European Commission Confirms Irish Bill Contravenes EU Law

The European Commission last week warned that an Irish bill to outlaw trade with Israeli settlements, which advanced in the Irish Senate in July, would violate the European Union’s exclusive right to determine trade policy for its member states.

The Control of Economic Activity (Occupied Territories) Bill 2018, proposed by Senator Frances Black, would criminalize Irish trade in products and services produced by “illegal settlements in occupied territories,” punishable by fines up to 250,000 euros ($310,000) and five years in jail. Without mentioning Israel by name, the bill carefully laid out qualifications that would limit its scope to Israeli settlers and settlements in the West Bank, East Jerusalem, and Golan Heights. In fact, Senator Black specified that the bill targeted Israeli settlements.

During the Irish Senate’s deliberations in July, Foreign Minister Simon Coveney declared the Irish government’s opposition to the bill while sympathizing with the sentiments of its sponsors. The Irish Times reported that one Irish government official privately asked the European Commission’s trade directorate last week if the legislation could be legal under a “public policy” exemption clause, as the bill’s sponsors have argued. The commission official ruled out that possibility.

Israeli exports to Ireland totaled some $83 million in 2016, comprising only about 1.5 percent of Israel’s $60 billion in exports worldwide. The products in question represent a small portion of that $83 million. As such, the immediate impact of the bill, if enacted, would be more symbolic than practical. However, if other European countries were to follow Ireland’s lead, the damage to Israel’s economy could mount. No other country in Europe has such a law at present.

The bill, if passed, could also force U.S. companies operating in Ireland to choose between violating Irish law or U.S. law, which forbids American companies from participating in foreign boycotts that the American government does not endorse. This could have a deleterious impact on the Irish economy. U.S. investment in Ireland accounted for 67 percent of the country’s foreign direct investment in 2017, and American companies employ over ten percent of the Irish workforce.

In addition, two-dozen U.S. state laws require pension fund divestment from companies that boycott Israel (in some cases specifically defined to include Israeli settlements). The Irish bill could thus complicate matters for U.S. firms in Ireland, not to mention the 440 Irish firms doing business in the U.S.

Earlier this year, the Trump administration reportedly made clear to Irish officials in private that the U.S. opposes the bill. The U.S. government should publicly explain how the bill violates U.S. law and emphasize the consequences of its passage.

The Irish bill’s fate is still yet to be determined. The European Commission’s warning, coupled with continued U.S. guidance, could weaken support for the legislation, which both targets Israel unfairly and would damage relations between Washington and Dublin.