Newspaper article The Christian Science Monitor

Export Labels Split Israel ; Israel Agreed Last Week to EU Demand to Specify Products Made in Settlements

Newspaper article The Christian Science Monitor

Export Labels Split Israel ; Israel Agreed Last Week to EU Demand to Specify Products Made in Settlements

Article excerpt

It is a clear winter's day in the Judean hills, but clouds are gathering around dozens of Israeli firms in the occupied territories that export to the European Union.

Last week, during talks with the EU, Israeli Trade and Industry Minister Ehud Olmert agreed that Israel will begin specifying the place of origin of its exports. The decision could threaten the well- being of Israeli West Bank firms producing everything from humus to skin-care products.

The agreement will enable the EU, Israel's largest trade partner, to distinguish between exports coming from Israel - entitled to customs exemptions under a free trade agreement - and those from the occupied territories.

Supporters of the decision said there was no choice because the EU, unsure where the products originated, had started to assess tariffs from exporters inside Israel's pre-1967 borders also. The estimated $7 billion in Israeli exports to Europe were thus being endangered by the nonlabeling of the $120 million in exports from the West Bank and Gaza, they argued.

The issue has political as well as economic implications, reflecting deep-seated differences between Israel and the EU over Israel's borders and its construction of settlements on land the EU envisions as the heartland of a future Palestinian state.

Forcing a choice

In this instance, analysts say, the EU forced Israel into a choice between the well-being of its export industry as a whole, and that of the small number of Israeli exporters in the West Bank and Gaza Strip. This sets a precedent, showing Israel is vulnerable to pressure on the settlements issue, they say.

"This definitely sets a border and the government has made a big mistake here," says Ron Nachman, the mayor of Ariel, the second- largest settlement.

"The European Union is putting a yellow star of David on products from Barkan," he adds, referring to the wine exporting industrial zone near his settlement.

An EU spokesman said: "The EU's position has always been that this is a technical issue based on international law, which does not recognize settlements over the Green Line as being part of Israel."

The Green Line refers to Israel's borders before the 1967 Middle East War, when it captured the West Bank, Gaza Strip, Golan Heights, and Sinai Peninsula.While the EU and almost all of the international community consider the West Bank and Gaza Strip "occupied territories," Israel says they are "disputed territories" where it has claims.

Settlers upset

Settler leaders say they are incensed that a hard-line Likud government, known for its sponsorship of the settlements, gave in to the EU. But the agreement's defenders cite the economic welfare of Israel as a whole.

"Whoever is playing politics with this is endangering all of Israel's exports to Europe," Mr. Olmert, the Israeli trade minister, said during an interview with Israel Television. …

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