EU drive to label West Bank settlement exports unlikely to harm Israel, experts say

Wondering how much and what exactly West Bank settlements export to Europe? Here are the answers.

Construction at the West Bank settlement of Ma'ale Adumim

Construction at the West Bank settlement of Ma’ale Adumim, near Jerusalem, Sept. 16, 2014

With the European Union seemingly bent on moving ahead with plans torequire labeling of all goods produced outside Israel’s internationally recognized borders, speculation abounds over how badly this could hurt the country’s exports.

So how much do Jewish settlements in the West Bank, Golan Heights and East Jerusalem actually sell in Europe? It’s not a number that’s easy to come by, as the Israeli government publishes no separate figures on exports from these disputed areas – presumably out of concern it might be seen as tacit acknowledgement of their questionable status.

But according to figures obtained by Haaretz from a high-ranking authority on foreign trade matters, exports originating from the settlements are a mere drop in the bucket, at least in relative terms.

Figures compiled by this well-placed source – who asked not to be identified because of the sensitivity of the matter – show that in 2012, the last year for which they exist, industrial exports from the West Bank, Golan Heights and East Jerusalem to the European Union totaled $100 million, accounting for less than 1 percent of Israel’s total industrial exports to this huge trade bloc (excluding diamonds). Industrial exports from the West Bank, Golan Heights and East Jerusalem to the entire world totaled $250 million that year, accounting for slightly over half a percent of the total.

According to this source, the overwhelming majority of industrial exports from the settlements are not finished goods, but rather, components – pipes, tubes, spare parts and the likes. In other words, the type of merchandise that rarely finds its way onto supermarket or department store shelves, where it could be picked out easily by discerning consumers who pay attention to labels.

Agricultural exports from the settlements to Europe, the source estimates, total no more than “a few million dollars.” Most of these are dates and grapes grown on kibbutzim and moshavim – different forms of cooperative settlement – in the Jordan Valley.

This is not the first time the European Union has cracked down on exports from Jewish settlements located over the Green Line. Ten years ago, it threatened that if Israel did not distinguish between goods produced within and outside its internationally recognized borders, as required by the free trade agreement between the two sides, it would strip all Israeli exports of their free trade status on the continent.

Faced with that ultimatum, the government agreed that the customs authorities in Europe would receive special codes by which to identify goods originating in the settlements so that they could slap import tariffs on them. The Israeli government, meanwhile, agreed to compensate exporters from the settlements for any losses accrued as a result. For the past 10 years, about NIS 7-8 million (approximately $1.8-2.1 million) has been set aside each year in the state budget for this purpose.

After being stripped of their preferential status in the European markets, exports from the Jewish settlement now face the even greater risk of total boycott once their origins are identified openly through labeling.

“From my talks with the Europeans, it would seem to me that they are looking for any possible way right now to shake up the status quo,” said Arie Arnon, a professor of economics at Ben Gurion University of the Negev, who specializes in the Palestinian-Israeli conflict.

“Although the volume we’re talking about is extremely small,” he continued, ”the fear is that it will develop into something bigger. Some stores many not want to deal with the hassle of putting special labels on goods from the settlement, so they may just stop bringing in goods from Israel entirely. This could also develop into a secondary boycott, with European companies and consumers cutting off ties not only with businesses operating in the settlements, but also with those located inside Israel that are also active in the territories, like the banks.”

According to the high-ranking foreign trade source, about 600 factories owned by Israelis operate in the West Bank.  In recent years, international pressure has forced several of the big exporters among them to move their production facilities inside Israel’s internationally recognized borders. These include the Barkan winemaker, the Bagel Bagel pretzel maker, the Swedish-owned Mult-T-Lock lock manufacturer, and most recently — in wake of a huge international backlash—the  SodaStream seltzer machine maker.

This week, the Ahava skin care products manufacturer based near the Dead Sea, announced that it is contemplating setting up another factory near its existing facility but within Israel proper.

In 2006, Gush Shalom, the peace activist group headed by Uri Avnery, published a list of several hundred products made in areas beyond the Green Line.

Five years later, the Knesset passed the so-called “anti-boycott law,” which penalizes persons or organizations that call for a boycott of Israel or the settlements. Concerned that it might be sued for heavy damages under the law, Gush Shalom removed the list from its website. (An appeal by Gush Shalom and other organizations against the law was basically struck down earlier this year).

Adam Keller, the spokesman of Gush Shalom, says that the organization does not distinguish between ideological and non-ideological settlements in drawing up its lists. Still, he notes with irony that it is mainly farmers from settlements in the Jordan Valley considered to be “non-ideological” who will bear the brunt of the new labeling edict. “Most of the more radical settlements are located in the mountainous areas, where there’s not a lot of agriculture,” he says. “So the people there, who mainly work in the civil service, are less likely to be affected.”

Yarom Ariav, a former director-general of the Israeli Finance Ministry and senior executive at Israel Chemicals, one of the country’s largest exporters, said the new European directive, which has yet to be approved, is more symbolic than anything else. “In terms of the amount of damage to the economy, it’s negligible,” he noted, “although when it comes to individual exporters, it could definitely be significant.”

In Ariav’s view, the main danger of the new labeling decree is that it could trigger a chain reaction. “It could definitely cause the boycott movement against Israel to expand, and if there is no peace agreement on the horizon, I definitely see that happening,” he says. “There’s a dynamic involved here in which people get used to the idea of Israel and anything connected to Israel being considered tainted. The next phase could be an undeclared consumer boycott and then an all-out boycott.”

(Source / 18.06.2015)

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