The European Union's high court ruled Thursday that products that Israeli companies make in the West Bank are subject to import duties in the EU because they are not covered by trade agreements the bloc has with Israel or the Palestinian Authority.
Israeli Foreign Ministry spokesman Yigal Palmor said Israel had no immediate comment on the EU court ruling.
Existing EU trade agreements charge no import duties on Israeli products made in Israel and Palestinian ones made in the West Bank. Israeli companies located in the settlements produce many products there, including cookies, pretzels, wines, cosmetics and computer equipment.
Thursday's ruling stems from a German case filed by Brita, a German company that imports drink-makers for sparkling water and fruit syrups from Soda-Club Ltd., an Israeli company in Mishor Adumim, one of 10 Israeli industrial areas in the West Bank.
Brita told German customs authorities its imports came from Israel and were therefore exempt from import duties.
Suspecting they came from the West bank, German authorities asked Israel to clarify matters. Israeli customs only confirmed the goods originated in an area under Israeli responsibility and said nothing about the West Bank.
The Palestinian Authority cannot lose rights to trade benefits to an EU-Israel deal, and Israeli goods can only get preferential treatment if they have been manufactured in Israel proper, the court said.
Later Thursday, soda Club CEO Daniel Barenboim told Ynet: "The case is between BRITA and the European customs' authority concerning the import of Soda Club products in 2002. In any case, our company does not enjoy tax benefits for export to the EU these days so this case is an archeological matter."
Meanwhile, an Israeli official offered the following comments: "The situation is such that the EU does not offer tax benefits for Israeli products manufactured beyond the Green Line. They do not consider it an area under Israeli sovereignty. Therefore this verdict, while unpleasant for us, changes nothing in respect to the status of Israeli goods exported to the EU."
"According to agreements between Israel and the EU, products produced inside the Green Line are entitled to tax benefits," the official added. "Products produced outside the Green Line, by European standards, are not eligible for such benefits. This is the situation and though unpleasant for us, is not likely to change for the worse."