EU-Israel Trade Agreement

Part of the debate – in Westminster Hall at 4:22 pm on 27 January 2010.

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Photo of Phyllis Starkey Phyllis Starkey Labour, Milton Keynes South West 4:22, 27 January 2010

I was just talking about Ahava and mentioning that when the firm was challenged about where its site of production was, it made no attempt to rebut its site in the occupied territories, but just waffled about how

"the Dead Sea treasures are international and do not belong to one nation", which was an interesting response to an HMRC request.

In answer to another written parliamentary question, HMRC confirmed that all such cosmetics- not just Ahava ones-are imported as "from Israel". Many other companies working with Dead sea products and which are known to have their facilities in the west bank must also be using some other address to get the "Made in Israel" designation. It means that Ahava products, although labelled as "from the occupied territories", must be designated as originating from Israel on the EUR1 form, which means that it is putting down the head office, not the site of production. Other companies that use products where the Dead sea mud and other minerals are processed or mixed with other ingredients from Israel should, on the EUR1 form, be setting out the proportions that originate from Israel and the proportion originating not from there, but from the west bank. However, they are obviously not doing that.

There is an additional issue that is beyond HMRC, which is whether Ahava and the others are violating article 55 of the Hague regulations on exporting non-renewable resources from an occupied territory. The Ahava case is so blatant that Dutch customs have now agreed to investigate after questions in Parliament from Socialist party MPs. Surprisingly, HMRC claims not to have shared any information with the Dutch authorities, which seems extraordinary. The HMRC claims to closely monitor imports, but has so far identified no cases where doubt existed over the place of production of imported cosmetics. However, it has asked the European Commission to check that the Israeli authorities are including the place of production and not the head office on the proof of origin.

That brings me to the role of the European Union. Apparently, UK Customs does not have the power to visit the occupied territories to check production facilities and so on, but the European Commission does. Any irregularities reported to the Commission are supposed to be disseminated to European Union member states, including information about the action taken. That does not seem to be happening in relation to Ahava or, in the German case, to BRITA.

Officials from the Commission origin unit visited Palestine and Israel in 2009, apparently to get a clearer picture of where the production sites were. However, the European Anti-Fraud Office, OLAF, which can enter the premises of Israeli exporters and examine their bookkeeping, has apparently not passed on any information about what came out of that visit. I should point out that because movements in the west bank are controlled by the Israeli army, OLAF cannot make unannounced inspections of premises in the settlements themselves. What information has the European Commission gathered? Has that information been communicated to member states, and will HMRC be acting on it? If not, will the Minister press for more effective action by the Commission?

To summarise, the Israeli authorities, the export companies and the producers all have a strong interest in misrepresenting the origin of settlement produce. First, they have a direct financial incentive, through the exemption from import duty if the goods are alleged to be from Israel. Secondly, there is the possibility of evading consumer boycotts aimed at settlement goods; that has become particularly important now that the Department for Environment, Food and Rural Affairs has insisted that guidance more clearly identifies settlement goods for the consumer. It has to be said that they have a track record of deliberate falsification. However, HMRC monitoring relies on inadequate documentation, and if there is doubt, it has to go back to the same authorities for confirmation; it can then be kept waiting for up to 10 months. Even in a blatant case such as that of Ahava, no action seems to have been taken.

The European Commission is also failing in its duty to collect the information needed by member states to deal with fraud and to disseminate information between the various customs authorities. It is absolutely unacceptable that such systematic and sustained fraud should be allowed to continue. I have five specific questions on that point.

First, in relation to agricultural produce, will HMRC discuss with retailers how they can share their traceability information? That should at least ensure consistency between consumer labelling on whether exemption from import duty applies. Secondly, will HMRC consider more rigorous verification procedures that do not rely on the same source of information as the original issuing authority? If necessary, that should be taken up urgently with the European Commission.

Thirdly, given that the technical arrangements are unenforceable, what action will the Government take at EU level to make them enforceable? Fourthly, will HMRC do spot checks based on a proper risk assessment-that is, on known settlement producers, and information from external reports. Fifthly, will the Minister explain how Ahava cosmetics, which are known to be produced in the occupied territories at Mizpe Shalem, are permitted to be designated "Made in Israel" and escape import duty? Will the Minister instruct HMRC to investigate Ahava urgently, and to share that information with their Dutch colleagues in order to stop this fraud?

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