Israel has complained about the EU's inclusion of parts of the town of Modi'in-Maccabim-Reut on a blacklist of "settlements."

The European Commission on 3 August added three postal codes in the town to a register of over 500 codes relating to "Israeli settlements located within the territories brought under Israeli administration since June 1967."

Modi'in-Maccabim-Reut - Israeli "reality" versus UN law (Photo: ChristianBier)

The designation refers to Palestinian land annexed after the so-called Six-Day War in a move considered by EU countries to violate binding UN resolutions.

Products originating from annexed land cannot benefit from preferential tariffs agreed under a 12-year-old EU-Israel trade deal.

The commission for the first time also published the list online, saying "the way [the rules] are imple­mented in the EU should be streamlined in the light of experience."

The list was previously available to EU customs authorities who are supposed to use it to cross-check importers' certificates of origin. But NGOs, such as Human Rights Watch and the Council for European Palestinian Relations, say the system does not work.

Modi'in-Maccabim-Reut is a town of around 80,000 people dating back to the 1980s.

It is in a strip of land between 1km and 3kms wide which was originally designated as a buffer zone between Israeli-controlled territory and Palestinian territory after the 1948 Arab-Israeli War.

The Israeli foreign ministry in a statement published on its website on Tuesday (14 August) said the EU broke off talks on the blacklist "ex abrupto" and that it has lodged "an official protest" in Brussels.

It added: "For anyone who deals in reality, there is not the slightest doubt that the Modi'in, Maccabim and Re'ut localities are an integral part of Israel and their future is not in question."

It also said that naming the town on a public EU document risks creating a new political flashpoint: "It extends the domain of conflict to places and issues that do not belong there."

For its part, the left-leaning Haaretz newspaper quoted two trade lawyers, Gill Nadal and Omer Wagner, who said the move "constitutes a deviation and breach of contract" of the EU trade agreement.

The right-leaning Ynetnews cited Israel's minister of diaspora affairs, Yuli Edelstein, as saying the EU is "trying to gnaw away at Israel's sovereignty."

The publication of the EU list has also raised fears EU consumers will use it to privately boycott goods.

The development comes after EU foreign ministers in May said they will "fully and effectively implement existing EU legislation and the bilateral arrangements applicable to settlement products."

It also comes after the Union last month upgraded trade and diplomatic relations with Israel.

The upgrade had been put on hold for almost three years after Israel's attack on Gaza in 2009, which killed around 1,400 Palestinians, over 300 of whom were children.