The grape harvest happening now in vineyards throughout the Israeli-occupied West Bank has begun to yield the fruit that will eventually become wine labelled "Product of Israel."

On a recent early-morning outing, Israeli boys with clippers cut bunches of green grapes that the Shiloh Winery will use to produce a chardonnay that will be sold around the globe.

But half a world away in Winnipeg, a child of Holocaust survivors is fighting to change the labels on bottles of wine produced in Jewish settlements in the West Bank.

"I found it to be completely outrageous that these wines should be labelled 'Made in Israel,' when in point of fact, they're produced in territory that the international community unanimously, including Canada, consider to the occupied territories," said David Kattenburg, who has launched a legal challenge over Canada's labelling regulations.

Modern revival of an ancient industry

Wine production in the region dates back thousands of years, with the word "wine" appearing hundreds times in the Bible. Ancient grape presses are still visited by tourists coming to the Holy Land.

While wine has a long history in the Middle East, the current production happening in Israel and the occupied territories is relatively new.

According to Israel's export authority, $53 million Cdn of product is sold around the globe, with Canada serving as Israel's fourth largest overseas market for wine.

Amichai Lourie holds grapes that will be made into a high-end chardonnay at his winery's vineyard in the West Bank. (Derek Stoffel/CBC)

There are well over 300 wineries in Israel, according to the export authority.

The most recent report in 2011 from Who Profits, a pro-Palestinian organization that investigates commercial activities on Israeli occupied land, there are at least 29 wineries in the West Bank.

Companies operating in the West Bank benefit from "readily accessible land, tax benefits and other financial incentives provided by the Israeli government," according to Who Profits.

Canada, and most other nations, view Israeli settlements as a violation of international law, with Global Affairs Canada saying the settlements pose a "serious obstacle to achieving a comprehensive, just and lasting peace."

Israel has long disputed this interpretation, instead regarding the West Bank as "disputed" territory that has been under Israeli military occupation for 50 years. Palestinians claim the land for a future state.

But walking among the rows of grapes ready for harvest, Amichai Lourie, the winemaker at the Shiloh Winery, located in the industrial zone of the settlement of Shiloh, in the central West Bank, is unequivocal about where he's standing: "This is Israel… this is where we belong."

Controversial Canadian decision

Along with the Psagot Winery to the south, Shiloh's product was recently at the centre of a controversial decision that saw the Liquor Control Board of Ontario send a letter asking vendors to stop selling the products of the two West Bank wineries.

The LCBO instruction came after the Canadian Food Inspection Agency in July ordered that the wine could no longer be sold in Canada, citing issues around the labelling of a product from occupied territory in the West Bank.

David Kattenburg, seen at his home in Winnipeg, is fighting the CFIA over how wines made in the West Bank are labelled. (Trevor Brine/CBC)

Yaakov Berg, the owner of Psagot Winery, wrote on Facebook that he was "shocked" by the decision.

"Canada, a country founded and expanded as it conquered and destroyed the homeland of another people, a country with no roots or historical validity of its existence there, questions the right of Jews to live and grow vineyards in the land of our forefathers," Berg wrote.

Regulator reversal

But the CFIA reversed its decision, less than 24 hours after the original ruling, after pressure from the pro-Israel advocacy group B'nai Brith Canada, which called the original ruling "disturbing and discriminatory."

In a statement emailed to CBC News, the CFIA said it "regrets the outcome" of the initial decision, which "did not fully consider the Canada-Israel Free Trade Agreement."

That agreement, signed in 1996, applies to Canadian territory where customs law applies, "in accordance with international law and domestic law."

The definition of the application of the agreement for Israel omits the reference to international law.

But some think the omission is problematic.

"Israeli law does not apply… in the West Bank. And if Israeli law doesn't apply there, why would Canada define it as 'made in Israel'?" said Anat Ben Nun, the director of external relations for Peace Now, an Israeli group that opposes settlements.

Anat Ben Nun of Peace Now supports efforts to change how West Bank products are labelled in Canada. (Derek Stoffel/CBC)

"There is an opportunity still to amend the [free trade] agreement in a way that would allow for the labelling of settlement products, and for every Canadian citizen to make his or her own decision regarding what products they're buying," Ben Nun told CBC News.

David Kattenburg, a 64-year-old university science instructor in Winnipeg, has launched a formal challenge of the July decision by the CFIA, claiming the agency did not follow international and Canadian law when making its decision, arguing it's the federal government's responsibility to "hold Israel accountable for the crimes that it commits through the extension of its settlements."

The European Union brought in guidelines in 2015 for the labelling of some agricultural products, including wine, which require member states to show whether goods come from occupied land.

Bottles on display in the tasting area of the Psagot Winery in the West Bank. (Derek Stoffel/CBC)

In an interview, Kattenburg said he's not calling for a boycott of West Bank wines. "I'm simply asking that they be truthfully labelled so that Canadian consumers can decide whether or not they wish to aid and abet war crimes and participate in the dispossession of Palestinians."

Israel's embassy in Ottawa swiftly jumped into action in July when the CFIA temporarily banned West Bank wine. But now that the decision has been reversed, a spokesperson for the Israeli government dismissed Kattenburg's formal challenge, saying "we are not concerned."

"We believe that Canada understands that the way to peace passes through direct negotiations, and not through initiatives in tribunals or courts," said Emmanuel Nashon, spokesman for the Israeli Ministry of Foreign Affairs. "The solution is certainly not in the Canadian court of trade. It is here in Israel in direct talks between the parties."

'It's not just about money'

While the CFIA hears Kattenburg's appeal, in the West Bank, the winemaker in Shiloh vows that he won't change the labels on his bottles, no matter what is decided in Canada.

"I will not take out the words 'Made in Israel', under no circumstances," said Amichai Lourie, "Even if I lose the market, I'll lose the market. No big deal."

Lourie said he could not specify how much of his business comes from Canada, saying only "it's worth a lot."

"Making wine in Israel, it's not just about money. You're connecting to the land," Lourie said after serving some of his wine to visiting tourists. "There are things that we won't compromise."