Direct financial and military support from Europe to Israel is very limited compared to American aid. Within the European Neighbourhood and Partnership Instrument (ENPI), established in 2007, Israel is eligible for 14 million euros in financial assistance over the period 2007-2013.
European aid to Israel is provided mostly in the form of trade benefits. In the framework of the Euro-Mediterranean Partnership (PanEuroMed), bilateral agreements have been drawn up between the Community and its Member States on the one hand, and most countries of the Mediterranean basin on the other hand. Those agreements state, in particular, that products originating from the Mediterranean countries concerned, may be imported into the European Union (EU) free of customs duty.
The existing Association Agreement with Israel incorporates free trade arrangements for industrial goods, concessionary arrangements for trade in agricultural products and the prospect for greater liberalization of trade in services and farm goods. This means that Israeli products can be imported into the EU duty-free or at least with a reduced level of duty being applicable. Due to continuing settlement building and the blockade of the Gaza Strip, an upgrade of the Association Agreement was put on hold following a vote in the European Parliament.
Contrary to Israeli wishes, the benefits of the preferential system do not apply to products originating from Jewish settlements because they have been produced outside Israel’s own territory. In response to pressure from activist campaigners who have argued that settlement products violated human rights, the EU adopted a technical arrangement in 2005 whereby Israeli exporters have to provide proof of the origin of their goods. The EU drew up a list of settlements and their postcodes which it considered to be beyond Israel’s 1967 borders. One of the main problems, however, is that the system relies on correct labelling by the exporting company. EU customs authorities do not have the authority to go to Israel or Palestine to check the origin of goods.