EU, Israel resolve trade dispute over settlements

5 August 2004

EU, Israel resolve trade dispute over settlements

By Reuters

BRUSSELS - Goods produced in Israeli settlements in the West Bank and Gaza Strip will no longer be allowed to enter the European Union tariff-free under an agreement initialed on Thursday.

Israel and the European Commission inked a deal designed to end a long-running and politically charged dispute over the "rules of origin" for products from the settlements which were labeled "made in Israel".

Brussels contended this was a breach of Israel’s free trade agreement with the 25-nation bloc and warned importers in 2002 that they should collect deposits on the goods which could be liable to duty.

The goods involved, produced in the West Bank and Gaza Strip, include palm oil, citrus fruit, tomato juice, plastics and low-tech industrial products worth less than $200 million a year.

But the issue has been a focal point for EU displeasure at Israeli settlement policies, highlighting differences over the legitimacy of the post-1967 borders.

Under the accord, goods exported by Israel to the EU will be labeled with a town of origin as well as the nationality, an Israeli official said.

Customs authorities in EU member states will then be able to charge duty on products labeled, say, "made in Ariel, Israel" but not on those marked "made in Tel Aviv, Israel".

The deal was negotiated when Industry and Trade Minister and Deputy Prime Minister Ehud Olmert visited Brussels for talks last November.

It appears to save Israeli face by using the word "Israel" to describe the location of the settlements, but allows the EU to make its point by charging a tariff on goods produced beyond the pre-1967 Green Line.

An EU official said External Relations Commissioner Chris Patten and Internal Market Commissioner Frits Bolkestein would put a joint proposal to the EU executive next month for a new regulation replacing the notice to importers.