EU-Israel Trade Agreement

Part of the debate – in Westminster Hall at 4:00 pm on 27 January 2010.

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Photo of Phyllis Starkey Phyllis Starkey Labour, Milton Keynes South West 4:00, 27 January 2010

This debate relates to the information given to Her Majesty's Revenue and Customs by those exporting goods from Israel and Israeli settlements to the United Kingdom and the effectiveness or, as I shall demonstrate, the ineffectiveness of HMRC checks in preventing fraud.

Under the EU-Israel trade agreement, produce from Israel enters the UK and other EU member states under a preferential agreement that exempts it from import duties. The agreement only applies to Israeli territory that is within its internationally recognised borders, and that has recently been reaffirmed in a legal ruling from the European Court of Justice.

The Israeli authorities have long had a cavalier attitude to compliance with the agreement. In 1997, for example, in another Adjournment debate, I drew attention to the then practice of Israeli authorities of importing Brazilian orange juice, re-labelling it "Made in Israel" and re-exporting it under preference to the European Union. Israel has also unilaterally interpreted the agreement as applying not just to Israel but to the numerous settlements in East Jerusalem and the west bank, even though they are illegal under international law. Settlement produce has been routinely labelled "Made in Israel" and thereby exemption has been claimed from import duty. Not only is that defrauding the EU taxpayer by avoiding legitimate import duty, but it sets a dangerous precedent that could allow other countries unilaterally to reinterpret their agreements with the EU.

As a result of the abuse, in February 2005 the EU introduced a technical arrangement requiring all goods from Israel to be marked with their place of origin and postcode, supposedly so that individual customs authorities could identify settlement goods and prevent the fraudulent obtaining of exemption from import duty. However, it is clear that these checks are not working and that goods from settlements are still being misrepresented as originating in Israel.

An indication of the likely scale of abuse can be estimated from the total duty raised on settlement goods in 2009, which was just under £22,000, compared with demands for duty in 2005-08 that averaged £110,000 per annum, which is five times the level raised in 2009 and suggests that at least 80 per cent. of settlement goods are imported without duty being paid on them. The information and powers available to HMRC are so weak that the controls are unenforceable and the European Commission oversight is ineffective.

I shall now deal with the mislabelling of goods and will talk first about agricultural produce.


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