To say that the status of East Jerusalem should be decided in the negotiations and simultaneously claim that construction in Gilo is illegal is a total absurd. If EU claims that Jewish "settlement" in Gilo is illegal then what is the purpose to conduct negotiations since the status of Gilo had already been determined? And if the status needs to be determine later, in the future negotiuations, then only after knowing the results of those negotiations EU could say what is illegal and what is not.
Fire in Jerusalem suburb causes severe air pollution (Haaretz)
from the article: EU, Obama: Settlement construction could threaten peace progress