An Alternative Euro-Israeli Dispute Resolution. Proposal for the "Rules of Origin" Saga. JMWP No. 49.02, December 2002

Zemer, Lior and Pardo, Sharon (2002) An Alternative Euro-Israeli Dispute Resolution. Proposal for the "Rules of Origin" Saga. JMWP No. 49.02, December 2002. [Working Paper]

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Abstract

1. The Issue under Dispute. The principle of "Rules of Origin" is a main motif in trade agreements. Determining the product’s country of origin constitutes an assessment according to which it will be decided whether an infrastructure of various customs benefits will be accorded to the product. The issue of rules of origin is one of the main characteristics in the Association Agreement between the State of Israel and the European Union of 1995 (hereinafter: the AA), and in light of recent developments, one of the claims is being scrutinized anew. The fourth protocol to the AA regulates and stipulates rules regarding origin of products. The rules also determine a "verification" mechanism of the origin certificates, which serve as a reference according to which the product complies with the origin requirements. In accordance with this mechanism and the awakening regarding violations of the rules of origin, applications have been submitted to the Israeli customs authorities by customs authorities of some of the European Union (hereinafter: the EU) Member States to verify the origin certificates on goods that the State of Israel exports to the EU and that originate in the Jewish settlements of the West Bank, Gaza Strip, East Jerusalem and the Golan Heights (hereinafter: the disputed territories). The origin certificates indicate the goods' country of origin as Israel. Following this, and further to the interpretation by the State of Israel of the trade agreement of 1975, which was signed between Israel and the EEC, and of the AA, trade with the Disputed Territories is entitled to preferential treatment like the other internationally recognised areas of the State of Israel, and therefore, the AA incidence cannot be restricted on these territories. In contrast to Israel’s stance, the EU insists on its claim, according to which these territories are not entitled to enjoy preferential treatment and the benefits bestowed on Israeli products (hereinafter: the dispute).

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