Israel has started to engage in low key diplomatic talks with the European Union to hash out strained relations stemming from the bloc's settlement labeling plan, Israel Radio reported on Wednesday. The EU stands firm in its decision to label products made over the Green Line, however it is reportedly willing to provide Israel compensation in order to resume suspended EU involvement in diplomatic dialogue on peace efforts with the Palestinians. According to a report initially published by Ha'aretz, officials in Jerusalem said the Israeli and EU sides were jointly discussing moves to work toward restoring relations. In November, Jerusalem suspended diplomatic dialogue with the EU for a few weeks to strongly protest Brussel’s decision to publish the legislation guidelines that allow member states to place consumer labels “Not made in Israel” on products produced over the Green Line.The European Union in January reinforced its position that products made in Israeli settlements must be clearly labelled in Europe, despite growing tensions with Israel over the issue, but stressed that the bloc opposes any boycott of the Jewish state.EU foreign ministers said the guidelines on labels for farm and other products, which were unveiled in November and branded discriminatory by Israel, were there to explain EU law and did not mark a change in the European Union's long-held opposition to Israeli settlements."The EU and its member States are committed to ensure continued, full and effective implementation of existing EU legislation and bilateral arrangements applicable to settlements products," ministers said in a statement. The Foreign Ministry responded to the statement by saying that the EU continues to hold Israel to double standard, while ignoring the Palestinian role in stalled peace talks and about 200 other conflicts over territory in the world.The Palestine Liberation Organization welcomed the EU statement and called for greater European involvement.Reuters contributed to this report.