Say no to Europe

Say no to Europe

By Zvi Tenney*

March 21 2002-For several years now, and through zealous maintenance of its one-sided position on the Israeli-Palestinian conflict, the European Commission has been endeavoring to promote international recognition of a Palestinian state through a series of economic and commercial measures. These efforts are being made despite, and in spite of, the absence of an agreed settlement with Israel.

As part of these ongoing efforts, on November 23, 2001 the Commission issued an official Notice to European importers in which it cautions that, in its opinion produce from Jewish settlements on the West Bank, the Gaza Strip, East Jerusalem and the Golan Heights is not eligible to be considered as Israeli produce, and should therefore not be included in the trade agreement between the EU and Israel. Consequently, taxes are payable on such products, even if Israel issues them with certificate of origin.

This move, which is not backed by international law appears to be of a tactical-political nature. On the one hand, it is an overt expression of opposition to Jewish settlements, but it is also an attempt to possibly get Israel to withdraw its reservations to a free trade agreement signed by the EU with the Palestinian Authority back in 1997.

…. Apparently, the European Commission assumes that Israel would be hesitant about asking for international arbitration (as required by clause 75 in the trade agreement between the sides) and will prefer to reach a compromise and withdraw its objections to the European-Palestinian agreement.

Accepting such a proposal would be a diplomatic, political and economic mistake. Israel has no reason to fear international arbitration. WTO sources have several times repeated a statement made by former US Secretary for Foreign Trade Stuart Eisenstadt, that: "Israel exporting of goods from the territories bearing a Made in Israel label is not in breach of international law."

Indeed, according to WTO regulations, a free trade agreement applies also to all areas in which the country's customs laws are applicable. This principle was for example explicitly included in a trade agreement between Canada and Israel signed in 1996 and approved by the WTO.
Even if one relates to such territories as occupied by a foreign power the WTO imposes responsibility for foreign trade from these territories on the occupying country.

This is augmented by a legal aspect supported both by the provisions of the trade agreement between the sides and the provisions of the community law which notes, inter alias, that: "the domain of applying agreements may be expanded, beyond the sovereign area, to territories in which the signatory maintains any kind of authority, including partial authority." This is the situation in Area C, not to mention East Jerusalem and the Golan Heights where Israeli law is applicable in full.

It should be noted that the 1969 Vienna treaty on "interpretation of
agreements" stresses the critical nature of "precedents" in the application of agreements. Thus, the EU may not change the situation that has existed since 1975, when it signed the initial free trade agreement with Israel.

This basic principle is also backed by "the community law principle of legitimate expectations", (in this case, of European importers and Israeli exporters who have the right to view the trade agreement as applied for many years).

Moreover, one may assume that the EU is aware of Israel's right to apply "reciprocity" and to impose customs duties on all European produce to be exported to the Territories, to East Jerusalem and the Golan Heights. In such a case, European would suffer far greater damage than Israel as European exports are three times larger than Israeli exports to Europe.

It is reasonable to assume that an Israeli request for international
arbitration would force the Europeans to retreat, in one way or another. This would put an end to the ongoing damage to Israeli exports, which have already had to contend with embargoes and the obligation to deposit funds as a condition of release from European customs.

Even if diplomatic intervention manages to modify or temporarily defer these rulings, the continued atmosphere of threat and uncertainty will continue to damage Israeli exports to Europe, and may even be used as a detrimental economic political precedent in other export markets elsewhere.

This episode seems characteristic of those cases in which the well known diplomatic rule applies: "Very often the most effective way to say "no", is to say "no."

Jerusalem Post, March 21 2002

*The writer is a retired Ambassador and served as the head of the Economics Department at the Foreign Ministry.