In 2000, the European Union and Israel established a free trade framework that eliminated import duties between them. A safeguard was added in 2004: goods from illegal Israeli settlements in the occupied Palestinian territories would be excluded from the tariff benefits. Spanish customs and those of other EU nations were required to separate certain products by origin, based on a zip code. The practice of tracking revenue from tariffs on Israeli goods remained uncertain in Spain, raising questions in parliamentary inquiries in Madrid and Brussels and drawing sharp criticism from human rights groups. They reminded supervisors that trading from occupied territories conflicts with international norms and is morally questionable.
Today, more than two decades after the agreement, the Ministry of Finance issued a new certificate of origin code for Israeli products at Spanish customs, known as Taric. If an Israeli exporter wishes to receive tariff preferences, they must demonstrate that the product did not originate in the Occupied Territories. An AEAT instruction notified to the press states that the certificate of origin held by the operator does not indicate a location that loses preferential status under the EU-Israel Association Agreement. The regulation, effective from May 16, introduces this requirement through the tax administration framework.
The West Bank, including East Jerusalem and Gaza, would form part of a Palestinian state as envisioned in the Oslo Accords of 1993. The Israeli government continues to militarily occupy the West Bank, restrict movement in Gaza, and maintain settlements. There are hundreds of neighborhoods and many checkpoints that house a wide Israeli presence. The regional economy relies on agricultural products such as wine and dates. These settlements are deemed illegal by Spain, the EU, the United Nations, and the United States, among others. As stated by a European trade commissioner, international law indicates that any agreement between Israel and the EU should specify that it does not apply to territory occupied since June 1967.
The Israeli Embassy indicated it had not been informed of the change and declined further comment at the time of reporting.
The Tax Office explained that the technical change aims to “signal” to exporters the need to comply with an existing obligation. Those seeking preferential treatment must provide a certificate or other origin document tied to a region within internationally recognized borders. The Treasury body interprets that the new law does not alter the substance of the technical agreement implementing the origin rules of the EU-Israel Association Agreement, originally adopted in 1999.
Human rights organizations push further. They question why trade from settlements remains legal if the settlements themselves are considered illegal, noting that the regulatory change closes a gap while highlighting concerns about the EU’s stance on occupation and settlement activities.
No import control from colonies
The European Commission introduced the new code, Y864, to be applied to all Israeli-origin products from May 16. Exporters seeking tariff preferences under the EU-Israel Association Agreement must prove that their goods did not originate in the Occupied Territories, including the West Bank, Gaza, and East Jerusalem as defined by the EU.
In practice, Spain and other EU countries already operated a system requiring specification of city and zip code, but enforcement was lax. Customs officials seldom verified the origin code on every package of dates or bottle of wine.
The Tax Office acknowledges a lack of comprehensive control: the total volume of imports from the Occupied Territories is not widely known. The new system aims to empower member states to collect statistics on trade from contracted territories and to provide proof of origin rather than relying on the zip code. The goal is to improve compliance and enable authorities to identify goods that truly originate in Israel without relying on documentary reviews alone.
So far, a two-pound pack of Medjoul dates shows how origin details mattered. One lot listed the Haifa location in Israel; the other notes the origin as well. The new certificate of origin code should support systematic checks of these imports.
The approach does not automatically end trade with the settlements. Some agricultural operations still pack and market goods in settlements while labeling them as Israeli, rather than as products from the Occupied Territories.
Spain imported goods from Israel valued at 818 million euros in 2021, including machinery, plastics, chemicals, and electrical components.
Commission Brakes
In 2021, the Commission faced a European Citizens Initiative calling for suspending EU trade with the settlements resulting from military occupation. The commission argued it lacked authority to sanction third countries, a stance later challenged in European courts. The courts upheld that excluding occupied territories from tariff preferences is a matter of enforcing a trade agreement rather than imposing a sanction, and it remains the Commission’s duty to ensure compliance.
In response, requirements were tightened. The Tax Office notes that the system should be strengthened to prevent the settlements’ assets from benefiting from trade choices that contradict international norms.