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TORONTO – Wines from the West Bank can continue to be sold in Canada with the label “Product of Israel,” the federal food inspection agency said Thursday, reversing an earlier decision that drew condemnation from Jewish groups.

The Canadian Food Inspection Agency’s initial decision – deeming the wines mislabelled – had led the Liquor Control Board of Ontario to ask vendors to stop selling and importing wines from the Psagot Winery and Shiloh Winery since their grapes were grown, fermented and processed in an area where the CFIA said the federal government doesn’t recognize Israel’s control.

The CFIA said Thursday afternoon it had not fully considered the Canada-Israel Free Trade Agreement when dealing with the matter.

“The Canadian Food Inspection Agency regrets the outcome of the wine labelling assessment which led to the Liquor Control Board of Ontario’s response regarding products from two wineries labelled as ‘Product of Israel,”‘ the CFIA said in a statement.

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“These wines adhere to the agreement and therefore we can confirm that the products in question can be sold as currently labelled.”

Under the agreement cited by the CFIA, Israel refers to any territory where the country’s customs laws are applied.

The issue was highlighted in a letter by the LCBO to vendors this week, saying the CFIA had determined calling the wines “Product of Israel” would not be acceptable because they were made from grapes in the West Bank occupied territory.

The letter said the CFIA advised the LCBO that the federal government doesn’t recognize Israel’s control over several territories it occupied in 1967, including the West Bank.

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“As such, wine products from these regions that are labelled as ‘Product of Israel’ would not be acceptable and would be considered misleading as per subsection 5 (1) of the Food and Drugs Act,” the letter had said.

The two wineries issued separate statements earlier on Thursday criticizing the CFIA’s stance.

Psagot Winery called it an effort to deny Jewish heritage in the region.

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“We are shocked at the blatant distortion of history on behalf of the Canadian government,” said winery owner Yaakov Berg. “We call on all friends of Israel to stand with us and reject this further attempt to deny our heritage.”

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Shiloh Winery called the decision “absurd” in a post on their Facebook page, adding that the LCBO’s business unit promoted one of their wines in its catalogue last May.

The issue also drew criticism from Jewish groups in Canada.

B’nai Brith Canada condemned the CFIA’s decision to declare the wine as misleadingly labelled. The Centre for Israel and Jewish Affairs said it was alarmed at the decision.

After changing its stance, the CFIA said it would be following up with the LCBO to correct its original response.