Commission proposes suspension of trade concessions with Israel and sanctions on extremist ministers of the Israeli government and violent settlers

This article is brought to you in association with the European Commission.

Following the announcement of President von der Leyen in her State of the Union address, the European Commission presented today its proposal to the Council to suspend certain trade-related provisions of the Association Agreement between the EU and Israel (“the Agreement”) as well as its proposals for sanctions on Hamas, extremist ministers and violent settlers.

The Commission is also putting on hold its bilateral support to Israel, with the exception of support to civil society and Yad Vashem. Concretely, this affects future yearly allocations between 2025 and 2027, as well as ongoing institutional cooperation projects with Israel and projects funded under the Regional EU-Israel cooperation facility.

The proposals follow a review of Israel’s compliance with Article 2 of the Agreement, which found that actions taken by the Israeli government represent a breach of essential elements relating to respect for human rights and democratic principles. This entitles the EU to suspend the Agreement unilaterally.

Specifically, this breach refers to the rapidly deteriorating humanitarian situation in Gaza following the military intervention of Israel, the blockade of humanitarian aid, the intensifying of military operations and the decision of the Israeli authorities to advance the settlement plan in the so-called E1 area of the West Bank, which further undermines the two-state solution.

European Commission President, Ursula von der Leyen, said: “The horrific events taking place in Gaza on a daily basis must stop. There needs to be an immediate ceasefire, unrestrained access for all humanitarian aid, and the release of all hostages held by Hamas. The European Union remains the biggest donor of humanitarian aid and an unwavering champion of the two-state solution. Reflecting these principled commitments, and taking into account serious recent developments in the West Bank, we propose to suspend trade concessions with Israel, sanction extremist ministers and violent settlers, and put bilateral support to Israel on hold, without affecting our work with Israeli civil society or Yad Vashem.”

The suspension concerns the core trade-related provisions of the Agreement, and in practice means that imports from Israel will lose their preferential access to the EU market. These goods will therefore be charged duties at the level applied to any other third country with whom the EU has no free trade agreement.

Next steps

Suspension of trade-related provisions

The Commission is proposing a Council decision on the suspension of certain trade-related provisions of the Agreement that fall within the Union’s common commercial policy.

The Council needs to adopt the decision with a qualified majority.

The decision will enter into force on the date of its adoption.

Once the decision is adopted, the EU-Israel Association Council will be notified about the suspension. The suspension will take effect 30 days after the notification to the Association Council.

Sanctions against Hamas, extremist ministers of the Israeli government and violent settlers

In specific terms, the package consists of 4 draft legal acts with 9 listing proposals against the ministers and the settlers (under the EU Global Human Rights Sanctions Regime), as well as a reinforced package of listings against 10 members of the Hamas politburo, based on a new listing criterion under the Hamas Sanctions Regime.

The Council now needs to approve the decision by unanimity.

Background

Following the recent decision by Israel to introduce a blockade to the access of humanitarian aid to Gaza, the humanitarian situation has deteriorated to an unprecedented and unsustainable level, driven by ongoing bombardments, military operations, mass displacement, and the collapse of basic services.

The EU High Representative presented to the Foreign Affairs Council of 23 June 2025 a review which concluded that there are indications that Israel would be in breach of Article 2 of the the Euro-Mediterranean Agreement, which establishes respect for human rights and democratic principles as an essential element of that Agreement.

Violation of Article 2 amounts to a serious material breach of that Agreement. The European Union has the right to respond to such a breach in a way that is proportionate and in view of promoting the end of the violations. Given the special urgency of the situation, the EU can act without first taking recourse to the Association Council established under the Agreement.

In her 2025 State of the Union address on 10 September 2025, President of the European Commission Ursula von der Leyen announced that the European Commission would propose a partial suspension of the Association Agreement on trade-related matters.

The Euro-Mediterranean Agreement establishes an association between the European Communities and their Member States, of the one part, and the State of Israel, of the other part.

Article 2 of the Euro-Mediterranean Agreement provides that “relations between the Parties, as well as all the provisions of the Agreement itself, shall be based on respect for human rights and democratic principles, which guides their internal and international policy and constitutes an essential element of this Agreement”.

EU-Israel trade

The EU is Israel’s biggest trading partner, accounting for 32% of Israel’s total trade in goods with the world in 2024. Israel is the EU’s 31^st largest trading partner.

Total trade in goods between the EU and Israel in 2024: €42.6 billion.

EU imports from Israel were worth €15.9 billion, led by:

1. machinery and transport equipment (€7 billion, 43.9%)
2. chemicals (€2.9 billion, 18%), and
3. other manufactured goods (€1.9 billion, 12.1%).

The EU’s exports to Israel amounted to €26.7 billion and were dominated by:

4. machinery and transport equipment (€11.5 billion, 43%),
5. chemicals (€4.8 billion, 18%), and
6. other manufactured goods (€3.1 billion, 11.7%). 

Trade in services between the EU and Israel amounted to €25.6 billion in 2023 (the EU imports €10.5 billion, and exports €15.1 billion).

EU’s bilateral support to Israel

The EU’s financial support to Israel is covered by the Neighbourhood, Development and International Cooperation Instrument (NDICI) Global Europe (NDICI-GE) for the period 2021 to 2027. In this context, Israel was set to receive an average of €6 million per year under the current MFF between 2025 and 2027.

In addition, the EU will equally put on hold the institutional cooperation projects, including twinning programmes and projects under the Regional EU-Israel cooperation facility benefitting Israel in the region in the context of the Abraham Accords. The amount to be put on hold is approximately €14 million.

Sanctions against violent settlers

Under the EU Global Human Rights Sanctions Regime, the Council has listed so far nine individuals and five entities linked to violent extremism in the West Bank and East Jerusalem, as well as the blocking of humanitarian aid into Gaza.

On 7 December 2020, the Council established a Global Human Rights Sanctions Regime, which applies to acts such as genocide, crimes against humanity and other serious human rights violations or abuses (e.g. torture, slavery, extrajudicial killings, arbitrary arrests or detentions). The EU Global Human Rights Sanctions Regime underscores the EU’s determination to enhance its role in addressing serious human rights violations and abuses worldwide. Achieving the effective enjoyment of human rights by everyone is a strategic goal of the Union. Respect for human dignity, freedom, democracy, equality, the rule of law and human rights is a fundamental value of the Union and of its common foreign and security policy.

In its conclusions of 27 June 2024, the European Council reiterates its strongest condemnation of the brutal terrorist attacks conducted by Hamas and other terrorist groups against Israel on 7 October 2023. The European Council strongly condemned the ongoing extremist settler violence in the West Bank, including East Jerusalem, and invited the Council to take work forward on further restrictive measures against extremist settlers. The European Council also called for safe access to the holy sites and for the Status Quo to be upheld. Lastly, the European Council condemned the Israeli government’s decisions to further expand illegal settlements across the occupied West Bank and urged Israel to reverse these decisions.

Trending now: