Mr. Declan Smyth:

The European Union has two association agreements with the states concerned. It has an association agreement with Israel, which regulates trade in goods and services between Israel and the European Union, and it has an association agreement with Palestine - at the time it was with the PLO – which regulates trade in goods. Under the EU-Israel association agreement, the European Union has agreed to confer preferential tariff rates on certain goods coming from Israel. These are rates that are lower than the rates it charges WTO members with which it does not have these types of association agreements. They would be slightly higher. If an Israeli producer or manufacturer of goods wants to avail of a lower tariff rate in sending goods to the European Union, he or she must make a declaration in order to avail of the lower tariff rate. A technical arrangement has been developed between the European Union and Israel, which agreed a set of postcodes for the identification of goods originating in the settlements. Because an import declaration is required to accompany goods coming from Israel, it must indicate if it is a good coming from the settlements by using the postcode, which means it is not entitled to the preferential tariff rate. The way the European Union has implemented its WTO obligations is essentially to make trade in goods with all states, regardless of whether they are WTO members, eligible for what are called "most-favoured nation tariff rates", which are the highest rates the Union charges, regardless of whether the state from which the goods are being sent is a WTO member.

For instance, due to the way the European Union has implemented its WTO obligations, goods coming from Belarus, Iran or North Korea, which are not members of the WTO, are nevertheless entitled to the most-favoured nation tariff rate on goods. As it happens in reality, that does not come to pass because there are various sanction regimes applying to all of those countries, which suspend the most favoured nation rates for those goods.