EU and Israel end trade dispute


MIDDLE EAST: Israel and the European Commission agreed yesterday to end a long-running and politically charged trade dispute over the "rules of origin" for products from the settlements labelled "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, captured by Israel in the 1967 Middle East war, include palm oil, citrus fruit, tomato juice, plastics and low-tech industrial products worth less than €167 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 pre-1967 border.

About 240,000 settlers live at some 140 settlements. Most of the world, including the EU, considers the settlements illegal but Israel disputes this.

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

Customs authorities in EU states will then be able to charge duty on products labelled, say, "made in Ariel, Israel" but not on those marked "made in Tel Aviv, Israel", provided the Israelis declare the origin honestly.

The deal was negotiated when Israeli Vice Prime Minister, Mr 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, Mr Chris Patten, and Internal Market Commissioner, Mr Frits Bolkestein, would put a joint proposal to the EU executive next month for a new regulation replacing the notice to importers. - (Reuters)