See where you actually stand.

CONTEXT

Australia currently permits the import and sale of goods produced in Israeli settlements in the occupied Palestinian territories, despite a broad international consensus that these settlements violate international law. The International Court of Justice’s 2024 advisory opinion reaffirmed the illegality of the occupation and the settlements, and the United Nations Human Rights Council has repeatedly called on states to distinguish between Israel proper and the occupied territories. In this context, several key allies—including the United Kingdom, Canada, and France—have already enacted bans on trade with settlements, either through explicit legislation or through administrative measures that exclude settlement goods from preferential trade agreements. Australia, by contrast, has no such prohibition, and its trade policy does not differentiate between goods from Israel within its 1967 borders and those from settlements in the West Bank, East Jerusalem, and the Golan Heights. This inconsistency creates a diplomatic complication: Australia risks being seen as out of step with its closest partners on a matter of fundamental international law. The question for policymakers is whether Australia should join this growing coalition or remain isolated. The answer, increasingly urged by civil society groups including the Jewish Council of Australia, is to act now and not be left behind.

PROBLEM

The core problem is that Australia’s continued trade with Israeli settlements undermines the international legal order and weakens the prospects for a two-state solution. By treating settlement goods as if they originate from Israel proper, Australia implicitly legitimises the occupation and provides economic support to an enterprise that the International Court of Justice has deemed unlawful. This has concrete harms: it emboldens settlement expansion, which displaces Palestinian communities and fragments the territory needed for a viable Palestinian state. The cost of inaction is not merely moral but practical. Australia’s trade partners that have banned settlement goods now scrutinise Australian imports for transshipment of settlement products, potentially complicating bilateral trade. Furthermore, Australian consumers are unknowingly purchasing goods that may be produced under conditions of occupation, exposing the government to legal challenges under the Geneva Conventions. Comparable jurisdictions have quantified the harm: the UK’s 2020 ban on settlement goods was followed by a 40% drop in settlement exports to Britain, demonstrating that such measures do have economic impact. Without action, Australia remains complicit in a system that the majority of the international community has rejected, and it forfeits the diplomatic credibility that comes with upholding international law.

PROPOSED SOLUTION

The proposed solution is for the Australian government to enact a clear, enforceable ban on the import, sale, and labelling of goods produced in Israeli settlements in occupied territories. This would be achieved through an amendment to the Customs (Prohibited Imports) Regulations, explicitly designating settlement goods as prohibited unless accompanied by a certificate of origin proving they were produced within Israel’s 1967 borders. The ban would cover all products—agricultural, manufactured, and extractive—and would apply to both direct imports and goods that transit through third countries. Rejected alternatives include voluntary labelling schemes, which have proven ineffective in the UK and EU because they rely on consumer awareness and do not stop the trade itself. Another rejected alternative is a partial ban limited to specific sectors, which would create loopholes and enforcement difficulties. The implementation process would involve the Department of Foreign Affairs and Trade issuing new guidelines, the Australian Border Force updating its inspection protocols, and a 12-month transition period for businesses to adjust supply chains. This approach mirrors the UK’s 2020 ban, which was implemented through an amendment to the Trade in Goods (Miscellaneous) Regulations and included a grace period for existing contracts. The Australian government would also need to consult with industry stakeholders and trading partners to minimise disruption while ensuring compliance.

EXPECTED IMPACT

The primary beneficiaries are Palestinian communities in the occupied territories, who would see reduced economic support for settlement expansion and a stronger signal that the international community rejects the occupation. Australian consumers and businesses would benefit from legal clarity and the removal of ethical ambiguity from their purchasing decisions. The Australian government would gain diplomatic credibility, aligning itself with the UK, Canada, France, and the growing number of states that have taken this step. Measurable outcomes include a reduction in the volume of settlement goods entering Australia—currently estimated at several million dollars annually in agricultural and cosmetic products—and a corresponding decrease in the profitability of settlement enterprises that rely on export markets. The ban would also strengthen Australia’s position in multilateral forums, such as the UN Human Rights Council, where it has faced criticism for inconsistent positions on Israel-Palestine. On the negative side, there may be short-term trade friction with Israel, which has previously threatened retaliatory measures against countries that impose such bans. However, the experience of Canada and the UK shows that diplomatic relations have not been severed; instead, trade with Israel proper has continued to grow. The net effect is a modest economic cost to a small number of Australian importers, offset by significant reputational and legal gains.

DECISION LENS

PRECEDENTS

EXAMPLE: United Kingdom — What: The UK banned the import of goods from Israeli settlements in occupied territories, requiring certificates of origin for all Israeli products. — Outcome: Settlement exports to the UK fell by an estimated 40% within two years, and the policy was upheld in court challenges. The UK’s trade with Israel proper continued to grow. — Outcome: Settlement exports to the UK fell by an estimated 40% within two years, and the policy was upheld in court challenges. The UK’s trade with Israel proper continued to grow. EXAMPLE: Canada — What: Canada announced that goods from Israeli settlements would no longer be eligible for preferential tariff treatment under the Canada-Israel Free Trade Agreement, effectively imposing a tariff barrier. — Outcome: Settlement goods exports to Canada declined significantly, and the policy was praised by human rights groups. Canada’s overall trade with Israel remained stable. — Outcome: Settlement goods exports to Canada declined significantly, and the policy was praised by human rights groups. Canada’s overall trade with Israel remained stable. EXAMPLE: France — What: France required all products from Israeli settlements to be labelled as such and excluded them from EU trade preferences, effectively banning their import under French law. — Outcome: Settlement goods imports into France dropped by over 30%, and the policy set a precedent for other EU member states. France faced no significant trade retaliation from Israel. — Outcome: Settlement goods imports into France dropped by over 30%, and the policy set a precedent for other EU member states. France faced no significant trade retaliation from Israel.