Guidance

Overseas business risk: The Occupied Palestinian Territories

Updated 24 February 2022

Due to the ongoing conflict in Israel and the Occupied Palestinian Territories, you should also view the latest travel advice for the OPTs.

1. General overview

The British Government defines the Occupied Palestinian Territories (OPTs) as consisting of two separate land areas: the West Bank, including East Jerusalem, and the Gaza Strip. Together these territories cover an area of 6,165 sq. km: the West Bank 5,800 sq. km (130 km long and 40-65 km in width); and Gaza Strip 365 sq. km (45 km long and 5-12 km in width). The Palestinian population of the OPTs reached 4.68 million in 2017.

Since 1997 and until the UK left the EU, trade relations between the UK and the OPTs were governed by the Euro-Mediterranean Interim Association Agreement on trade and cooperation. A number of British companies have proven success in the market. Large-scale international donor funding has created opportunities for businesses with specialised services that can act in support of large infrastructure or capacity building projects. In sectors such as professional services (including financial and public sector consultancy services) and security, British companies do well.

It is difficult to obtain accurate trade figures for the OPTs because the OPTs and Israel are in a customs union, and many goods marked for Israel have a final destination in the OPTs. The main UK exports to the OPTs are automobiles, mechanical engines, power generators, pharmaceutical products, laboratory and medical equipment, chemicals, industrial lubricants and oils, construction materials and food products. The main exports to the UK from the OPTs are agricultural products including olive oil, medical herbs, grains and palm dates, stones/ marble and holy land products/ souvenirs.

2. Politics

The Palestine Liberation Organisation (PLO) is the representative body for the Palestinian people. Its Chairman is Mahmoud Abbas, who is also President of the Palestinian National Authority (PA), the executive body of the PLO. The PA was formed after the 1993 Oslo Accords with Israel, to govern the West Bank and Gaza until the conclusion of permanent status negotiations with Israel. In practice, the PA has administrative control over Areas A and B of the West Bank, whilst Israel retains control over Area C of the West Bank and East Jerusalem, and Hamas has de facto control in Gaza.

2.1 East Jerusalem

East Jerusalem, including the Old City, was annexed unilaterally by Israel and separated from the remainder of the West Bank by the Separation Barrier. Israel has placed East Jerusalem under the law, jurisdiction and administration of the State of Israel. The UK, with the vast majority of the international community, views East Jerusalem as Occupied Territory.

2.2 West Bank

The West Bank was split into three administrative divisions following the Oslo Accords as an interim measure pending the establishment of a Palestinian State. These interim measures are still in place. Area A (16%) is under the civil and security control of the Palestinian Authority; Area B (22%) is under Palestinian civil control and Israeli security control; Area C (62%) is under full Israeli civil and security control. Israeli security forces enter all three Areas of the West Bank at will.

2.3 Gaza

While the Ramallah-based PA remains the sole legitimate authority for Gaza in the eyes of the international community, Hamas took full control of the Gaza Strip illegally in June 2007 and has been operating as the de facto authority, establishing its own security force in Gaza. Hamas has been designated by the EU as a terrorist organisation under Common Position 931. Those contemplating any economic or financial involvement in Gaza should seek appropriate legal advice. Although Israel withdrew its citizens from settlements, Israel retains control of the land borders, movement and access to Israel (and via Israel to the rest of the OPTs), airspace, and the maritime border. Thus, Israel remains the Occupying Power in Gaza, as in the rest of the OPTs. The extensive restrictions on imports into and exports from Gaza (including transfers between the West Bank and Gaza) have had a major detrimental effect on Gaza’s economy and make investment in Gaza particularly difficult. Israel and Hamas have engaged in periodic conflict, characterized by rockets fire into Israel, as well as Israeli airstrikes into Gaza, causing loss of life and destruction.

2.4 Israeli settlements in the OPTs

The UK has a clear position on Israeli settlements: The West Bank, including East Jerusalem, Gaza and the Golan Heights have been occupied by Israel since 1967. Settlements are illegal under international law, constitute an obstacle to peace and threaten a two-state solution to the Israeli-Palestinian conflict. We will not recognise any changes to the pre-1967 borders, including with regard to Jerusalem, other than those agreed by the parties.

There are therefore clear risks related to economic and financial activities in the settlements, and we do not encourage or offer support to such activity. Financial transactions, investments, purchases, procurements as well as other economic activities (including in services like tourism) in Israeli settlements or benefiting Israeli settlements, entail legal and economic risks stemming from the fact that the Israeli settlements, according to international law, are built on occupied land and are not recognised as a legitimate part of Israel’s territory. This may result in disputed titles to the land, water, mineral or other natural resources which might be the subject of purchase or investment.

UK citizens and businesses should be aware of the potential reputational implications of getting involved in economic and financial activities in settlements, as well as possible abuses of the rights of individuals. Those contemplating any economic or financial involvement in settlements should seek appropriate legal advice.

On 24 March 2016, the United Nations Human Rights Council (UN HRC) adopted Resolution 31/36. The resolution included a requirement that the Office of the United Nations High Commissioner for Human Rights (UN OHCHR) create a database listing all business enterprises involved with/operating in the settlements. The UK has made clear its opposition to this database initiative. Nonetheless, the UN OHCHR issued a report on business enterprises involved in certain activities relating to settlements in the Occupied Palestinian Territories on 12 February 2020, in response to UN HRC Resolution 31/36. A small number of British business enterprises were named in the report.

Since 2005, products produced in Israeli settlements located within the territories occupied by Israel since 1967 are not entitled to benefit from preferential tariff treatment upon entry into the United Kingdom. This approach is maintained under the UK-Israel Trade and Partnership Agreement, which came into force on 1 January 2021. The United Kingdom published a Notice to Importers, on 1 January 2021, concerning imports from Israeli settlements into the United Kingdom, including a list of non-eligible locations.

The United Kingdom (2009) and European Union (2014) introduced guidelines outlining how products originating from the territories occupied by Israel since 1967 should be labelled in order to comply with UK and EU legislation, and so as not to mislead the consumer. This guidance states that produce originating from Israeli settlements, located within the territories occupied by Israel since 1967, should be specifically labelled as such. The UK’s approach following the end of the UK-EU transition period remains in line with this approach.

2.5 Economics

The Palestinian economy and the Palestinian private sector are heavily constrained by the conduct of the Israeli occupation. This includes restrictions on movement and access for goods and people (including between the West Bank, including East Jerusalem, and Gaza), extensive and bureaucratic permit systems, and import/export restrictions (particularly in relation to Gaza). These make it hard for the PA to achieve greater economic integration with their neighbours or the EU. Economic relations between the PA and Israel are governed by the Paris Protocol (1994), which allows the PA to establish trade relations with third countries, provided that such agreements conform to Israel’s own import policy.

Israel restricts the PA’s access to the electromagnetic sphere by hindering deployment of new technologies, preventing infrastructure construction in the West Bank (Areas B & C) and the Gaza Strip, limiting the selection of equipment to be imported and by facilitating the work of unauthorized Israeli telecom operators in the Palestinian areas.

Most Palestinian enterprises are traditional family-run businesses, in light industry and consumer goods – especially food, beverages, clothing, minerals and furniture, with marketing of products targeting the domestic market.

One of the main obstacles facing these enterprises is access restrictions imposed by Israel on raw materials, new technologies and mobility of skilled labour/expertise. SMEs find it hard to access financing. Some producers also have weak marketing capacity, especially when marketing internationally.

The situation in Gaza is particularly dire. Power and water shortages and the inability to trade freely with the West Bank, Israel and the rest of the world is resulting in a contracting economy and increasing levels of unemployment and poverty.

To help address these issues the UK will provide up to £58 million over seven years (2018-2025) to support economic development in Gaza and the West Bank.

This support will focus on addressing the barriers to economic development and job creation across the OPTs. The UK will work with the parties to help address movement and access restrictions, increase trade and improve water and energy supply, particularly in Gaza. This will improve daily life for thousands of Palestinians.

Support will be through four main channels:

• World Bank (WB). Support to the energy and water sectors, which will include infrastructure development and sector reform
• Office of the Quartet (OQ). The UK will support the OQ’s work on clearance revenues, electricity, water and movement and access issues. The OQ will provide technical assistance in these areas and plays a unique role in bringing together Palestinian and Israeli officials and politicians to agree on action to promote economic development in these areas.
• A Trade Facilitation and Customs Programme. The primary objective of the programme is to increase Palestinian exports by improving the movement of goods, and by increasing the capacity of trade related institutions and private firms. The programme is implemented by Cowatersogema International Inc.

3. Business

The Palestinian business community is highly entrepreneurial; businesses aspire to a high level of professionalism and product quality. Large enterprises are internationally connected, with global partnerships, despite the restrictions in place. The labour force is highly educated, multilingual, and well versed in the technologies and practices needed to do business successfully on a global level. There are donor-funded credit guarantee facilities and political risk insurance schemes to mitigate risks.

An Interim Association Agreement on Trade and Cooperation was concluded between the EU and the Palestine Liberation Organisation (PLO) on behalf of the Palestinian Authority in 1997. The agreement provides for duty-free access to EU markets for Palestinian industrial goods, and the phasing out of tariffs on EU exports to Palestine over five years. An Agreement for further liberalisation of agricultural products, processed agricultural products and fish and fishery products entered into force on 1 January 2012.

On 18 February 2019, the UK and PA signed the Political, Trade and Partnership Agreement that has entered into force on 1 January 2021. The Agreement is the basis for political, economic and trade relations between the UK and PA. It maintains the effects of the EU-PA agreement in a bilateral context and covers:

• trade in goods – including provisions on rules of origin and tariffs
• limited areas of services, competition and intellectual property
• wider cooperation

The agreement simplifies trade and will allow businesses to trade as freely as they do now once the UK leaves the EU. Trading on these preferential terms, rather than on World Trade Organization terms, will continue to deliver significant savings and help to further strengthen the bilateral trading relationship. The agreement allows Palestinian businesses to continue access to the UK market tariff-free which will continue to benefit Palestinian producers in priority sectors, including exporters of fruit, nuts and vegetable fats including dates and olive oil.

This agreement applies to the territory of the West Bank and the Gaza Strip. Products produced in the Israeli settlements located within the territories brought under Israeli administration since June 1967 are not entitled to benefit from preferential tariff treatment.

4. Human rights

The Palestinian Basic Law protects a number of key rights in the sphere of work. It provides for the right to form trade unions and to strike, in accordance with the law. It also provides for the right (and duty) to work, and for organisation of work in a way that provides justice to all and ensures the welfare and safety of workers, while also ensuring that they have social benefits. The Labour Law implements some, but not all, of these provisions (including basic provisions for collective bargaining and dispute resolution). The International Labour Organisation sees a need to amend the Labour Law to raise the minimum age of work from 15 to 16 years.

5. Bribery and corruption

Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world.

In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case, it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.

The PA has made significant efforts to strengthen its legal and institutional framework against corruption. A number of anti-corruption laws have been enacted by the Palestinian authorities and institutions created, such as the Anti-Corruption Commission and Corruption Crimes Court, an external audit bureau, the State Audit and Administrative Control Bureau, and the Economic Crimes and Support Unit in the Attorney General’s office. Nevertheless, nepotism or “wasta” in public appointments has not yet been eradicated.

Visit the Business Anti-Corruption portal page providing advice and guidance about corruption in Israel and some basic effective procedures you can establish to protect your company from them. Read the information provided on our Bribery and corruption page.

6. Terrorism and security

For the latest advice on the risk of terrorism in the OPTs, please see the Foreign, Commonwealth & Development Office travel advice.

There are important security risks, particularly in Gaza, and as a result the Foreign, Commonwealth & Development Office currently advise against all travel to Gaza. See full FCDO travel advice to the OPTs for more details.

7. Organised crime

There is very limited evidence of serious organised crime in the West Bank. There is some evidence of organised vehicle thefts being committed in Israel with the stolen vehicles being recycled in the West Bank, and the associated insurance pay-offs occurring in Israel. As elsewhere, there is a drugs problem in the West Bank and Gaza. These are generally cannabis-based drugs and to a lesser degree ‘designer’ drugs, such as ecstasy, and some harder drugs e.g. cocaine and heroin. This is reflected in the Palestinian prison population, whose drug-related inmate ratio is comparable to Europe.

Read the information provided on our organised crime page.

8. Intellectual property

The PA does not have a modern Intellectual Property Protection Law. The OPTs (the West Bank and the Gaza Strip) have separate jurisdictions concerning Intellectual Property. Currently intellectual property is governed by the Civil Claims Law of 1933 and the Palestinian Trademark and Patent Laws of 1938 in Gaza, and Commercial Law No. 19 of 1953 in the West Bank.

To obtain full protection all over the OPTs it is advisable to file a separate application for each class of goods and/or services in each jurisdiction. The PA is not a member of any international convention, but abides by the International Classification of Goods and Services for the Purposes of the Registration of Marks under the Nice Agreement.

Read the information provided on our Intellectual Property page.

9. Contact details

British Consulate General Jerusalem
Trade section
15 Ragheb Nashashibi Street
Sheikh Jarrah Quartet
97200 Jerusalem
PO Box 19690

Email: britain.jerusalem@fcdo.gov.uk

Home: https://www.gov.uk/world/organisations/british-consulate-general-jerusalem

Tel: +972-2-5414151

10. Useful links

• Palestinian Central Bureau of Statistics

• Palestinian Investment Promotion Agency

• World Bank – West Bank and Gaza