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April 13, 2001/Nisan 20, 5761, Vol. 53, No.28
E.U., Israel tussle over West Bank products
JESSICA STEINBERG
Jewish Telegraphic Agency
JERUSALEM - When British-born Peter Wise-burgh established Soda-Club Enterprises in 1991, he probably didn't expect to be part of a spat with the European Union over Israel's borders.
Wiseburgh's Israeli company wanted to export in-home carbonation systems that turn tap water into sparkling water. It chose to establish a production plant in a former munitions factory in the Mishor Adumim industrial zone, which is in the West Bank but is often considered part of greater Jerusalem.
"We were looking for a large factory, and this popped up and we took it," Wiseburgh said. "The Israeli government encouraged us to go there. Now they have to find some reasonable way to overcome what is a bureaucratic problem."
Despite the lack of an Israeli-Palestinian peace agreement, it was assumed in the early 1990s that West Bank products exported to the European Union would enjoy the tax-exempt status granted other Israeli products under the Israel-E.U. free-trade agreement.
In 1997, however, as Europe adopted an increasingly hostile tone toward Benjamin Netanyahu's Likud government, the European Union effectively defined everything across the Green Line - Israel's border before the 1967 Six-Day War - as Palestinian land.
Feeding the E.U.'s decision was a boycott campaign led by left-wing Israeli activists against Israeli products made in the West Bank and Gaza Strip.
Taken together, the steps placed Soda Club and dozens of other Israeli companies at the center of a growing political storm.
Israel and the European Union agreed to a 10-month hiatus to settle the question of whether West Bank products would enjoy the tax-free status given Israel's other European exports. That period will expire at the end of May.
On May 21, a joint committee on the Israel-E.U. association will meet in Brussels to discuss, among other matters, whether to differentiate between goods prepared in Israel proper and those made by Israeli companies in the West Bank.
Most of the Israeli companies in question - whether they're growing flowers, developing Dead Sea beauty products or producing seltzer-making systems - set up shop in the West Bank for the cheap and plentiful real estate.
But E.U. officials see the moves as a ploy to get tax breaks for products made in occupied territory. A decision to tax such exports could have serious economic consequences for Wiseburgh and other Israeli entrepreneurs in the West Bank and Gaza Strip.
More importantly, however, it would mark a further deterioration in Israel's relations with Europe at a time when the European Union is demanding a larger role in Israeli-Palestinian peace efforts. Israelis increasingly perceive the European Union as biased toward the Palestinians, who claim all of the West Bank for themselves.
The question is, will the 15 E.U. countries let politics interfere with business?
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