Answer of the Federal Government to the minor interpellation tabled by Bundestag Members Kerstin Mller, Marieluise Beck, Agnes

Brugger, Viola von Cramon-Taubadel, Thilo Hoppe, Uwe Kekeritz, Katja Keul, Ute Koczv, Tom Koenigs, Omid Nouripour, Lisa Paus, Claudia Roth, Manuel Sarrazin, Dr. Frithjof Schmidt and the Alliance 90/The Greens parliamentary group Bundestag Printed Paper No. 17/13339 of 29.04.2013

Imports to the EU and Germany of products from Israeli settlements in the West Bank

Preliminary remarks of the questioners:

Israel exports a considerable volume of products to the European Union and to Germany. Products from the territories under Israeli occupation (West Bank), originating both in Israeli settlements in these territories and in Palestinian production sites, are imported into the EU and Germany. The Israelis always refer to the country of origin as Israel and make no distinction between production sites in Israel within the pre-1967 borders and in Israeli settlements in the occupied territories (West Bank). The actual place of origin is further obscured where products are produced in settlements but the controlling businesses are domiciled in the Israeli heartland. For European and German consumers it is important to know exactly where and by whom the products they buy were produced. The intention here is not to boycott Israeli or Jewish products, but to enable consumers to make informed decisions about their purchases. The issue is likewise to implement international law and the European Union's policy towards Israel. In October 2012, twenty-two partly faith-based organisations from nine Member States of the EU and from Norway and Switzerland, some of them providing humanitarian and development aid, others promoting peace and human rights, but all of them operating in the West Bank, published a joint report entitled "Trade away peace: how Europe helps sustain illegal Israeli settlements". In the foreword to this report Hans van den Broek, former EU Commissioner for External Relations, makes the point that during the past decades the EU has consistently criticised and condemned Israel's settlement policy, regarding it as a major obstacle to peace between Israel and the Palestinians. The EU, he says, has repeatedly stressed that it will not recognise any unilateral changes to the pre-1967 borders.
The report says: "The most recent estimate of the value of EU imports from settlements provided by the Israeli Government to the World Bank is $300m (230m) a year; this is approximately fifteen times the annual value of EU imports from Palestinians. While settlement exports may represent a relatively small proportion of total Israeli exports, they still amount to a considerable quantity in absolute terms and are of vital importance for the economic viability of many settlements." The report concludes that on the one hand "The position of the EU is absolutely clear: settlements

are illegal under international law [...] and threaten to make a two-state solution impossible." On the other hand, through its policy of importing goods from Israeli settlements in the West Bank, the EU sustains the continued existence of those settlements, not only acting against its declared political view of the situation but also hampering the building of a Palestinian state, to which it contributes sizeable funding. At their meeting of 10 December 2012 the EU foreign ministers, recalling their Foreign Affairs Council conclusions adopted in May 2012, reiterated "their commitment to ensure continued, full and effective implementation of existing European Union legislation and bilateral arrangements applicable to settlement products."

We ask the Federal Government: I. Do the existing tax incentives given to Israeli settlers in the West Bank breach the Paris Protocol of 1994 and possibly agreements between Israel and the EU? Is Israel in breach of the Paris Protocol in drastically curtailing Palestinian exports to Israel and to other countries, allegedly on security grounds? Under Annex V, Article V of the Protocol on Economic Relations, subsumed into the Palestinian-Israeli Interim Agreement of 28 September 1995 on the West Bank and the Gaza Strip, both states are entitled to determine and regulate their policy in matters of direct taxation independently. This entitlement includes the right to grant tax incentives. The Association Agreement of 20 November 1995 between the European Union and Israel contains no restrictions on this right. The Federal Government does not comment on the performance of agreements under international law that are not binding upon the Federal Republic of Germany. In the past, the Federal Government has worked repeatedly, including vis vis Israel, for implementing measures to strengthen the Palestinian economy, and it will continue to do so.

2. What is the value of annual imports from Israeli settlements to Germany and the EU? What is the value of annual imports from Israel as a whole to Germany and the EU? What is the value of annual imports from the Palestinian Autonomous Territories to Germany and the EU?

The Federal Government has no statistical data on annual imports of Israeli settlement products to Germany and the European Union. According to the Federal Statistical Office, German imports from Israel in 2012 were valued at 1.65 billion euros (1.69 billion in 2010; 1.88 billion in 2011), whilst German imports from the Palestinian Territories in 2012 were worth 374 000 euros (178 000 in 2010; 209 000 in 2011). The Federal Government has no reliable figures for the European Union's foreign trade with Israel and the Palestinian Territories.

3. Does the Federal Government see any inconsistency between its declared support for the

Palestinians' efforts to build their own state and the fact that Germany imports products from Israeli settlements, a practice which sustains the continued existence of the Israeli settlements? The Federal Government has for years supported the building of a Palestinian state, politically and through development cooperation. Its view is that a negotiated settlement must be found between Israel and the Palestinians on the borders of this future Palestinian state and the other final status issues. These negotiations must also cover the question of what to do with the settlements established in the occupied territories since 1967. At the same time, the Federal Government regards the ongoing construction of settlements as a breach of international law and an obstacle to peace. It regularly warns - on the web pages of the Foreign Office and elsewhere - of the political and legal risks to investors and businesses of engaging in economic activity in the Israeli settlements. See also answer to Question 2.

4. Given that it distinguishes between Israel within its pre-1967 borders and the Israeli-occupied

territories, does the Federal Government believe that products from Israeli settlements in the West Bank ought not to be described as "Made in Israel"? The Federal Government's view is that only products from the pre-1967 territory of the State of Israel can be labelled "Made in Israel".

5. What is the Federal Government's view on the issue described as follows in the report of the 22

non-governmental organisations: "By trading with settlements and contributing to their permanence, the EU is also undermining its years of political and financial investment in Palestinian state-building efforts"? See answer to Question 3.

6. How does the Federal Government think that both agricultural and industrial goods from Israeli settlements might be reliably labelled in a way which would enable the consumer to know whether the product comes from an Israeli settlement or a Palestinian producer in the West Bank? Might it perhaps issue guidelines requiring products from Israeli settlements to be labelled "West Bank (Israeli settlements)", for example? Germany implements the requirements of EU law. A requirement to indicate the country of origin exists for foodstuffs, for example. These include, for example, fresh fruit and vegetables, wine, honey, beef and veal, olive oil, eggs and poultrymeat from non-EU countries, and organic produce. All measures must be consistent with the uniform framework of EU laws on place of origin labelling. For the interpretation of EU law regarding proper and lawful labelling in all EU Member States, the Federal Government expects the European Commission to provide further guidance which will make it easier for Member States to apply EU law consistently. Rules on the mislabelling of origin, applicable to all products, are also set out in the Food and Feed Code (LFMG). Moreover, under Article 6 of the Directive concerning unfair business-to-consumer commercial practices (2005/29/EC), a commercial practice is deemed to be misleading if, amongst other things, it contains false information in relation to the main characteristics of the product. Directive 2005/29/EC ensures full harmonisation of the rules on unfair commercial practices vis vis consumers. It is thus not possible to set stricter national rules for the scope of the Directive. Sections 3 and 5 of the Unfair Competition Act (UWG) lay down rules accordingly on consumer protection and misleading commercial practices. It is for the courts to decide whether individual cases entail instances of unfair commercial practice. The Federal Government is not aware of any German or European court judgments on the labelling of products from the occupied territories.

7. Why, according to a Spiegel report, does the Federal Government expect the European Commission to provide guidance on the interpretation of EU law in relation to proper and lawful labelling, when the United Kingdom, Ireland, Finland, Sweden, Estonia, the Netherlands, Austria, Spain and Cyprus have clearly replied "no" to the question of whether products from settlements in the West Bank or Golan Heights "come from Israel" (Christoph Schult: Patience Runs Out, Der Spiegel, 9 February 2013)? The Federal Government's view as to the admissibility of "Israel" as a designation of origin is given in the answer to Question 4. This view is shared by all the EU Member States. Furthermore, the application of EU law on designations of origin to the specific case of the Israeli-occupied territories prompts a whole range of questions which, in the view of the Federal Government and its EU partners, need to be clarified by guidance from the European Commission, so that the law can be uniformly applied throughout the EU.

8.

How has the Federal Government delivered on the "commitment to ensure continued, full and effective implementation of existing European Union legislation and bilateral arrangements applicable to settlement products" which the EU foreign ministers reiterated at their meeting of 10 December 2012, recalling their Foreign Affairs Council conclusions adopted in May 2012? What further steps are planned? What rules does the Federal Government regard as important here?

Further to the Council conclusions of May and December 2012, the European Commission, jointly with the European External Action Service, sent out a questionnaire to all EU Member States on implementation of the EU directives on origin labelling. The Federal Government has commented in detail on these matters, indicating the areas in which it believes the European Commission needs to provide the Member States with guidance. The Member States' replies are currently being analysed by the Commission and the European External Action Service. The Federal Government regards this process in Brussels as a core element of efforts to secure full and effective implementation of existing legislation on settlement products. It is essential in the Federal Government's view that consumers should be fully informed.

9.

Does the Federal Government agree with the position of the Wiesbaden city consumer protection department that the "Dead Sea Laboratories, Israel" designation of origin used by the Israeli company Ahava is not misleading because the company has its headquarters in the heartland of Israel, even though its production sites are in the West Bank (Christoph Schult: Patience Runs Out, Der Spiegel, 9 February 2013)?

Responsibility for supervision of the trade in cosmetic products rests exclusively with the authorities of the Lnder. That includes labelling issues. It is not part of the Federal Government's remit to assess the way in which the Lnder interpret and apply the laws. As of 11 July 2013, the date of application of Regulation (EC) No 1223/2009 on cosmetic products, it will become mandatory for imported cosmetic products to specify the country of origin.

10. What ways does the Federal Government envisage of ensuring that labelling must show the actual place where goods are produced and not the address of the company's head office?

By way of example, fruit and vegetables sold fresh to the consumer must indicate their country of origin (Regulation (EC) No 1234/2007, Article 113(1a)). The term "origin" is defined more precisely in the rules on customs duties. Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code gives a definition in Article 23 of "goods originating in a country". In the case of vegetable products these are "vegetable products harvested [within that country]" (paragraph 2b). The reference to harvesting ensures that the designation of origin refers to the place where the goods were actually produced and not to the site of the producer's headquarters.

11. Does the Federal Government believe that precise origin labelling of products from the West Bank will constitute support for Israel, in preventing a situation whereby people stop buying products from Israel altogether until such time as they can be sure that those products are not in fact products from Israeli settlements? The Federal Government stands by the principle that every consumer must be able to take informed decisions about the products he or she buys. This purpose is served by a proper designation of origin on products marketed. This labelling is meant to make it possible, not impossible, for the buyer to make an informed decision.

12. What is the Federal Government doing to counter the impression created in sections of the Israeli media that the debate on proper labelling of goods from settlements in the West Bank is aimed at obtaining a generalised boycott of products from Israel? The Federal Government has repeatedly said that it is opposed to boycotts and that the focus of the debate within the EU on the labelling of settlement products is not on boycotts but on the correct application of EU consumer protection law.

13. Why did the Federal Government not add its signature to the letter of 12 April 2013 sent to EU High Representative Ashton by 13 Member States of the EU (the United Kingdom, France, Spain, the Netherlands, Austria, Belgium, Denmark, Finland, Ireland, Luxembourg, Malta, Portugal and Slovenia), a letter in which they welcomed Lady Ashton's call of 22 February 2013 for full implementation of existing EU legislation regarding the labelling of products from Israeli settlements? The Federal Government plays an active and constructive part in the ongoing debate on settlement products by the appropriate Council bodies in Brussels.

14. What is the Federal Government doing to get the EU and EFTA to oblige Israeli exporters to label products from Israeli settlements properly and stop describing them as originating in "Israel"?

Responsibility for accepting the conformity checks carried out by non-EU countries rests with the European Commission. In August 2012, at the request of the Federal Government and other EU Member States, the European Commission published a list of up-to-date postal codes in the Official Journal which replaces the Notice to Importers on Imports from Israel into the EU of 25 January 2005 and simplifies procedures for checking the origin of goods. Both the European Commission and the European External Action Service have taken specific measures to implement the Council conclusions of May and December 2012. They have the support of the Federal Government in this. See answer to Question 6.

15. Does the Federal Government consider that the provisions of bilateral agreements between the Federal Republic of Germany and Israel stipulate with sufficient clarity that these apply expressly to the State of Israel within its pre-1967 borders, in such a way as to ensure compliance with the decision adopted by the EU foreign ministers at their meeting on 10 December 2012 that all agreements between Israel and the European Union must unequivocally and explicitly indicate their inapplicability to the territories occupied by Israel in 1967? Bilateral agreements in force between the Federal Republic of Germany and the State of Israel and the application of such agreements are consistent with the decision taken at the Foreign Affairs Council of 10 December 2012.

16. Is the Federal Government prepared to implement the ACAA Agreement, which the European Parliament approved in October 2012 and which facilitates trade in industrial products between the EU and Israel but does not include a territorial clause, solely on condition that Israel herself formally agrees that it applies only to the pre-1967 territory of the State of Israel? Regarding the Protocol on Conformity Assessment and Acceptance of Industrial Products of 6 May 2010, which came into force on 19 January 2013 and was concluded between the EU and Israel under the Euro-Mediterranean Agreement establishing an association between the European Communities and their Member States, of the one part, and the State of Israel, of the other part, reference is likewise made to the answer to Question 15. The EU trade commissioner, Karel De Gucht, told the European Parliament it could rest assured that the Commission would observe the EU's position of not recognising Israeli jurisdiction over the occupied territories in implementation of the Agreement.

17. Is the Federal Republic prepared to insist, within the OECD, that when Israel submits statistical data it must always distinguish between the State of Israel within its pre-1967 borders and the settlements in the West Bank?

The Federal Government supports the decision of the Organisation for Economic Cooperation and Development (OECD) that macroeconomic statistics for the State of Israel must be presented in line with the general and international standards of the United Nations, World Bank and International Monetary Fund (IMF). In this way the comparability of published statistics is guaranteed.