Britain has stepped up inspections of Israeli imports to make sure products from Jewish settlements in the West Bank do not enter duty-free but the government does not plan to mount a broader divestment campaign.
In an interview with Reuters on Monday, Britain's envoy to the Middle East, Bill Rammell, said pressuring British companies to pull out of the Jewish settlements would be a step too far.
In addition to random inspections of Israeli goods by the British tax authority, Britain has taken the lead in trying to get the European Union to set labelling standards to make clear to consumers which products come from Israel and which come from settlements in the occupied West Bank.
Starting in early January, Britain also plans to start warning its citizens about the risks of buying property in Jewish settlements, saying they could be affected should a peace agreement be reached.
The initiatives, some of which were outlined by British Prime Minister Gordon Brown in a Dec. 9 letter to Palestinian Prime Minister Salam Fayyad, are meant to discourage Israel from expanding Jewish settlements, deemed illegal by the international community.
"This isn't about boycotting Israel. The settlements are not Israel," Rammell said in Jerusalem after meeting Israeli and Palestinian leaders and touring parts of the West Bank.
Palestinians say the settlements are a land grab and an obstacle to a peace agreement, and they have urged Britain and other European states to step up pressure on Israel to halt their expansion.
Outgoing Israeli Prime Minister Ehud Olmert has called for withdrawing from nearly all West Bank territory in return for peace with the Palestinians, but, under this proposal, major settlement blocs would stay with Jewish state.
Israeli exports to Britain total nearly $2 billion a year, and British officials said it is not yet clear what percentage of those products come from the settlements.
Under a 2005 agreement, products from Israel enter EU states like Britain duty-free.
Palestinians complain that many of those goods, labelled as made in Israel, actually come from West Bank settlements.
Rammell said the inspections were helping British authorities identify producers from the settlements, who are then denied the benefits.
"One, you would make sure that it wasn't given a tax-exemption. Two, you would tell that to the producer. And three, you would be alerted to that source for the future," he said.
But Rammell made clear Britain has no plans to join a campaign in some European countries to pressure companies to divest from the settlements.
"I'm not sure it's effective. It would be extremely complicated. And I think it's about a proportionate response," he said.