A proposed model for enhanced European Union-Israeli relations: Prevailing legal arrangements and prospective juridical challenges

Journal of World Trade

Volumn 40, Issue 6, 2006, Pages 1115-1144

  Harpaz, Guy ^a  

^a HEBREW UNIVERSITY OF JERUSALEM   (Israel)

Author keywords

[No Author keywords available]

Indexed keywords

EUROPEAN UNION; MODELING; TRADE POLICY; TRADE RELATIONS;

ASIA; EURASIA; EUROPE; ISRAEL; MIDDLE EAST;

EID: 33847717937     PISSN: 10116702     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (305)

1. For recent developments in EU-Israeli relations, see G. Harpaz and R. Frid, The Wider Europe Initiative, 9 International Trade Law and Regulation 1 (2004), p. N-6-7;
2. G. Harpaz, Enhanced Relations between the European Union and the State of Israel under the European Neighbourhood Policy: Some Legal and Economic Implications, 31 Legal Issues of Economic Integration 4 (2004), p. 257;
3. G. Harpaz, The Europe Neighborhood Policy and its Impact on the Israeli-European Union-United States Triangle, 6 San Diego International Law Journal 2 (2005), p. 295.
4. See also N. Munin, Wider Europe Neighbourhood - A New Model for EU-Israel Relations?, 31 Israel Tax Quarterly 122 (2003), p. 29 (in Hebrew).
5. S. Sofer, Towards Distant Frontiers: The Course of Israeli Diplomacy, 10 Israel Affairs 1-2 (2004), p. 6.
6. For analysis, see S. Avineri and W. Weidenfeld (eds.), Integration and Identity: Challenges to Europe and Israel (Bonn: Europa Union Verlag, 1999);
7. E. Ahiram and A. Tovias (eds.), Whither EU-Israeli Relations? Common and Divergent Interests (Frankfurt am Main: Peter Lang, 1995);
8. M. Hirsch, E. Inbar and T. Sadeh, The Future Relations between Israel and the European Communities - Some Alternatives (Tel Aviv: Bursi, 1996);
9. I. Greilsammer and J. Weiler (eds.), Europe and Israel: Troubled Neighbors (Berlin: Walter de Gruyter, 1998).
10. For background, see M. Rom, In the Path of Israel's International Commercial Policy: GSP and the European Common Market (Ramat-Gan: Ramot, 1998) (in Hebrew);
11. A. Primor, "Israel and the EC", in M. Rabello (ed.), European Legal Traditions and Israel (Jerusalem: Harry and Michael Sacher Institute for Legislative Research and Comparative Law, the Hebrew University of Jerusalem, 1994), p. 459;
12. C. Shachor-Landau, "Israel and the EC on the Eve of the Maastricht Agreement", in Rabello, ibid., p. 445;
13. D. Kapeliuk, A Legal Analysis of the Free Trade Agreement of 1975 between the European Community and the State of Israel, 27 Israel Law Review (1993), p. 415;
14. T. Einhom, The Role of the Israeli Courts in Promoting Free Trade - A Critical Study in View of the EC-Israel FTA, 12 Bar-Ilan Law Studies (1995), p. 165 (in Hebrew).
15. See Commission of the European Union, "Extracts of the Conclusion of the Presidency of the Essen European Council", 9-10 December 1994, Bulletin of the European Union, Supplement 2/95: "The European Council considers that Israel, on account of its high level of economic development, should enjoy special status in its relations with the European Union, on the basis of reciprocity and common interest...".
16. Euro-Mediterranean Agreement establishing an association between the European Communities and their Member States, on the one part, and the State of Israel, of the other part, Official Journal L 147, 21 June 2000, pp. 0003-0171.
17. For analysis, see especially, N. Munin, The EU and Israel: State of the Play (Jerusalem: Israeli Ministry of Finance, 2003), pp. 145-226 (in Hebrew);
18. A. Reich, From Diplomacy to Law: The Juridicalization of International Relations in the Framework of GATT and Israel's Free Trade Agreements, 22 Tel-Aviv Law Review 1 (1999), pp. 398-403 (in Hebrew);
19. E. Inbar, Improving Israel-EU Relations: the European Economic Area as a Possible Model, 5 Israel Affairs 1 (1999), p. 109;
20. T. Sadeh, The European Union and Israel: The Customs Union Alternative, 5 Israel Affairs 1 (1999), p. 87;
21. A. Tovias, Mapping Israel's Policy Options Regarding its Future Institutionalized Relations with the EU (Center for European Policy Studies, 2003);
22. M. Hirsch, The 1995 Trade Agreement between the European Communities and Israel: Three Unsolved Issues, 1 European Foreign Affairs Review 1 (1996), p. 87;
23. B. Hirsch, The Institutional Framework in Israeli-European Union Relations and its Contribution to the Trade Relations, 29 Israel Tax Quarterly 114 (2001), p. 11 (in Hebrew).
24. For official Israeli statistics, see (last visited 18 October 2005).
25. See Article 6 of the Association Agreement.
26. Articles 10-15 of the Association Agreement.
27. Articles 29-30 of the Association Agreement.
28. Articles 31-34 of the Association Agreement.
29. The Association Agreement must not, however, be perceived merely as an economic instrument. It also sets out the basis for, inter alia, cultural, research and political cooperation. See Commission Staff Working Paper, European Neighbourhood Policy, Country Report, Israel (COM(2004)373 final), Brussels, 12 May 2004, SEC(2004) 568: The State of Israel participated in the fourth, fifth and sixth Framework Programmes for Research and Technological Development. Israel and the Commission initialled in March 2004 the agreement on Galileo, Europe's satellite radio navigation programme. See also the Preamble and Articles 1-2 of the Association Agreement, which refer to the mutual objective of promoting peace, security and regional cooperation, and to the need to advance stability, prosperity, understanding and tolerance in the Mediterranean region.
30. For analysis, see E. Aoun, European Foreign Policy and the Arab-Israeli Dispute: Much Ado about Nothing?, 8 European Foreign Affairs Review 3 (2003), p. 289.
31. Venice Declaration, Bulletin of European Communities Commission, No. 6 (1980), p. 7.
32. Aoun, as note 13 above, pp. 289, 297.
33. Id.
34. See Barcelona Declaration adopted at the Euro-Mediterranean Conference, 27-28 November 1995, Barcelona, 28 November 1995, final version.
35. For analysis, see M. Heller, "Reassessing Barcelona", in F. Tanner (ed.), The European Union as a Security Actor in the Mediterranean (2001), p. 77;
36. A. Tovias, "Israel and the Barcelona Process: The First Five Years", in K. Boehnke (ed.), Israel and Europe: A Complex Relationship (Wiesbaden: Deutscher-Verlag, 2003);
37. R. Gillespie, Reshaping the Agenda? The Internal Politics of the Barcelona Process in the Aftermath of September 11, 8 Mediterranean Politics 2-3 (2003), p. 21.
38. Since then Cyprus and Malta joined the Union as Member States and Turkey commenced accession negotiations.
39. See note 17 above. The Preamble to the Barcelona Declaration states that the parties are "convinced that the general objective of turning the Mediterranean basin into an area of dialogue, exchange and co-operation guaranteeing peace, stability and prosperity requires a strengthening of democracy and respect for human rights, sustainable and balanced economic and social development". The parties indeed undertook "to develop the rule of law and democracy ... to respect human rights and fundamental freedoms".
40. Sofer, as note 2 above, p. 7.
41. For a thought-provoking analysis of Israel's failure to realize the economic potential in her relations with the EU, see Einhorn, as note 4 above.
42. See Country Report, Israel, as note 12 above, p. 5: Due to her relatively high level of economic development, Israel does not benefit from bilateral financial support under MEDA. However she is eligible for MEDA funds earmarked for regional co-operation. While Israel initially participated in a number of projects, following the outbreak of the second Intifada it became increasingly difficult for the country to find partners in the Mediterranean area. Yet Israel participates in Euro-Med Youth (promoting people-to-people contacts and cooperation between actors of civil society and NGOs in the youth field), in the Euro-Med audiovisual and Euro-Med heritage programmes.
43. See R. Hollis, The Politics of Israeli-European Economic Relations, 1 Israel Affairs 1 (1994), p. 118;
44. E. Navon, "EU and Israel: An Historical Perspective (1973-1993)", in G. Harpaz (ed.), 10 Newsletter of the Israeli Association for the Study of European Integration (Ramat Gan: Israeli Association for the Study of European Integration, 2003), p. 15;
45. B. Kühnel (ed.), Troubled Waters: Europe and its Relations with the United States and Israel (Jerusalem: Institute for European Studies, 2003).
46. For analysis, see J. Weiler, The Constitution of Europe: "Do The New Clothes Have an Emperor?" and other Essays on European Integration (Cambridge: Cambridge University Press, 1999);
47. U. Haltern, Pathos and Patina: The Failure and Promise of Constitutionalism in the European Imagination, 9 European Law Journal 1 (2003), p. 14.
48. See, e.g., C. Hillion (ed.), EU Enlargement: A Legal Approach (Oxford: Hart, 2004).
49. For the impact of enlargement on Israel, see A. Tovias, Israeli Policy Perspective, 8 Mediterranean Politics (2003), pp. 213, 221;
50. Munin, as note 1 above, p. 33ff (in Hebrew).
51. J.C. Hulsman and L.T. Schirano, The European Union is Dead, 81 The National Interest (2005), p. 61.
52. Ibid.: An "undivided Europe cannot be a united but inward-looking European Union that does not care about what happens beyond its borders."
53. CIG 87/1/04 REV 1, Brussels, 13 October 2004, at Article 1-57;
54. O.J. 2004/C 310/01, 16 December 2004.
55. Brussels, 11 March 2003, Com(2003) 104 final.
56. These include Algeria, Egypt, Israel, Jordan, Lebanon, Libya, Morocco, the Palestinian Authority, Syria, Tunisia, Ukraine, Moldova, Belarus and Russia. The Initiative does not apply to the EU's relations with the candidate countries (Turkey, Romania and Bulgaria), or to the countries of the western Balkans. Later the Council decided to include Armenia, Azerbaijan and Georgia in the ENP, see Council of the European Union, 2590th Council Meeting, General Affairs and External Relations - General Affairs, Luxembourg, 14 June 2004, 10189/04 (Press 195), Provisional Version, Press Release, 12.
57. See also European Parliament, Report, Wider Europe - Neighbourhood: A New Framework for Relations with our Eastern and Southern Neighbours, Committee on Foreign Affairs, Human Rights, Common Security and Defence Policy, Com(2003) 104, 2003/2018 (INI), Final A5-0378/2003, 5 November 2003, pp. 9, 17;
58. Beyond Enlargement: Commission Shifts European Neighbourhood Policy into Higher Gear, Brussels, 12 May 2004, available at .
59. European Parliament Report, ibid.
60. See, e.g., the Council Conclusions on Implementation of the Wider Europe - New Neighbourhood Initiative, 13 October 2003.
61. Council of the European Union, ibid., p. 10.
62. See also G. Verheugen, former Commissioner for Enlargement, The European Neighbourhood Policy official website, (visited 19 May 2004): "Now we have to put an end to the artificial division of Europe, it is important not only to prevent the emergence of new dividing lines but to take the opportunity to enhance our relations with our new neighbours. This is the aim of the European Neighbourhood Policy."
63. Communication from the Commission, Paving the Way for a New Neighbourhood Policy, Brussels, 1 July 2003 Com(2003) 393 final.
64. See European Parliament Report, as note 30 above, p. 9.
65. Id.
66. Id.
67. Ibid., p. 18.
68. See Romano Prodi, former President of the Commission:"... I want to see a 'ring of firiends' surrounding the Union and its close European neighbours, from Morocco to Russia and the Black Sea. This encircling band of friendly countries will be diverse". "A Wider Europe - A Proximity Policy as a Key to Stability, speech delivered at the sixth ECSA - World Conference on Peace, Security and Stability - International Dialogue and the Role of the EU, Jean Monnet Project, Brussels, 5-6 December 2002.
69. The Initiative, as note 29 above, p. 3.
70. As note 39 above. See also (visited 19 May 2004).
71. For the deficiencies of that Process from an Israel perspective, see Tovias, as note 25 above, p. 216ff.
72. See EC Commission, as note 30 above: The Action Plans will be differentiated, i.e., tailor-made to reflect the existing state of relations with each county, its needs and capacities, as well as common interests.
73. See also "EU Enlargement and the Union's Neighbourhood Policy", speech by Commissioner G. Verheugen, at the Diplomatic Academy, Moscow, 27 October 2003, 6: "Our Wider Europe - New Neighbourhood Policy will take full account of the differences in relations with each of our neighbours ... So do their relationship with us. Ukraine is not Egypt and Israel is not Moldova ... Hence differentiation is a key notion in our neighbourhood policy. Our relations also reflect different sets of common interests, and a different extent of values shared."
74. The Strategy Paper outlines the vision of the ENP and its main components.
75. Country Reports assess the relevant bilateral relations, analyse the political, economic, social and institutional landscape of the neighbour concerned, and describe the prevailing state of affairs in areas of particular interest to the ENP. (The EC Commission has already presented a strategy Paper and Country Reports.)
76. See the Communication from the EC Commission, as note 34 above: A two-step approach is proposed. An initial phase (2004-2006) will focus on improving coordination between the various financial instruments concerned within the existing legislative and financial framework. In the second phase (2006 onwards), a new legal instrument is to be proposed, addressing the common challenges and needs identified in the ENP.
77. Council of the European Union, as note 30 above, pp. 10-13.
78. For the text of the Plans, see (visited 16 January 2005).
79. For the text, see (visited 16 January 2005).
80. Ibid., Section I.
81. To include facilitating efforts to resolve the Middle East conflict, the exploration of the possibility of joining other international instruments and protocol dealing with human rights issues, the fight against anti-Semitism, racism, xenophobia, Islamophobia, terrorism and the proliferation of weapons of mass destruction, conflict prevention and crises managements.
82. See Article 2.2-2.3 of the Action Plan. The parties undertook to promote reciprocal trade and investment. Special emphasis is placed on the liberalization of trade in services in general and financial services in particular (Article 2.3). Article 2.3.1(2) declares that the parties will complete all the necessary procedures for enabling Israel to participate in the Pan-Euro-Mediterranean cumulation of origin, as a part of the efforts to widen the Euro-Mediterranean links. They also undertook to develop trade promotion between Israel and other Euro-Mediterranean partners. Provisions are made for enhanced cooperation in other areas such as intellectual property rights and public procurement.
83. That includes, under Article 2.4 of the Action Plan, issues of migration (lawful and unlawful), asylum policy, fighting terrorism and organized crime (including trafficking in human beings), cyber crime, drugs, money laundering and other forms of economic crimes (with special emphasis on financing of terrorism), cooperation in police areas, judicial cooperation (including extradition, data protection, mutual legal assistance, and enhanced cooperation between Israel agencies and EUROPOL).
84. Under Article 2.5 of the Action Plan enhanced cooperation is envisaged in the areas of transport, energy, the information society, environment, science and technology.
85. Through education, training, and widening youth connections, sport, culture and audio-visual instruments, and increasing the levels of cooperation in the civil society of both parties, by developing and strengthening the links between NGOs and other civil organizations. See Article 2.6 of the Action Plan.
86. As note 3 above.
87. Munin, as note 6 above, p. 171ff.
88. R. Oppermann, Cooperation, Association, Accession: Reflections on the Legal Options for the European-Israeli Economic Relations, 13 Tel Aviv University Studies in Law (1997), p. 9.
89. A. Reich, public speech, Wider Europe and Israel, at conference held by the Israeli Ministry of Foreign Affairs, Jerusalem, 7 September 2003.
90. Tovias, as note 25 above; Tovias, "Exploring the 'Pros' and 'Cons' of Switzerland's and Norway's Model for Relations with the EU: What Can be Learned from these Two Countries' Experience by Israel?", in G. Harpaz (ed.), 11 Newsletter of the Israeli Association for the Study of European Integration (Ramat-Gan: Israeli Association for the Study of European Integration, 2004), p. 14.
91. Tovias, "Exploring the 'Pros' and 'Cons' of Switzerland's and Norway's Model for Relations with the EU: What Can be Learned from these Two Countries' Experience by Israel?", in G. Harpaz (ed.), 11 Newsletter of the Israeli Association for the Study of European Integration (Ramat-Gan: Israeli Association for the Study of European Integration, 2004), p. 14.
92. Under that model, Israel would be required to adopt the EU's tariff legislation. For analysis, see Sadeh, as note 6 above; Hirsch, Inbar and Sadeh, as note 3 above, pp. 121-156.
93. For the Swiss Model and its implications for Israel, see Tovias, as note 60 above.
94. For certain other difficulties in that model, see D. Allen and M. Smith, External Policy Developments, 41 Journal of Common Market Studies 1 (Annual Review) (2003), p. 103.
95. The Initiative, as note 29 above, p. 15.
96. For the EEA Agreement, see [1994] O.J. L3/36.
97. For analysis, see Laredo, The EEA Agreement: An Overall View, 29 Common Market Law Review 5 (1992), p. 1203.
98. For a legal and institutional analysis, see Baudenbacher, The EFTA Court - an Example of the Judicialisation of International Economic Law, 28 European Law Review (2003), p. 880;
99. Hirsch, Inbar and Sadeh, as note 3, pp. 83-120.
100. For analysis of Israel's options, see Munin, as note 6 above, p. 171ff.
101. For further comment, see Tovias, as note 25 above;
102. Tovias, as note 60 above;
103. Inbar, as note 6 above, p. 110ff.
104. Tovias, as note 60 above.
105. Id.
106. See P. Brenton and M. Manchin, Trade Policy Issues for the Euro-Med Partnership, Centre for European Policy Studies, Working Paper No. 7 (May 2003), pp. 14-15, available at (last visited 18 October 2005).
107. Tovias, as note 60 above.
108. Id.
109. See also Inbar, as note 6 above, p. 110ff. A simple duplication of the EEA model is neither feasible nor desirable. Inbar offered a less institutionalized, and more incremental model of a "European Israel Economic Area". He argued that Israel should not agree to a decision-shaping process that will reduce its autonomy in shaping its own future, concluding at p. 115 that, "The discussion on the applicability of the EEA Agreement to the EC-Israeli domain is highly influenced by whether the Israeli objective is to aim as close as possible at economic, and to some, extent, political integration with Europe; or whether Israel should plan to try to gain the most out of liberalizing the free movement of goods, persons, capital and services with the EC, as well as through cooperation in other fields. The distinction between these options derives from the issue of state sovereignty. Aiming at high economic and to some extent political integration with the EC implies a quite substantive sacrifice of national sovereignty, while avoiding the formal political-institutional features of the EEA does not require such a sacrifice. If Israel chooses the first option, it would be a sharp transformation of its current policy, in terms of economic and sovereignty adjustments. My basic argument is that I find the latter option more feasible for Israel and as such one must look at the costs and benefits of this option."
110. For analysis of the importance of this agreement, see G. Harpaz, The Europe Neighborhood Policy and its Impact on the Israeli-European Union-United States Triangle, 6 San Diego International Law Journal 2 (2005), pp. 318-320.
111. Tovias, as note 60 above.
112. See "EU Enlargement and the Union's Neighbourhood Policy", speech by Commissioner G. Verheugen, at the Diplomatic Academy, Moscow, 27 October 2003: By themselves the action plans will not create any new legal obligations. The existing Partnership and Cooperation Agreements and Association Agreements will continue to form the legal basis for our relations with the partners. The Neighbourhood Policy sets out a comprehensive framework. This allows us to focus attention and create motivation and this will bring added value compared to current agreements and processes.
113. See EC Commission, as note 5 above.
114. See Section 3 of the Action Plan, as note 49 above.
115. See Article 40 of the Association Agreement.
116. See Article 51 of the Association Agreement.
117. See Article 53 of the Association Agreement.
118. See Article 46 of the Association Agreement.
119. See Article 54 of the Association Agreement.
120. See Article 36 of the Association Agreement.
121. See Article 46 of the Association Agreement.
122. See Article 30 of the Association Agreement.
123. See Article 36 of the Association Agreement.
124. For analysis, see D. Geradin and N. Petit, Competition Policy and the Euro-Mediterranean Partnership, 8 European Foreign Affairs Review 2 (2003), p. 161: The effectiveness of the competition provisions in the Euro-Med agreements depends on the enactment of implementing measures by the Councils of Association.
125. See Article 47 of the Association Agreement.
126. For analysis, see Hirsch, Inbar and Sadeh, as note 3 above, p. 106.
127. See Article 55 of the Association Agreement: "The Parties shall use their best endeavours to approximate their respective legislations in order to facilitate the implementation of this Agreement."
128. For analysis, see T. Sadeh, "Enhancing Israeli-EU Economic Relations: A Survey of Existing Barriers to Trade and Possible Remedies", in G. Harpaz (ed.), 11 Newsletter of the Israeli Association for the Study of European Integration (Ramat-Gan: Israeli Association for the Study of European Integration, 2004), pp. 9-10.
129. For the same argument in the Euro-Med context, see B. Hoekman, From Euro-Med Partnership to European Neighborhood: Deeper Integration à la carte and Economic Development, Working Paper No. 103 (Egyptian Center for Economic Studies, July 2005), p. 5, available at (last visited 18 October 2005).
130. See also F. Attina The Euro-Mediterranean Partnership Assessed: The Realist and Liberal View, 8 European Foreign Affairs Review 2 (2003), p. 186: "While showing the flag of free trade, the Europeans use the arms of protectionism and do not allow Mediterranean states to compensate, with the export of agricultural products, for the loss of state revenues they suffer from the gradual elimination of the tariffs on the import of the European industrial products."
131. But see Sadeh, as note 87 above, p. 6.
132. Hirsch, as note 6 above, p. 99.
133. Brenton and Manchin, as note 67 above, p. 4.
134. Article 29 of the Association Agreement.
135. Hoekman, as note 88 above.
136. Section 36 of the Association Agreement.
137. Hoekman, as note 88 above.
138. See also Geradin and Petit, as note 84 above, p. 161, for the same argument in relation to other Euro-Med Association Agreements.
139. Section I of the Proposed EU-Israel Action Plan, as note 49 above.
140. See EC Commission, Beyond Enlargement: Commission Shifts European Neighbourhood Policy into Higher Gear, Brussels, 12 May 2004, available at . The Action Plans will be differentiated, i.e., tailor-made to reflect the existing state of relations with each country, its needs and capacities as well as common interests.
141. See also "EU enlargement and the Union's Neighbourhood Policy", speech by G. Verheugen, at the Diplomatic Academy Moscow, 27 October 2003, 6: "Our Wider Europe - New Neighbourhood Policy will take full account of the differences in relations with each of our neighbours ... So do their relationship with us. Ukraine is not Egypt and Israel is not Moldova ... Hence differentiation is a key notion in our neighbourhood policy. Our relations also reflect different sets of common interests, and a different extent of values shared."
142. There is, however, a negative aspect to that differentiated, tailor-made principle. The en bloc principle, which formed the basis of the Barcelona Process, was intended to advance coherent economic, political and social co-operation in the Middle East and North Africa. The tailor-made approach would reinforce bilateral relations and may therefore come at the expense of regional coherence and solidarity, so needed in the Middle East in general. The EU is faced with a real dilemma.
143. Commission of the European Communities, Communication from the Commission to the Council and the European Parliament, Reinvigorating EU Actions on Human Rights and Democratisation with Mediterranean Partners, Strategic Guidelines, Brussels 21.05.2003 Com(2003) 294 final, 5.
144. See Commission Staff Working Paper, European Neighbourhood Policy, Country Report, Israel, [COM(2004)373 final], Brussels, 12.5.2004, SEC(2004) 568.
145. The Action Plan, Section I (Introduction), as note 49 above.
146. See L. Chokron, "The Political Background of the Negotiations Toward the 1995 Association Agreement", in Hirsch, Inbar and Sadeh, as note 3 above, p. 184.
147. See European Parliament Report, as note 30 above, p. 9.
148. See the words of Curt Gasteyger, quoted in C. Spencer, The EU and Common Strategies: The Revealing Case of the Mediterranean, 6 European Foreign Affairs Review 1 (2001), p. 35.
149. Brenton and Manchin, as note 67 above, p. 7. Brenton and Manchin advance this argument in the general Euro-Med context. They contend that deep integration entails agreements between governments to reduce the market segmenting effects of differences in national regulations by the coordination, harmonization or mutual recognition of national laws, regulations and enforcement mechanisms.
150. See Hoekman, as note 88 above, for that proposition in the Euro-Med context.
151. For examination of this issue in our context, see Brenton and Manchin, as note 67 above, pp. 2-7.
152. See the Tenth Anniversary of the Euro-Mediterranean Partnership: A Work Programme to Meet the Challenges of the Next Five Years, Communication from the Commission to the Council and the European Parliament, 25 April 2005, Section 2.2(a): Services account for approximately 60 percent of GDP in the Mediterranean countries. World Bank studies indicate that the liberalization of trade in services generates substantial welfare gains. it may also contribute to domestic economic adjustments and reforms. Full text available at .
153. Hoekman, as note 88 above;
154. see also L. Herman, Two for Tango: European Union Free Trade Areas in Services and Israel, Working Paper 42/2005 (Jerusalem: Helmot Kohl Institute for European Studies, Hebrew University Jerusalem);
155. Hirsch, Inbar and Sadeh, as note 3 above, pp. 65-66;
156. M. Luben, Further Integration in Trade in Insurance Services between Israel and the EU, 31 Israel Tax Quarterly 121 (2003), p. 50 (in Hebrew).
157. Hoekman, as note 88 above;
158. Hirsch, Inbar and Sadeh, as note 3 above, pp. 74-80.
159. See also the Tenth Anniversary of the Euro-Mediterranean Partnership, as note 108 above, Section 2.2(a): A road map should be agreed on trade liberalization in agriculture products, providing for a high degree of liberalization with very limited number of exceptions and a timetable for implementation.
160. See Hirsch, as note 6 above, p. 92ff;
161. Hirsch, Inbar and Sadeh, as note 3 above, pp. 53-54.
162. But see the debate on this issue in Section IV.C below.
163. Brenton and Manchin, as note 67 above, pp. 13-14.
164. See A. Nov, Wider Europe: The EU State Aid Regime and its Opportunity for the Southern Mediterranean Countries, paper presented in the Sixth Mediterranean Social and Political Research Meeting, Montecatini Terme, 16-20 March 2005.
165. See O. Perez, The WTO and the Environment: Lessons for the State of Israel (2003), available at (last visited 1 October 2005);
166. A. De-Shalit, "Europe, Israel and Environmental Policies: Lessons to be Learnt", in A. De-Shalit (ed.), The Environment: between Theory and Practice (Oxford: Oxford University Press, 2000).
167. Hoekman, as note 88 above, p. 21:
168. Safeguard measures should not be needed, given the small size of the addressees of the ENP. Anti-dumping protection should be removed upon the completion of bilateral free trade. See also G. Harpaz, "Dumping" the Anti-Dumping Instruments in the Trade Relations between the European Union and the State of Israel? - The European Union's Perspective, 39 Journal of World Trade 3 (June 2005), p. 445.
169. Hoekman, as note 88 above, p. 20.
170. Brenton and Manchin, as note 67 above, pp. 9-11, 15.
171. See also E. Hadar, The European Union and its Activities in Product Certification, Standardization and Acceditation (Tel-Aviv: Shaba, 2002) (in Hebrew).
172. Hoekman, as note 88 above, p. 23: In 2005 a framework protocol for negotiations on service was agreed in the context of the European Mediterranean Policy. The Protocol envisages employing the GATS structure, a positive list approach to determining the sectoral and substantive convergence of commitments. The Protocol calls for progressive alignment with the acquis in the area of services.
173. See Commission of the European Communities, Framework Protocol of Istanbul for the liberalization of trade in services among Euro-Mediterranean partners, mimeo; See also Section 2.2(a) of the Tenth Anniversary of the Euro-Mediterranean Partnership, as note 108 above: The EU should invite its Mediterranean partners to embark on a new chapter of integration, departing from the traditional hub and spoke model. Partners should agree to conclude negotiations on the liberalization of services and establishment with a strong regional dimension.
174. See Article 55 of the Association Agreement.
175. See Reich, ibid.
176. See also Geradin and Petit, as note 84 above.
177. The area of competition law is a case in point, see ibid., p. 167: High expectation exists on the part of the EU, in particular in the area of competition law, where the EU expects the neighbouring countries deep convergence of competition rules and regulatory practices.
178. See Wider Europe Initiative, as note 29 above, p. 10.
179. See Section I (Introduction) of the Action Plan, as note 49 above.
180. European Neighbouthood Policy, Strategy Paper, COM(2004)373 final (12.5.2004), pp. 9, 14-15, 16, 23.
181. As note 34 above;
182. Hoekman, as note 88 above, p. 13.
183. For further analysis, see G. Harpaz, When East meets West: Approximation of laws in the EU-Mediterranean context, 43 Common Market Law Review 4 (2006).
184. Hadar, as note 118 above.
185. See M. Gal, Size Does Matter: The Effects of Market Size on Optimal Competition Policy, 74 University of Southern California Law Review (2001), p. 1477,
186. See note 113 above.
187. G. Harpaz and R. Frid, Case Note - The Israeli Supreme Court Judgment on Force-Feeding of Geese, 10 International Trade Law and Regulation 1 (2004), pp. 2-3.
188. See Explanatory Notes of the 2000 money laundering legislation, No. 2809 (1999), p. 422.
189. For analysis, see L. Herman, World Money Laundering and Israel, 30 The Israeli Tax Quarterly 117 (2002), p. 7 (in Hebrew).
190. See Hoekman, as note 88 above, p. 23: In 2005 a framework protocol for negotiations on service was agreed in the context of the European Mediterranean Policy. The Protocol calls for progressive alignment with the acquis in the area of services - see Commission of the European Communities, Framework Protocol of Istanbul for the liberalization of trade in services among Euro-Mediterranean partners, Mimeo.
191. Enabling market entrance even for relatively small sales, see D. Leebron, Claims for Harmonization: A Theoretical Framework, 27 Canadian Business Law Journal (1999), p. 88.
192. But compare with M. Boodman, The Myth of Harmonization of Laws, 39 American Journal of Comparative Law (1991), p. 715: The absence of harmonization of laws may not necessarily increase in any significant manner the costs of inter-jurisdictional business.
193. Leebron, ibid.: If a manufacturer faces significantly different requirements in each jurisdiction for which it manufactures, it will not be able to achieve economy of scales beyond its market share in one jurisdiction.
194. Creating a level playing field and preventing a race to the bottom, see Leebron, ibid.;
195. A. Reich, Globalization and Law: The Future Impact of International Law on Israel's Commercial Law, 17 Bar-Ilan Legal Studies 1 (2001), pp. 27-29 (in Hebrew).
196. Reich, ibid., p. 40.
197. Ibid., p. 17.
198. See also Tenth Anniversary of the Euro-Mediterranean Partnership, as note 108 above, Section 2.2(c): Approximation of technical legislation in the area of standards and conformity assessment bears an important potential in terms of trade creation, investment attraction and integration of economies. The objective is to promote trade by aligning standards and technical requirements, reducing costs related to duplicative testing and certification and thus to facilitate market access.
199. Geradin and Petit, as note 84 above, p. 173.
200. Boodman, as note 132 above, p. 718: Jurisdictions which do not want to devote resources to lengthy law reform pojects can "free-ride" upon the law reform project of other jurisdictions.
201. Ibid.;
202. Reich, as note 134 above, p. 31.
203. See Nov, as note 114 above, pp. 7-8: " ... it may be beneficial for a country that provides tax incentives to FDI as a result of political pressure, to relinquish its sovereignty and be bound by a global or regional regime that will rejuire that country to abstain from providing tax incentives".
204. See Geradin and Petit, as note 84 above, p. 174 for the application of this argument in the area of competition law.
205. See the address by A. Reich, "The European Neighbourhood Policy and its Potential Impact on the Commercial and Consumer Law of EU Neighbouring Countries", paper presented at the 12th Biennial Meeting of the International Academy of Commercial and Consumer Law, Riga (11-14 August, 2004).
206. For analysis, see A. Tovias and R. Del Sarto, Caught Between Europe and the Orient: Israel and the EMP, 36 International Spectator 4 (2001), p. 91.
207. For analysis, see Hirsch, Inbar and Sadeh, as note 3 above, pp. 99-102.
208. See M. Gal, Competition Policy for Small Economies (Cambridge, MA: Harvard University Press, 2003);
209. Gal, as note 127 above, pp. 1444-1449: These include high concentration levels and high entry barriers. Given the scale economies and high entry barriers, small economies cannot in most cases sustain more than a few competitors in most of their industries. The prevalence of concentrated markets structures adversely affects price, output and research levels.
210. For the debate on this issue, see Economic Quarterly (August 2001), p. 139 (in Hebrew).
211. G. Harpaz, The Europe Neighborhood Policy and its Impact on the Israeli-European Union - United States Triangle, 6 San Diego International Law Journal 2 (2005), pp. 318-320.
212. The area of intellectual property is a case in point.
213. See the Nobel Prize Laureate D.C. North, Institutions, Institutional Change and Economic Performance (Cambridge: Cambridge University Press, 1990).
214. See Articles 67-74 of the Association Agreement.
215. For the broader picture, see J. Monar, Institutional Constraints of the European Union's Mediterranean Policy, 3 Mediterranean Politics 2 (1998), p. 39: The European Union's policy in the Mediterranean suffers from a gap between its apparent potential to act and its actual performance. This discrepancy can be explained in part by the particular institutional and procedural constraints of the Union's "dual" system of foreign affairs. These constraints make the Union a clearing-house for national interests rather than a unitary actor, they lead to an in-built tilt towards economic measures and they create difficulties for its partners in terms of transparency and predictability. Cases such as the implementation of the Euro-Mediterranean Partnership demonstrate the limitations that the system imposes on the Union's Mediterranean policy decision-making and implementation.
216. Including new specialized subcommittees, see Hoekman, as note 88 above, pp. 17-18.
217. Ibid.
218. The work of that body should be open to participation by independent regional think tanks and research entities, ibid., pp. 14, 25.
219. Ibid., p. 34.
220. For analysis, see Macioti, "How can the EC-Israel Research Cooperation be Expanded?", in Hirsch, Inbar and Sadeh, as note 3 above, p. 217;
221. Kohl-Koch, "International and European Cooperation in Science, A German Point of View", in Hirsch, Inbar and Sadeh, as note 3 above, p. 233;
222. Keynan, "The State of Cooperation in Scientific Research, Israel and the EC", in Hirsch, Inbar and Sadeh, as note 3 above, p. 249.
223. For support, see M. Emerson, European Neighbourhood Policy: Strategy or Placebo?, CEPS Working Document No. 215 (November 2004). Emerson argues that the most advanced neighbouring countries should be partially incorporated in various institutional arrangements, such as the European Environmental Agency.
224. See also the idea of instituting a European-Mediterranean Development Bank, Section 2.2(f) of the Tenth Anniversary of the Euro-Mediterranean Partnership, as note 108 above.
225. See also Section 2(5) of the Action Plan, as note 54 above.
226. For analysis of the existing financial regime, see P. Holden, The European Community's MEDA Aid Programme: A Strategic Instrument of Civilian Power?, 8 European Foreign Affairs Review 3 (2003), p. 347: The MEDA Programme has been providing financial and technical assistance to most of the countries engaged in the European Mediterranean Partnership. Due to some political and financial constraints, MEDA cannot be regarded as a fully developed, targeted strategic instrument. MEDA I (1995-1999) allocated 685 million euro per annum, as compared with 764 million euro per annum under MEDA II (2000-2006).
227. See Hoekman, as note 88 above, p. 7: under MEDA, 3.4 billion euro was committed to grant aid during the years 1995-1999. During 2000-2006 the allocated budget is 5.3 billion euro, of which 10 percent is allocated to regional projects. MEDA grants are supplemented by loans granted by the European Investment Bank. At the end of 2004, 12 billion euro was lent by the Bank to Mediterranean governments.
228. C. Yannaras, Dissenting Views on Turkey's European Prospects, 16 Mediterranean Quarterly 2 (2005), p. 51;
229. C. Rumford, Failing the EU Test? Turkey's National Programme, EU Candidature and the Complexities of Democratic Reform, 7 Mediterranean Politics 1 (2001), p. 47.
230. For analysis of the dispute settlement mechanism under the WTO, see T. Broude, International Governance in the World Trade Organization: Judicial Boundaries and Political Capitulation (London: Cameron May, 2004).
231. For the interface between the mechanism under the Association Agreement and that under the WTO, see T. Broude, From Pax Mercatoria to Pax Europea: How Trade Dispute Procedures Serve the EC's Regional Hegemony, paper presented at the conference on "The EU in Regional and Bilateral Dispute Settlement", organized by the Israeli Association for the Study of European Integration in cooperation with the Friedrich Naumann Foundation, The EU-Israel Forum, The German Innovation Centre and the Interdisciplinary Centre, Herzlia, 24-25 October 2004, pp. 22-23, available at last visited 17 November 2005).
232. Compare with the dispute settlement procedure under the US-Israeli Free Trade Agreement, A. Azriel, Improving Arbitration under the US-Israel Free Trade Agreement: A Framework for a Middle-East Free Trade Zone, 67 St John's Law Review (1993), p. 187.
233. For this theme in general, see Reich, as note 6 above.
234. For the said dispute settlement regime, see Reich, ibid., pp. 401-403.
235. For analysis of the situation under the aegis of the European Economic Agreement, see Baudenbacher, as note 63 above.
236. See the introductory parts of J. Jackson, The World Trading System, Law and Policy of International Economic Relations (Cambridge, MA: MIT, 1997).
237. Reich, as note 6 above.
238. Baudenbacher, as note 63 above.
239. Broude, as note 160 above. 230 For the interface between the mechanism under the Association Agreement and that under the WTO, see T. Broude, From Pax Mercatoria to Pax Europea: How Trade Dispute Procedures Serve the EC's Regional Hegemony, paper presented at the conference on "The EU in Regional and Bilateral Dispute Settlement", organized by the Israeli Association for the Study of European Integration in cooperation with the Friedrich Naumann Foundation, The EU-Israel Forum, The German Innovation Centre and the Interdisciplinary Centre, Herzlia, 24-25 October 2004, pp. 22-23, available at last visited 17 November 2005).
240. Ibid., pp. 9-11.
241. Ibid., pp. 21-22.
242. Ibid., p. 20.
243. Id.
244. See Article 75(4) of the Association Agreement.
245. Broude, as note 160 above, p. 21.
246. Ibid., p. 20.
247. See also J. Weiler, "Comments on the Dispute Resolution Procedures in the EU-Israel New Association Agreement", in Hirsch, Inbar and Sadeh, as note 3 above, p. 176.
248. Broude, as note 160 above, p. 21.
249. In August 2005, Israel withdrew unilaterally from the Gaza Strip. Hence the dispute and its solution are not applicable any more to this area.
250. For the dispute and its implications, see M. Hirsch, Rules of Origin as Foreign Policy Instruments?, 26 Fordham International Law Journal (2003), p. 572;
251. T. Sadeh, "Enhancing Israeli-EU Economic Relations: A Survey of Existing Barriers to Trade and Possible Remedies", in G. Harpaz (ed.), 11 Newsletter of the Israeli Association for the Study of European Integration (Ramat-Gan: Israeli Association for the Study of European Integration, 2004), p. 8.
252. For the solution to the dispute, see G. Harpaz, The Dispute over the Treatment of Products Exported to the European Union from the Golan Heights, East Jerusalem, the West Bank and the Gaza Strip - The Limits of Power and the Limits of the Law, 38 Journal of World Trade 6 (December 2004), p. 1049.
253. See Article 83 of the Association Agreement which provides: "This Agreement shall apply, on the one hand, to the territories in which the Treaties establishing the European Community, and the European Coal and Steel Community are applied and under the conditions laid down in those Treaties and, on the other hand, to the territory of the State of Israel."
254. See note 176 above.
255. See note 176 above.
256. See note 176 above.
257. Official Journal of the European Communities, 2001/C 328/04, 23 November 2003.
258. See the words of Ehud Olmert, in his capacity as the Mnister of Trade and Industry, in an address before the Annual Meeting of the Israeli Association for the Study of European Integration, Hebrew University, 15 April 2004, published in G. Harpaz (ed.), 11 Newsletter of the Israeli Association for the Study of European Integration (Ramat-Gan: Israeli Association for the Study of European Integration, 2004), p. 74 (in Hebrew).
259. See Ambassador Giancarlo Chevallard, in Kühnel, as note 23 above p. 14.
260. For further analysis, see A. Timm, "Germany-USA-Israel: Current Attitudes and the Historical Legacy", in Kühnel, as note 23 above, p. 77.
261. For the EU stance, see R. Miller, The PLO Factor in Euro-Israeli Relations, 1964-1992, 10 Israel Affairs 1 (2004) p.123.
262. See Article 75 of the Association Agreement, as analysed by Reich, as note 6 above, pp. 401-403.
263. See Hirsch, as note 176 above.
264. For support, see Hoekman, as note 88 above, p. 28: The dispute settlement and enforcement mechanism are largely diplomatic in nature.
265. Broude, as note 160 above, p. 29.
266. Weiler, as note 173 above, p. 177.
267. For support, see Broude, as note 160 above, p. 30.
268. See Article 2.3.1 of the EU-Israel Action Plan, as note 49 above.
269. See Broude, as note 160 above, pp. 23-27. Broude analysed the EC-Mexico Global Agreement, the EC-Chile Association Agreement; and the Trade, Development and Cooperation Agreement between the EC and the South African Customs Union, and reached the conclusion that these procedures demonstrate higher levels of effectiveness and judicialization.
270. See Broude, ibid.
271. Hoekman, as note 88 above, p. 26: An institution such as ENP Ombudsman, a small claims court or a fast track "light" dispute settlement procedure can provide the private sector with direct and rapid channels to address instances of excessive or arbitrary use of non-tariff barriers.
272. See, by analogy, Israel's refusal to appear before the International Court of Justice in the Advisory Opinion on the Legal Consequences of the Construction of the Wall in the Occupied Palestinian Territory, 43 I.L.M. 1009 (2004).
273. For analysis, see Y. Shany, Capacities and Inadequacies: A Look at the Two Separation Barrier Cases, 38 Israel Law Review 1-2 (2005), pp. 234-235.
274. Resolution No. 796, Israeli Reaction to the Decision of the European Countries in Venice, 15 June 1980, as translated by the present author.
275. Id.
276. As Benjamin Netanyahu, a former Prime Minister and a renowned pro-American politician puts it: "It is no secret that in the past twenty years we have invested a major political effort in our relations with the United States and not without significance. But it is also true that in the same period pro-Arab views have made headways among European opinion leaders. And it will not do to just brush aside the unfavourable voices. As Europe's political and economic clout grows, so its status in world affairs and its influence will be felt in the policies of other nations", quoted in Hollis, as note 23 above.
277. As note 42 above, at Article 2.1.
278. See F. Oz-Salzberger and E. Salzberger, The German Heritage of the Israeli Supreme Court, 21 Tel Aviv University Law Review (1998), p. 259 (in Hebrew).
279. See C.A 29/84 Kusoy v. I.L. Phychtonger Bank 38(4) P.D. 505;
280. C.A 214/89 Avneri v. Shapira, 53(3) P.D. 840, 853;
281. H. C.J Barzilai v. Government of Israel 40(3) P.D 505, 621 (all in Hebrew).
282. See Geradin and Petit, as note 84 above, p. 158: The competition rules found in the Euro-Med Agreements have to be interpreted in conformity with the EC secondary legislation, the decision-making practice of the EC Commission and the case law of the European Court of Justice and the Court of First Instance.
283. For general analysis of the challenges for the Israeli judiciary in facing international norms in an increasing globalized environment, see Reich, as note 134 above, pp. 63-68.
284. See, e.g., G. Harpaz, The Israeli Supreme Court in Search of Universal Legitimacy, 65 Cambridge Law Journal 1 (2006), pp. 7-10, in relation to the Israeli treatment of the Advisory Opinion of the International Court of Justice, concerning the Advisory Opinion on the Legal Consequences of the Construction of the Wall in the Occupied Palestinian Territory.
285. For the EFTA countries' experience in that regard, see Baudenbacher, as note 63 above.
286. See Kühnel, "Foreword", in Kühnel, as note 23 above, p. 7.
287. Kohl-Koch, as note 155 above.
288. See, e.g., the research conducted mainly at the Law Faculty and at the European Forum of the Hebrew University, at the Israeli Association for the Study of European Integration, see (last visited 18 October 2005);
289. at the Posen Forum at the University of Haifa, see (in Hebrew) (last visited 18 October 2005);
290. and at the European Centre at Interdisciplinary Centre at Herzlia, see (last visited 18 October 2005).
291. See, e.g., the first LL.M. degree specializing in European Law offered by the Law Faculty, the Hebrew University.
292. See, e.g., 29 April, 2004, Israel and the Wider Europe Initiative (Israeli Association for the Study of European Integration, Bar-Ilan University, 2 May 2004);
293. "Israel and the Wider Europe Initiative", annual conference of the Israeli Association for International Studies, University of Haifa; 11 May 2004,
294. "The European Union", annual conference, Israel Law Bar, Eilat; 23 June 2004,
295. "Old and New Challenges in Israel-EU Relations", Ministry of Justice, Jerusalem; 25 October 2004,
296. "The EU in Regional and Bilateral Dispute Settlement", IDC, Herzlia; 13 December 2004,
297. "EU Enlargement, the New Constitution and the European Neighbourhood Policy - Towards a European Constitution: Processes of Integration or Issues of Discord?", International Conference organized by the Helmut Kohl Institute for European Studies of the Hebrew University in co-operation with Konrad Adenauer Foundation and EU-Israel Forum, Hebrew University, Jerusalem; 16 May 2005,
298. "The Israeli New Civil Code from an EU Perspective", IDC, Herzlia; 15 June 2005,
299. "EU-Israel Relations", International Law Forum, Law Faculty, the Hebrew University of Jerusalem; 4 July 2005,
300. "Teaching EU Law in Israel", International Consortium on Legal Education, Second Annual Conference, Yeditepe University, Istanbul.
301. For the list of publications of various Israeli scholars during 2003-2004, see G. Harpaz (ed.), 11 Newsletter of the Israeli Association for the Study of European Integration (2004), pp. 81-84, available at (last visited 18 October 2005).
302. The objective of the Jean Monnet Action is to promote knowledge on European integration at academic institutions, see (last visited 18 October 2005).
303. For analysis, see Hirsch, Inbar and Sadeh, as note 3 above, pp. 117-118.
304. See Section 2.3 of the Tenth Anniversary of the Euro-Mediterranean Partnership: A Work Programme to Meet the Challenges of the Next Five Years, as note 108 above.
305. Article 2.6 of the EU-Israel Action Plan, as note 49 above.