The Protocol on Economic Relations between the Government of the State of Israel and the Palestine Liberation Organization (Paris Protocol), was signed in Paris on Apr. 29, 1994, and stated (in part):
The two parties view the economic domain as one of the cornerstone in their mutual relations with a view to enhance their interest in the achievement of a just, lasting and comprehensive peace. Both parties shall cooperate in this field in order to establish a sound economic base for these relations, which will be governed in various economic spheres by the principles of mutual respect of each other's economic interests, reciprocity, equity and fairness.
This protocol lays the groundwork for strengthening the economic base of the Palestinian side and for exercising its right of economic decision making in accordance with its own development plan and priorities. The two parties recognise each other's economic ties with other markets and the need to create a better economic environment for their peoples and individuals."
The World Bank, in a July 1, 2002 West Bank and Gaza sector report titled "Long-term Policy Options for the Palestinian Economy," wrote:
"The Paris Protocol gave the Palestinians administrative autonomy over the Palestinian Territories in terms of public service delivery, and formalized policies of economic cooperation and integration with Israel relating to the exchange of goods, fiscal policy, currency arrangements, and labor services...
The Paris Protocol was designed to formalize and improve the existing economic arrangements with Israel to promote Palestinian economic development and reduce disparities with Israel. To this end, the PP [Paris Protocol] consisted of the following measures:
a modified customs union allowing some Palestinian export diversification with its Arab neighbors;
revenue-sharing through Israeli tax collection and remittance to the PA;
coordination of VAT rates and other indirect tax rates;
continued access of Palestinian labor to the Israeli labor market through a regulated system of permits; and
measures to promote private sector development such as through the development of financial institutions."
B'Tselem, the Israeli Center for Human Rights in the Occupied Territories, in an article titled "The Paris Protocol" posted on its website (accessed July 6, 2007) under the topic of "Restrictions on Movement," wrote:
"The Paris Protocol is the framework establishing the interim-period economic relations between Israel and the Palestinian Authority. The Protocol was signed in April 1994 and is part of Oslo 1, which was signed a few days later. The model established in the Protocol is known as a 'customs union,' the primary characteristic of which is the absence of economic borders between members of the union. The practical effect of selecting this model was preservation of the economic relations that had existed until then..."