EU expected to propose Israeli settlement trade curbs

The European Commission is expected to present options on how to restrict imports of goods from Israeli settlements in the occupied Palestinian territories, ahead of a meeting of EU foreign ministers in July, according to five diplomats who spoke to reporters.

After months of deadlock, the EU executive has faced sustained pressure from a majority of European governments to put forward a concrete proposal on restricting trade with the settlements, which are considered illegal under international law.

During a meeting of foreign affairs ministers in Luxembourg on Monday, Commissioner for the Mediterranean Dubravka Šuica said the Commission would prepare some options before the next ministerial meeting on 13 July, five diplomatic sources told the outlet. The sources were granted anonymity to speak candidly.

What exactly those options will be remains unclear.

Mislabelled goods and corrective measures

Last week, a report by advocacy group Global Echo Litigation Centre suggested that agricultural products produced in the Palestinian-occupied territories entered the EU market mislabelled as legitimate Israeli goods.

It might present corrective measures if the report’s evidence is corroborated.

“On the issue of trade with illegal settlements, many member states called for proposals from the Commission,” EU foreign policy chief Kaja Kallas told reporters after the meeting. “I will convey this request, and I will ask the Commission to prepare ahead of the next Foreign Affairs Council a list of options for possible trade measures, including measures aimed at preventing imports of goods originating from illegal settlements.”

Israel recently introduced measures aimed at strengthening its control over the West Bank and East Jerusalem in areas including property law, planning and licensing. Those steps go against key agreements signed under the 1993 Oslo peace agreement. Settlement activity in the Palestinian territories is regarded as illegal, based on a 2024 advisory opinion from the International Court of Justice which found Israeli settlements to be unlawful. In 2019, the Court of Justice of the European Union ruled that food products produced in these settlements must be clearly labelled as coming from an “Israeli settlement,” rather than being described simply as “Product of Israel.”

Qualified majority vs. unanimity

A proposal to impose tariffs on goods from these settlements would be decided under qualified majority voting. That requires the support of at least 55% of EU member states representing at least 65% of the EU’s total population. A group of EU countries, including France and Sweden, has already argued in favour of this approach. They say tariffs fall under trade policy and therefore require only a qualified majority.

France’s Minister for Foreign Trade, Nicolas Forissier, recently told journalists that restricting EU trade with them was “not aggressive but normal.”

The Council has not found a qualified majority to suspend the EU-Israel Association Agreement, a more significant measure.

The EU executive has stalled on the matter, arguing that such tariffs would constitute sanctions under EU law, requiring unanimity among national governments — for which there is no consensus.

The Council Legal Service, the institution’s influential legal advisory body, has reportedly disputed this view, strengthening the push for trade restrictions to curb Israel’s illegal expansion in the West Bank.

The Israeli government rejects the designation of those settlements as illegal, classifying them as “temporary sites.”

In May, the EU adopted restrictive measures against extremist settlers and the organisations supporting them, after the new Hungarian government lifted the previous veto on the move imposed by former Prime Minister Viktor Orbán.

“There was a clear understanding that the options need to be clear,” Kallas said. “I will take this back to the college [of Commissioners].”