Israeli Prime Minister Benjamin Netanyahu said the European Union "should be ashamed" on Wednesday of its long-awaited call for member states to label products from Israeli settlements in east Jerusalem, the West Bank and Golan Heights - areas grabbed by Israel in 1967 which the EU regards as sites of illegal occupation.

Wrapping up a visit to Washington when he heard that the EU planned to go ahead with the idea first floated in 2012, Netanyahu slammed the 28-member bloc for hypocrisy, saying the plan was "hypocritical, based on a double-standard policy since it only concerns Israel and not the 200 other conflicts around the world."

He has previously likened the policy to what he said were similar labels placed in Jewish products in the Nazi era.

The Israeli government also announced on Wednesday that it was suspending all dialogue with the EU in response to the matter. The foreign ministry issued a statement saying it was cancelling bilateral talks in "various forums that were supposed to be held in the coming weeks."

Brussels: labeling is not political

In an effort to downplay the decision, Brussels said it was a "technical issues not a political stance," based on European consumer regulations. As relations with Israel already strained over the EU's consistent condemnation of settlement building in Palestinian areas, European Commission Vice President Valdis Dombrovskis was at pains to explain that "the EU does not support in any form a boycott or sanctions against Israel."

The new guidelines for labeling products explain the procedure thus: "since the Golan Heights and the West Bank (including east Jerusalem) are not part of the Israel territory according to international law, the indication 'product from Israel' is considered incorrect and misleading. Expressions such as 'Product from Golan Heights (Israeli settlement)'…could be used."

Palestinians cautiously welcomed the move. The Palestine Liberation Organization's (PLO) department for negotiations affairs tweeted that the "EU labeling of settlement products is a step in the right direction but insufficient."

es/kms (AFP, dpa)