-term financing to compete more
effectively and to expand or develop export markets.

The Foreign Agricultural Service of the U.S. Department of Agriculture
(USDA) administers the Market Promotion Program to help U.S. producers
and other organizations finance promotional activities for U.S. products
with funds from USDA\'s Commodity Credit Corporation. These funds can
also be used for market research, consumer promotions, and technical
assistance.

[Project Financing]{.underline}

Project finance is available to U.S. investors from the following U.S.
government agencies: OPIC, EXIM, and the Trade and Development
Administration (TDA). The World Bank\'s International Finance
Corporation (IFC) and the European Community\'s local development banks
and credit agencies also provide project finance, although loans from
the latter generally go to local Palestinian companies or to firms with
a connection to European companies.

OPIC operates two major financing programs: direct loans and loan
guarantees. American investors planning to share significantly in the
equity and management of a venture in WB/G may use OPIC medium- to
long-term financing (5-12 years). OPIC financing commitment to a new
project cannot exceed 50% of the total project cost. OPIC loans usually
range from \$100,000 to \$4 million. Interest rates vary according to
the project\'s financial and political risk. The OPIC loan guarantee
program is available to all U.S. businesses regardless of size. OPIC
issues commercial and political risk guarantees under which funding can
be obtained from a variety of U.S. financial institutions. Typically,
OPIC loan guarantees range from \$1 to \$25 million but may reach \$50
million. Interest rates are comparable to those of other USG-guaranteed
issues of similar maturity.

As noted above, EXIM provides project finance in the form of direct
loans, guarantees, or a combination of both through its Project Finance
Division, in which outside consultants are contracted to evaluate
projects. These services are available to major U.S. suppliers and to
project sponsors without access to bank or government guarantees. The
equity investor must be both creditworthy and exposed to meaningful
financial risk. The direct loan and/or guarantee can cover up to 85% of
the contract amount. EXIM is committed to completing its evaluation and
issuing a preliminary indication of willingness to finance a project
within 45 days from the day all the required documentation is submitted
with the application for financing.

The Trade and Development Administration (TDA) promotes economic
development in developing countries by funding feasibility studies,
consultancies, training programs, and other project-planning services.
TDA has financed feasibility studies for a food-processing facility, a
West Bank olive oil production facility, and a petroleum refinery in
Gaza. TDA also organized and financed orientation visits to the United
States for power and telecommunications officials from WB/G.

The International Finance Corporation (IFC), the private sector arm of
the World Bank, was established to encourage private-sector activities
in developing countries. IFC provides loans, equity investments,
guarantees, and stand-by financing.

Following the signing of the Declaration of Principles in September
1993, the United States pledged \$500 million for assistance to the
Palestinians over a five-year period. Of this amount, \$375 million was
to be administered though U.S. Agency for International Development
(USAID) programs and the remaining \$125 million through OPIC-provided
investment guarantees, as described above. The United States increased
its pledge at the November 1998, Donors' Conference in Washington
following the signing of the Wye River Memorandum.

USAID funds activities and programs to increase private-sector economic
opportunities for Palestinians, encouraging broad-based growth by
addressing key problems which hinder economic opportunities: access to
financial services, access to markets, productivity and competitiveness
of Palestinian firms, and the policy framework for private-sector
development. Improving private-sector opportunities to achieve increased
employment and incomes will help build support for the peace process and
provide a stable foundation for long-term prosperity.

[List of Banks with Correspondent U.S. Banking Arrangements]{.underline}

The Cairo-Amman Bank and Arab Bank, the largest banks operating in the
PA, have correspondence relationships with several U.S. banks. Also two
international banks operate in the PA: HSBC and Standard Chartered
(formerly known as ANZ Grindlays).

[Impact of Current Events on Operations of Commercial Banks]{.underline}

The current situation has impacted the commercial banks operations in
two areas: a rise in the number of bounced checks and defaulters on loan
repayments. However, the liquidity and general financial standing of
banks have not been seriously affected because over the last five years
banks have been following a very conservative lending policy. In
December 1999 total bank deposits in the PA were \$ 2,875.14 million
while total outstanding credit was \$ 1,005.47 million and out of that
\$613.8 million was credit to business. Also in December 1999 the
overall lending to deposit ratio stood at 34.9% while the longest-term
loans had a three-year repayment period. Currently, for example, L/C\'s
are still being issued but full payment is required up front and loans
and overdrafts are not available except for top rated customers who can
provide collateral. Clearing of checks between banks is taking longer
periods (up to two weeks) and Israeli businesses often refuse to accept
checks drawn out on banks operating in WB/G. Most banks are not hiring
new staff and those that leave are not being replaced.

**9: BUSINESS TRAVEL**

[Business Customs]{.underline}

Business in WB/G is personal and family-oriented, built on trust and
long-term relationships. However, this trend is slowly changing in the
light of survey research showing that 60% of larger local businesses are
non-family owned. WB/G businesspeople are pragmatic and generally
politically moderate. The owners of larger enterprises have
international contacts and worldwide experience. Although business
orientation has in the past tended to be toward Europe and the Gulf,
local entrepreneurs seek American partners because of their technical
expertise and know-how. U.S. businesspeople who travel to the area
should familiarize themselves with State Department travel warnings
currently urging American citizens to defer trips to the West Bank and
Gaza Strip. If they decide to proceed with travel, they should
concentrate on building strong personal relationships with potential
partners. It is customary to discuss plans over cups of Arabic coffee or
tea, and you may often be invited to the family home or out for a
restaurant meal. Most major Palestinian businesspeople speak English
well, although when negotiating contractual terms it is advisable to use
a good translator, who might be a local attorney assisting with the
deal. Palestinians dress more formally than Israelis, usually in Western
business suits. Business cards are always exchanged, and appointments
can be made on short notice. The normal workweek varies depending on the
business, although most firms are closed on Fridays (Muslim holiday),
even if the owner is Christian. Christian-owned firms are also generally
closed on Sundays.

[Travel Warning (Updated April 28, 2004)]{.underline}

This travel warning is being updated in light of the killings of HAMAS
leaders in Gaza. In the aftermath of the killings of two HAMAS leaders
by Israel in less than a month, statements have been made by some HAMAS
elements and other terrorist groups threatening revenge against U.S.
interests, which could include kidnappings. The Department of State
continues to urge all U.S. citizens to depart Gaza immediately, and to
warn U.S. citizens to defer travel to Israel, the West Bank and Gaza due
to current safety and security concerns. This Travel Warning supercedes
the Travel warning issued March 23, 2004.

The Department of State warns U.S. citizens to depart Gaza immediately
and to defer travel to Israel, the West Bank and Gaza due to current
safety and security concerns. Statements threatening revenge against
U.S. interests following the killing of HAMAS leaders in Gaza, which
could include kidnappings, although we have no information that these
threats will be carried out at this time. HAMAS has also vowed revenge
against Israel. Ongoing violence over the last three years has caused
numerous civilian deaths and injuries, including to some American
tourists, students and residents, as well as to U.S. Mission personnel.
The potential for further terrorist acts remains high. The situation in
Israel, Jerusalem, Gaza and the West Bank remains extremely volatile
with continuing terrorist attacks, confrontations, and clashes. The
Department of state recommends all U.S. citizens depart Gaza following
the lethal terrorist attack on U.S. Mission personnel in Gaza on October
15, 2003. In addition, as the Israeli Defense Force continues to conduct
extensive military operations, especially in Gaza, the possibility that
innocent bystanders might become victims remains high.

American citizens who remain in Israel, the West Bank and Gaza despite
this and earlier warnings are urged to continue to review their personal
security situations and to take those actions they deem appropriate to
ensure their well-being. Private Americans are encouraged to follow the
precautions detailed below and remain in close communication with the
American Embassy in Tel Aviv and the American Consulate General in
Jerusalem for more detailed information. American citizens residing in
the West Bank and Jerusalem should consider relocating to a safe
location.

American citizens should avoid, to the extent possible, public places
such as restaurants and cafes, shopping and market areas and malls,
pedestrian zones, public buses and bus stops, and other crowded venues
and the areas around them.

Americans should also avoid demonstrations. Roads designed for Israeli
settlers, including East Jerusalem, have been the sites of frequent
shooting attacks and roadside explosives, sometimes resulting in death
or injury. U.S. Embassy and Consulate employees and their families have
been prohibited from using public buses throughout Israel, the Jerusalem
municipality, the West Bank and Gaza.

U.S. Government personnel in Israel, Jerusalem, the West Bank and Gaza
are under tight security controls, including prohibition of non-official
travel to the West Bank and Gaza. Official travel to the West Bank and
Gaza is conducted only for specific mission needs, and under the
auspices of U.S. Government security personnel. Occasionally, U.S.
Government personnel are prohibited from traveling to sections of
Jerusalem and parts of Israel, depending on prevailing security
conditions.

As a result of ongoing military activity in the West Bank and Gaza,
sections of those areas have been declared closed military zones. The
Government of Israel may deny entry at Ben Gurion Airport or at a land
border to persons it believes might travel to "closed" areas in the West
Bank or Gaza or to persons the Israeli authorities believe may
sympathize with the Palestinian cause and are seeking to meet with
Palestinian officials. Closed areas in the West Bank and Gaza have been
subject to intense shelling and firing. In some instances, Americans
have been wounded and their property damaged . Major cities in the West
Bank are often placed under Israeli military curfew. All persons in
areas under curfew should remain indoors or risk arrest or injury.
Americans have been killed, seriously injured, detained, and deported as
a result of encounters with Israeli Defense Forces operations in Gaza
and the West Bank. Travel restrictions may be imposed with little or no
warning and travelers run the risk of finding themselves stranded as a
result. Due to the closures and fighting, provision of medical and
humanitarian care has been severely delayed in those areas.

In addition, dual Palestinian --American citizens may encounter
difficulties, or be barred from, entering and/or departing Israel, the
West Bank and Gaza, especially during times of Israeli closures.
Americans who hold Palestinian ID numbers should consult the Embassy or
Consulate for the most recent information before attempting to cross
relevant borders. These restrictions can change frequently and without
any advance notice.

During times when the closures and curfews are lifted, in order to
depart Israel via Ben Gurion Airport, Palestinian-Americans must apply
for an Israeli transit permit. Except in humanitarian or special
interest cases, Israeli authorities are unlikely to issue this permit.
In this event, and notwithstanding the restrictions mentioned above,
travelers must depart via land crossings and may experience lengthy
delays. All travelers who enter or travel in Gaza or the West Bank
should expect delays and difficulties at Israeli military checkpoints
located throughout those areas, and should exercise particular care when
approaching and traveling through checkpoints. Travelers should also be
aware they might not be allowed passage through the checkpoints.

From time to time, the Embassy and Consulate General may temporarily
suspend public services to review their security posture. Due to current
limitations on official travel by U.S. Government employees to the West
Bank and Gaza made necessary by the unrest and uncertain conditions, the
ability of consular staff to offer timely assistance to U.S. citizens in
need in these areas is considerably reduced at present. U.S. citizens
who require emergency services may telephone the Consulate General in
Jerusalem at (972) (2) 622-7230 or the Embassy in Tel Aviv at (972) (3)
519-7551.

Current information on travel and security in Israel, the West Bank and
Gaza may be obtained from the Department of State by calling
1-888-407-4747 within the United States, or, from overseas,
1-317-472-2328. U.S. citizens should consult the Consular Information
Sheet for Israel, the West Bank and Gaza, the Middle East and North
Africa Public Announcement, and the Worldwide Caution Public
Announcement, and the Worldwide Caution Public Announcement at the
Department's Internet site at
[http://travel.state.gov](http://travel.state.gov/) Up-to-date
information on security conditions can also be accessed at
[http://www.usembassy-israel.org.il](http://www.usembassy-israel.org.il/)
or [http://jerusalem.usconsulate.gov](http://jerusalem.usconsulate.gov/)

[Entry Requirements]{.underline}

A valid passport, an onward or return ticket, and proof of sufficient
funds are required for entry to Israel and Israeli-occupied areas. A
no-fee three-month visa may be issued upon arrival and may be renewed.
(Note: Visitors who plan to travel to Arab countries with no diplomatic
relations with Israel may request that their Israeli entry visas be
stamped on a separate form at the port of entry). Anyone refused entry
or who has experienced difficulties with his/her visa status during a
previous visit, or who has overstayed a visa, can obtain information
from the Israeli Embassy or nearest consulate regarding the advisability
of attempting to return to Israel. Permission must be obtained from
Israel for anyone attempting to claim the status of a returning resident
in WB/G. At present, U.S. citizens may enter and exit WB/G on a U.S.
passport without obtaining visas from either Israel or the PA. While
travel to and from the West Bank is fairly free and open, only cars with
special permits are allowed to cross at checkpoints into Gaza. Private
vehicles frequently encounter long delays entering or leaving Gaza.

International crossing-points now in operation between Israel and Jordan
are at Arava (Wadi Al-Arabah) Crossing in the south and the Jordan River
Crossing (Sheikh Hussein Bridge) in the north. American citizens using
these two crossing-points can obtain visas at the border. According to
an agreement between the Jordanian and Israeli governments, border
crossings in both directions in private vehicles have been permitted
since May 1996. Crossing procedures for the Allenby Bridge, linking
Jordan and the West Bank, remain unchanged. Prior visa application and
bridge-crossing permits are required, however, to cross the Allenby
Bridge.

Procedures for crossing into Jordan are subject to frequent changes.
Travelers wishing the most up-to-date border-crossing information should
contact the U.S. Embassy in Tel Aviv or the U.S. Consulate General in
Jerusalem. For further entry information, travelers may wish to contact
the Embassy of Israel, 3514 International Drive, NW, Washington, D.C.
20009, telephone (202) 364-5500, or the Israeli Consulate General in Los
Angeles, San Francisco, Miami, Atlanta, Chicago, New Orleans, Boston,
New York, Philadelphia, or Houston.

West Bank and Gaza: Palestinian-Americans with past or current residency
status in the West Bank or Gaza are subject to the same travel
regulations that affect resident Palestinians. First, such individuals
who plan to stay longer than three months are required to hold a
Palestinian passport to enter the West Bank or Gaza via Israel, the Gaza
International Airport, or the Rafah or Allenby Bridge border crossing.

Second, all Palestinian-Americans with past or current residency status
in the West Bank or Gaza must obtain a transit permit to cross Israel to
and from the West Bank or Gaza, including before any planned departure
via Ben Gurion airport. A transit permit is not required for direct
departure from Gaza via the Gaza International Airport or the Rafah
border crossing, or for direct departure from the West Bank via the
Allenby Bridge border crossing. Currently, the Israeli government issues
transit permits only in urgent humanitarian cases. During periods of
heightened security restrictions, Palestinian-Americans with past or
current residency status in the West Bank or Gaza may not be allowed to
enter or exit Gaza or the West Bank, even if using their American
passports.

Persons carrying a Palestinian identity number will not be permitted to
enter Israel through Ben Gurion International Airport if their last
departure was through the Allenby Bridge or Rafah border crossings. Such
persons who arrive at Ben Gurion will be turned back by Israeli
officials and required to re-enter through Allenby or Rafah. Anyone who
last departed Israel through Ben Gurion Airport may return via the
airport or any border crossing.

[Holidays]{.underline}

Muslim holidays include Eid Al Fitr, Eid al-Adha, the Islamic New Year
(Ra's as-Sana), the Prophet Mohammed's Birthday (Mawled), Isra and Mi\'
raj. Businesses are open on those holidays, but government offices are
closed. Business and government offices close for three days for Eid Al
Fiter and four days for El Adha. The Consulate General in Jerusalem is
closed on these holidays, but the US Embassy in Tel Aviv is open. The
month-long Ramadan period will beginning in mid October 2004. During
this period, businesses and government offices generally remain open,
but business slows somewhat as observant Muslims are required to observe
a fast from before sunrise to sunset. Islamic holidays are based on
lunar calendar, so dates will vary from year to year. In addition, the
U.S. Embassy in Tel Aviv and the U.S. Consulate in Jerusalem are closed
for official American and Jewish holidays:

[American, Islamic, and Israeli Holidays: September, 2004 -- December,
2005]{.underline}

September 6, 2004 Labor Day

September 11 Isra/Mi'raj

September 16 Rosh Hashana\*

September 17 Rosh Hashana 2^nd^ day\*

September 25 Yom Kippur\*

September 30 Succot\*

October 7 Simhat Torah\*

October 11 Columbus Day

October 15 Ramadan begins

November 11 Veterans Days

November 14 Ramadan ends (Eid al-Fitr)

November 25 Thanksgiving

December 25 Christmas

December 31 New Year's

January 21, 2005 Eid al-Adha

January 17 Martin Luther King Day

February 13 Islamic New Year

February 21 President's Day

April 21 Mawled

April 24 Passover (1st Day)\*

May 1 Passover (Last Day)\*

May 12 Israeli Independence Day\*

May 30 Memorial Day

June 13 Shavuot (Pentecost)\*

July4 Independence Day

September 1 Isra/Mi'raj

September 5 Labor Day

October 4 Ramadan begins

October 4 Rosh Hashanah (New Year 1st Day)\*

October 5 Rosh Hashanah (New Year 2nd Day)\*

October 10 Columbus Day

October 13 Yom Kippur (Day of Atonement)\*

October 18 Succot (Feast of Tabernacles)\*

October 25 Simhat Torah (Rejoicing of the Law)\*

November 3 Ramadan ends (Eid al-Fitr)

November 11 Veterans\' Day

November 24 Thanksgiving Day

December 26 Christmas Day

January 2, 2006 New Year\'s Day 2006

\*Israeli National Holidays: All businesses in Israel are closed. Jewish
holidays begin at sunset the day before. Businesses and offices close in
the early afternoon of the day before. Many Israeli businesses close for
the duration of Passover (7 days) and Succot (8 days).

[Language:]{.underline} All Palestinians speak Arabic. Most heads of
larger companies and many other Palestinians speak English well.

[Business Infrastructure]{.underline}

*Transportation:* U.S. business visitors should use one of the several
taxi services in Jerusalem for travel in Jerusalem and the West Bank.
Long-term business visitors may want to rent a car and driver. Travel to
and from Gaza is time-consuming; business visitors should allow a full
day for travel and meetings there. Most visitors hire a taxi in Tel Aviv
or Jerusalem to travel to the Erez crossing-point into Gaza and then
have a local Gaza contact send a car for pickup on the Gaza side.
Israeli security authorities do not permit most Israeli and West Bank
vehicles to enter Gaza. When traveling within the West Bank or to/from
Gaza, travelers should keep their passports available for inspection at
Israeli checkpoints.

*Communications:* Telephone and fax connections within WB/G are very
good. Many PA ministries and businesses use cellular telephones. While
short-term cellular phone rental is available for business visitors, it
is advised to use "Jawwal" cellular phone service, which has excellent
coverage for this area, in Gaza.

[Hotels and Restaurants]{.underline}

There is a good selection of hotels and restaurants in Jerusalem and a
wide variety in Tel Aviv. In the West Bank a number of three-star hotels
have opened, particularly in Ramallah and Bethlehem. Also, two new
five-star Intercontinental hotels have recently opened in Bethlehem and
Jericho, although the one in Bethlehem is currently closed due to the
on-going political crisis. Most WB/G restaurants serve traditional
Palestinian food. Several new American and international-style
restaurants have recently opened in Gaza, Ramallah, and Bethlehem. Since
the establishment of the PA, a number of new and pleasant restaurants
have sprung up along the Gaza shore. Although visitors should take care
to ensure that local restaurants have good refrigeration in the summer,
most restaurants that U.S. businessmen will visit observe acceptable
health standards.

[Medical Facilities]{.underline}

Medical facilities exist in WB/G; the following is a list of several
hospitals:

\- Ramallah Government Hospital Tel: 972-2-298-2222

\- Arab Care Hospital (also in Ramallah) Tel: 972-2-298-6420

\- Shifa' Hospital (Gaza) Tel: 972-8-286-2765

\- Al Ahli Hospital (Gaza) Tel: 972-8-286-3014

Palestinian hospitals do not accept insurance unless drawn out by a
local Palestinian insurance company so payment in cash is required.
Hospitals usually ask for a deposit upon admittance of patient and
amount is calculated according to estimated duration of treatment in
hospital. In West Bank very serious and untreatable cases are usually
referred to Israeli hospitals. In the West Bank, the best hospital is
Ramallah Government Hospital, which is very well equipped and staffed.
In Gaza the best available hospital is Shifa\'. Travelers can find
information in English about emergency medical facilities and
after-hours pharmacies in *The Jerusalem Post* newspaper. Most doctors
and hospitals expect immediate cash payment for services. U.S. medical
insurance is not always valid outside the United States, so supplemental
medical insurance with specific overseas coverage is a useful
investment. Travelers can obtain additional health information from the
\"International Travelers Hotline\" of the Center for Disease Control:
(404) 332-4559.

**10: ECONOMIC & TRADE STATISTICS**

[Appendix A: Country Data]{.underline}

\--Population: 3,827,914 - projected 2004

\--Population Growth Rate: 3.5%

\--Religions: Islam 90%, Christianity and other 10%

\--Government: Self-governing Authority

\--Languages: Arabic; English spoken at senior business/government level

\--Work Week: Saturday - Thursday afternoon

[Appendix B: Domestic Economy]{.underline}

Please note that macroeconomic data for WB/G is sketchy, so not all
categories of interest to U.S. businesses are included.

Figures are millions of U.S. dollars, except where noted.

+--------------------------------------+-------------------------------+
| > **Item**                           | > **2002**                    |
+--------------------------------------+-------------------------------+
| > Nominal GDP                        | > \$2.97 billion WB figure is |
|                                      | > \$3.2 bil                   |
+--------------------------------------+-------------------------------+
| > Nominal GNI                        | > \$3.33 billion              |
+--------------------------------------+-------------------------------+
| > Real GDP Growth Rate               | > -14.5 %                     |
+--------------------------------------+-------------------------------+
| > GNI Growth Rate                    | > -16.4 %                     |
+--------------------------------------+-------------------------------+
| > GDP Per Capita                     | > \$857                       |
+--------------------------------------+-------------------------------+
| > GNI Per Capita                     | > \$955                       |
+--------------------------------------+-------------------------------+
| > Inflation                          | > 1.5% (estimate)             |
+--------------------------------------+-------------------------------+
| > Unemployment/Underemployment       | > 30.6 %                      |
+--------------------------------------+-------------------------------+
| > Foreign Exchange Reserves          | > N/A                         |
+--------------------------------------+-------------------------------+
| > Average Exchange Rate (for USD     | > 4.39 Israeli Shekels        |
| > 1.00)                              |                               |
+--------------------------------------+-------------------------------+
| > Debt Service Ratio                 | > N/A                         |
+--------------------------------------+-------------------------------+
| > U.S. Economic Assistance           | > \$200 million               |
+--------------------------------------+-------------------------------+

[Appendix C: Trade Statistics]{.underline}

The following figures were provided by the Palestinian Central Bureau of
Statistics, and are the latest figures available. Figures are millions
of U.S. dollars.

+------------------------+----------------+------------+--------------+
| > **Item**             | > **1999**     | > **2000** | > **2001**   |
+------------------------+----------------+------------+--------------+
| > Total Exports        | > 372.1        | > 400.9    | > 320.7      |
+------------------------+----------------+------------+--------------+
| > Total Imports        | > 3,007.3      | > 2,382.8  | > 1,906.2    |
+------------------------+----------------+------------+--------------+
| > Trade Balance        | > -2,635.0     | > -1,982.0 | > -1,585.0   |
+------------------------+----------------+------------+--------------+
| > Exports to U.S.      | > 2.92         | > 2.27     | > 1.77       |
+------------------------+----------------+------------+--------------+
| > Imports from U.S.    | > 87.130       | > 56.745   | > 45.396     |
+------------------------+----------------+------------+--------------+

**11: USEFUL CONTACTS**

***U.S. Embassy, U.S. Consulate General, other USG and U.S. State
Contacts***

Michael Richardson, Senior Commercial Officer

The U.S. Commercial Service, American Embassy

71 Hayarkon Street, Tel Aviv 63903

Tel: 972-3-519-7327, Fax: 972-3-510-7215

E-mail: michael.richardson@mail.doc.gov

[www.buyusa.gov/israel/en](http://www.buyusa.gov/israel/en) and
[www.buyusa.gov/westbank](http://www.buyusa.gov/westbank)

Douglas Wallace, Deputy Senior Commercial Officer

The U.S. Commercial Service, American Embassy

71 Hayarkon Street, Tel Aviv 63903

Tel: 972-3-519-7471, Fax: 972-3-510-7215

E-mail: douglas.wallace@mail.doc.gov

John Coronado, Commercial Officer

The U.S. Commercial Service, American Embassy

71 Hayarkon Street, Tel Aviv 63903

Tel: 972-3-519-7586, Fax: 972-3-510-7215

E-mail: john.coronado@mail.doc.gov

Issa Noursi, Commercial Specialist (automotive, building, construction,
consumer goods, educational services, environmental, medical/healthcare,
and packaging sectors)

Ground Floor

19 Keren Hayesod Street

Jerusalem 94188

Tel: 972-2-625-5201, Fax: 972-2-623-5132

E-mail: issa.noursi@mail.doc.gov

[www.buyusa.gov/westbank](http://www.buyusa.gov/westbank)

Assad Barsoum, Commercial Assistant (apparel/textiles,
computers/software, financial, food/food processing and packaging equip,
telecommunications, and tourism sectors)

Ground Floor

19 Keren Hayesod Street

Jerusalem 94188

Tel: 972-2-625-4742, Fax: 972-2-623-5132

E-mail: <assad.barsoum@mail.doc.gov>

[www.buyusa.gov/westbank](http://www.buyusa.gov/westbank)

Bill Weinstein, Economic Counselor

Economic Section, U.S. Embassy

71 Hayarkon Street

Tel Aviv 63903

Tel: 972-3-519-7364, Fax: 972-3-510-1035

Ms. Amy Schedlbauer, Economic Section Chief

U.S. Consulate General

18 Agron Road, Jerusalem 94190

Tel: 972-2-622-7281, Fax: 972-2-624-9462

E-mail: schedlbaueraw@state.gov

Leo Pizarro, Contracting Officer (Construction Contracting)

U.S. Agency for International Development (USAID)

Trade Tower

25 Hamered Street, Tel Aviv 68125

Tel: 972-3-511-4893, 972-3-511-4848; Fax: 972-3-511-4888

*Official Mail:*

USAID Attn: Leo Pizarro

Unit 7228, Box 0026

APO AE 09830

E-mail: lpizarro@usaid.gov

Dale Lewis, Contracting Officer (Non-Construction Contracting)

U.S. Agency for International Development (USAID)

Trade Tower

25 Hamered Street, Tel Aviv 68125

Tel: 972-3-511-4818, Fax: 972-3-511-4888

*Official Mail:*

USAID Attn: Dale Lewis

Unit 7228, Box 0026

APO AE 09830

E-mail: lewisd@usaid.gov

Yossef Barak, Agricultural Specialist

Agricultural Section, U.S. Embassy

71 Hayarkon St., Tel Aviv 63903

Tel: 972-3-519-7686, Fax: 972-3-510-2565

E-mail: <yossi.barak@usda.gov>

Asif Chaudhry, Regional Agricultural Counselor

(Responsible for WB/G, Egypt, Israel, Jordan, Syria, and Lebanon)

Office of Agriculture Affairs

U.S. Embassy,

8 Kamal el-Din Street, Garden City

Cairo, Egypt

Tel: (20) 2-797-2388/9, Fax: (20) 2-796-3989

E-mail: asifchaudhry@usda.gov

Ms. Naomi Wiegler, Israel, West Bank and Gaza Desk Officer

U.S. Department of Commerce, Room 2029B

ITA/MAC/Office of the Middle East

14th & Constitution Avenues, NW

Washington DC 20230

Tel: 202-482-1870

E-mail: Naomi_Wiegler@ita.doc.gov

Mr. Danny Rubenstein, Director Office of Israel and Arab-Israeli Affairs

U.S. Department of State

2201 C Street, NW Room 624

Washington, DC 20520

Tel: 202-647-2647; Fax: 202-736-4461

Ms. Catherine Novelli, Assistant USTR, Europe & Mediterranean

U.S. Trade Representative (USTR)

600 17th St., NW

Washington, DC

Tel: 202-395-3320, Fax: 202-395-3974

E-mail: cnovelli@ustr.gov

Mr. John Wall, Business Advisor

U.S. Agency for International Development (USAID)

1300 Pennsylvania Ave., N.W.

Suite 4.10-033

Washington DC, 20523-4101

Tel: 202-712-0511 Fax: 202-216-3028

E-mail: jwall@usaid.gov

Mr. Charles Morgan, Country Officer

U.S. Agency for International Development (USAID)

1300 Pennsylvania Ave., N.W.

Suite 4.10-033

Washington D.C. 20523-4101

Tel: 202-712-5731

E-mail: cmorgan@usaid.gov

Henry Steingass

U.S. Trade & Development Agency (TDA)

North Kent Street, Ste. 200

Arlington 22209-2131

Washington, DC 20523

Tel: 703-875-4357 Fax: 703-875-4009

Email: HSteingass@TDA.gov

John Richter

Export Import Bank

811 Vermont Ave. NW

Washington, DC 20571

Tel: 202-565-3903

Fax: 202-565-3961

Email: john.richter@exim.gov

Mr. Abed Tarbush

Overseas Private Investment Corporation (OPIC)

1100 New York Ave., NW

Washington, DC 20527

Tel: 202-336-8632 Fax: 202-408-9859

E-mail: atarbush@opic.gov

Mr. Dan Berman, Director

Agricultural Export Services Division

U.S. Department of Agriculture, U.S. Foreign Agricultural Service

Room 4939S

Tel: 202-720-0142 Fax: 202-690-4374

E-mail: berman@fas.usda.gov

***Palestinian Contacts***

[Bilateral Business Group Contacts]{.underline}

Palestinian American Chamber of Commerce

Ramallah, West Bank

Mr. Suheil Gedeon, Chairman

Tel: 972-2-296-4996 Fax: 972-2-295-3888

Higher Council for the Arab Tourist Industry

P.O. Box 19850

Jerusalem

Mr. Hani Abu-Dayyeh, Chairman

Dr. Abdel Rahman Abu Rabah, Director

Tel: 972-2-628-1805

[Trade or Industry Associations in Key Sectors]{.underline}

Federation of Palestinian Chambers of Commerce, Industry & Agriculture

P.O. Box 54701

Jerusalem

Dr. Amin Baydoun, Director of Economic Research

Tel: 972-2-234-4923 Fax: 972-2-234-4924

[http://www.pal-chambers.com](http://www.pal-chambers.com/)

Palestinian Federation of Industries

P.O Box 574

Ramallah, West Bank

Mr. Mazen Sinokrot, Chairman

Tel: 972-2-240-7334

Fax: 972-2-240-7335

E-mail: pfi@palnet.com

Palestinian Businessmen's Association

Ramallah, West Bank

Mr. Mohammad Masrouji, President

Mr. Majed Ma'ali, Director General

Tel: 972-2-234-3320 Fax: 972-2-234-7179

E-mail: palba@palnet.com

http//: [www.pba-palestine.com]{.underline}

Palestinian Information Technology Association (PITA)

P.O Box 2460

Ramallah, West Bank

Mr. Mashhour Abu Daka, General Manager

Tel: 972-2-240-8478 Fax: 972-2-240-8479

E-mail: info@pita-palestine.org

[http://www.pita-palestine.org](http://www.pita-palestine.org/)

Palestine Trade Center (PALTRADE)

P.O. Box 883

Ramallah, West Bank

Mr. Iyad Joudeh, CEO

Tel: 972-2-240-8383 Fax: 972-2-240-8370

E-mail: info@paltrade.org

[http://www.paltrade.org](http://www.paltrade.org/)

Bethlehem Chamber of Commerce & Industry

P.O. Box 59

Bethlehem, West Bank

Dr. Samir Hazboun, President

Mr. Nabil Bandak, Manager

Tel: 972-2-274-2742 Fax: 972-2-276-4402

E-mail: bcham@palnet.com

Hebron Chamber of Commerce

P.O. Box 272

Hebron, West Bank

Mr. Hashim El Natsheh, President

Mr. Maher El Haimouni, Secretary General

Tel: 972-2-222-8218 or 222-7491 Fax: 972-2-222-7490

E-mail: hebcham@palnet.com

[http://www.pal-chambers.com](http://www.pal-chambers.com/)

Jericho Chamber of Commerce, Industry & Agriculture

P.O. Box 91

Jericho, West Bank

Mr. Kazem Moaqet, Manager

Tel: 972-2-232-3313; Fax: 972-2-232-2394

E-mail: jercom@palnet.com

Nablus Chamber of Commerce & Industry

P.O. Box 35

Nablus, West Bank

Mr. Ma\'az Nabulsi, President

Mr. Husam Hijjawi, Secretary General

Tel: 972-9-238-0335 or 972-9-237-9615 Fax: 972-9-237-7605

E-mail: nablus@palnet.com

[http://www.pal-chambers.com](http://www.pal-chambers.com/)

Ramallah Chamber of Commerce

P.O. Box 256

Ramallah, West Bank

Mr. Mohammad Amin, Chairman

Mr. Salah El-Odeh, Secretary General

Tel: 972-2-295-5052 / 972-2-295-6043 / 972-2-298-4690 Fax:
972-2-298-4691

E-mail: ramcom@palnet.com

[http://www.pal-chambers.com](http://www.pal-chambers.com/)

Palestinian Chamber of Commerce

P.O. Box 33

Gaza

Mr. Mohammad Al Qudweh, President

Mr. Nu\'man Youssif Deeb, Deputy

Tel & Fax: 972-8-286-4588 / 972-8-282-1172

E-mail: gazachamber@palnet.com

[http://www.pal-chambers.com](http://www.pal-chambers.com/)

Hebron Business Forum

Hebron, West Bank

Mr. Khader Kawasmi, Chairman

Mr. Hashem Salah, Director

Tel & Fax: 972-2-222-6787

[Government Offices Relating to Key Sectors and/or Significant Trade
Related Activities]{.underline}

*In most cases it is better to contact Palestinian Authority offices by
fax or telephone rather than by letter.*

Palestinian Ministry of National Economy

P.O. Box 1629

Ramallah, West Bank

Mr. Saeb Bamya, Director General of International Relations

Tel: 972-2-298-1214 /5/6 Fax: 972-2-298-1207

[http://www.met.gov.ps](http://www.met.gov.ps/)

Palestinian Economic Council for Development & Reconstruction (PECDAR)

P.O. Box 1629

Dahyyet El-Bareed, West Bank

Dr. Mohammad Shtayyeh, Managing Director

Tel: 972-2-234-7040/2/3 Fax: 972-2-244-9032

[http://www.pecdar.gov.ps](http://www.pecdar.gov.ps/)

Palestinian Ministry of Finance

Ramallah

Dr. Salam Fayyad, Minister

Tel: 972-2-240-4917/8, 972-2-240-0650 Fax: 972-2-240-4140

E-mail: cbomof@palnet.com

[http://www.mof.gov.ps](http://www.mof.gov.ps/)

Palestinian Ministry of Tourism & Archeology

P.O. Box 534

Bethlehem, West Bank

Tel: 972-2-274-1581 Fax: 972-2-274-3753

Palestinian Ministry of Transportation

P.O. Box 246

Ramallah, West Bank

Mr. Mohammad Al Qawasmeh, Director General

Tel: 972-2-298-6944/5/7 Fax: 972-2-298-8187/8

Palestinian Ministry of Planning & International Cooperation

Ramallah

Mr. Majdi Khaldi, Director General

Tel: 972-2-298-9163, 298-9404 Fax: 972-2-296-3772

Palestinian Ministry of Agriculture

Tal Hawa, Rimal

Gaza

Tel: 972-8-2830405 Fax: 972-8-2863926

Dr. Mahmoud Abu Samra, Director General

Tel: 972-8-286-6590/282-6370/283-0305 Fax: 972-8-286-3926

Palestinian Ministry of Postal Services & Telecommunications

Gaza

Tel: 972-8-282-5612 Fax: 972-8-282-4555

Palestinian Civil Aviation Department

P.O. Box 4043

Gaza

Mr. Fayez Zaidan, Director General

Tel: 972-8-282-2800 Fax: 972-8-282-1309

Palestinian Energy Authority

P.O. Box 3591

El-Bireh, West Bank

Dr. Abdul Rahman Hamad, Chairman

Tel: 972-2-298-6190 or 972-2-298-6192 Fax: 972-2-298-6191

Gaza:Tel & Fax:972-8-280-8488/9

Palestine Standards Institution

P.O. Box 2258

Ramallah, West Bank

Mr. Mazen Abu Sharia, Director General

Tel: 972-2-298-4144 Fax: 972-2-296-4433

[http://www.psi.gov.ps](http://www.psi.gov.ps/)

*[Commercial Banks]{.underline}*

Arab Bank PLC

P.O. Box 1476

Al Harajeh Building

Ramallah, West Bank

Mr. Mazen Abu Hamdan, Regional Director

Tel: 972-2-295-4817/18/19 Fax: 972-2-298-2444

Bank of Jordan

P.O. Box 1829

Ramallah, West Bank

Mr. Aziz Shaker, Deputy Regional Director

Tel: 972-2-295-2694/5/6/7/8 972-2-295-8686 Fax: 972-2-295-8684

Cairo Amman Bank

P.O. Box 1870

Ramallah, West Bank

Mr. Bishara Dabbah, Area Manager

Tel: 972-2-298-9435/6, 972-2-298-5790/91/92 Fax: 972-2-295-5437

Commercial Bank of Palestine

P.O. Box 1799

Ramallah, West Bank

Mr. Suheil Gedeon, General Manager

Tel: 972-2-295-4141, Fax: 972-2-295-3888

Bank of Palestine

Ramallah

Irsal Street

Mr. Suheil Musarsa, Marketing Manager

Tel: 972-2-296-5010/11, Fax: 972-296-6864

The Housing Bank

Rukab Building

Ramallah, West Bank

Mr. Anis Alhagah, Regional Manager

Tel: 972-2-298-6270-4, Fax: 972-2-298-6276

Union Bank for Saving and Investment (No branches in Gaza)

Post Office Street

Ramallah, West Bank

Mr. Musa Shammieh, Director

Tel: 972-2-298-6412, Fax: 972-2-298-6416

Egyptian Arab Land Bank

El-Bireh, West Bank

Mr. Fouad Jabr, Regional Manager

Tel: 972-2-295-8421/2/3/4 , Fax: 972-2-295-8425

Jordan National Bank (No branches in Gaza)

Ramallah - Al Bireh, West Bank

Mr. Hanna Ghattas, Regional Manager

Tel: 972-2-298-6370/ 972-2-295-9343, Fax: 972-2-298-6372/ 972-2-295-9341

Jordan Kuwait Bank (No branches in Gaza)

Sufian Street

Nablus, West Bank

Mr. Muhammed Yasser Al Asmar, General Manager

Tel: 972-9-237-7223, Fax: 972-9-237-7181

Arab Palestinian Investment Bank

P.O. Box 1268 Al Harajeh Building

Ramallah, West Bank

Dr. Samir Abdullah, General Manager

Tel: 972-2-298-2452, Fax: 972-2-298-2444

Palestine International Bank

P.O. Box 3636

El-Bireh, West Bank

Tel: 972-2-2987467 /972-2-2987197, Fax: 972-2-2987148

HSBC (No branches in Gaza)

P.O. Box 2067

Ramallah, West Bank

Mr. Issa Qassis, Director

Tel: 972-2-298-7802/3, Fax: 972-2-298-7804

[Multilateral Development Bank Offices]{.underline}

IBRD - International Bank for Reconstruction and Development

P.O. Box 54842, Jerusalem

Mr. Nigel Roberts, Country Director

Tel: 972-2-236-6500, Fax: 972-2-236-6543

**12: MARKET RESEARCH**

The [U.S. Commercial Service in
Jerusalem](http://www.buyusa.gov/westbank) periodically publishes CS
Market Research Reports that may be of interest to U.S. exporters.
Recent titles (and author) include:

Apparel-Niche Opportunities for U.S. Exporters, Assad Barsoum

Cellular Phone Service Opportunities in WB/G, Issa Noursi

Change in Regulations for Import of Lubricant Oil into WB/G, Issa Noursi

Coca-Cola Resumes Operations, Issa Noursi

Fast Food Franchising, Issa Noursi

First Palestinian Shopping Center, Issa Noursi

Furniture, Assad Barsoum

Gaza Power Project, Issa Noursi

Hospital Furniture Kitchen Equipment, Issa Noursi

Housing Construction, Issa Noursi

IT Opportunities in WB/G, Assad Barsoum

Medical Equipment, Issa Noursi

Opportunities for U.S. Education Service Providers in WB/G, Issa Noursi

Opportunity for U.S. Supermarket Developers, Assad Barsoum

Palestinian Securities Exchange, Issa Noursi

PALTEL Seeks Strategic Partner, Issa Noursi

Personal Computers, Assad Barsoum

Pharmaceutical Industry in WB/G, Issa Noursi

Processed Foods, Assad Barsoum

Textile Fabrics, Assad Barsoum

Toiletries, Issa Noursi

These reports are available from our offices by contacting:

Issa Noursi

Commercial Specialist

19 Keren Hayesod Street

Jerusalem

Tel 972-2-625-5201

Fax 972-2-623-5132

E-mail: Issa.Noursi@mail.doc.gov

Assad Barsoum

Commercial Assistant

19 Keren Hayesod Street

Jerusalem

Tel 972-2-625-4742

Fax 972-2-623-5132

E-mail: Assad.Barsoum@mail.doc.gov

**13: TRADE EVENT SCHEDULE**

***Access Eastern Mediterranean Program***

The [Access Eastern Mediterranean
Program](http://www.buyusa.gov/easternmed) (AEM) is a new regional
marketing service offered by the U.S. Commercial Service offices in
**Egypt, Israel, Jordan, Lebanon, Morocco, Turkey, and West Bank/Gaza**.
The program helps U.S. exporters of products and services in five
different sectors by providing a low cost and very effective way to
simultaneously explore opportunities in these seven markets. The sectors
that will be covered under this program in FY2005 are:

Educational Services *(studying in the USA)*: **Oct 2004**

Telecommunications Equipment & Services: **Nov-Dec 04**

Healthcare/Medical Equipment & Services: **Feb-Mar 05**

Automotive Aftermarket Products & Equipment: **Apr-May 05**

Safety and Security Equipment and Services: **Jun-July 05**

During each month-long AEM event *(except for the Educational Services)*
Commercial Service Specialists will proactively market the U.S.
companies' products or services in order to identify potential and
suitable agents and distributors in each of their respective markets.
Some of the events include participation in one or more catalog shows in
one or more of the respective countries. For more information about how
the program will function in the West Bank and Gaza, please contact:
issa.noursi@mail.doc.gov and <assad.barsoum@mail.doc.gov>.

See our [AEM website](http://www.buyusa.gov/easternmed) for full details
and **online registration**.

***Catalog Shows***

The U.S. Commercial Service in Jerusalem will organize at least two
targeted, industry-sector-focused Catalog Shows this year. These
low-cost but very effective catalogs shows are a good way for your
company to evaluate market potential, gain exposure and explore business
opportunities without having to personally travel. *Especially in light
of the USG\'s current travel advisories, the Catalog Show program is an
excellent alternative method to evaluate market opportunities*.
Commercial Specialists will promote your participation in the event to
local buyers and/or potential business partners; invite them to our
venue to view your product literature; collect and qualify all trade
leads; and then send them directly to you in a final report for your
follow-up.

**Home Furniture Catalog Show**

August 17-20, 2004

Jerusalem, Ramallah, Bethlehem and Nazareth

CS Jerusalem contact: assad.barsoum@mail.doc.gov

The U.S. Commercial Service is organizing a unique **"Furniture Catalog
Show,"** August 17-20, 2004 in Jerusalem, Bethlehem, and Ramallah. Our
aim is to help U.S. companies tap the roughly \$100 million Palestinian
furniture market, and to explore interest in your product in the
Israeli-Arab market, representing about one-fifth of the population of
Israel. The population of the West Bank and Gaza is 3.6 million, and is
growing at 3.9% annually. American furniture exports to the Palestinian
market in 2000, the last full year of statistics, were \$1.4 million
(only 6% of total imports). Despite the unrest, opportunities exist for
American furniture exporters of upholstered living room sets, dining and
bedroom sets, sleepers and recliners, coffee and end tables, home
entertainment furniture, and curios. For further information, please
contact Assad Barsoum.

**Study USA -- "Eastern Mediterranean Tour"**

October 13-23, 2004

Jerusalem October 15

CS Jerusalem contact: [issa.noursi@mail.doc.gov]{.underline}

The U.S. Commercial Service offices at the American Embassies and
Consulates General in **Egypt, Israel, Jordan, Lebanon, Turkey and West
Bank/Gaza** are planning a **"Study USA Eastern Mediterranean Tour"**,
October 13-23. The Jerusalem event is being organized in cooperation
with the U.S. Consulate General Jerusalem, the Public Diplomacy section
of the Consulate and AMIDEAST (an American NGO working in the field of
education). CS will recruit U.S. colleges and universities to
participate in the event, which will take place on October 15 in
Jerusalem. For schools unable to send an Admissions Office
representative, representation by local alumni is an option. For further
information, please contact Issa Noursi.

[Other Trade Promotion Opportunities]{.underline}

\- Reverse Partner Service/Missions: Palestinians visiting the U.S. can
be matched with U.S. firms and meetings can be arranged in the cities
the Palestinians are visiting.

\- U.S. firms interested in meeting Palestinian firms should contact
1-800-USA-TRADE or visit <http://www.export.gov/cs> to find out where
there nearest U.S. Department of Commerce U.S. Export Assistance Center
(USEAC) is located. USEAC Trade Specialists can help U.S. firms make
contacts with Palestinian businesspeople.