EU-Israeli relations are supposedly based on shared values as well as common strategic and economic interests. However, there are political disagreements over the fate of the Palestinians, settlements and the rise of the extreme right in Europe. The EU’s recent requirement for labelling goods produced in the occupied Palestinian territories by Israeli companies has caused consternation in Jerusalem. Israel’s reaction was comparing this measure to the discriminatory policies undertaken during World War II. In spite of the rising emotions, economic relations between the two entities remain impressive (30 billion dollars in total trade). The state of play of both the constructive and challenging aspects of relations between the European Union and Israel will be discussed in this panel.