Israeli Exports to the EU: Quotas, PFAS, and Carbon

Three EU regulatory regimes have taken effect since the beginning of 2026, changing the conditions for Israeli exports to the European Union: steel import quotas, restrictions on PFAS compounds in consumer goods and food packaging, and the financial phase of the Carbon Border Adjustment Mechanism (CBAM). All three impose obligations on European importers, but Israeli exporters hold much of the information needed for compliance. The EU-Israel Association Agreement does not exempt Israeli exporters from these requirements.

On October 1, 2026, the obligation to declare the country where steel was first melted and poured took effect for imports of steel products covered by the new regime. Nine days later, on October 10, restrictions on marketing certain consumer goods containing PFHxA took effect. These measures supplement the steel quotas in effect since July 1, 2026, and the restrictions on PFAS compounds in food packaging in effect since August 12, 2026. In addition, CBAM entered its permanent phase on January 1, 2026, making imports subject to a carbon payment obligation.

What these regimes have in common is not the sector but the approach. The EU is expanding its strategy for protecting EU markets, supplementing customs duties with information requirements, such as where steel was first melted and poured, the composition of fabric coatings, and the volume of carbon emissions during fertilizer manufacturing. Because manufacturers, rather than importers, hold this information, much of the practical risk falls on Israeli exporters.

This update outlines the new regimes, Israel’s status under the EU-Israel Association Agreement, and the measures exporters should begin taking now.

These regimes are still being implemented, and some are expected to change before the end of this year.

Steel Regime

Regulation 2026/1384 was adopted on June 17, 2026, replacing the temporary protective measures for the European steel market, which were based on the World Trade Organization’s rules, with a permanent arrangement of import quotas. The annual volume of quotas for all categories together is 18,345,922 tons, which, according to the European Commission’s announcement, reduces the total volume of duty-free import quotas by about 47% compared with 2024. The regulation also doubles the out-of-quota duty to 50%. The arrangement applies to basic steel products listed in Chapters 72 and 73 of the customs tariff, including construction steel, bars, steel wire, pipes, and profiles. The arrangement does not currently apply to more processed steel products, such as steel structures and screws and bolts, but the European Commission is required to consider adding basic steel products by the end of 2026 and processed steel products by June 30, 2027.

Even steel products manufactured entirely in Israel are not exempt from the customs duties that apply to out-of-quota imports. According to Implementing Regulation 2026/1457, Israel has a designated quota in only one category: large welded tubes with an annual volume of 3,336.97 tons. In all other categories, Israeli steel products compete with products from other countries for a shared quota allocated on a first-come, first-served basis.

Pursuant to Implementing Regulation 2026/1963, as of October 1, 2026, all imports of steel products covered by the regime must be accompanied by a declaration of the country where the steel was first melted and poured. The principal supporting document is a Mill Test Certificate specifying the casting heat number. Alternative documents are allowed until September 30, 2027, after which a Mill Test Certificate will be mandatory. At present, the country of melt and pour does not affect the quota to which a shipment is attributed. However, the European Commission will consider making it a basis for quota eligibility by June 30, 2028. If the European Commission so decides, steel first melted and poured in a third country and processed in Israel may be attributed to that third country’s quota.

Israel’s volume of steel exports is limited. According to the European Commission’s data, EU imports of iron and steel from Israel totaled about EUR 27 million in 2025, or about 0.2% of all imports from Israel. The regime affects a limited number of Israeli exporters, who must assess whether their shipments will clear customs before exporters from other countries exhaust the shared quota.

PFAS Restrictions

The restrictions on consumer products containing perfluorohexanoic acid (PFHxA), one of the most prevalent PFAS compounds used in water-, oil-, and stain-repellent coatings, took effect on October 10, 2026. European Commission Regulation 2024/2462 added Entry 79 to Annex XVII of the REACH Regulation. Clothing, footwear, cosmetics, food-contact paper packaging, and consumer mixtures containing PFHxA and its salts above 25 ppb or related substances above 1,000 ppb may no longer be placed on the EU market. The thresholds are measured separately for each homogeneous material, such as fabric, coating, or footwear soles. The additional restriction on non-apparel consumer textiles and leather, such as carpets, curtains, and upholstery, will apply from October 10, 2027. Products placed on the EU market before the applicable dates may continue to be sold.

The restriction is not based on acute toxicity. PFHxA is considered less toxic than PFOA and accumulates less in the human body, which is why it is used as a substitute for PFOA. The main rationale is its environmental impact: PFHxA is highly resistant to degradation and, according to the European Commission, far exceeds the REACH Regulation’s “very persistent” criterion. It is water-soluble and migrates into groundwater and drinking water, meaning that any emissions add to its accumulation in the environment and have irreversible effects. The scientific committees of the European Chemicals Agency (ECHA) concluded that the risk is inadequately controlled, and the European Commission adopted that conclusion.

A stricter restriction applies to food packaging. As of August 12, 2026, Section 5(5) of Packaging Regulation 2025/40 prohibits the marketing of food-contact packaging containing PFAS at a concentration of 25 ppb per individual material, 250 ppb for the sum of materials, or 50 ppm for the sum of PFAS, including polymers. The restriction is not limited to PFHxA or paper packaging. It applies to anyone selling packaged foods to the EU, including exporters of agricultural produce and processed foods, even if the packaging was purchased from an external supplier.

The Israeli sectors most exposed are clothing and footwear, including outerwear and sportswear with water-repellent finishes; cosmetics, including Dead Sea products; packaging manufacturers and food exporters; and manufacturers of consumer cleaning and sealing products. According to UN Comtrade data, EU imports from Israel in 2025 totaled about USD 23 million for clothing, about USD 104 million for cosmetics, perfumes, and essential oils, and about USD 68 million for soaps and cleaning products. Only a small proportion of these products actually contain PFAS.

However, export statistics do not capture the full number of companies affected by the restrictions. Many Israeli clothing, footwear, and cosmetics companies manufacture their products in Egypt, Jordan, or Asia and sell directly to Europe from those locations. These goods are not recorded as Israeli exports, but the restrictions still apply to the products, and Israeli companies often bear contractual liability toward European customers. The same is true of Israeli chemical and coating companies that sell to manufacturers in Europe. A supplier’s declaration that PFAS was “not intentionally added” does not guarantee compliance with the thresholds, since residues on production lines may cause cross-contamination.

Carbon Border Adjustment Mechanism (CBAM)

Regulation 2023/956 established a mechanism requiring importers of high-emission products to purchase CBAM certificates based on the emissions generated during manufacture. The objective is to align the carbon cost of imported products with that of European manufacturing, which is subject to emissions trading. Only reporting obligations applied from 2023 to 2025. The mechanism’s permanent phase began on January 1, 2026, and imports this year are subject to payment obligations. Regulation 2025/2083 simplified the regime: importers of up to 50 tons per year are exempt, CBAM certificates will be sold from February 1, 2027, and the first CBAM declaration, covering imports in 2026, must be submitted by September 30, 2027.

The mechanism applies to iron and steel, aluminum, cement, hydrogen, electricity, and fertilizers. The fertilizer category includes ammonia, nitric acid, nitrogen fertilizers, complex fertilizers, and potassium nitrate, but excludes potash and phosphorus-potash. The mechanism therefore affects a significant share of Israeli exports. According to UN trade data, EU imports from Israel in 2025 totaled about USD 225 million for fertilizers, about USD 540 million for inorganic chemicals, about USD 169 million for aluminum, and about USD 82 million for iron and steel products. Not all products in these categories are covered, but Israeli steel products within its scope are subject to CBAM, in addition to the quota regime.

Although the payment obligation falls on importers, the amount depends on the manufacturers’ emissions data. Importers that do not receive verified data from manufacturers must use default values, which were deliberately set at a high level. Exporters that provide verified emissions data therefore have an advantage over competitors that do not. Article 9 of the Regulation allows a reduction in the number of CBAM certificates to be surrendered to reflect the carbon price actually paid in the country of manufacture. Israel’s excise tax on fuels has included a carbon component since 2025, which gradually increases until 2030. The European Commission has not yet decided whether this component will be recognized for purposes of reducing the number of CBAM certificates required.

On December 17, 2025, the European Commission’s proposal COM (2025) 989 called for extending the mechanism to about 180 additional downstream products, mainly steel and aluminum products, and introducing anti-circumvention measures. The European Council and Parliament adopted positions calling for an even broader extension and began negotiations in September 2026. If approved, the extension will also affect manufacturers of finished metal products not currently covered by the mechanism.

EU-Israel Association Agreement Does Not Exempt Israeli Exporters from the New Requirements

Across these regimes, neither Israel’s status as a trade partner nor the EU-Israel Association Agreement guarantees an exemption for Israeli exporters. For steel, the EU relied on the Association Agreement’s protection clause to impose customs duties on imports from Israel. For PFAS and CBAM, the Association Agreement does not exempt Israeli exporters from compliance. Meeting the rules of origin that determine eligibility for preferential treatment under the Association Agreement is also insufficient. The steel regime requires information about the country of melt and pour, even though it does not currently affect quota allocation; CBAM considers manufacturing emissions; and the PFAS restrictions focus on product composition under the applicable rules. Although legal avenues for challenging these regimes exist, Israeli exporters should make practical and contractual preparations to comply.

Measures Israeli Exporters Should Take

1. Map products. Check the customs codes of products exported to the EU against Annex I of the Steel Regulation and Annex I of the CBAM Regulation to determine whether they fall within those regimes. Separately, identify products with coatings, finishes, or packaging that may contain PFAS. For the PFAS restrictions, mapping must extend to individual components: fabric, lining, coating, adhesive, footwear soles, and packaging.
2. Obtain information from suppliers. Request the relevant information from suppliers: Mill Test Certificates specifying the country of melt and pour, laboratory tests assessing compliance with the applicable thresholds, and verified emissions data. We recommend requesting this information now, selecting a laboratory capable of testing at the required thresholds, and documenting when each product batch was first placed on the EU market. This documentation will help establish whether inventory qualifies for any applicable relief for products placed on the market before the relevant restriction took effect.
3. Update contracts. Supplier contracts should require the provision of relevant information, notification of changes in formulations or country of origin, and indemnification. Contracts with European customers should specify which party bears the risk of shipment rejection, out-of-quota customs duties, and the cost of CBAM certificates. Declarations should also be reviewed to ensure they accurately reflect the information available to the exporter. Incoterms alone do not address these issues.
4. Prepare for 2027. Several important deadlines fall in 2027: declarations of the country of melt and pour will require a Mill Test Certificate, the PFHxA restriction will extend to non-apparel consumer textiles and leather, and importers will begin purchasing CBAM certificates. Companies considering alternatives to PFHxA should, where possible, choose substances outside the PFAS group.

Timetable

Israeli companies exporting steel products, aluminum, fertilizers, textiles, cosmetics, or packaged foods to the EU should assess their exposure before the 2027 deadlines.

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Prof. Amichai Cohen is a special counsel for international law.