JERUSALEM/RAMALLAH (Reuters) - Israel and the Palestinian Authority (PA) have reached an agreement to end a five-month long trade dispute, officials said on Thursday.
The dispute, which opened a new front in the Israeli-Palestinian conflict, began in September when the PA announced a boycott of Israel calves. The Authority exercises limited self-rule in the occupied West Bank under interim peace deals.
In response to the boycott, Israeli Defense Minister Naftali Bennett in January announced a halt to all agricultural imports from the PA, which in turn prompted the Authority to end imports of Israeli agricultural products.
Palestinians in the West Bank send over two-thirds of their farming exports to Israel, whose agriculture ministry says the calves boycott affected around 400 Israeli cattle breeders, costing them a total of $70 million since October.
A final tit-for-tat move in the trade dispute came on Feb. 8, when Israel's defence ministry banned all Palestinian exports through Jordan, apparently in an effort to entice the PA to lift its ban on Israeli calves.
In a statement announcing the agreement, Israel's defence ministry said that "the calf boycott has been lifted, (and) trade with the PA will be restored accordingly".
The actions of the PA had in part reflected greater efforts to end what it sees as over-dependence on Israeli markets. The PA prime minister's office said in a statement that under the agreement Israel would allow the PA to begin the "direct import of livestock, including calves, from all countries around the world without obstacles".
The trade dispute had threatened to fray trade links that have generally held strong since the two sides signed the interim peace accords in the 1990s, even weathering the collapse in 2014 of peace talks.
Bilateral tensions have been further fuelled by the announcement last month of U.S. President Donald Trump's Middle East peace plan and an ensuing string of violent incidents in Jerusalem, the West Bank and Gaza. Palestinians have rejected the proposal as favouring Israel.
(Reporting by Ali Sawafta and Dan Williams, Writing by Rami Ayyub, Editing by Jeffrey Heller and Toby Chopra)