The recent decision by the European Union to label products from Israeli settlements in the occupied West Bank has elicited loud cries of protest from Israel and from the Netanyahu government’s supporters in Washington. Critics have claimed that Israel is being treated unfairly, that the EU is trying to pressure Israel into concessions outside of the framework of bilateral negotiations, and that these measures are a part of the Boycott, Divestment and Sanctions movement whose real aim, critics claim, is to de-legitimize Israel.

In fact, the EU measures simply represent an effort to more faithfully implement a longstanding policy, backed by a strong international consensus, of differentiating between the State of Israel within the pre-1967 line, often referred to as the Green Line, and Israeli settlements built in the territories occupied in the 1967 war.

The effort to oppose this differentiation is often based on partial or misleading information, which we address below. It is important to recognize, however, that the unimpeded growth of settlements will eventually foreclose the option of a two-state solution, if it hasn’t already done so, as it will eliminate any possibility of contiguous and economically viable Palestinian state. It is therefore imperative that anyone hoping for a peaceful future for Israelis and Palestinians understand the facts about the settlements, EU labeling and the goal of differentiation.

• Is labeling an attempt to pressure Israel into concessions?

No, it is an attempt to clarify the view of the EU, one shared by the United States, that the settlements are not part of Israel. The labeling decision applies to limited categories of products, mostly agricultural, from the settlements. Israel’s finance ministry said that the labeling decision would impact some $50M per year, which is less than 1% of Israel’s trade with the EU in 2014, a total of $14 billion. It is meant to signal European concern about the lack of a diplomatic process, to be sure. It is a signal that the EU wants to see movement toward a resolution of this conflict resume, but in the absence of that movement, unilateral Israeli steps like settlement building will not be legitimated.

• Is labeling part of an effort by the EU to diminish its trade ties with Israel?

No. The EU extends extremely favorable trade arrangements with Israel, and it has publicly reaffirmed both its support for those arrangements and its opposition to any sort of boycott of Israeli products. Indeed, they have stressed that even when it comes to settlement products, no boycott is being considered by the EU.

• Why is the EU doing this, even though all parties agree there will be territorial changes from the 1967 line in any final agreement?

Along with the overwhelming majority of the international community, the EU views Israeli settlements beyond the Green Line as illegal under international law. Along with the U.S., the EU recognizes that there will likely be an exchange of territories when a two-state solution is agreed upon. Until such agreements are finalized, however, all land captured in 1967 is legally considered occupied territory.

• Is this just a technical decision by the EU to comply with long-standing policy?

Partly. It has long been EU policy that products from Israeli settlements are to be excluded from the very favorable trade deals Israel enjoys with the EU. Until now, however, the EU has not enforced the labeling laws, on the assumption that they would soon become moot in the wake of a peace deal between Israel and the Palestinians. The decision to enforce these measures demonstrates the recognition by the EU that Israel will not soon end its occupation, and is an effort to keep the two-state solution viable.

• Isn’t the EU singling out Israel here? Aren’t there nearly 200 other territorial disputes in the world? Why does the EU treat this one differently from, say, Western Sahara?

The idea of “200 other territorial disputes” has become a popular talking point, but it has little connection to the question at hand. With only a few exceptions, those territorial disputes do not involve the issues of settlements or even occupation. In the case, for example, of Crimea, the EU has banned trade and imports from that territory due to Russia’s intervention there. Multiple U.S. administrations have made clear that resolving the Israel-Palestinian conflict is a core national security interest; the EU measures are fully consistent with that view. Such foreign policy concerns are also explicitly spelled out in the EU’s trade agreement with Israel. The case of Western Sahara is the only truly comparable one to the West Bank, but the EU does not have the same policy in both places, thus labeling requirements are different. While the EU supports a peace process in Western Sahara, it does not recognize the territory as occupied. However, a European court recently ruled that the EU’s 2012 trade deal with Morocco was invalid due to the issue of Western Sahara. As the court’s decision implies, the discrepancy between these policies does not indicate that the policy regarding the West Bank is wrong or discriminatory, but rather that the policy regarding Western Sahara is inconsistent with broader EU policies. The argument this strengthens is not that labeling products from Israeli settlements is wrong, but that the same rule should apply in Western Sahara.

• Why shouldn’t the United States fight the EU on labeling?

As the Obama administration said in response to the EU decision, labeling products from settlements as what they are does not constitute a boycott on Israel. Further, as Secretary of State John Kerry recently pointed out, the process of transitioning Israeli rule over Palestinians to the Palestinians themselves is currently being reversed by Israeli settlement policy. Anyone who supports the two-state solution should welcome efforts to differentiate between Israel and the occupied territories.  Efforts to blur that distinction threaten to enmesh Israelis and Palestinians in a perpetual conflict.

• What is the US stance on settlement products?

The United States’ trade agreements with Israel were expanded in 1996 to include the West Bank and Gaza Strip. This was a part of a larger process of creating a “Qualifying Industrial Zone” to encourage economic cooperation between Israel, the Palestinians, Egypt and Jordan. Nonetheless, products made in the West Bank are required to be labeled as such, though they are not required to be specifically labeled as being from Israeli settlements. Despite this, when Congress passed legislation which applied in a uniform fashion to both Israel and “territories controlled by Israel,” the Obama Administration was quick to declare that, “…by conflating Israel and ‘Israeli-controlled territories,’ a provision of the Trade Promotion Authority legislation runs counter to longstanding U.S. policy towards the occupied territories, including with regard to settlement activity.”

• Won’t this labeling decision amount to a de facto boycott of Israel, and encourage more such boycotts?

No, these measures are not connected the Boycott, Divestment, and Sanctions (BDS) movement. The EU has stated clearly that they are opposed to all boycotts against Israel. One EU official told the Huffington Post, “It is essential to remind that the EU is strictly against any kind of boycott of Israeli products. Accordingly, we consider that a transparent labeling scheme is the best way to avoid that. In the absence of such a scheme, some European consumers and operators intending not to buy products from the settlements might be tempted not to buy Israeli products at all.”

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 spokesman 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.