A deal that allows Israel to trade with European countries on friendly terms is at the centre of the latest tug of war within the European Union about how to respond to the conflict in Gaza.
Under mounting pressure, the European Commission has proposed suspending the free trade deal. What would that mean, and will it really happen?
Who has proposed what?
The commission, the EU’s executive arm led by Ursula von der Leyen, has proposed suspending the preferential access Israel enjoys to the European market thanks to a long-standing free trade deal. The move still needs to be backed by a majority of the union’s 27 member states – a threshold that could prove to be too high.
The proposal is a significant step for the commission. It has been heavily criticised for failing to hold Israel to account during its near two-year invasion of Gaza.
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The commission is proposing to shelve key elements of a free trade deal that did away with tariff barriers.
For example, Israeli exports of fruits, including dates and avocados, are not subject to import taxes when sold into the EU. Suspending that arrangement would see import duties reimposed on those Israeli goods of between 5 per cent and 16 per cent.
The proposal would end special preference shown to Israeli goods. “We are not proposing to suspend trade with Israel,” one senior commission official said.
“It is important to show Europeans that we are ready, willing and able to act when principles and lines have been crossed,” said another official involved in drafting the proposal.
Would this hurt Israel?
A decision by the EU to suspend the trade deal would be a big blow, both economically and diplomatically.
Last year Israel exported about €16 billion-worth of goods to the EU, making the 27-state bloc its biggest trading partner. All in, exports to Europe account for just under a third of Israel’s trade in a given year.
“We are proposing these measures not to punish Israel or Israeli people, but really to pressure the Israeli government to change course and end the suffering in Gaza,” said Kaja Kallas, the EU’s foreign affairs chief.
The political damage would probably be greater than any economic pain. Israeli prime minister Binyamin Netanyahu’s government wants to avoid the reputational slight of being sanctioned by the EU and has been intensively lobbying behind the scenes to stop that happening.
Will national capitals back the commission plan?
Whether this proposal goes anywhere will likely depend on the governments of Germany and Italy.
German chancellor Friedrich Merz and Italian prime minister Giorgia Meloni have to date blocked any joint EU sanction of Israel. Hungary, Austria and the Czech Republic have also fiercely defended Israel.
Because this decision technically relates to trade, rather than foreign policy, it does not require the unanimous consent of all 27 states to be approved, just the support of a qualified majority. That means the support of 15 or more countries, representing at least two thirds of the EU’s population.
[ Why Ursula von der Leyen’s shift on Israeli sanctions is significantOpens in new window ]
Diplomats believe either Berlin or Rome would need to switch positions to secure such a majority.
Kallas was not optimistic when asked about the prospects. The political faultlines seemed stuck in the same place they had been previously on the contentious subject, she told reporters in Brussels.
Ireland, Spain, and the Netherlands have been leading the push for the EU to do more to restrain Israel from further destroying Gaza. Expect a divisive debate between the different camps over the coming days and weeks on this one.
