The Gaza conflict is holding up bilateral trade negotiations over the liberalization of services between the EU and Israel and over the country's possible integration into the European Single Market. "At the moment our focus is not on advancing our relations with Israel as planned, but on the question of what we can do to ensure a lasting cease-fire," said Benita Ferrero-Waldner, the EU external relations commissioner, at a closed meeting with Mediterranean journalists in Brussels this week. "Our aims are to promote a humanitarian cease-fire and to sustain a durable cease-fire on conditions that the attacks on Israel stop and the weapons smuggling is halted." In December of last year, the EU approved a significant upgrade in the bilateral relations with Israel to enhance political and economic cooperation in line with Israel's desire for integration into the European Single Market. For the time being, though, The Jerusalem Post has learned that meetings between EU officials and Israeli trade officials to advance ongoing bilateral trade negotiations have been canceled or delayed until further notice. In 1995, Israel and the EU signed a so-called Association Agreement, which sets out a number of areas for possible economic cooperation. The agreement covers the liberalization in the area of goods, but not services. The goal on the EU's future agenda for the Mediterranean region is to facilitate market access to industrial services and the liberalization of trade in services, which entails mutual recognition of professional services. This, in turn, is expected to create more competition and bring down prices. The potential for developing services trade in the Euro-Med area is considerable. Services trade with the Mediterranean countries currently represents only 3.5 percent of the EU's total services trade. Trade in services only represents 3.5% of the volume of trade in goods. At the end of last year, the EU started bilateral negotiations on liberalization of services with Israel. Until now, Israel has shown interest in integration into specific areas of the European Single Market, while the EU is interested in a more comprehensive package. Israel has a major interest in the liberalization and mutual recognition of the financial services sector. The idea is for this sector to be included in a free trade agreement, and ultimately Israel's participation in the European Single Market for financial services. For this process, Israel will need to align legislation with EU norms and standards in areas such as public procurement, intellectual property, trade customs, transparency principles and regulatory issues as needed. On free movement of goods and technical regulations, Israel has made significant progress over the past year in harmonizing standards for pharmaceutical products negotiated under the Agreement on Conformity Assessment and Acceptance of Industrial Products (ACAA). Until now, all pharmaceutical products entering the EU market have to undergo additional testing to receive certification, which is very costly. Once the agreement is approved, this form of double certification will not be needed, and Israeli pharmaceutical products will be allowed to enter the internal market directly. The Post has learned that all preparatory work has been done apart from the legislative requirements for application, which still await Knesset approval. In light of the conflict in the Gaza Strip and with elections coming up, it is feared that the process could be delayed, but hopes are high that the pharmaceutical sector will be integrated into the EU internal market by later this year or 2010. Furthermore, the EU and the Industry, Trade and Labor Ministry have plans to expand ACAA for all sectors, such as medical devices, for a comprehensive integration into the internal market.