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In a ruling touching on the status of the West Bank, the European Union high court said Thursday the disputed area is not part of Israel and Israeli goods made there are subject to EU import duties.

The ruling has no immediate bearing on the Mideast peace process.But for trade purposes, it argues Israel has no standing in the area where it has built settlements and where its companies make such products as cookies, pretzels, wines, cosmetics and computer equipment.

The ruling opens the door to EU import duties on Israeli goods from the West Bank rendering those products less competitive.

The EU has accords with both Israel and the Palestinians that end customs duties.

The court said the EU deal with Israel "applies to the territory of the State of Israel" and the Palestinian one to "the territories of the West Bank and the Gaza Strip."

Each of those two association agreements has its own territorial scope," it said, adding Israeli goods made in the West Bank cannot enjoy duty-free access to the vast EU market.

A source in the Foreign Ministry told Army Radio that the EU ruling "surprised no one," adding that "Israel regrets a decision which authorizes the persecution of Israeli products made in Judea and Samaria and a constitution of the European political campaign against the settlements."

But it is likely to stir Israel, whose military maintains control over the area, its Israeli settlements and Israeli companies there.

The latter can benefit from cheaper labor in the West Bank.

Many of the settlements there use Palestinian workers, who earn less than their counterparts in Israel.

But since Palestinians are largely barred from working in Israel and have few job opportunities in the Palestinian-controlled areas of the West Bank, jobs in settlement factories are sought after.

Pro-Palestinian groups in Europe are likely to be pleased by Thursday's ruling because they regularly protest in European supermarkets to complain about Israeli labels on farm products from the West Bank.

Israel continues to build settlements there that are widely seen as illegal under international law and a hindrance to the search for peace with the Palestinians.

Thursday's ruling stems from a German case filed by Brita GmbH, a German company that imports drink-makers for sparkling water and fruit syrups from Soda-Club Ltd., an Israeli company in Mishor Adumim, one of 10 Israeli industrial areas in the West Bank.

Brita told German customs authorities its imports came from Israel and were therefore exempt from import duties.

Suspecting they came from the West bank, German authorities asked Israel to clarify matters.

Israeli customs only confirmed the goods originated in an area under Israeli responsibility and said nothing about the West Bank.

That led Germany to impose customs duties. On appeal, a Hamburg appeal court asked the Court of Justice of the European Union for its opinion.The Palestinian Authority cannot lose rights to trade benefits to an EU-Israel deal and Israeli goods can only get preferential treatment if they have been manufactured in Israel proper, the court said.