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Withholding trade with Israeli settlements is an obligation under international law

In James Crawford's opinion, the duty of non-recognition of illegal settlement activity does not mandate states to withhold from trading with them. In my opinion, this is incorrect.

Tom Moerenhout
13 July 2012

The question about third party permissibility and obligations with respect to trade with Israeli settlements in occupied territories is of great relevance to international efforts to settle the Israeli-Palestinian and Israeli-Syrian conflict peacefully. Mirroring the Boycott, Divestment and Sanctions campaign that assisted in the downfall of apartheid in South Africa, international civil society is increasingly pushing for a similar approach to Israeli settlement activity. In response, more policy makers have seriously assessed the possibility and legality of trade bans.

James Crawford, Professor of International Law at Cambridge University, has written a well-argued legal opinion on the third party obligations with respect to Israeli settlements in the Occupied Palestinian Territories. Commissioned and published by the UK Trades Union Congress (TUC), the opinion is especially relevant in setting out the main legal questions, the applicable international law and confirmation that settlement trade bans can be enacted by EU Member States individually, without breaching EU law.

Logically, legal opinions are often discussed and contradicted by other legal opinions. It will not come as a surprise to Professor Crawford that certain of his conclusions are not shared by other legal scholars. In a short, constructive reply, I would like to (1) disagree with Crawford's opinion on the applicability of the duty of non-recognition to trade between third parties and Israeli settlements in Occupied Territories - henceforth settlement trade - and (2) complete his analysis of the law of the World Trade Organization (WTO) with respect to settlement trade bans.

(1) Crawford correctly establishes that the duty of non-recognition applies not only to the construction of the Wall (on which the International Court of Justice (ICJ) has delivered an advisory opinion) but also to the illegal Israeli settlements. In his opinion, this duty "does not require positive action on the part of individual states. Significant collective action through the United Nations organs has been addressed to this exact issue, with little practical effect." In Crawford's opinion, the duty of non-recognition of illegal settlement activity does not mandate states to withhold from trading with them.

In my opinion, this is incorrect. The obligation of non-recognition holds two elements. First, it is a customary obligation. Second, it is a self-executing obligation, which does not need collective action to be triggered. When a state observes a breach of peremptory norms of international law, it does not need action by the United Nations (i.e. in this case a trade embargo under Chapter VII) to not recognize by any measure or action the illegality at hand. The self-executing nature of the customary obligation is to prevent permanent members of the Security Council, or other states protected by them, from being able to breach such norms or prevent the exercise of the duty of non-recognition by other UN members.

Crawford bases his opinion on the premise that the duty of non-recognition does not apply to settlement trade on the 1970 Advisory Opinion of the ICJ on the presence of South Africa in Namibia. This is the only time, prior to the Advisory Opinion on the Wall, that the ICJ has confirmed the applicability of the obligation of non-recognition. However, in his assessment of the relevance of the Namibia opinion to settlement trade, Crawford makes a number of unfounded and shaky assumptions.

He quotes the Court that non-recognition "should not result in depriving the people of Namibia of any advantages derived from international co-operation". Crawford subsequently implies that the economic activity of settlements can benefit the local Palestinian population and that this could be a ground for not applying the duty of non-recognition to settlement trade. This argument, however, is flawed. It is well established under Israeli law (the Elon Moreh case) and under public international law (the Hague Convention and Fourth Geneva Convention) that economic gains from the occupation for the occupying force are illegal. Under core humanitarian law, settlements are only legal when they serve the “needs of the army of occupation”.

One could argue then that economic activity by such settlements grants benefits to the Palestinian population by employing them during the occupation. This line of reasoning also does not legally hold. The Fourth Geneva Convention prohibits the requisition of labor from leading to a mobilization of workers in an organization of a military or semi-military character. And more generally, it can hardly be argued that the benefits of settlement trade to the local Palestinian population are primarily meant to serve the occupied population, rather than to "entrench authority over the territory", as Crawford points out, right before awkwardly concluding that this may not be the case for Israeli settlements.

Crawford explicitly mentions the elements of the duty of non-recognition that the Namibia Opinion included. While this list did not include the withholding of trade, it can hardly be considered as exhaustive, or entirely applicable to the complexity of the Israeli-Palestinian conflict. In his opinion, the duty of non-recognition does not create positive obligations. I agree. However, withholding trade is not to be seen as a sanction (which would be a positive action) but rather as a rectification of an error in international trade relations: trading with internationally recognized illegal settlements. It is thus not about banning trade (a positive obligation) but about refraining oneself from trading with an illegal actor (a negative obligation).

Crawford himself identifies an important criterion when the scope of the duty of non-recognition is assessed: "The obligation not to assist the responsible State is limited to acts that would assist in preserving the situation created by the breach". Taking into account settlement expansion and the role of economic activity therein, it could hardly be contested that trade with settlements is an element that assists in the preservation of settlement activity. The preamble of the World Trade Organization establishes that the objective of free trade is to allow states the opportunity of “raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, and expanding the production of and trade in goods and services”. This comes down to the increased viability of free trade participants.

Trading with settlements does not only assist in preserving the situation created by the breach, it assists furthermore in future breaches. Simply put: it gives viability to Israel's overall settlement project. The duty of non-recognition exists exactly to prevent this from even being a possibility.

Crawford goes even further down the same wrong path when he mentions that "economic and commercial dealings between Israel and a third state may be considered as either a breach of the obligation of non-recognition...". Again, it is crucial to make a difference between trade with Israel and trade with illegal Israeli settlements. Trade with Israel is legal, and the duty of non-recognition does not mandate positive action to install sanctions against Israel, even though it is this state that is responsible for the illegal settlements. Trade with settlements, on the contrary, is illegal, and the duty of non-recognition does mandate that states refrain from trading with them not to recognize or assists the breach of fundamental norms.

(2) Crawford spends one paragraph on WTO law. He mentions that because settlements do not belong to the territory of the state of Israel, states are not obliged to allow trade from them. However, the question is more complex as the General Agreement on Tariffs and Trade (GATT - the corner stone agreement of the WTO) extends the territorial application of the treaty to "other territories for which is has international responsibility" (GATT Article XXVI.5.(a). The main question thus is whether settlements belong to territories for which Israel has international responsibility.

While Israel certainly incurs certain international responsibilities over settlements, an analysis of the negotiation history of GATT and the application of international law such as the duty of non-recognition - too long for this short commentary - drive the conclusion that GATT is not meant to apply to civilian or military settlements of a WTO member state that illegally occupies the territory of another state or people of whom the right to self-determination has been recognized.

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