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A Legal Analysis of the Free Trade Agreement of 1975 between the European Community and the State of Israel

Published online by Cambridge University Press:  04 July 2014

Daphna Kapeliuk-Klinger
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Extract

On January 1, 1989, the State of Israel abolished the remaining customs duties and charges, having equivalent effect on imported products originating in the European Communities (hereinafter the Community), in accordance with the Free Trade Agreement (hereinafter the FT Agreement) concluded on May 11, 1975, between the Community and Israel.

The FT Agreement, which sets out to create a free trade area in the territories of the contracting parties, was the result of the previously existing relationship between the Community and Israel, as well as the emergence of the Global Mediterranean Policy within the Community. The FT Agreement attempts to foster economic activity by promoting expansion of trade and cooperation in reciprocal areas of interest, thus creating fair competition and contributing to the development and expansion of world trade.

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Articles
Information
Israel Law Review , Volume 27 , Issue 3 , Summer 1993 , pp. 415 - 446
Copyright
Copyright © Cambridge University Press and The Faculty of Law, The Hebrew University of Jerusalem 1993

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References

1 (1975) O.J. (Official Journal of the EC) L. 136/3. Although the Community changed its name to the “European Union”, for the purpose of this paper the term “the Community” will be used.

2 Ibid., Art. 1.

3 K.A. no. 972, vol. 28, p. 381.

4 The Israeli mission to the EEC was established in 1958 after the American and Greek missions.

5 (1964) O.J. L. 95/1571.

6 (1970) O.J. L./1. Art. 113 is wider in scope than Art. 111 and gives competence “where agreements with third countries need to be negotiated”.

7 Pomfret, R. & Tovias, A., The Global Mediterranean Policy of the EEC, paper delivered to the Tel-Aviv Conference on the Economic Integration of Israel in the EEC, Giersch, H., ed., (Mohr, Tubingen, 1980) 47Google Scholar.

8 Miller, A., Free Trade Between the State of Israel and the European Communities: A Legal Discussion of the Agreement of 20 May, 1975. Thesis submitted for the Degree of Master of Law (The Hebrew University of Jerusalem, July, 1985) 8Google Scholar.

9 Cohen, Y., Israel and the EEC: Israel's Integration in the Economic Structure of the European Community, (The Israel Ministry of Industry, Trade, and Tourism, Jerusalem, 1979) 27Google Scholar.

10 Ibid., at 15.

11 Supra n. 1.

12 Art. 18 of the FT Agreement.

13 (1975) O. J. L. 165/62.

14 (1978) O. J. L. 270/2.

15 (1978) O J. L. 270/10. All documents form one integral instrument. Art. 14 of the Additional Protocol and Art. 11 of the First Financial Protocol.

16 Commission v. Council (ERTA case) [1971] E.C.R. 263, at 274.

17 Art. 210 of the EEC Treaty.

18 Supra n. 16; see also ECJ Opinion 1/76 [1977] E.C.R. 741 (Laying-up fund for Inland Waterway Vessels).

19 ECJ opinion 1/78 [1979] E.C.R. 2871 (International Agreement on Natural Rubber).

20 Demirel [1988] E.C.R. 3751.

21 Kapteyn, P.J.G. & van Themat, P. Verloren, Introduction to the Law of the European Communities after the Coming into Force of the Single European Act, (Kluwer Graham & Trotman, London, 2nd ed., 1990) 828–838Google Scholar.

22 For detailed discussion see Hartley, T. C., The Foundations of the European Community Law, (Clarendon Press, Oxford, 1988) 154–167Google Scholar.

23 (1983) O.J. L 335/8.

24 (1988) O.J. L 327/51.

25 See discussion by Ehlermann, C. D., “The Institutional Context of the EEC-Israel Economic Relations” in Greilsammer, I. & Weiler, J. H. H., eds., Europe and Israel Troubled Neighbours, (W. de Gruyter, Berlin, 1988) 218–219Google Scholar.

26 For more detailed discussion see, e.g., Brownlie, I., Principles of Public International Law, (Clarendon Press, Oxford, 3rd ed., 1979) Chap. 2Google Scholar.

27 See generally, Samara & al. (1956) 10 P.D. 1825Google Scholar; Dinstein, Y., International Law and the State, (Shocken and T.A. U., Tel-Aviv, 1971, in Hebrew) 143Google Scholaret seq.

28 Lapidoth, R., Les Rapports entre le Droit International Public et le Droit Interne en Israel, (Editions Pedone, A., Paris, 1959) 111Google Scholar.

29 The Law and Administration Ordinance has since been superseded by the Foundations of Law, 1980, which abandons the direct reference to English law for reference to wider principles of “freedom, justice, equity and peace of Israel's heritage” (34 L.S.I. 181).

30 See McWhirter v. A.G. [1972] 2 CMLR 882, (C.A.) as referred to in Halsbury's Laws of England, (4th ed., 1974) vol. 8, para. 986, n. 7Google Scholar.

31 Samara & al., supra n. 27, at 1829.

32 See, e.g., supra n. 16.

33 See for example, Huntings, N., “Enforceability of the EEC-EFTA Free Trade Agreements”, (1977) 2 Euro. L.R. 163Google Scholar; Tagaras, H., “L'Effet Direct des Accords Internationaux de la Communaute”, (1984) Cahiers de Droit Europeen 15Google Scholar; Volker, E., “The Direct Effect of International Agreements in the Community Legal Order”, (1983) 1 Legal Issues of European Integration 131Google Scholar; Cohen, supra n. 9, at 36-47; Meesen, K., “The Application of Rules of Public International Law within Community Law”, (1976) 13 Common Market L.R. 485Google Scholar; Bebr, G., “Agreements Concluded by the Community and their Possible Direct Effect: From International Fruit Company to Kupferberg”, (1983) 20 Common Market L.R. 35Google Scholar; Llavero, M., “The Possible Direct Effect of the Provisions on Competition in the EEC-EFTA Free Trade Agreements in the Light of the Kupferberg Decision”, (1984) Legal Issues of European Integration 83Google Scholar; Kapteyn, P., “The ‘Domestic’ Law Effect of Rules of International Law within the European Community System of Law and the Question of the Self-Executing Character of GATT Rules”, (1974) International Lawyer 74Google Scholar; Pescatore, P., “External Relations in the Case Law of the Court of Justice of the European Communities”, (1981) 18 Common Market L.R. 615Google Scholar.

34 International Fruit Company (Rotterdam) and others v. Produktschap voor Groenten en Fruit, (The Hague), [1972] E.C.R. 1219, at 1226.

35 R. & V. Haegeman v. Belgian State, [1974] E.C.R. 449, at 459-460.

36 See Van Gend en Loos, [1963] E.C.R. 1, at 12Google Scholar.

37 See Art. 189 of the EEC Treaty and see, e.g., Politi S.A.S. v. Ministero delle Finanze, [1971] E.C.R. 1039, at 1048 (concerning Regulations); Franz Grad v. Finanzmet Traunstein, [1970] E.C.R 825, at 839 (concerning Directives).

38 See discussion below on the direct effect of FT Agreements, pp. 426-428.

39 Supra n. 34.

40 The particular position of the GATT as an international agreement should be noted. The Community is not a GATT Contracting Party and has never joined the GATT Agreement as a signatory. However, following the transfer of external trade powers from the Member States to the Community, the Community succeeded the Member States in GATT and acts provided by it. The Court explicitly held that in matters covered by GATT, the Community “has replaced the Member States”, see Douaneagent der NV Nederlandse Spoorwegen v. Inspecteur der invoerrechten en accijnzen, [1975] E.C.R. 1439, at 1450.

41 Supra n. 34, at 1226, point 7.

42 Ibid., point 8.

43 Supra n. 34; see also Compagnia Singer SpA v. Amministrazione delle Finanze dello Stato, [1983] E.C.R. 487; Societa Italiana per l'Oledotto Transalpini (SIOT) v. Ministero delle Finanze, [1983] E.C.R. 731.

44 Conceria Daniele Bresciani v. Amministrazione Italiana delle Finanze, [1976] E.C.R. 129.

45 Ibid., at 140, point 16.

46 See Pabst case, [1982] E.C.R. 1331, at 1350, point 27.

47 Ibid., point 26.

48 The Kupferberg case, [1982] E.C.R. 3641, at 3665, point 25.

49 See, e.g., Defrenne, [1976] E.C.R. 445, at 471.

50 Supra n. 48.

51 Procureur de la Republique Besancon v. M. Bouhelier and others, [1979] E.C.R. 3151.

52 Ibid., at 3160, point 6.

53 The Polydor case, [1982] E.C.R. 329.

54 Supra n. 48.

55 Ibid., at 3662 et seq., points 11-14.

56 Ibid., at 3665, point 22.

57 Ibid., at 3666, point 31.

58 Ibid., at 3665, point 23.

59 Ibid., at 3665, point 24.

60 Ibid., at 3666, point 27.

61 It is interesting to note that in this case the Court did not give Kupferberg the remedy he requested.

62 The Bulk Oil case (Bulk Oil (Zug) v. Sun Oil Ltd., [1986] E.C.R. 559) should be mentioned since it is the first and only case until now, in which the FT Agreement was subject to Court review. The Court refrained from explicitly dealing with the FT Agreement direct effect questions.

63 Supra n. 21, at 831-832.

64 See further discussion on Cooperation on page 444.

65 The “most-favoured-nation” principle would seem to preclude certain countries from abolishing trade tariffs, on a regional basis, without granting the same concessions to other members of GATT. Art. XXIV of GATT makes exceptions in the case of free trade areas and customs unions. Under Art. XXIV(8)b concessions in a free trade area may be reserved to those products originating in the territories of the parties to the free trade area. It has been argued that the rules of origin set out in Protocol 3 of the FT Agreement are restrictive concerning products originating in third party countries which undergo sufficient processing in the Community or in Israel. It is argued that the rules of origin contradict the principle set out in Art XXIV(5)b which provides that within a free trade area regulations of commerce shall not be more restrictive than the corresponding regulations which existed in the same constituent territories prior to the formation of the free trade area.

66 Horovitz, D., “The Impending ‘Second Generation’ Agreements between the European Community and Eastern Europe: Some Practical Considerations”, (1991) 25 J. of World Trade 54, at 57Google Scholar.

67 Protocol 3 of the FT Agreement, Art. 1.

68 Protocol 3 of the FT Agreement, Art. 3.1 (a).

69 Protocol 3 of the FT Agreement Art. 1.1(b) and 1.2(b). See also Forrester, , “EEC Customs Law: Rules of Origin and Preferential Duty Treatment”, Part II, (1980) 5 European L.R. 257, at 267Google Scholar.

70 Supra n. 3.

71 Nikelsberg, I., “The Ability to Use Israel's Preferential Trade Status with both the United States and the European Community to Overcme Potential Trade Barriers”, (1990) 24 Geo. Washington J. Int'l L. and Economics 371, at 385–386Google Scholar. See Article 1 of the Israel-USA FT Agreement, supra n. 3.

72 Supra n. 62, point 16.

73 Supra n. 66, at 61.

74 Council Resolution no. 85 of 7 May 1985 on a new approach to technical harmonization and standards; (1985) O. J. C 136/1.

75 (1990) O.J. L 291/2.

76 The principles were set in Rewe-Zentral AG v. Bundesmonopolverwaltung fur Branntwein, [1979] E.C.R. 649, at 662 with respect to free movement of goods within the Community.

77 Supra n. 21, at 397.

78 Centrafarm Bv. et al. v. Sterling Drug Inc., [1974] E.C.R. 837.

79 Supra n. 51.

80 Supra n. 53, para. 19.

81 Supra n. 66, at 66.

82 Council Directive 90/531, (1990) O.J. L 297/1.

83 Supra n. 3; supra n. 71, at 392.

84 March-Hunnings, , “Enforceability of the EEC-EFTA Free Trade Agreements”, (1977) 14 European L.R. 278Google Scholar; Walbroek, , “Enforceability of the EEC-EFTA Free Trade Agreements: A Reply”, (1978) 15 European L.R. 28Google Scholar.

85 Sec. 2 of the Restrictive Business Practice Law, 1988, (1988) S.H. no. 41, p. 128.

86 Ibid., sec. 3.

87 Ibid., sec. 9.

88 Stanley Adams v. Public Prosecutor of the Canton of the City of Basel, Decision of the Swiss Supreme Federal Court of 3 May 1978, (1978) Common Market L. Rep. 480, at 486.

89 (1975) O.J. L 136/188.

90 Weiler, J. H. H., “Israel and the EEC: A New Legal Model for Trade and Cooperation”, (1980) 3 Jewish Law Annual 197, at 207Google Scholar. See also Art. 25(2) of the FT Agreement.

91 Ahlstrom et al. v. Commission (Wood Pulp), [1985] E.C.R. 5193.

92 Kaniel, M., “Israel and the Common Market”, (1981) 4–6 Ro'eh Haheshbon 130, at 132Google Scholar.

93 Supra n. 90, at 201.

94 Supra n. 66, at 74.

95 Supra n. 14.

96 Ibid., Art. 21.

97 Art. 25, Protocol 3 of the FT Agreement.

98 Supra n. 14, Art. 5(2).

99 Art. 16(3)(a) of the FT Agreement.

100 Art. 16(3)(b) of the FT Agreement.

101 Art. 16(3)(c) of the FT Agreement.

102 Supra n. 9, p. 26.

103 For example, in agricultural expertise, studies, research and development.

104 ECU 30 million in the First Financial Protocol, supra n. 15; ECU 40 million in the Second Financial Protocol, see supra n. 23; ECU 63 million in the Third Financial Protocol, see supra n. 24; ECU 82 million in the Fourth Financial Protocol.