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Monday, 21 October, 2002, 15:31 GMT 16:31 UK
EU holds fire on 'Made in Israel' row
Palestinian and Jewish shop in the occupied territories
Jewish businesses in occupied territories are at stake
Israel has averted higher European Union import duties on $200m-worth of products from Jewish settlements in the West Bank, Gaza Strip and Golan Heights.

Israeli Foreign Minister Shimon Peres met his 15 EU counterparts on Monday, and agreed that the issue should be put on ice pending "technical talks" next year.

Goods produced in the occupied territories are not covered by a trade agreement signed in 2000 between the EU and Israel, which offers low or zero tariff access.

Only about 2% of the $7.6bn-worth of exports from Israel to the EU would be affected.

The issue is highly political, because it deals directly with the legality of Israel's occupation and borders.

European concerns

EU are nonetheless concerned over the issue, and have levelled a list of economic grievances against the Israeli Government.

"Israel must proceed with easing of restrictions on Palestinian population and allow full, safe, and unfettered access to the occupied territories for international and humanitarian personnel," said Danish Foreign Minister Per Stig Moeller.

"Israel must immediately stop the on-going expansion of settlements."

Also at issue are millions of dollars in tax revenues which Israel has withheld from Palestinians.

The EU is demanding that this be repatriated.

Made in Palestine?

Goods manufactured in the West Bank, Gaza Strip, East Jerusalem and Golan Heights cannot be labelled as "Made in Israel" under the trade agreements.

In November, the European Commission told importers they would have to collect deposits for the full duties on imports from these areas.

The Commission gave Israel 10 months to clarify its position.

Israeli Foreign Minister Shimon Peres is expected to try to resolve the dispute when he meets his EU counterparts in Luxembourg on Monday.

The EU has a trade agreement with the Palestinian Authority, which allows exports from the West Bank and Gaza to enter Europe at similar low tariffs.


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