Palestinian Authority sources say they are unimpressed by Minister Silvan Shalom's threats to impose sanctions against the PA to counter a Palestinian boycott on settlement goods.

PA spokesman Dr. Ghassan al-Khatib said Tuesday that threats by "settler leaders and manufacturers as well as by ministers and settler sympathizers do not deter us."

"We are not interested in maintaining the welfare of settlements any longer. We are interested in boosting the local Palestinian industry and economy," al-Khatib said

He added that the campaign is directed only at settlement products and not at other Israeli goods.

"As far as we are concerned and the entire world is concerned, the settlements are illegal according to international law – and what is being produced in them is illegal."

During a visit to Ariel Tuesday, Minister Shalom suggested imposing higher taxes on PA products made in its territories and blocking the transfer of goods into Israel. He also proposed to compensate Israeli factories with money intended for the Palestinians.

"Threats are meaningless as Palestinian goods don't end up in the Israeli market due to the occupation, while the Palestinian market is open to Israeli products," a source in Ramallah said.

"The balance of trade indicates $3 billion worth of Israeli goods in the Palestinian market per year compared to $400 million worth of Palestinian goods in Israeli markets," he added.

Al-Khatib ended his statement by noting, "Whoever is concerned about Palestinian workers should open the Israeli labor market to them. There are currently 200,000 unemployed people in the PA and we haven't heard of anyone worrying about them or about Palestinian workers in the settlements."

On Monday, Prime Minister Benjamin Netanyahu commented on the issue: "It is unacceptable that the Palestinians are waging an economic war against us with the sense that everything is allowed."