GAZA CITY, Gaza Strip — A controversial move designed to combat monopolies is about to take effect in the Gaza Strip. Proponents say the change will cut prices for consumers, while opponents warn it will open the door to commercial fraud and counterfeit goods.
In October, the Ministry of National Economy in the Gaza Strip gave traders six months to sell their goods as a preliminary step toward abolishing all exclusive commercial trading licenses. The law, which takes effect April 1, is designed to level the playing field for all importers, open the door to market competition and curb rising prices in favor of consumers.
Tariq Labad, the spokesman for the Hamas-run Ministry of National Economy, explained that prices are expected to fall 20-50% on many consumer goods.
“There are 40-50 commercial licenses in the Gaza Strip and their holders import goods from abroad, while some of them manipulate prices in light of the Israeli siege imposed on Gaza,” he said, stressing that his ministry’s main objective is to protect the consumer.
However, Ahmed Abu Shaaban, exclusive agent of Israel's Tambour paints in Gaza, said the ministry’s decision will hurt his business, which he has been developing for years. He told Al-Monitor he provides all goods related to paints at suitable prices for the consumer.
He warned that canceling exclusive contracts would allow small traders to buy goods from any dealer around the world at prices lower than those set by the brand-name supplier. Small traders could also fly under the radar, evading taxes or customs duties by filing forged statements, or not filing statements at all. They are also able to manipulate prices temporarily to make a quick profit, he said.
Exclusive commercial licenses were abolished in the West Bank in 2012. The Ministry of Economy in Gaza said that move reduced the prices of consumer goods by opening the way for many traders to import goods and creating competition in the markets. The ministry expects the same results in Gaza.
Trader Nabil Yazigi, who holds a commercial license to import batteries for cars and trucks in Gaza, told Al-Monitor the biggest loss will be felt mainly by consumers and then by commercial agents because commercial fraud will plague Gaza markets.
Yazigi explained that owners of exclusive commercial licenses are responsible for the goods they import, but once those licenses are canceled, it will be much more difficult for the Ministry of National Economy to identify traders who import counterfeit goods.
Maher Tabbaa, the director of public relations and media at the Gaza Chamber of Commerce and Industry, called on Gaza's Ministry of National Economy to find solutions that take into account the interests of both commercial agents and consumers. He warned that the decision taking effect April 1 will require strict control by the ministry and other concerned parties to keep out counterfeit goods.
He told Al-Monitor the Israeli siege on the Gaza Strip, which has been in place 10 years, is causing many traders to lose their work permits, in addition to the licenses they had obtained from Arab and international companies, which narrowed the number of traders in Gaza with commercial licenses to about 50.
Tabbaa refused to describe exclusive commercial brokerages as monopolies, saying traders import consumer products from suppliers under agreements that take everyone's interests into account.
Mouin Rajab, an economics professor at Al-Azhar University in Gaza, disagrees. He said the exclusive contracts have resulted in monopolies over some consumer goods. However, he also believes abolishing these contracts will allow some brands to be counterfeited. He said consumers will wind up with some poor-quality goods, which could also harm brand names as a result.
He noted that some suppliers might refuse to provide goods to anyone other than their exclusive agents because of the nature of their long-term relationships, not to mention suppliers' conviction that working with an agent is safer than working with small traders who could be unreliable and unable to absorb even small losses. Also, competition among traders — which leads to lower prices — will still remain limited in light of the Israeli siege on the Gaza Strip.