ECJ Rules that West Bank Goods are NOT “Made in Israel”

by Julian Ku

The BBC reports:

The European Court of Justice has ruled that Israeli goods made in Jewish settlements in the occupied West Bank cannot be considered Israeli.

This means goods made by Israelis or Jews in the West Bank cannot benefit from a trade deal giving Israel preferential access to EU markets.

At first glance, this seems like the correct result, especially given the existence of a separate EC-PLO trade agreement that is intended to govern such goods.  Moreover, according to the ECJ, Israel never responded to German requests to confirm the origin of these goods.  So Israel doesn’t seem to have much of a case here.

Of course, the result seems of dubious benefit to actual residents of the West Bank, but that is another matter I suppose (see here for an argument on this line). A fuller discussion of the opinion can be found here but I can’t seem to find the full judgment on the ECJ website.  Anyone who has a link should feel free to post it in the comments.

http://opiniojuris.org/2010/02/27/ecj-rules-that-west-bank-goods-are-not-made-in-israel/

16 Responses

  1. Unfortunately the ECJ website is poorly designed so you can’t link directly to judgements, so you need to search for case C‑386/08 (Brita GmbH v Hauptzollamt Hamburg-Hafen), dated 25th February 2009.

  2. I guess I shouldn’t be surprised, but once more, Julian Ku links to inane nonsense. From the Commentary link:

    Europeans are obviously entitled to put principle above the consequences for Palestinian employment; countries make such decisions all the time. But the fact remains that once again, the biggest victims of efforts to advance the “peace process” will be ordinary Palestinians.
     
    I’d be surprised if the ECJ regarded its decision as an effort to advance the peace process, and just from skimming the opinion, nothing in it leads me to believe that the ECJ did so regard its opinion. Therefore, I’m only left to conclude that the writer wanted to take a gratuitous shot at the peace process (note the quotation marks, too). Lame.

    Many Israeli firms moved to the West Bank because they could export to the EU duty-free while also benefiting from cheaper Palestinian labor. Thus, if the new import taxes lower these firms’ profits, hundreds of Palestinians could lose their jobs. And because “Palestinians are largely barred from working in Israel and have few job opportunities in the Palestinian-controlled areas of the West Bank, jobs in settlement factories are sought after.”

    Yes, Israel creates “settlement factories” on expropriated Palestinian land, then hires Palestinians to work in them at lower wage rates and with fewer labor protections, in order to exploit the labor of an occupied people. Israel was really just doing the Palestinians a favor by creating employment opportunities!

    Which do you think Palestinians would prefer: to work in Israeli settlement factories, or for the occupation to end?

    Moreover, tens of thousands of Palestinians used to work inside Israel; today, almost none do. The second intifada made a massive flow of Palestinians into Israel too risky, and Israelis felt no obligation to employ residents of a state-in-the-making that was waging nonstop physical and diplomatic warfare against them. The Palestinians, after all, cannot simultaneously demand independence from Israel and jobs inside Israel. The result is unemployment that now totals 18 percent in the West Bank and 39 percent in Gaza.
     
    Yes, and the Israeli strangulation of Gaza has nothing to do with that. The enclavizaiton of the West Bank has nothing to do with that. Movement restrictions on Palestinians in the West Bank have nothing to do with that. Expropriation of Palestinian farms and the destruction of Palestinian businesses by the occupying forces have nothing to do with that.
     
    It’s all because the Palestinians are just a bunch of terrorists, and if they’d only see that the Israelis really want to extend the opportunity to them to have good jobs, well, Palestinians would magically be much more content and happier than they are now.
     
    That piece is so perverse that it’s frankly disgusting.

  3. Regarding the commentary linked by Julia Ku, it is necessary to point out that, while it is true that now the products made in the West Bank are not going to fall within the scope of the EC-Israel Agreement, they are no going to be subject to import duties. The EC-PLO Agreement will apply to these goods instead.  Article 5 of that agreement provides that ‘[n]o new customs duty on imports, or any other charge having equivalent effect, shall be introduced on trade between the Community and the West Bank and Gaza Strip’. Article 6 of the Agreement goes on to state that ‘[i]mports into the Community of products originating in the West Bank and the Gaza Strip shall be allowed free of customs duties and of any other charge having equivalent effect and free of quantitative restrictions and of any other measure having equivalent effect’.
    Therefore, I do not understand how the application of the same preferential treatment to the same goods, although governed by a different agreement, can be a disadvantage to the companies operating in the occupied territories.

  4. I agree with Anonsters: the ECJ had to decide this way and other considerations such as those mentioned by Julian Ku have to be left out. the judgement is legally precise and comprehensible, and, fortunately, neglects such non-legal arguments.

    to Andrés: for your question check marginal numbers 55ff. of the judgement. the ECJ explains that

    “To allow elective determination simply because both the agreements at issue provide for preferential treatment and because the place of origin of the goods is established by evidence other than that envisaged under the association agreement that is actually applicable would be tantamount to denying, generally, that, in order to be entitled to the preferential treatment, it is necessary to provide valid proof of origin issued by the competent authority of the exporting State.”

    it rules that

    “the customs authorities of the importing Member State may not make an elective determination, leaving open the questions of which of the agreements to be taken into account – namely, the EC-Israel Association Agreement and the EC-PLO Association Agreement – applies in the circumstances of the case and of whether proof of origin falls to be issued by the Israeli authorities or by the Palestinian authorities.”

    Conclusion: the EU/PLO agreement is only applicable if the PLO administration is the exporting state and issues proof of origin.

  5. Let’s just get this straight…products made in the West Bank by Palestinians benefit from reduced tariffs. Products made by Jews in the West Bank are subject to higher tariffs. Same products, same locations, but different treatment. Explain to me why it doesn’t sound like Europe things it’s Nuremberg 1935 all over again.

  6. Andres, I think it’s fair to say that Jewish Israelis in the West Bank probably have a chance between “slim and none” to actually receive the West Bank’s reduced tariffs under the PLO agreement. The purpose of this suit—and similar actions taken by other European states—appears to try and punish any productive activity by Jewish Israelis in any of the disputed territories, and therefore its effects will definitely not be neutral for those companies operating under a separate tariff agreement.

  7. Explain to me why it doesn’t sound like Europe things it’s Nuremberg 1935 all over again.


    Oh, I dunno. Maybe because Israel is the belligerent occupier of the West Bank, and the products made by the Jews who would be subject to the tariffs are made on illegal settlements planted on forcibly expropriated land. Ho hum.

  8. Anonsters, by their own agreements between Israel and the PLO, the final borders of Israel and any potential Palestinian state are not yet determined. While it may be true that these lands will be “Palestinian” in the future, it’s shortsighted for the ECJ to prohibit Israel from declaring goods made by Israelis—in territory that Israel has de facto control over, that may one day end up becoming bilaterally recognized as Israeli (by land-swap deals)—as being “Made in Israel” for these purposes. Especially when it establishes de facto ethnic-based punishment akin to what Jews in Europe suffered only several generations ago—thus my Nuremberg reference.

  9. Nathan, excuse me, are you from the past?! seemingly there’s no discussion without reference to the Nazis. besides that you got all the information necessary to answer your question. you admit it yourself:

    “… it may be true that these lands will be “Palestinian” in the future”
    “… territory that Israel has de facto control over, that may one day end up becoming bilaterally recognized as Israeli (by land-swap deals
    )”

    you’re right in saying that the future of the territories is yet to be determined. conclusion: the territory is currently NOT Israel. and that’s all the ECJ finds and bases its judgement on. what is there to discuss?


  10. Chris, please pardon me, but I’m going to address your two points in reverse order.
    I think you’re incorrect in understanding my remarks as endorsing the view that the territories are currently not part of Israel. I said it might not be Israel in the future, but as of right now I think there is a very persuasive argument that it is a part Israel, or at the least it’s not “not Israel.” (Pardon the use of the double negative.)

    Right now there is no Palestinian state, and Israel exercises de facto control over that territory and no other existing state lays claims to it. The Palestinian Authority disputes its status, but the PA is not a state, and has no finalized borders internationally, and even bilaterally—between the PA and Israel—it’s not recognized as definitively Palestinian. On what ground, other than a desire by the ECJ to settle the issue itself, can they say it’s not Israel?

    It’s interesting, you asked me if I were from the past, but I have to ask: is the ECJ from the future and knows how these territories will be divided up? Because as of right now, that territory is as much Israel as it isn’t (in my humble opinion).

    Second, for my comparison to Nuremberg. I am not disputing the ECJ may have a solid legal argument for not recognizing it as being from “Israel.” I don’t know this area of law well enough to address those particulars. But my comment was directed towards what I think may be the practical effect of this ruling—and what I believe is also the intended goal of those pursuing it. And that’s to try stigmatize Israelis in the West Bank, and treat one class of people more harshly in the same region simply due to them being Jewish in a non-Jewish area.

    And the last time Europeans stripped Jews of their economic privileges in a manner at all like this was in the Nuremberg laws. Obviously this is not to the same extent or for the same purpose, but I think the parallels that do exist are strong enough to warrant the comparison. But you’re welcomed to disagree.

  11. It’s interesting, you asked me if I were from the past, but I have to ask: is the ECJ from the future and knows how these territories will be divided up? Because as of right now, that territory is as much Israel as it isn’t (in my humble opinion).

     
    I regret to inform you that you are wrong.
     
    Both the ICJ (albeit in an advisory, non-contentious, and non-binding opinion) and Israel’s High Court of Justice, as well as the majority of legal scholars who have studied the issue, regard the Occupied Territories as… occupied territories.
     
    Israel has certain obligations and responsibilities under the Fourth Geneva Convention and the Hague Regulations as the Occupying Power.
     
    The West Bank is not Israel. Period.

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    Territoriality and Origin of Goods.
    All:

    Importing states generally apply two territorial approaches when determining a product’s origin: the practical-trade approach, and the political-sovereignty approach. The practical-trade approach evaluates the question of origin from a purely commercial standpoint and determines the relevant questions according to the principles of international trade law, while minimizing politics in evaluating rules of origin. Alternatively, the political-sovereignty approach gauges issues of origin from the perspective of international politics. It therefore highlights questions of sovereignty recognition.
    For the following reasons, I posit that here the Court employed the political-sovereignty approach. First, from a purely trade law analysis, it is ludicrous to believe that then Prime Minister Shimon Peres – who executed the Agreement on Nov. 20, 1995, days after Yitzhak Rabin was assasinated – - a leading architect of Israel’s settlement policies, would have executed any agreement that did not incorporate the West Bank, Gaza and the Golan Heights, as within “the territory of the State of Israel.” Peres also would absolutely not have waived Israeli cutoms jurisdiction over these areas. Moroever, looking at the four-corners of the EC-Israel Agreement, there is no definition of the term “the territory of the State of Israel.” Again, Peres would not have signed any document that intended to limit Israel’s customs jurisdiction over the areas at issue.
     
    Similarly, as an afterthought, the Court’s insertion at ¶ 64, of what it believes is the European Union’s view of the territories captured by Israel in 1967 is wholly immaterial and beside the point. The Parties could have agreed to the territorial scope at any time during the negotiation, or the EC could have sought to add a territoriality reservation to the EC-Israel Agreement, as late as the year 2000, when its members approved it. Additionally, what the EU or EC believes is the territory of Israel in 2006 or 2009 appears to be extraneous. Both the EC and Israel, of course have the option of renegotiating the Agreement. However, since the Court seems to believe that the EU’s position is that the West Bank is not Israeli territory, why does the EU not say that the Agreement in null and void until the Parties can agree on its territorial scope.
     
    It is however fair to ask why Israel did not respond within the required 10 month period, under the EC-Israel Agreement, to the Hamburg Customs office request. It is also curious that there is no mention whether Brita or Soda-Club asked Israel to stand up for its position that the West Bank is part of Israel.
    Finally, although not a legal issue, judicial opinions have consequences. I will make two practical observations. First, the reason that Israeli companies set up operations in the West Bank is because of an inexpensive Palestinian labor pool and duty-free exports to the EU. Thus, if the Court’s decision is adopted throughout Europe, new export duties may mean lower profits for these firms, and hundreds, if not thousands of Palestinians may lose their jobs. Given that the unemployment rate on the West Bank, in places, exceeds 33%, this cannot be good news for Palestinians.
    Second, since the Court says that the Golan Heights are also not israeli territory, goods from that region, whose exports are in the billions of Euros will also be implicated.

  13. you’re right, Itzchak, let’s add to our argument here the behaviour of the German and Israeli administration. it’s fair to question the circumstances of the case a little bit more, just as the ECJ did in its judgement.

    “It is however fair to ask why Israel did not respond within the required 10 month period, under the EC-Israel Agreement, to the Hamburg Customs office request. It is also curious that there is no mention whether Brita or Soda-Club asked Israel to stand up for its position that the West Bank is part of Israel.”

    I want to add here some further facts to what you said.
    1) it’s, it appears, the first case the German administration was more picky concerning the place of origin of a product “made in Israel”. 2) or there have been more incidences we don’t know of where the German administration did not apply the EC-ISRAEL agreement but the importing company decided to not complain before a German (or, for that matter, any other European) court. 3) here’s the question of the Israeli administration’s behaviour. just repeating what Itzchak said: why didn’t the Israeli office respond? 4) did the Hamburg Finanzgericht have to submit the case to the ECJ or were there other options? 5) and finally, similar to what Itzchak said: what’s the Isreali government’s position? as far as I know it was very quiet just as the Israeli media. so my guess is that they know they can only lose claiming Westbank is Israel. nobody started seriously challenging the judgement on legal grounds.
    these are only some of the points that really call my attention since the authorities’ action might have been based on much more “political” decisions than the ECJ’s reasoning and judgement. here is where we have to start speculating in lack of much information – since the ECJ remains, as far as I have read, silent and the media and most commentators were not so much interested in such aspects of the case.

  14. Chris.  Thanks for your exceptionally astute insights.  I could not agree with you more.

    If we take the facts as presented by the ECJ at face value, one could argue that the Israeli customs officials, backed by high level government officials, decided not to fight this battle and leave Soda-Club and similarly situated companies to take the hit, while maintaining national policy that the West Bank “is” Israeli territory until the parties to the conflict, i.e., Israel and the Palestinian Authority, decide otherwise.

    Perish the thought that a government would place politics and ideology over the plight of citizens that it has encouraged to invest their money in a given undertaking!  Does that sort of thing take place anywhere else in the world?

    Indeed, sales from West Bank and East Jerusalem manufacturers have been estimated at some 75 million Euros (approx. $100 million) per annum.  Compare that with  overall Israel exports to the EU of 13 billion Euros per annum.  It’s a drop in the preverbial ocean.  So, maybe the government decided that it’s better to hang Soda-Club and its cohorts out to dry, and not get into a row withe EC and EU officials.

    Just a thought.

  15. Since my earlier comment still hasn’t appeared, let me try again more carefully. This is what was written on EJIL:Talk! about this case. (I’ll omit the link, since that probably got me in trouble last time.)

    One might have thought that the question would hinge on whether the origin of the products fell within the territorial scope of the EC-Israel Agreement (the ‘territory of the State of Israel’). But the Court took quite a different route. It referred to the EC-PLO Association Agreement, which provides for free trade for products from the ‘territories of the West Bank and the Gaza Strip’ and said:

    52. Accordingly, to interpret Article 83 of the EC-Israel Association Agreement as meaning that the Israeli customs authorities enjoy competence in respect of products originating in the West Bank would be tantamount to imposing on the Palestinian customs authorities an obligation to refrain from exercising the competence conferred upon them by virtue of the abovementioned provisions of the EC-PLO Protocol. Such an interpretation, the effect of which would be to create an obligation for a third party without its consent, would thus be contrary to the principle of general international law, ‘pacta tertiis nec nocent nec prosunt’, as consolidated in Article 34 of the Vienna Convention.

    Is this correct? Recognizing Israeli competence in relation to products originating in the West Bank does not amount to a denial of Palestinian competence over those products. And even if it did, it does not impose any obligation on the Palestinian authorities not to exercise this competence. They remain free to do so, if they can. So this is not entirely convincing.
    The more interesting question is why the Court found it necessary to adopt this odd approach to the case. Why not just determine whether or not the West Bank is part of the ‘territory of the State of Israel’ (as did the A-G)? Could this have anything to do with possible future cases involving annexed territories?

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