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David Kriss, the press officer of the European Commission to Israel, today denied reports that the European Union has taken steps to abolish the duty-free status of goods made in Jewish settlements.

The Wall Street Journal reported today that after failing to reach a compromise with Israel, the EC decided to revoke the tax-free status of goods exported to the European Union by Israeli settlements in the occupied territories. Kriss denies that this report is accurate.

The EU has advised Israel that it will shortly be advising European importers to set aside money to cover duty that might be retroactively imposed on imports from Jewish settlements in the West Bank and Gaza Strip. The EU was obliged to publish the warning as a matter of law, Kriss says.

In that case, certificates of origin from the settlements would no longer entitle the importer to a customs break.

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Israeli sources claim that the EU is exploiting a technical dispute to compel the evacuation of the settlements and influence talks over future borders of Israel and a Palestinian nation.

EU representatives said this week that the customs exemption on goods from the settlements could be maintained under a free-trade agreement being worked out between the EU and the Palestinian Authority.

The Israeli negotiators threw out the proposal, saying that PA customs officials are not willing to handle goods from the settlements. Moreover, Israel refuses to recognize the PA as being in a position of authority over the settlements, which are an integral part of Israel.