A European court ruled Thursday that Israeli goods produced in the Palestinian territories cannot benefit from EU trade privileges, in a politically sensitive judgment centering on Jewish settlements.
In its decision, the Luxembourg-based European Court of Justice maintained a clear legal distinction between Israel and the Palestinian territories, regardless of whether the Jewish state controls any of those areas.
The case concerns German drinks filter and dispenser company Brita which had sought to import drinks makers and syrups from Israeli producer Soda-Club, made at a site in Mishor Adumin in the West Bank, to the east of Jerusalem.
Brita contested a German court decision which refused the goods preferential duties treatment as the products were made in the Israeli-occupied territories.
The EU court in Luxembourg upheld that decision, ruling that "products originating in the West Bank do not fall within the territorial scope of the European Community-Israel agreement and do not therefore qualify for preferential treatment under that agreement."
The court decision, while made to settle a trade and customs dispute, touches on the controversial issue of Jewish settlements in the occupied territories, a fraught issue at the heart of the Middle East peace process, and the status of the Palestinian territories themselves.
The European Union would like to see the emergence of a fully-fledged state of Palestine, though as part of a full negotiated agreement with Israel.
The EU already has its separate association agreements with Israel and the Palestine Liberation Organization, the latter acting for the benefit of the Palestinian Authority of the West Bank and the Gaza Strip.
Those agreements provide that industrial imports to Europe originating in Israel or the Palestinian territories respectively are exempt from customs duties.
Under the deals the parties are expected to cooperate on determining the precise origin of the products receiving preferential treatment.
The case goes back several years and came to light as suspicious German customs officials questioned their Israeli counterparts as to the exact origins of the products.
The Israeli side had responded that the merchandise was made in an area under "their responsibility." But it had not said whether it came from the occupied territories.
That response prompted the German authorities to deny the goods the trade privileges.
The Palestinian side had expected such a court decision.
During a visit to Brussels on Tuesday, Palestinian leader Mahmud Abbas called on Europe "not to invest in the settlements and to boycott products" made in the Israeli settlements within the West Bank.
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