EU Commission proposes suspending free-trade arrangements on Israeli goods

BRUSSELS – The European Commission on Sept 17 proposed suspending a trade arrangement affecting about €5.8 billion (S$8.77 billion) of Israeli exports due to the Gaza war, although the measure does not currently have enough support among European Union nations to pass.

EU foreign policy chief Kaja Kallas also proposed a package of sanctions on two Israeli ministers, as well as “violent” Israeli settlers and 10 senior members of Palestinian militant group Hamas. 

The two ministers are far-right National Security Minister Itamar Ben-Gvir and Finance Minister Bezalel Smotrich, an EU official said.

Israel’s nearly two-year offensive in Gaza and the worsening humanitarian situation have increased political pressure on European leaders to take action.

Israeli exports to face duties if suspension passes

The EU is Israel’s biggest trading partner, with trade in goods between the two amounting to €42.6 billion in 2024, according to the EU.

If the free-trade arrangement is suspended, Israel would face duties at the same level as other countries without a trade accord with the bloc.

In Israel’s case, that would affect exports worth approximately €5.8 billion, resulting in an estimated €227 million a year in duties, a senior commission official told reporters.

Israeli Foreign Minister Gideon Saar said on social media platform X that the European proposals are “morally and politically distorted, and it is to be hoped that they will not be adopted”.

The suspension of free-trade arrangements, first floated by European Commission president Ursula von der Leyen last week, would require the support of a qualified majority of EU governments –15 out of 27 EU members representing 65 per cent of the EU population.

EU diplomats told Reuters that it is unlikely that the proposal would get the necessary support, with much depending on Germany, which has so far been reluctant to impose EU penalties on Israel.

Germany not reached a final view on proposals

A German government spokesperson said on Sept 17 that it has not yet formed a final view on the EU proposals, and Germany wants to keep the channels of communication with Israel open.

Diplomats say the proposed measures against the Israeli ministers are also unlikely to pass as they require unanimous support from EU members.

Ms Kallas said that although public opinion has been shifting due to suffering in Gaza, she believes “the political lines are very much in the place where they have been so far”.

But the proposals mark a political shift in the EU’s relationship with Israel.

The commission is also putting its bilateral support for Israel on hold, without affecting work with Israeli civil society and Yad Vashem, Israel’s main Holocaust memorial centre.

Hamas militants attacked Israel in October 2023, killing about 1,200 people and taking 251 hostages, Israeli tallies show. Israel’s military assault against Hamas has killed more than 64,000 people, Gaza’s Health Ministry says. REUTERS