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Understanding EU Labeling Regulations

Recently, the European Union implemented a procedure for enforcing existing regulations requiring the labeling of some goods produced in Israeli settlements in the occupied West Bank. Israel has vociferously objected to any labeling of products from its settlements, and this has prompted concern in Congress, including a bi-partisan letter written by Senators Cruz and Gillibrand protesting the requirement.

The Obama administration has made it clear that it does not object to the EU’s decision. “We do not believe that labeling the origin of products is equivalent to a boycott,” State Department Israeli settlement winespokesman Mark Toner said in response to a question. “And as you know, we do not consider settlements to be part of Israel. We do not view labeling the origin of products as being from the settlements as a boycott of Israel.”

The Cruz-Gillibrand letter offers some reasons for this disagreement between Congress and the President; they rest on both a different view of the administration and different understandings of the legal and political conditions under which the EU made its decision.

The Cruz-Gillibrand letter asserts that labeling settlement products as such will, “…discourage Europeans from purchasing these products and so serve as a de-facto boycott of Israel and Israeli companies.” The EU labeling guidelines apply only to specific products, mostly produce, that come from settlements that Europe and the overwhelming majority of the world consider illegal. It’s difficult to see how this can be reasonably construed as a boycott on Israel. It is strictly confined to settlement products. If companies doing such business are also companies rooted within Israel, they will not suffer anything beyond the labeling of this one aspect of their business.

Moreover, it must be recognized how minimal the financial impact of this decision is. Labeling products as originating in settlements will not discourage all sales; at most, it will negatively impact some percentage of retail sales. The labeling applies to less than 1% of all Israeli sales to European Union countries.

The Cruz-Gillibrand goes on to say that “This labeling campaign, along with the Boycott, Divestment, and Sanction (BDS) movement, are efforts to delegitimize Israel.” But the EU has never endorsed nor even hinted at any sympathy for the BDS movement. On the contrary, the EU has stated, unambiguously, that it values its relationship with Israel. Contrary to the letter’s assertion, the EU labeling measure strongly affirms the legitimacy of Israel, within its internationally recognized borders, the so-called “Green Line.” The labeling measure clarifies the illegitimacy of Israel’s settlements, a point which every American administration has repeatedly emphasized since 1967.

The Cruz-Gillibrand letter also cites US law which opposes any state-sanctioned boycott of Israel (a law crafted to oppose the Arab League boycott of Israel) and cites the recent Trade Promotion Authority legislation “…requiring our President to discourage Europe from enacting any politically motivated policies that would boycott, divest, or sanction Israeli products when negotiating the Transatlantic Trade and Investment Partnership.”

The anti-boycott provision remains in force, but as we have made clear, it does not apply here. The law does not apply to Israeli settlements, but only to Israel proper. It was intended to block efforts aimed at destroying Israel economically, not to stifle efforts to oppose the settlement program. In any case, labeling is not a boycott. Many analysts, including many in the Obama Administration, were concerned about the provision in the TPA bill that treated Israeli settlements as equal in standing with the sovereign state of Israel within its recognized borders. It was for this reason that the President made it clear that this provision was contrary to long-standing American policy and would not be upheld. In doing so, President Obama once again affirmed the distinction that has always been and remains American policy: that the settlements, whether one refers to them as illegal as the Europeans do or merely as illegitimate as the United States does, are distinct from the State of Israel.

Finally, Cruz-Gillibrand asserts that labeling “…prejudges the outcome of future negotiations between Israel and the Palestinians.” But the opposite is true. By treating the settlements, an indisputably key point in any future negotiations, as if they were part of Israel in any way, it grants legitimacy to their presence, and would in effect be rewarding unilateral Israeli actions, something which the U.S. and its partners all continue to strongly oppose. This would weigh very heavily in any future negotiations. The precedent set by United Nations Security Council Resolution 242, which calls on Israel to withdraw from territories it captured in the 1967 war, establishes that, even if Israel does retain some of that territory in an eventual peace agreement, the international community does not recognize any part of that territory as Israeli until such negotiations.

The EU’s labeling process has also been criticized for singling out Israel. It is true that Europe has not applied the same standard to other areas, but this is an argument for those standards to be applied elsewhere as well, not against labeling products from Israeli settlements. No doubt, the EU decision to begin with Israel is connected to Europe’s views that the settlements are illegal and that the current Israeli government bears a significant portion of the blame for the stagnation of the peace process. But targeting products of Israel’s settlements out of such motives does not, despite assertions by some to the contrary, run afoul of either international trade law or World Trade Organization or other international institutions’ regulations. If legislation targeted Israel, such questions could be raised, but the EU labeling policy targets only the settlements, not the State of Israel.

The EU continues to give Israeli products preferential treatment in import regulations such as tariffs. This affirms the European view that Israel is not only legitimate, but a valued trading partner. Labeling settlement products is a legitimate way for Israel’s largest trade partner to make clear its objection to the growing settlements which, in both the European and American view, are endangering the possibility of a two-state solution to the Israeli-Palestinian conflict. Differentiating between the legitimate State of Israel and the illegitimate settlements counters those who would use Israel’s ongoing occupation of the West Bank to de-legitimize the entire country. It is not a boycott of Israel, or even of the settlements, and should not be treated as one.