Legal and Practical aspects of the Palestinian National Authority joining the WTO

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Dipartimento di Giurisprudenza

Programma: Diritto pubblico e dell’economia

TESI DI PERFEZIONAMENTO

Legal and Practical aspects of the Palestinian National

Authority joining the WTO

A thesis submitted to the University of Pisa – Faculty of Law in the candidacy for the degree of

PhD in Public Economy Law

Candidato

Tutor/Relator

Diab Hasanin

Prof. Leonardo Pasquali

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Introduction

The international economic institutions and organizations are considered the main element of the economic globalization. The World Trade Organization (WTO) and other economic institutions, such as the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), among others, form the main grounds on which the world economic system relies.

One of the most important factors leading to the establishment of the world economic institutions which now constitute the tools of globalization is the expansionist capitalism logic. Due to the economic crisis the capitalist economy suffered from since the late 1960s, as well as the failure of economic theories to provide solutions which can face this crisis, international economic institutions played an important role in exploiting the deterioration of the third world economies in addition to their failure to achieve the development and their external debt accumulated. Thus, these institutions started to generalize their philosophy of free trade.

The customs and trade barriers established between the nations have to be removed in order to achieve free trade. Furthermore, the IMF and the IBRD have decided that if the customs barriers are removed, loans will be granted to developing countries and the countries of Eastern Europe. As a result, the economic role played by the country, privatization, and market openness to foreign capital declined.1

The establishment of the WTO in 1995 was considered a developed image of the General Agreement on Tariffs and Trade (GATT), founded in 1947; its main purpose was to achieve the free trade of goods without customs and non-customs barriers.

1 Laurence Boulle, the Law of Globalization: an introduction, Netherlands: Kluwer Law International, Frederick, MD, 2009 pp 175-176.

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The establishment of the WTO has been considered one of the most important achievements of the negotiations of the Uruguay Round, which was the last of the GATT agreement rounds. After 47 years, the global economic system could finally agree upon an international formula in order to regulate the global economy. The WTO, therefore, is not considered a new organization that has new bases and principles which cancel these principles and bases the GATT relied on, but a complement to GATT’s works.

The WTO liberates foreign trade; establishes the rules which develop world trade between the member states; settles the current disputes; and supervises the implementation and administration of the set of trade agreements. It is the only competent world organization of the international laws concerned in the trade between the nations.

Since 1997, the Palestinian Authority (PA) has expressed an interest in getting observer status in the WTO; this has been a step which paves the way to getting full membership in the organization.

Palestine’s first application for accession to the WTO as an observer member was submitted in 2006, then, other two applications were submitted in 2009 and 2011. Unfortunately, they have not been viewed yet. Furthermore, in 2005, 2009, 2011 and 2013, the PA participated in the WTO’s ministerial conference.

In this research, I will not examine the extent of importance of Palestine’s accession to the WTO. However, I start from the supposition that Palestinian submits an application for membership, its application is actually approved, and the negotiation for accession is started. Here, the question which shall be addressed is “Does the PA possess a legal readiness which meets the accession requirements in terms of its control over Palestine’s trade policy, on the one hand, and the existence of the regulations, laws and legislations which are compatible with the requirements of the accession to the WTO as well as its multilateral agreements held, on the other hand?

The Focus of the Research

Since the PA attempts to accede to the WTO, the Palestinian legislator bears a huge burden of responsibility for the preparation of the ground or the appropriate legal environment in order to start the future negotiation stage for acceding to the WTO whether at the level of addressing the

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fault and gaps that distinguish the Palestinian laws and at a level of achieving the legislative harmony among them or at a level of the compatibility of these laws with the international orientations and practices represented by the WTO’s rules and principles.

Most importantly, the Palestinian legislator has to notice these problems and recognize that the negotiation process required for the accession to the WTO is very long and complicated, requiring substantial time and effort.

Therefore, it is requested to develop and adopt a clear legislative plan as well as establish the purposes and priorities so that they are gradually implemented in accordance with clear and specific timetables. Furthermore, PA must identify the problems pertaining to Paris Economic Protocol, in which the Palestinian negotiator must take them into account while negotiating the Israeli party.

This research aims to contribute to identifying the legal gaps and problems of the framework regulating the Palestinian economic environment and propose suggestions which must be adopted by the Palestinian in order to strengthen Palestine’s accession to the WTO.

Research Problems:

In order to accede to the WTO, the PA has been obliged to conduct various legal and economic research projects and studies for figuring out the extent of the importance of the accession to the WTO in addition to examine the legal aspects of the accession to the WTO in terms of the privileges which can be taken advantages of in case of accession and the obligations which are imposed on the PA.

The present study is a part of this preliminary research, which must be conducted before acceding to the WTO. The most important issues are outlined as follows:

 The extent of the ability of the PA to consolidate the two sides of nation (the West Bank and the Gaza Strip)

 The extent of the ability of the PA to enact economic laws, contributing to the creation of a legal environment that is able to respond to the rapid changes which distinguish the economic sector.

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 The extent of the ability of the PA to enact laws that are compatible with each other, as well as with international trade standards and the WTO’s rules and requirements.

 The extent of the ability of the PA to terminate or amend the Paris Economic Protocol, which limits Palestine’s control over its foreign trade policy.

 The extent of the ability of the PA to take advantage of trade agreements held with the outside world as a step that paves the way to accede to the WTO accession.

Although the PA is interested in the topic of accession to the WTO, this subject has not been legally examined; this is one of the most important problems I have faced in the present research. As of the time of this writing, I have not found a legal study, investigating the topic of Palestine’s accession to the WTO, with the exception of some legal articles; furthermore, no legal studies examining Paris Economic Protocol were found.

It should be noted that the Palestinian Economic Policy Research Institute (MAS) conducted various studies pertaining to the Palestinian, economy as well as Palestinian foreign trade. However, the subject has generally been examined from an economic, rather than a legal, perspective.

Research Methodology

In this research, I used the analytical and descriptive approach in order to highlight the Palestinian legal and legislative reality, through describing the legislative process applied in Palestine, as well as its impact. Furthermore, I analyzed the laws regulating the economic sector in order to figure out the extent to which these laws are compatible with each other, as well as with the requirements for WTO accession, and to what extent these laws are compatible with Paris Economic Protocol and the trade agreements held between Palestine and the outside world. In addition, I analyzed these agreements and displayed them on the international standards followed by the WTO.

Road Map

This research consists of two parts in which each party has two chapters. Chapter One illustrates the WTO, its establishment, the difference between the WTO and the GATT agreement, as well

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as its purposes and its structure, in addition to the requirements for WTO accession. Chapter Two discusses the legal status of Palestinian in terms of the multiplicity of the legal systems applied in Palestine, including the Othman laws; the laws enacted during the British mandate over Palestine from 1917-1948; the Jordanian rule over the West Bank between 1948–1967; and the Egyptian rule over the Gaza Strip and other laws established in that period. It also outlines the Israeli occupation of the West Bank and the Gaza Strip in 1967, the issuance of various military orders, the establishment of the PA, and the resuming of legislative powers over the Palestinian territories.

Moreover, in Chapter One I touch upon the various UN resolutions concerning the Palestinian Question: partition resolutions and resolutions 242 and 338, which, as I discuss in this research, have been the most important of those issued by the UN in this area. I then examine the UN recognition of the Palestinian Liberation Organization (PLO) as a legitimate representative of the Palestinian people and the Palestinian–Israeli Peace Agreements, under which the PA has been established on parts of the Palestinian territories occupied in 1967 and the executive, legislative and judicial powers of that authority.

Chapter Two shows the process of restructuring the Palestinian economy and its legislation as a requirement of accession to the WTO; in order to achieve such process, I give an overview of the Palestinian economic sector and the relevant Israeli military orders, as well as their effect on the Palestinian economy in terms of distorting it and annexing it to the Israeli economy, on the one hand, and the attitude of the international law towards such orders, on the other hand.

Then, I touch upon the topic of legislation under the PA and how legal reform can be a method which contributes to achieving economic reform. In addition, I investigate the legislative approach followed by the PA, as well as the legislative stages established since the PA was founded in 1994. Furthermore, I discuss both the first election of the Palestinian legislative council, held in 1996, and the second election held in 2006. In this chapter, I also discuss the Palestinian–Palestinian political division and the existence of the two authorities; the first is in the West Bank under the leadership of the PLO, whereas the second is in the Gaza Strip under the ruling of the Hamas Movement.

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Later, I touch upon the PA’s attempt to consolidate the laws applicable in Palestine, whether they are consolidated between the West Bank and the Gaza Strip or they are consolidated in terms of their Palestinian or Israelis military resources.

I allocate the second part of chapter two to highlighting the legal framework regulating the Palestinian economy through a brief discussion of the most important Palestinian laws which affect the economy, such as the Company Law, investment law, monetary authority law, Palestine Securities Exchange law, intellectual property laws and the Palestinian specifications and standards law in addition to various laws I analyze in order to figure out the extent of the conformity of these laws with each other as well as with the requirement of the accession to the WTO.

In Chapter Three, I study Paris Economic Protocol signed by the PLO and Israel in 1994, since it is considered the legal framework regulating Palestinian-Israeli economic relations, on the one hand, and the Palestinian relations held with the outside world, on the other hand. In this chapter, I illustrate this Protocol, its nature as well as its most important text, and the powers granted to the PA for identifying its customs duties and taxes, which it can impose on the goods imported to the Palestinian territories through the lists identified in the protocol. This Protocol also gives the PA a right to establish trade relations with other countries. However, the powers granted to the PA for establishing these relations are limited.

In addition, I theoretically and practically evaluate the Protocol and the extent of Israel’s commitment to implement its article as well as the extent of the conformity of Protocol with the standards followed by the international trade, particularly the WTO standards, in addition to the compatibility of the Protocol with the Palestinian national interests. Then, I touch upon the importance of amending the protocol, in particular because it restricts the ability of the PA to draw its foreign trade policy. This restriction is considered to be an obstacle hindering Palestine’s accession to the WTO, since the control of countries or separate customs territories over their trade policies is one of the most important requirements for WTO accession.

Chapter Four investigates Palestinian foreign trade. Various trade agreements have been held between the PLO and many countries and unions; Palestine has become a party to various bilateral and regional agreements (free trade agreements and customs union) or to similar

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arrangements with their trade partners, particularly in the Arab world (according to the Great Arab Free Trade Area (GAFTA)), the European Union, the United States of America, Canada, the European Free Trade Area (EFTA) and Turkey. In this chapter, I focus on the cooperation agreement signed by the PLO and the European Union, in which the Palestinian lands have been considered “a separate customs territory”. I also illustrate the Palestinian-Jordanian trade agreement, as well as the agreements held with GAFTA, United States of America and the European Free Trade Area (EFTA).

To achieve the purposes of the research, I also analyze these agreements and compare them with the WTO’s rules; I found that many of their texts have stipulated that these rules shall be applied on such agreements. Furthermore, I investigate the extent to which the PA has taken advantage of these agreements in order to accede to the WTO.

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Part I. The Palestinian legal and legislative system and the

requirements of the accession to the WTO

Chapter I: The WTO and the Palestinian legal status

1.1 The nature and the evolution of The WTO

In the aftermath of World War II, the world witnessed fundamental changes in its economical structure. The major countries started establishing foundations for the international economic relationships for post-war era.

The birth of the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD) in 1944, and signing the General Agreement on Trade and Tariffs (GATT) in 1947 were considered as a launch for a new world order.

Though the two organizations IMF and IBRD became permanent entities, the GATT remained as a temporal entity until the establishment of WTO in 1995.

The main reasons beyond establishment of the global economic institutions, that currently represent tools of globalization, are the capital expansion and the extreme economic crisis that affected the capitalist economy since the late sixties where role of the economic institutions appeared to take advantage of deterioration of economic of the Third World countries and their failure to achieve development and accumulation of their foreign debts.

These institutions started popularizing their philosophy in the liberate trade and to achieve this purpose it was necessary to remove customs and trade restrictions among nations.

After the collapse of the Soviet Union, the World Trade Organization (WTO) was established to be the tool of globalization in the trade domain. Further, IMF and IBRD started connecting the granting of loans to the Third World countries and Eastern European States with removal of

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tariff barriers, fallback of economic role of a state, privatization, and opening of markets to foreign capital. 2

1.1.1 GATT and Development towards establishing WTO

WTO started its activities in the first of January, 1995, and though it is considered the last application of the Multilateral Trading System model (MTS), it has not been the first experience in this scope. In 1947, the first agreement in this system was signed i.e. Global Agreement for Tariff and Trade (GATT) where the main goal of this agreement was trading goods literately without tariff or non-tariff barriers.

GATT appeared to develop a global economic foundation that controls the economic procedures of the stated singed this agreement including reduction of customs duties on goods exchanged among these countries, prevention of protectionist measures such as the embargo, quantitative portions, and administrative restrictions like inflexibility in granting official approvals, licenses, etc. 3

The GATT, which became operative in 1948, was based on a set of principles which are considered the basis on which the WTO is established, these principles are:

First: Reduction of Trade Barriers

Through reducing tariffs and reducing or removing non-tariff restrictions. In GAAT, the negotiations were based on reciprocity i.e. if a state offers reduction of tariffs on certain goods, this depends on a condition that such state will get tariff reductions from other states on the goods that fall in its exportation interest which is called the tariff agreed upon in the scope of tariff negotiations.

2_{Muneer Al-Hamash, Institutions of Globalization Economy, Middle East Affairs Journal, volume 95, May 2000, p}

34

3_{Abd Al-Mutaleb Abd AL-Hamid, The GATT and Mechanisms of WTO from Uruguay through Seattle to Doha,}

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Second: Most Favored Nation

Upon this principle, the member state grants all powers or merits assigned for a certain state to all member states where each member state, that offers favored merit when dealing with another state, commits to grant the same favored dealing to all member states in the organization according to the principle of non-discrimination in bilateral trading transactions.

This principle is considered the main principle that governs GATT activities; establishment of multilateral global system of international trade. However, there are some exceptions:

1. Regional Trade Arrangements:

GAAT permits establishment of economic and trade blocs among countries located in one geographical territory as an exception from Most Favored Nation clause (MFN). Under this exception, GAAT encourages more tariff exemptions and concessions among countries of the same territory according to certain arrangements and it states that Convention on Geographical Proximity is a prerequisite for the geographical arrangements. Also, the concessions under these arrangements should not be less than those granted under the GATT.

2. Intra-regional Trade for developing countries:

This exception, unlike the previous one, does not require the geographical proximity, so the developing countries, with no geographical proximity, may make favored arrangements without being forced to grant such arrangements to the developed countries. This is an encouragement from GATT for the growing countries to liberalize their intra-regional trade.

3. Protection measures in developing countries:

The developing countries have the right to take necessary measures to protect their new industries where they are exempted from MFN clause until their new industries are able to compete in the international markets.

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4. Advantages granted to the developing countries:

Under this exception, the developing countries are granted feasible measures that facilitate arrival of their exports to the markets of advanced industrial countries with protection of these exports from unfair competition risks in the developed countries.4

Third: National Treatment Principle

This principle is provided in article III of the GATT where it states that the contracting countries should treat the imported goods equally as treatment given to the same locally produced products5. It prevents imposing restrictions on the imported products as imposing high sales tax on the imported product but no on the local product which makes price of the former higher than the later and so that the customer buys the local product due to its low cost compared to the imported one.

Forth: Transparency Principle

It means that there should be clear and accurate information about all national laws, rules, and regulations related to sectors under the umbrella of WTO.

The member state must disseminate all laws and regulations that control trade in general or between such state and other states taking into account the issue of non-discrimination among member states in the Organization and clarification of the special government rules for reasons of national interest of national security.

Fifth: Treating the developing countries distinctly:

Article 78 of the GATT grants the developing countries the right to protect their emerging industries by giving them additional measures that allow for sufficient flexibility to amend tariff structure for purpose of providing necessary protection for establishment of an industry. The

4_{Sami Hatem, Omar Sulaiman, Contemporary Issues in Trade and Development, Cairo, Al-Dar Almusria}

Alubnania, edition 1. 1994, p 19.

5_{Ahmad Al-Kawaz, New System of Word Trade, Development Bridge Journal, v.36, December 2004, p.2-3. also,}

Al-Fatlawi, Suhail Hasan. World Trade Organization. Dar Al-Thaqafa for Public and Distribution, Amman, 2006, pp.19.-22.

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protection measures are taken according to specific procedures including notification of GATT of the intent of the contracting party about taking such measures and entering into trade negotiations with other parties that might be affected by such measures.

Sixth: organizing the trade relationships legally between obligations and rights of the contracting parties in order to achieve balance and liberalize trade between them through developing rules and procedures for purpose of liberalizing trade and resolving disputes arising between them.6

1.1.2 Establishment of the World Trade Organization (WTO)

Establishment of the World Trade Organization in 1995 has been the most important achievement of the Uruguay rounds of negotiation, the last round of GATT rounds, where the global economic system had been waiting about 47 years before being able to reach to agreed global formula for organizing the global economy represented by establishment of WTO. Establishment of WTO had been sanctioned in Havana Conference in 1947. Yet, because of the U.S refusal to this organization since the Congress had not approved it, the participating countries were content with keeping the General Agreement on Tariffs and Trade (GATT) which had been approved by 23 countries at meeting held in Geneva in October 1947, while establishment of WTO was approved in Marrakech 1994 by authorized representatives of 123 countries, which is called Marrakech Declaration on 15.04.1994 where the Organization started its work as of 01.01.1995. 7

The WTO is considered a complementary organization to GATT’s activities, not a new organization that based on new bases and principles invalidating those the GATT based on. Thus, the countries that agreed to associate with WTO without withdrawal from GATT will continue to apply two different sets of legal rules.8

6_{Para 3 of Article III of WTO Agreement.}

7_{Zaki, Najwa. The WTO and International Standards of Work Under Globalization of International Economy, Oil}

and Industry News Journal, vo.31, issue 355, 2000, pp.8-10.

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In the period between signing the GATT in 1947 and announcement of establishment of WTO several important steps were taken in the scope of development of the multilateral trading system; the countries involved in the Agreement held consecutive sessions to discuss the exchange of new tariff reductions and joining of other countries to the Agreement.

In 1961, short-term arrangements for cotton textile trade were agreed to as an exception from GATT rules where quantitative restrictions on countries’ exports of the cotton products were negotiated. In 1962, these short-term arrangements converted to long-terms one and they continued in effect till 1974 when Multi Fibre Arrangement (MFA) entered into force for purpose of achieving gradual liberalization in textile products trade while avoiding adverse effects on markets and production lines.

In 1964, Kennedy’s negotiations started to achieve further liberalization of international trade which lasted until June 1967 where the final charter was signed by 50 countries that control 75% of the global trade. The tariffs on industrial goods were reduced on a horizontal basis to reach to 50% reduction. Also, separate agreements were signed on grains, chemical products and anti-dumping rules.

In 1965, the contracting parties approved a new provision (Section IV) of the Agreement concerning trade and development which pushed the developed countries to give top priority to reduce trade restrictions on products of developing countries. A committee on Trade and Development was established to carry out theses new provisions.

In 1973, the Tokyo Session was held which gave rise to exchange of further tariff reductions especially on industrial goods. Also, in this session agreements were made in areas of: support and compensative duties, technical barriers to trade, import licensing procedures, government purchases, customs valuation, review of anti-dumping rules, meat trade, dairy products trade, civil aircraft trade. Also, it was agreed for the first time to reduce tariff on the part of industrialized countries to tropical products exported from developing countries.9

9_{Adel Khalil. The WTO, Its Establishment and Mechanism, Development Bridge Jouranl, vol.37. February 2010,}

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In 1988, the Uruguay Session started and it ended on 15 December 1993. The Round of Uruguay was not confined to discussion of trade in goods but it included trade in services, intellectual property rights, procedures for health and plant health and trade-related investment measures.

It was agreed to transform rule of the multilateral trading system to an integrated organization, namely, the World Trade Organization. The final charter of the session of Uruguay was signed in Marrakech on April 15, 1994 where the negotiations took seven years in which attitudes and views of different countries varied. 122 countries participated in the Round. The document presented by secretary of the GATT at that time and integrated project for a final document including 28 legal documents; agreements, decisions, memorandums of understanding for interpreting some original articles of GATT to cover all areas of negotiations that had been reached to in Uruguay in 198610. One of these documents is Project of the WTO Agreement which called “Marrakech Agreement Establishing The World Trade Organization”. Eight months later, this agreement was approved by the legislative bodies of the state members. The representative agreed to let the WTO Agreement open entirely to be signed by all participants in accordance with Article 14. This means that no country may make reservations on any article of the Agreement and that the countries must accept or refuse the Agreement in whole. The Agreement entered into force in January 1st, 1995. 11

1.1.3 The difference between the GATT and the WTO

The GATT was made as a provisional multilateral agreement and it was not intended to operate as an organization, while WTO is a set of permanent agreements, a world organization and permanent body to resolve conflicts. When WTO was established, several provisions of GATT, 1947 were cancelled, amended and updated where the new set of rules derived from GATT became, after being amended and updated, part of the new rules that intended to organize trade of goods and services and it was called (GATT) in 1994 and complementary agreements and decisions were added to it to organize trade in goods, services and intellectual property.

Main differences between GATT and WTO Agreement:

10_See_www.wto.org 11

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 Rules of GATT were applied on a provisional basis while rules of WTO are comprehensive and permanent.

 Agreements that were made under GATT did not require any legislative procedures to be approved while WTO Agreement was approved by the legislative bodies of the member states which make it fully legally established.

 The negotiating countries in GATT were called the contracting parties since it was considered a legal provision while countries affiliated with WTO are called “members” since it is considered an integrated organization.

 GATT was confined to trade in goods while WTO covers goods, services, and intellectual property.

 Dispute Settlement System in WTO is a body operates automatically and faster than GATT and that WTO furnishes ways of instant execution for decisions of Dispute Settlement Body more effectively. 12

1.1.4 The purposes of the WTO

Preamble Marrakesh Agreement for Establishing WTO contains general and non-specific goals. Parties of the Agreement aim at “ raising standards of living, ensuring full employment and a

large and steadily growing volume of real income and effective demand, and expanding the production of and trade in goods and services, while allowing for the optimal use of the world’s resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of economic development”.

It also states that Parties wish to “enter into reciprocal agreements involving reciprocal

advantages to achieve a significant reduction of tariffs and other trade barriers and eliminate discriminatory treatment in international trade relationships”. 13

12_{Adel Khalil, supra note, pp.15.17} 13_{Preamble of Establishment of WTO}

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Article 3 is clearer where it defines five basic functions to be carried out by the Organization:

1. Facilitating process of carrying out and managing works of multilateral trade agreements and providing necessary framework to do so.14

2. Providing a General Council that allows members to negotiate on their multilateral trade relationships in the matters contained in the agreements found in the appendixes of the Agreement and furnishing the appropriate framework to carry out results of these negotiations. 15

WTO aims to form a permanent forum of negotiations on international trade relationships whether through multilateral rounds or periodical meetings of sub-committees that offers opportunity of permanent meetings among representatives of member states of the Organization.

3. Supervising progress of document of understanding related to rules and measure that organize dispute settlement16, that was not applied in GATT, especially as for resolving disputes arising out of interpretation of provisions and agreement of Uruguay Round that characterized by divarication and complexity. Dispute Settlement Body is expected to form an effective and deterrent mechanism for purpose of maintaining the largest amount of stability in the global trade system.

4. Managing mechanism for reviewing trade policies of the member states. 17. Trade Policy Review Body is expected to mainly contribute to reinforcing principle of transparency so that it enables the member states to learn about trade system of each country to be discussed and show issues inconsistent with national trade liberalization agreements. WTO tries to obligate the member states to follow certain rules in the international trade that known to all.

5. Achieving a great deal of coordination in developing global economic policies in collaboration with International Monetary Fund and International Bank for Reconstruction and

14_{Article 3, Para 1, Marrakesh Agreement} 15_{Article 3, Para 2, Marrakesh Agreement} 16_{Article 3, Para 3, Marrakesh Agreement} 17

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Development and its affiliated agencies18. The ultimate goal for activities of the Organization is to provide an appropriate environment for further liberalization of world trade and allow access of multinational capitalist companies to the market by driving countries to abandon their traditional role in supporting exports and imposing duties on imports.

1.1.5 Accession to the World Trade Organization

Pursuant to the general rules of the International Law, an international organization should consist of a set of countries that use such organization to achieve their goals and protect their interests. Thus, an international organization is not an authority beyond the countries’ will but a tool to carry out that will. Every international organization develops certain conditions for membership where such conditions vary from an organization to another.

First: Conditions of Joining:

WTO Agreement provides for special conditions to joint it. These conditions are:

1. Offer concessions for custom tariffs:

WTO stipulates that the countries that wish to join it should offer a concessions schedule including custom tariffs that form obligations which cannot be ignored except in special cases. The country is obligated to reduce tariffs imposed upon goods and services it imports.

2. Offer obligations in services:

A country offers a schedule of obligations to be followed in service sector that includes a list of barriers and conditions found in occupational and service sectors and activities and it determines a timetable to eliminate them.

3. Comply with WTO Agreements:

The country that wishes to join WTO undertakes to sign protocol of joining the Organization which requires agreeing to obligations of WTO Agreements (except Government Tenders Agreement and the Convention on Civil Aircrafts, since they are optional). In other words, it

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should agree to GATT Agreement 1947, Uruguay Round Agreements, and other binding agreements. The country does not have the right to choose from the agreements unlike the case at the time of GATT especially after Tokyo Round where most of developing countries did not sign its results which were represented in special agreements, since these agreements are considered trade agreements that materially deal with work of the Organization

4. Stop supporting national companies.

The country undertakes to not supply any kind of support to national companies for purpose of fair competition with the imported goods and service since the support leads to reduce production costs which in turn makes such companies in a better competitive position than the foreign companies.

5. Apply principle of transparency:

The country wishing to join must undertake to apply principle of transparency where it notifies the member states of laws and orders it issues concerning goods and services. 19

Second: Procedures of Joining

Process and requirements of joining World Trade Organization means making sure that the new member states adhere to apply the same trading policies that practiced by all member states that characterized by transparency, equity, and being known in advance. The countries seeking to join WTO must prove that their trading practices are in harmony with all agreements emerged from the Organization being allowed to join WTO. So, joining WTO is a long and detailed process.

WTO does not require canceling all customs duties, where terms of joining are discussed by the applicant and the member states through series of bilateral and multilateral rounds of negotiations. These negotiations conclude certain conditions that determine requirements of the

19_{Al-Luqmani, Samir. the WTO, Its Negative and Positive Effects on our current and Future works in Gulf and}

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concerned country to join the Organization. However, the legal system in the country wishing to join must comply, before joining, with all agreements emanating from the Organization20.

Admission Procedures

These procedures include agreements of establishment of international organizations and procedures of submission and membership acceptance. WTO has a special method to accept membership, two methods or one of them are used to accept countries and members in the organization:

1. First method: the concerned country receives letters from a committee assigned to review the new membership applications. This committee often consists of major industrial countries in addition to the most important countries that have trading relationships with the country wishing to join the organization. The applications contain a list of goods and services subject to reduction of tariffs.

2. Second method: the country wishing to join the organization submits itself a list of reductions in tariffs to be as a ground for negotiation.

Sometime both methods are used together where the concerned country submits a list of tariff reductions and at the same time it receives a list of required reductions from the committee formed to review the membership.21

The procedures start when the country, wishing to join to the organization, sends a letter in this respect to the General Council stating its desire of joining, then the General Manager circulates such letter to all member states.

Accordingly, the General Council reviews the application and a task-force is formed to discuss the joining application, then this task-force submits its report to the General Council where this report includes recommendations of the task-force on the application which in turn contains a draft resolution a draft protocol containing conditions of joining agreed upon with the concerned

20_{Samir Al-Luqmani, Ibid, p.56} 21

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government and the task-force members in addition to schedule of obligations on goods and services.22 The country wishing to join submits a memorandum containing the following:

1. The regulatory framework used concerning all areas related to WTO and statistical date to members of the organization. Further, the members may ask for additional explanations where the applicant responses to them in writing. Accordingly, the task-force holds a meeting to discuss the possibility of the government to comply with provisions of the WTO Agreement.

After the end of negotiations on goods and services, the task-force submits a report with a draft resolution of a protocol to join the General Council. Upon approving these documents, the resolution is put to vote. If the majority of two-thirds approve it, the agreement enters into force after being accepted by the applicant, which means amending the national legislation to conform to rules of multilateral agreements.23

Types of membership:

First: Original members of the organization

The members who participated in discussing agreement of establishment of WTO and joined it before being operative. The original membership in the organization includes the members of GATT Agreement in 1947 provided founding condition of WTO and all multilateral trading agreements thereto should be accepted and list of tariff concession in goods and list of specific commitments in services to be provided. 24

Second: Members who joined WTO:

The members who joined the organization after the organization entered into force and were not of the countries that signed GATT Agreement in 1947.

There is no difference between the original member and the joined one concerning rights and privileges. To accept membership of a country by joining, such country should have legal entity

22_{Article 1/12 of Agreement of Establishment of WTO} 23_{Suheil Al-Fatlawi, Ibid pp.76-77}

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that qualifies it to execute the obligations contained in GATT and agreements thereto whether they are fully independent countries and separate customs territories that have a full autonomy in managing their foreign trading relationships and other matters set forth in this Agreement or multilateral trading agreements. This category includes the countries under the international protection or foreign occupation provided they should control entry and exit of people and money in their territories.25

WTO Agreement does not provide for the observer member. But the practical application created this position. There are many observer member states in the Organization.

If there is no provision regarding the legal position of the observer member, general provisions of International Organizations Law shall apply. The observer member has the right to attend conferences, seminars, discussions, and negotiations held by the organization and to give suggestions without having the right to vote. The observer member should join the Organization within five years form date of being accepted as an observer. 26

1.1.6. The Structure of the WTO WTO Bodies:

Developers of world trade agreements designed the organizational structure of WTO using principle of multiple bodies to achieve requirements and considerations of division of work and make decision quickly and effectively and diversity of authorities of these bodies on the other hand. There are two groups of bodies: the first one: with a general nature and the second one: specialized bodies handling specific authorities in different areas or specific sectors in terms of international trade. These bodies are:

1. General Bodies in WTO27

25_{Suheil Al-Fatlawi, Ibid, supra note pp.94-97}

26_See_{http://www.wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm#top} 27

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First: Ministerial Conference

Marrakech Agreement Establishing the World Trade Organization provides for in Article 4: “There shall be a Ministerial Conference composed of representatives of all the Members, which shall meet at least once every two years. The Ministerial Conference shall carry out the functions of the WTO and take actions necessary to this effect. The Ministerial Conference shall have the authority to take decisions on all matters under any of the Multilateral Trade Agreements, if so requested by a Member, in accordance with the specific requirements for decision making in this Agreement and in the relevant Multilateral Trade Agreement”28

It is noticed here that the Ministerial Conference ensures equality among countries in its works where application of principle of equality is not confined to formation only, but it extends to voting process. Each member has one vote in the meetings of the Ministerial Conference29, rather, respecting such equality among member states is achieved by granting each member state the right to request the Ministerial Conference to take decisions related to competence of World Trade Organization30.

Marrakech Agreement emphasizes on certain issues within the jurisdiction of the Ministerial Conference, these issues are:

a. Grant of Membership: the Ministerial Conference has the sole authority to take decisions of joining by voting of two-thirds of members.31

b. Effectiveness of Agreements (amendments and waivers): Member States of WTO and Councils of trading in goods, services and intellectual property rights may propose amendments to the Ministerial Conference which is the sole authority that has the right to discuss and approve the amendments in accordance with different details set forth in article 10 of Marrakech

28_{See Article 4/1 of Marrakesh Agreement Establishing WTO} 29_{See Article 9/1 of Marrakesh Agreement Establishing WTO} 30_{See Article 4/1 of Marrakesh Agreement Establishing WTO} 31

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Agreement. Thus, the Ministerial Conference is the sole body in WTO that is responsible for amending Marrakech Agreement and the multilateral trade agreements.

c. Organizational Matters: the Ministerial Conference may form committees specified by Marrakech Agreement. Thus, it has the right to form committees of trade and development, balance of payments constrains, budget, finance and administration. Further, it may form any additional committees to perform tasks it deems appropriate.32 The Organizational Matters also include appointing the General Manager who heads Secretariat of the Organization where the Conference appoints him and determines rules that control his powers, duties, conditions of service and term of office.33 However, there is a common authority granted to both the Ministerial Conference and the General Council. These two bodies have, exclusively, the right to adopt interpretations of Marrakech Agreement and international multilateral trade agreements.34

Second: The General Council:

Marrakech Agreement Establishing the World Trade Organization provides for establishing a general council composed of representatives of all Members and hold meetings as appropriate and that it carries out the functions assigned to it by this Agreement. The General Council establishes its rules of procedure and approves the rules of procedures for the committees provided for in the Agreement. 35

This Council oversees the daily execution of tasks of the Organization and it carries out tasks of the Ministerial Conference when it is held. Further, it carries out tasks of Dispute Settlement Body and tasks of reviewing trade policies of member states. There are specialized councils branched out of this Council: Council for Trade in Goods, Council for Trade in Services, Council

32_{See Article 4/7 of Marrakesh Agreement Establishing WTO} 33_{See Article 6 of Marrakesh Agreement Establishing WTO} 34_{See Article 9/2 of Marrakesh Agreement Establishing WTO} 35

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for Trade-Related Aspects of Intellectual Property Rights. Membership in this Council is available for all member states.36

It could be argued that the overall activities of the WTO are exercised by the General Council. This Council is a continuous one and it holds meeting as appropriate. Therefore, all above authorities of the Ministerial Conference are carried out by the General Council which is general and comprehensive authorities relate to basic issues. As for the relationship between the Council and other bodies of the Organization, it is considered the center for bodies of this Organization. On the one hand, the Council carries out general supervision on the quality councils as The Council for Trade in Goods and The Council for Trade-Related Aspects of Intellectual Property Rights. On the other hand, The General Council adopts rules of procedures of the said councils.37

Third: Dispute Settlement Body

The developers of World Trade Agreements predicted that the problem faced by the organization of international trade does not lie only in determining rules governing trade transactions among countries, but in the need to respect these rules to confront disputes that may arise in work regarding application and interpretation of provisions. Disputes in the trade area are out of question and common. The legal rules governing the international economic relations are mainly affected by the economic conditions and circumstances.

The Dispute Settlement Body is composed of representatives of all member states and serves as a general assembly. The Body may appoint a president and sets the rules of the procedures adopted. When the Board convenes for the settlement of disputes, it is held in this capacity not in the capacity of the General Council, though it includes all members of the General Council.38

Article (3/4) of the WTO Agreement provides for that “The General Council shall convene as appropriate to discharge the responsibilities of the Trade Policy Review Body provided for in the

36_{Suheil Al-Fatlawi, supra note, p.130}

37_{See Article 4/5 of Marrakesh Agreement Establishing WTO} 38

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TPRM. The Trade Policy Review Body may have its own chairman and shall establish such rules of procedure as it deems necessary for the fulfillment of those responsibilities”39

The WTO Agreement does not provide for certain conditions for representatives of the Body, rather it includes all countries and its decisions are delivered by the majority. It is also noted that settlement of dispute almost deals with economic and political issues. This Body should have been a legal body where a specific number of Members are selected taking into account, when selecting them, legal qualifications or the expertise in economic matters, since interpretation of conventions requires these conditions and does not depend on desire of the Member States that consider their interests in the interpretation even if they conflict with the Convention. However, the Organization determines that dispute settlement should be on the basis of waivers not on the basis of law to reach to rules that satisfy the Parties to WTO to elevate the world trade relationships.40

Forth: Trade Policy Review Body

The Trade Policy Review Body is composed of all state members of the Organization and all members of the General Council and it may appoint its own president and set rules of its procedure.41

These Councils may establish sub-bodies when necessary and such sub-bodies may develop special rules to carry out their work where such rules are subject to approval of the General Council which oversees them.42

Fifth: Secretariat

The Secretariat is composed of the Secretary General of the Organization and staff independent of the countries they belong to. The Secretary-General is appointed by the Ministerial Conference which determines his powers and The Secretary-General appoints secretary staff and

39_{See Article 4/3 of Marrakesh Agreement Establishing WTO} 40_{Suheil Al-Fatlawi, supra note, p.131}

41_{See Article 4/4 of Marrakesh Agreement Establishing WTO} 42

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he determines their duties, powers, and service conditions in accordance with the general rules determined by the Council.43

2. The Specialized Bodies in the WTO:

1. Council for Trade in Goods

This Council is composed of all member states in the Organization and it supervises course of multilateral trade agreements made by the Organization members.

2. Council for Trade in Services:

This Council is composed of all members of the Organization and it oversees execution of the multilateral agreements related to trade in services mentioned in the first appendix of the Organization agreement which are called Service Agreements.

3. Council for Trade-Related Aspects of Intellectual Property Rights.

Article (4/5) of WTO Agreement provides for that “There shall be a Council for Trade in Goods, a Council for Trade in Services and a Council for Trade-Related Aspects of Intellectual Property Rights, which shall operate under the general guidance of the General Council. The Council for Trade in Goods shall oversee the functioning of the Multilateral Trade Agreements in Annex 1A. The Council for Trade in Services shall oversee the functioning of the General Agreement on Trade in Services (hereinafter referred to as “GATS”). The Council for TRIPS shall oversee the functioning of the Agreement on Trade-Related Aspects of Intellectual Property Rights (hereinafter referred to as the “Agreement on TRIPS”). These Councils shall carry out the functions assigned to them by their respective agreements and by the General Council. They shall establish their respective rules of procedure subject to the approval of the General Council. Membership in these Councils shall be open to representatives of all Members. These Councils shall meet as necessary to carry out their functions”.44

43_{Samir Al-Luqmani, supra note, p.46} 44

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Withdrawal from WTO:

The WTO grants the members the right to withdraw from the Organization and from the multilateral agreements in accordance with the following conditions:

1. To notify the Organization in writing of intention of the state to withdraw from the Organization and multilateral agreements.

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1.2 Legal status in Palestine 1.2.1 Historical overview

Compared to other countries in the world, the legal status in Palestine is at once complicated and unique because a number of authorities have ruled over Palestine throughout history. Various legal systems have prevailed in Palestine. Accordingly, multiple legal systems have affected the political and legal structures in Palestine. The partition of Palestine has also led to the emergence of complex and varying legal systems in the West Bank, Gaza Strip and Jerusalem as well as within part of Palestinian territories occupied in 1948.

Until the end of the Ottoman rule in 1917, the legal system in Palestine was based – primarily – on principles of the Islamic Law, but it was also influenced by the Latin system in Europe.

In 1917, the Ottoman rule was terminated by the establishment of the British Mandate, which re-formed the legal system in Palestine. The British added to the Ottoman legislation the principles of the Anglo-Saxon system (the Common Law) which is based on judicial precedents.

In 1948, the Hashemite Kingdom of Jordan ruled over the West Bank, including East Jerusalem. The West Bank submitted then to the Jordanian legal system that is influenced by the Latin system. On the other hand, the Egyptian Administration controlled the Gaza Strip. The Common Law established during the British Mandate period remained effective in the Gaza Strip.

Following the 1967 war, the Israeli occupation seized control of the Palestinian legal system by imposing the military law (Military Orders) in the West Bank and Gaza Strip territories. After annexing it in 1980, the Israeli occupation submitted East Jerusalem to the Israeli Domestic Law. Finally, according to the Declaration of Principles on Interim Self-Government Arrangements of 1993 (Oslo Agreement I), the Palestinian Authority (PA) was established. Foundations were set for the Israeli-Palestinian agreements that regulate PA powers and authorities. Consolidation and approximation of various legal systems operative in the Palestinian territories are the most

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important legal issues. Since 1994, consolidated legislation has been promulgated for both the West Bank and the Gaza Strip governorates.45

The Ottoman Rule over Palestine 1516 – 1917

Palestine was part of the Ottoman Empire. Until the end of 1917, the Ottoman legal system had been enforced in Palestine for over 400 years. With the British occupation of Jerusalem on 9 December 1917, the Ottoman Rule over Palestine was terminated.

The Ottoman legal (legislative) history was divided into two basic periods. The first period lasted from the establishment of the Ottoman Empire until the Regulations Era (1839) and the second extended from the Regulations Era until 1917.

During the first period, the Ottoman legal system was primarily based on principles of the Islamic law, Islamic jurisprudence, customs and decisions issued by the Sultan (the Governor). However, events witnessed throughout the 17th and 18th centuries enfeebled the Ottoman Empire, leading to the emergence of a period of reforms know as the “Regulations Era”.

Since the beginning of 1839, reform regulations aimed to modernize and to some extent secularize the Ottoman Empire. The Ottomans also adopted a number of Western laws (the French Law of Commerce for example) in order to increase commercial activity with Europe. The reform regulations compelled the Ottoman Empire to codify the provisions based on religion, customs and Sultanic Law, resulting in the enacting of important pieces of legislation which are still effective in Palestine until now. Most significantly, the Land Law of 1857 and the Journal of Judicial Provisions.46

45_See,_{http://lawcenter.birzeit.edu/iol/en/index.php?action_id=210} 46

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British Mandate over Palestine: 1918 – 1948

The British army occupied the entire territories of Palestine in 1917 and the League of Nations mandate over Palestine was assigned to Britain. The British High Commissioner administered the mandate over Palestine and exercised all administrative and legislative powers therein. This period, which lasted for 30 years, witnessed an extensive legislative activity, resulting in the promulgation of legislation in various fields in Palestine. Ottoman laws, which had been operative until 1917, were still valid taking into account amendments or replacements introduced to them according to the British Mandate laws. The Mandate Government re-formed the legal system by converting it from the Latin-Ottoman system to the Anglo-Saxon system (The British Common Law).

In 1933, Robert Harry Drayton, then called “The Recorder of the Palestine Government”, was delegated to collect and edit all British Mandate legislation in three volumes. Drayton compiled and catalogued the laws, decrees, regulations, rules, etc. which were issued in Palestine in addition to the British Royal laws and decrees enforced therein. After the 1948 war, three quarters of Palestine were controlled by Israel. Meanwhile, Jordan ruled over the West Bank and Egypt over the Gaza Strip47.

The Jordanian Rule over the West Bank: 1948 – 1967

Following the 1948 war, the West Bank, including East Jerusalem, submitted to the Jordanian rule. In 1948, the Jordanian Military Governor declared that other laws and legislation that had been operative in Palestine would still be effective to the extent with which they do not contradict the Law on the Defence of the Trans-Jordan of 1935.

In 1949, the Jordanian Civil Administration restored the civil rule over the West Bank according to the Law of the Public Administration over Palestine. In 1950, the West and East Banks of the River Jordan were officially annexed. In addition, it was confirmed that the laws, which had been operative in the West Bank until the end of the British Mandate, would remain valid until they are replaced by Jordanian laws.

47

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Between 1950 and 1967, the Jordanian Parliament was composed of an equal number of deputies from both the West Bank and the East Bank. This period also witnessed a broad legislative activity, leading to a transformation of the legal system prevalent in the West Bank from the Anglo-Saxon system (the Common Law) into the Latin system. 48

The Egyptian Administration in the Gaza Strip: 1948 – 1967

After the 1948 war, Egypt administered the Gaza Strip but did not annex it to its territories. Therefore, little Egyptian civil legislation was effective in the Gaza Strip. Egyptian military forces ruled over the Gaza Strip and managed all public departments and civil affairs therein. With the establishment of the Legislative Council of the Gaza Strip in 1957, the Egyptian military authority in the Gaza Strip was converted into a civil authority.

In 1962, the Legislative Council appointed the first Palestinian President, thereby complementing the transference of the legal authority from the Egyptians to the Palestinian control. Also in 1962, the Legislative Council of the Gaza Strip ascribed a constitutional capacity to two basic laws: The Law of 1955 and the Constitutional Regulation of 1962, which were published as a collection for the first time in the Middle East Gazette, Winter/Spring Issue, 1963. The then current constitution reflected features of the Ottoman Law and British Common Law, which had been effective in Palestine over past periods. In a brief view, it should be noted that the legal system operative in the Gaza Strip before 1948 did not significantly change under the Egyptian Administration. 49

The Israeli Occupation in the West Bank and Gaza Strip: 1967 – Present

After the 1967 war, the Israeli forces occupied the Gaza Strip and West Bank, including East Jerusalem. The “Commander of the Area” – the Commander of Israeli forces – declared control over the legislative, executive and judicial authorities in the occupied Palestinian territories (OPT).

48_See_{http://lawcenter.birzeit.edu/iol/en/index.php?action_id=210}

49_{Al-Agha, Radwan. Legal System in Gaza strip, Any Legal System in Palestine, Faculty of Law, Birzeit}

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Initially, the Israeli forces issued Military Order no. 2 of 1967 that provided for the annulment of any effective laws in OPT in the event they contradicted military orders issued by the Administration of the Israeli Occupation. After Military Order no. 947 of 1981, all legal and administrative powers were transferred to the so-called “Civil Administration” which was established lately then. From the onset of Israeli occupation, Israeli-formed military courts and military commissions preserved a total jurisdiction over particular criminal issues as well as all disputes over lands, taxes, natural resources and finance. In general, the military orders issued during the occupation period regulated all aspects of life. Military orders in the West Bank were, however, somewhat different from those issued in the Gaza Strip. Since 1967, approximately 2,500 military orders have been issued in the West Bank and Gaza Strip. Many other orders were also issued but were not disseminated.

According to the military legislation since 1967, Israeli settlers in OPT have not submitted to the laws issued by the Israeli Commander of the Area or Civil Administration, but to the Israeli Domestic Law. Accordingly, the Israeli government has expanded the concept of Israeli citizenship so as to include settlements constructed throughout OPT. To achieve this end, the Israeli government claimed that settlements were not part of OPT. In addition, the Israeli government separated the legal system applicable in the occupied West Bank and Gaza Strip from that enforced in the Israeli settlements.50

The period following 1967 was legally characterized by:

1. The Israeli military commander is a government employee in Israel where the powers given to this military commander are granted by the Israeli Law and he is connected with the responsibilities and powers given to him according to the Israeli Law.

2. The International Customary Law determines powers of the occupier in an occupied territory with respect to modifying the legal system operative in the occupied territories. This refers to Article 43 of the regulations annexed to Hague Convention of 1923 which stipulates to change the law in the occupied territories these two conditions: 1. The absolute need of the population of the occupied territories requires the change and 2. Security reasons.

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