Settlement Product Labeling Policies, U.S. vs. EU

The current U.S. and EU approaches are similar in that both bar producers and exporters of products made in settlements from indicating that the point of origin of the products is Israel. The approaches differ, however, in how far they go. U.S. labeling, in effect, differentiates between Israel on the one hand, and the West Bank/Gaza on the other. The EU differentiates not only between Israel and the West Bank, but within the West Bank between Israeli and Palestinian goods. This difference reflects, fundamentally, the different historical and economic circumstances in which the respective regulations were adopted.

Historical Context – The U.S.

The historical context for current U.S. Customs regulations dealing with labeling products from the West Bank is explained in detail in a 1995 Department of Treasury Notice of Policy.

Prior to the onset of the Oslo peace process, U.S. Customs regulations required goods produced in the West Bank and Gaza to have the point of origin labeled "Israel," or “Product of Israel,” or "Israeli-Occupied West Bank (or Gaza),” or words of similar meaning. This reflected Customs’ view that, for the purposes of labeling goods as required under 19 U.S. Code § 1304,

the designation ‘West Bank’ is not an acceptable country of origin marking because the United States does not recognize the West Bank territory as an independent political entity.

It should be noted that even at the time, labeling such products as made in “Israel” was inherently problematic, as the relevant section of the U.S. Code of Federal Regulations, 19 CFR 134.1, explicitly states with respect to country of origin labeling that:

"Country" means the political entity known as a nation. Colonies, possessions, or protectorates outside the boundaries of the mother country are considered separate countries.

In any case,these regulations changed in 1995 (and were further amended in 1997), explicitly in the context of the Oslo process.  The Notice of Policy states that in light of the signing of the Israeli-PLO Declaration of Principles on Interim Self-Government Arrangements (the DOP),

In view of these recent developments [, the U.S. Department of the State has advised the U.S. Department of the Treasury by letter dated October 24, 1994, that, in their view, the primary purpose of 19 U.S.C. 1304 would be best served if goods which are produced in the West Bank and Gaza Strip are permitted to be marked “West Bank” or “Gaza Strip.” The Department of State believes that labeling goods as coming from the “West Bank” or “Gaza” will provide American purchasers with important information indicating their origin, which is the primary purpose of 19 U.S.C. 1304.

Notably, at that time, settlements were producing and exporting little or nothing to the U.S., rendering questions about labeling of settlement products a non-issue. And, notably, there is nothing in the historical record to indicate that in 1995, when this change was adopted, the Government of Israel in any way objected. Indeed, the Notice of Policy specifically cites the fact that, after Customs issued a notice proposing to change the new labeling requirements as per the State Department’s recommendation, only two comments were received from the public, both favorable to the proposal.

The 1995 regulation was updated in 1997, to reflect the fact that under Oslo, the West Bank and Gaza are to be treated as a single geographic/political area. Again, there is no evidence in the historical record that the Government of Israel objected to this updating of the regulations.

Finally, there is the question of East Jerusalem. U.S. Customs regulations, both pre-and post-Oslo, do not explicitly mention East Jerusalem. That said, U.S. policy since 1967, consistent under every president, is that the U.S. does not recognize Israel’s annexation of East Jerusalem, and various pieces of legislation (like the loan guarantees legislation adopted in 1992 and 2000) and agreements that differentiate between Israel and the West Bank do so by referencing geographic areas which were subject to the administration of the Government of Israel before June 5, 1967. By definition, this does not include East Jerusalem, meaning these U.S. Customs regulations should apply there as well.

Historical Context – The EU

The EU rules on labeling of products from the West Bank that are generating attention today were adopted twenty years after Oslo, in 2015. During those 20 years, the situation on the ground changed dramatically, with settlements now producing a significant amount of products for export to the European market (and to the U.S.).  Thus, in 2015, the issue for the EU was about addressing concerns that Israel is deliberately mislabeling settlement goods, which are being exported in large quantities, to hide their true point of origin. Adopting the US approach would not have resolved this problem, since under the US approach, settlement goods would be indistinguishable from Palestinian goods. Thus, the EU approach goes into greater detail, differentiating, in effect, not only between Israel and the West Bank, but within the West Bank between Israeli and Palestinian goods.

Current Approach –The U.S.

The U.S. regulation adopted in 1995 required that all products made in the West Bank (which for the purposes of U.S. law should include East Jerusalem, since the U.S. has never recognized Israel's annexation of East Jerusalem), or Gaza, be labeled as made in the “West Bank” or “Gaza.”

The full text of regulation, including background, is here. The key excerpt is the following:

...unless excepted from marking, goods which are produced in the territorial areas known as the West Bank or Gaza Strip shall be marked as “West Bank,” “Gaza,”  or “Gaza Strip” in accordance with the requirements of 19 U.S.C. 1304 and 19 CFR Part 134, and shall not contain the words “Israel,” “Made in Israel,” “Occupied Territories-Israel,”  or words of similar meaning.

This regulation was updated in 1997, to reflect the fact that under Oslo the West Bank and Gaza are to be treated as single territorial unit. The key excerpt is this:

Pursuant to the request of the Department of State, this document notifies the public that acceptable country of origin markings for goods produced in the territorial areas known as the West Bank or Gaza Strip consist of the following: “West Bank/Gaza,” “West Bank/Gaza Strip,” “West Bank and Gaza,” “‘West Bank and Gaza Strip,” “West Bank,” “Gaza,” and “Gaza Strip.”

This means that, for purposes of export to the U.S., products made by Palestinians in Ramallah are to be marked the same as products made by settlers in the neighboring settlement of Psagot , as made in the “West Bank/Gaza,” “West Bank/Gaza Strip,” “West Bank and Gaza,” “West Bank and Gaza Strip,” or “West Bank.”

Current Approach –The EU

The EU approach goes a step further that the U.S., requiring differentiation not only between Israel and the occupied territories, but also differentiation within the West Bank (including East Jerusalem) and Gaza (and Golan), between Palestinian products and products of settlements. The interpretive note explains in detail that the goal here is to ensure accurate labeling, so that consumers know the true origin of products (also important for categories of imports receiving preferential treatment or subject to specific certifications), and failing to differentiate between Palestinian and Israeli settlement products would not achieve this.  

The full text of the EU's interpretive note regarding labeling is here. The key excerpt is the following:  

(7) Since the Golan Heights and the West Bank (including East Jerusalem) are not part of the Israeli territory according to international law,the indication ‘product from Israel’ is considered to be incorrect and misleading...

(8) To the extent that the indication of the origin is mandatory, another expression will have to be used, which takes into account how these territories are often known.

(9) For products from Palestine that do not originate from settlements, an indication which does not mislead about the geographical origin, while corresponding to international practice, could be 'product from the West Bank (Palestinian product)', product from Gaza’ or 'product from Palestine'.

(10) For products from the West Bank or the Golan Heights that originate from settlements,an indication limited to 'product from the Golan Heights' or 'product from the West Bank' would not be acceptable. Even if they would designate the wider area or territory from which the product originates, the omission of the additional geographical information that the product comes from Israeli settlements would mislead the consumer as to the true origin of the product. In such cases the expression 'Israeli settlement' or equivalent needs to be added, in brackets, for example. Therefore, expressions such as 'product from the Golan Heights (Israeli settlement)' or 'product from the West Bank (Israeli settlement)' could be used.

 Looking Ahead

In the 20 years since the U.S. regulations were adopted, the settlement economy in the West Bank has grown exponentially, and generates significant exports, including to the United States.  It is unknown to what degree settlement exporters (and importers of settlement goods) comply with U.S. regulations. Anecdotal evidence indicates that to a great extent they do not, raising questions about the need for stronger enforcement and penalties for non-compliance.  The recent move by U.S. Customs authorities to issue a notice reminding importers of U.S. labeling requirements for goods coming from the West Bank may indicate that such enforcement is, indeed, being beefed up.

Moreover, the EU labeling requirements shine a spotlight on the deficiency of the U.S. regulations. If the purpose of point-of-origin labeling is at least in part to permit consumers to know where products are coming from when they make purchasing decisions, then U.S. regulations fall short. The EU approach, which permits consumers to know whether products in the West Bank are from Israeli settlements or are Palestinian products, is a model for labeling that is genuinely accurate and transparent.

 

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