EU Commission proposes suspending trade preferences for Israel, sanctions on Israeli individuals, entities

BRUSSELS -- The European Commission said on Wednesday that it has submitted a proposal to the Council of the European Union (EU), recommending a partial suspension of trade preferences granted to Israel, and sanctions on certain Israeli ministers, settlers and related entities.

According to a senior EU official, the move does not amount to halting trade with Israel, but to suspending its preferential treatment under the EU-Israel Association Agreement. Once implemented, Israeli exports to the EU would fall under the World Trade Organization's most-favored-nation (MFN) rules, resulting in higher tariffs.

According to EU trade data, Israel's goods exports to the EU amounted to about 15.9 billion euros ($18.8 billion) in 2024. The EU is Israel's largest trading partner, accounting for roughly 32 percent of its global trade.

The Commission estimates that, if trade volumes remain unchanged, Israeli exporters would face around 220 million euros in additional tariffs annually, affecting about 37 percent of exports to the EU, which are mainly agricultural products such as fruits, vegetables and nuts.

The Commission said that the measures are a reaction to Israel's breach of the EU-Israel Association Agreement, citing its impact on the humanitarian crisis in Gaza and the erosion of the two-state solution.

In addition, the Commission proposed sanctions against two Israeli ministers?— National Security Minister Itamar Ben-Gvir and Finance Minister Bezalel Smotrich?— as well as certain violent settlers and related entities. The EU also plans to add 10 Hamas political bureau members to its sanctions list, subjecting them to asset freezes and travel bans.

Under EU rules, the trade measures must be adopted by a qualified majority in the Council of the European Union and will formally enter into force 30 days after notifying the EU-Israel Association Council. (1 euro = 1.18 U.S. dollar)