Just Trade and Foreign Policy: A Case Study of the Legal Permissibility and Political Feasibility of Ceasing Trade with Israeli Settlements in Occupied Territories

Abstract

This study treats settlement boycotts as a question on legal trade and foreign policy. On the legal side, it concludes that ceasing trade with Israeli settlements is not only permitted before the World Trade Organization (WTO) but also obliged under public international law in general. It is found that GATT does not apply to settlements and that Israel cannot refer successfully to the WTO courts to rebuke settlement boycotts. However, in case a WTO panel would decide differently, settlement boycotts would still be permitted in WTO litigation using specific exceptions in WTO law. On the foreign policy side, this study investigates the political feasibility in the United States and European Union of trade embargoes toward Israeli settlements in occupied territories. It starts off with the construction of a dynamic conceptual and theoretical framework in which seven variables that determine political feasibility are set out: legal, economic, diplomatic, political culture, civil society, perceived gravity of the breach and knowledge, and level of leadership. This framework is subsequently applied to the United States and Europe. Findings are that there is currently not sufficient political feasibility to enact trade measures toward settlements. In the US, this is mainly due to diplomatic ties and leadership by a powerful lobby. In the EU, this is because of its history, lack of leadership and strong position of certain member states.