Israel's minister of industry, trade and labour Ehud Olmert has so far failed to resolve a dispute between Israel and the EU over Israel's exports to EU member countries.

On December 17, Olmert conveyed to the EU a written proposal to mark the geographical origin of goods over which there is a dispute, and the EU has asked whether the goods originate in the Palestinian Authority territories, including the West Bank and the Gaza Region.

This proposal apparently differs substantially from one Olmert announced in Brussels on November 26, after talks with EU Trade commissioner Pascal Lamy. At that time, Olmert said that he had proposed, and the EU had accepted, a solution whereby the geographical origin of all Israeli exports to the EU, including the town or settlement where the good were made, would be recorded on all waybills. The EU now refuses to accept Olmert's proposal as a way of resolving the problem of Israeli export from beyond the Green Line.

Trade sources in Tel Aviv commented that EU's stand "may have serious repercussions regarding the export of fresh produce from settlements beyond the Green Line, as these products would not benefit from the free trade agreement between the EU and Israel". The dispute between Israel and the EU is believed to be the EU's demand that the EU-Israel association agreement, which includes a free trade arrangement, should not apply to goods originating beyond the Green Line which, according to the EU, "are not Israel." The dispute has been going on for seven years, during which time foreign and trade ministers have refused to accede to EU's demands fearing that in the context of any future peace negotiations, "this would amount to recognition that the territories beyond the Green Line did not belong to the State of Israel".

The head of the EU Commission's delegation to Israel, Giancarlo Chevallard, was quoted in Globes as saying that "the EU indeed does not see in Olmert's current proposal a solution to the problem of Israeli exports from the territories, and expects that the government of Israel will make progress on this issue".

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