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EU Set to Tax Exports from Jewish Settlements - 2004-08-06

The European Union has decided to tax products from Jewish settlements in the West Bank and Gaza Strip, saying it does not recognize these areas as part of Israel. The move is outlined in a new agreement reached between the EU and Israel.

Israeli and EU negotiators have signed a document declaring that goods exported by Israel to Europe will be labeled with a town of origin, as well as nationality.

Those shown to have been produced in Israeli settlements in Gaza and the West Bank will no longer be allowed to enter the European Union tariff-free under the new agreement.

The decision will affect a number of goods, including palm oil and fruit juice, worth some $200 million a year.

These exports from the settlements amount to less than one percent of the $7.6 billion in annual Israeli exports to Europe.

But Israel fought for seven years to prevent Europe from placing tariffs on these goods, saying they should keep their duty-free status under a 25-year-old trade agreement.

Two years ago, the European Union issued a warning to European importers of goods from the settlements that they could be faced with retroactive duties on these products.

Since then, all EU importers have been forced to put up a deposit on the goods equal to the standard tariff, until the origin of the products had been established.

Israeli products have also been held up by European customs officials demanding to know whether they had come from Jewish settlements.

EU officials said the settlements are not recognized as belonging to Israel, and, therefore, there is a consensus in Europe that products from these areas should not be given the benefit of trade preferences granted to Israel.