BRUSSELS, June 10 (Reuters) - The European Commission plans to open European Union markets fully to Palestinian exports in the coming months to help strengthen the Palestinian economy, the EU trade chief said on Thursday.

The 27-country bloc has an agreement with the Palestinian Authority that allows Palestinian industrial goods duty-free access to the EU, and requires the Palestinian territories to phase out tariffs on EU exports over five years.

The EU decision to accelerate bilateral trade was announced after a meeting between EU Trade Commissioner Karel De Gucht and Palestinian Economy Minister Hasan Abu-Libdeh.

The European Commission is expected to propose granting duty-free, quota-free access for Palestinian exports to the EU in the coming months. It would help to revamp the private sector, De Gucht said in a statement.

Palestinian trade with the EU was worth 71 million euros ($85.5 million) in 2008, less than a fifth of the EU's aid programme for the territories that year, making the Palestinian Authority the bloc's smallest trading partner.

Economic conditions in the Gaza Strip, which together with the West Bank makes up the Palestinian territories, have worsened in the past three years under the weight of an Israeli blockade of the small enclave.

The United States said on Wednesday it would provide almost $400 million in new aid to the Palestinians, including funding projects to increase private sector competitiveness and improve infrastructure in the West Bank and Gaza.

De Gucht said the European Union continued to back the Palestinian territories' bid to become an observer to the World Trade Organisation, which would allow it to become part of the multilateral trading system.