Statement by the ITC Executive Director at the launching ceremony of the State of Palestine National Export Strategy
1 June 2015
Mr. Prime Minister,
Ladies and Gentlemen,
It gives me great pleasure to be back in Palestine to launch the State of Palestine’s first ever National Export Strategy (NES), which in its own way will contribute to help the Palestinian people on their quest to greater economic resilience. Trade with new markets, in value-added goods and services, can indeed help Palestinian SMEs generate jobs and foreign earnings. This is precisely one of the priorities to the Palestinian 2014-2016 National Development Plan to which the National Export Strategy perfectly aligns.
The National Export Strategy is also a strong sign of the Palestinian Authority’s progress in institution building. As a UN agency, ITC is honoured to have supported the State of Palestine in this venture.
I would like at the outset to salute the work of the talented team at the Palestine Trade Centre under the able guidance of the Ministry of National Economy. This strategy, its priorities, and the consensus it represents, are theirs. Thanks are also due to the European Union, which made this initiative possible through its Trade Diversification and Competitiveness Enhancement Programme.
Since the UN General Assembly decision in 2012, Palestine has engaged with the international community with increased assurance. This Strategy extends that engagement to international trade, placing trade and investment at the heart of Palestine’s economic development.
The result of a participative, inclusive approach that involved some 150 stakeholders from the private sector and civil society, the NES aims to promote a dynamic business environment, to build the capacities of potential exporting sectors and ensure the maximum contribution of trade to socioeconomic development.
While exports from Palestine more than doubled from 2009 to 2013, to nearly US$ 1.2 billion, they remain more than offset by imports of basic essentials, leaving the State of Palestine reliant on international donors to finance its trade deficit. Moreover, Palestine’s export basket is small and heavily reliant on a limited number of markets. Consolidating existing sectors and broadening the basket to include more value-added goods and services and more export destinations would help generate jobs, especially for women and youth.
Based on detailed analysis of their capacity to contribute to employment generation and enhanced trade performance, the Strategy sets clear export targets for nine sectors. Seven of these sectors deal with physical products: oil from Palestine’s iconic olive trees; stones and marble, which make up a quarter of current goods exports; fresh fruits; vegetables and herbs; agro-processed meat; textiles and garments; footwear and leather; and furniture. The strategy also targets two services sectors: tourism and information and communication technology.
Boosting these sectors would help Palestine strengthen its overall competitiveness, leading to better livelihoods for the Palestinian people. Taken together, the NES priority sectors can contribute to increasing the value of Palestinian exports by over US$700 million over the next five years, out of which services exports would account for one-third.
The Strategy’s recommendations extend also to four crucial enablers of economy-wide competitiveness: access to finance, trade information, trade facilitation and logistics, and quality management. Unless they can prove that their products meet international quality and safety standards, Palestinian SMEs will struggle to penetrate export markets. This is why ITC and the German metrology institute, PTB, are joining forces with the Palestinian Ministry of National Economy, to help Palestinian SMEs improve product quality and comply with market-driven standards.
Moving goods across borders, let alone accessing foreign markets and sustaining long term commercial connections, is far more difficult for SMEs in Palestine than most other countries.
Despite the many challenges posed by the political situation, Palestinian entrepreneurs, big and small, demonstrate every day their determination to survive and grow, both in their domestic market and internationally. Some are very successful, and their quality products and strong brands shape value chains and offer positive examples to emulate. While keeping SMEs centre-stage, the NES outlines options for supporting these high-performing export-oriented lead firms so that they can serve as drivers of growth.
Realism demands that we look at what the Palestinian government does and does not control in terms of building a policy environment conducive to starting businesses and connecting to foreign markets. The State of Palestine lacks authority over its own borders, and even over the large swathes of its own territory known as ‘Area C’. And many potential trading partners in the region are in turmoil.
Yet many key measures facilitating trade and promoting exports can also be addressed internally. We tend to assume that obstacles to trade result mainly from policies in the countries that we want to trade with, whether these policies are high tariffs or complex regulatory requirements. Experience shows, however, that countries do plenty at home to hamstring their own exporters, and that Palestine is like any other developing country in this regard.
According to a survey of 240 Palestinian exporters by the International Trade Centre, many of the complications they face while trying to comply with standards and other regulatory aspects of trade are home-grown. For example, obtaining certifications needed to export can be time-consuming and expensive. The NES strategy incorporates key findings from this survey to describe the substantial scope for the State of Palestine to facilitate trade for businesses, especially the small and medium-sized enterprises that generate most jobs.
That said, over 60% of hurdles to trade by Palestinian firms stem from outside Palestine. Fully unleashing Palestine’s full economic potential, will require constructive cooperation from its neighbours, starting with Israel. The mutual economic gains from trade would benefit both Palestine and Israel as they contribute to prosperity and stability in the region.
Mr. Prime Minister, ladies and gentlemen,
With this National Export Strategy, Palestinian businesses, policymakers and international partners have a tool to better use trade as a platform for growth, and to place SME development at the centre of the future economic roadmap. The National Export Strategy provides a framework to coordinate interventions for export development. It forms the basis for donor engagement ensuring that existing development efforts do not occur in isolation, and are instead aligned to national goals so as to maximize impact.
However, as promising as it may be, the National Export Strategy will only bear fruit when it is implemented. This is now our collective priority.
I am happy to report that the State of Palestine is already moving in this direction: when endorsing the strategy, it established the Palestinian Export Council (PEC) as a public-private governance body to manage and monitor the implementation of the National Export Strategy. The Council will play a key role in ensuring that all national and donor efforts are geared towards realising Palestine’s trade potential. ITC stands ready to assist the State of Palestine with NES implementation and support to the Palestinian Export Council.
I firmly believe that this Strategy will assist policymakers and enterprises alike, and will instil confidence in existing and potential business partners and investors that the State of Palestine is well and truly committed to realising its vision of “Export-led prosperity, Made in Palestine”.