On Wednesday 17 September, the European Commission translated into action the promises made by its President, Ursula von der Leyen, with regard to measures against Israel, owing to the humanitarian situation in Gaza (see EUROPE 13706/1). It proposed suspending tariff preferences on products traded between the EU and Israel, imposing sanctions on several individuals and halting financial support for Israel. “The aim is not to punish Israel. The aim is to improve the humanitarian situation in Gaza”, EU High Representative Kaja Kallas told the media.
Commercial side. Several Member States have called for it (see EUROPE 13644/1): the Commission is proposing to suspend part of the EU-Israel Association Agreement, namely the removal of tariffs on goods. Services are not affected, as they are not given special treatment in the Agreement.
However, not all Israeli products would be affected: 63% of Israel’s exports to the EU are not covered by the Association Agreement, but remain subject to the so-called most-favoured nation (MFN) tariff, which is close to or equal to zero. This treatment would remain unchanged.
On the other hand, the 37% of exports covered by the Agreement would see their tariffs increase if the decision were adopted. According to European Commission estimates, this covers around €5.8 billion of Israeli exports to the EU, which could bring in €227 million in additional customs duties.
In the opposite direction, European exports to Israel could be subject to €574 million in additional tariffs.
“We regret having to take this step, but it is both appropriate and proportionate in view of the situation in Gaza”, said European Commission for Trade, Maroš Šefčovič.
In its proposal for a decision, the Commission leaves certain parts of the Agreement untouched: these include the free movement of capital, compliance with intellectual property rules by both parties, competition rules and provisions on public procurement (Title IV of the Agreement). This enables customs authorities, for example, to continue to cooperate and money flows to circulate easily.
See the proposal: https://aeur.eu/f/ih6; and its annex: https://aeur.eu/f/ih7
Adoption procedure. Under the Association Agreement in force since 2000, the EU can suspend trade provisions unilaterally, without recourse to a dispute settlement procedure. It is based on a review of compliance with Article 2 of the Agreement, according to which Israel has breached essential clauses relating to human rights (see EUROPE 13665/3).
The EU Council must now approve the decision by a qualified majority, in line with the EU’s exclusive competence in trade matters.
Approval by Member States is not guaranteed (see EUROPE 13710/17). Concerning the suspension of Israel’s participation in part of the Horizon Europe research programme, Germany, Italy, Hungary, Bulgaria and the Czech Republic are said to have opposed it, preventing the proposal from achieving a qualified majority (see EUROPE 13699/2).
However, according to several sources, if Germany were to change its position, Italy could follow suit.
Ursula von der Leyen had anticipated disagreements in her State of the Union address. But the Commission feels that it is assuming its responsibilities with this proposal and is putting the ball in the Member States’ court.
However, if the proposed decision manages to gather sufficient support in the Council, the Commission will then have to notify the measure to the EU-Israel Association Council. A 30-day window will then be opened before the suspension takes effect, in particular to allow economic players to prepare for it.
“These 30 days will also be used to continue the dialogue, in the hope that in the end we will not need to impose the measure”, explained a European official.
If this suspension is ultimately implemented, it will not have an end date. Only a decision by the EU Council by qualified majority could reinstate trade liberalisation.
Proposed sanctions against ministers. The European Commission has also proposed sanctioning two Israeli ministers from the extreme right: Itamar Ben Gvir (National Security) and Bezalel Smotrich (Finance), as well as three violent settlers and six entities facilitating their actions, under the Human Rights Sanctions Regime, and 10 members of the Hamas politburo, based in Gaza, the West Bank and third countries, “based on a new listing criterion under the Hamas Sanctions Regime”.
Adoption of such a measure requires the unanimity of Member States and could prove difficult. A proposal for measures against violent settlers and members of Hamas has been on the table of the EU Council for several months, without agreement.
In addition, a proposal by the EU High Representative in August 2024 to sanction the two ministers never gained the necessary support. However, according to a senior official, the situation could change, given what has happened and is happening on the ground – whether in Gaza or the West Bank – and the fact that several EU Member States (see EUROPE 13690/2, 13683/28) and third countries (the United Kingdom and Canada) have sanctioned these ministers.
Suspension of bilateral support. The Commission has also decided to suspend the EU’s bilateral support to Israel, covered by the Neighbourhood, Development and International Cooperation Instrument. Israel was to receive an average of €6 million a year between 2025 and 2027. This sum has not yet been adopted by the Commission and will not be submitted to Member States, according to a senior European official.
The Commission will also suspend institutional cooperation projects, including twinning programmes with Israeli authorities and projects under the regional EU-Israel cooperation facility. This represents around €14 million.
“Until further notice, we will not be jointly identifying new actions or signing contracts”, explained the European Commissioner for the Mediterranean, Dubravka Šuica.
Of these funds, €4.3 million have already been contracted. “Individual contracts entered into always contain specific clauses allowing them to be temporarily suspended if conditions change. We are in the process of sending the necessary legal documents to our partners to suspend the contracts. This decision is based on the assessment that the objectives of the activities we are funding with European taxpayers’ money are not yet fully operational”, explained a European source.
Support for civil society (around €10.2 million) and for Yad Vashem (€20 million) is not affected, nor is support for peace-building initiatives (€5 million per year).
Israel denounces the announcements. The Israeli Foreign Affairs Minister, Gideon Sa'ar, described the Commission’s proposals as “morally and politically distorted”. He hoped that they would not be adopted, “as has been the case so far”. “Steps against Israel will be answered accordingly, and we hope we will not be required to take them”, he warned, adding that action against Israel would damage Europe’s interests. (Original version in French by Léa Marchal and Camille-Cerise Gessant)