The Psagot Winery, an enterprise located in an Israeli settlement near Ramallah in the West Bank, bills its product as coming from a vineyard in the “Jerusalem Mountains,” masking its location.
Labels on Psagot wine bottles shipped abroad say it is a product of Israel.
But in the European Union, Israel’s largest trading partner, such branding is about to change, to the chagrin of Israeli officials.
As soon as next week, the EU is poised to issue guidelines that will require its member states to clearly label products manufactured in Israeli West Bank settlements differently from goods made in Israel.
The Israeli government has launched a last-minute diplomatic push against the step. But officials privately acknowledge that the new guidelines are inevitable. The fear is it will make it easier for critics of Israel’s policies to boycott goods made in West Bank settlements, which much of the international community views as illegal under international law.
The potential economic impact of the new labeling is limited. Products manufactured in settlements make up less than 1 percent of total Israeli exports to the European Union, according to official figures.
But the political overtones of the European move have struck a nerve in Israel’s hawkish government, which supports the settlements and their expansion. Israeli officials have accused the EU of using trade as a political tool, putting all Israeli products at risk of a consumer boycott.
Prime Minister Benjamin Netanyahu has taken the argument further, comparing the labeling initiative to anti-Jewish persecution in Europe before World War II.
“The root of the conflict is not the territories, and the root of the conflict is not the settlements,” he said after the European Parliament voted in September to endorse the labeling of settlement goods. “We have historical memory of what happened when Europe labeled Jewish products.”
At a subsequent meeting with EU foreign policy chief Federica Mogherini, Netanyahu said that for many Israelis, the European labeling move “recalls dark days in Europe,” according to an account by his office.
The labeling of Israeli settlement products seeks to spell out the distinction between Israel and the territories it captured in the Six-Day War in 1967.
Lars Faaborg-Andersen, the EU ambassador to Israel, told Israel Television on Tuesday that goods produced in territories outside Israel’s internationally recognized borders “cannot be designated made in Israel, it'll have to say on the product that it’s made in a settlement in the West Bank.”
Tzipi Hotovely, the Israeli deputy foreign minister, lumped the new labeling guidelines with efforts by international activists to boycott Israel because of its policies toward the Palestinians.
“This move to label products is a clear move to de-legitimize Israel,” Hotovely said while touring an Israeli industrial zone in the West Bank, which she said was no different than factories in Israel proper. “As far as we’re concerned, all of Israel faces the threat of boycott. … Labeling is boycotting Israel.”
Israeli officials have raised the alarm in recent months over inroads made by the Boycott Divestment and Sanctions movement, a pro-Palestinian effort aimed at isolating Israel and modeled after a similar campaign against the former apartheid government in South Africa.
EU officials have asserted that their step is not a boycott but a move to inform consumers in line with the European position that the settlements are not part of Israel.
The EU already has taken measures to exclude settlement goods from duty-free status granted to Israeli products under a free-trade agreement with Israel. Britain, Denmark and Belgium have introduced their own labeling guidelines for settlement products.
Hotovely is traveling this week to Spain, Germany and France to lobby against the labeling guidelines being prepared by the EU. She has argued that the step could harm thousands of Palestinian families whose members work in Israeli factories and farms in the West Bank.
But there is scant hope in Israel that the lobbying effort will succeed.
Ohad Cohen, who heads the foreign trade section in the Israeli Ministry of Economy, told Israel Radio on Wednesday that efforts are underway to find new markets for Israeli goods, besides Europe and the United States.
“We are trying to develop markets in Asia and Latin America, to give those Israeli exporters who could run into difficulties while exporting to the European Union new possibilities,” he said.