EU foreign policy chief Catherine Ashton is pushing for comprehensive guidelines to introduce separate labelling for products from Israeli settlements in the West Bank, a newspaper reported on Tuesday.
Ashton sent a letter to European commissioners urging them to draft the guidelines by the end of 2013, the Haaretz newspaper said.
The guidelines, published in the EU's Official Journal on July 19, forbid the 28 members of the bloc from funding or dealing with Jewish settlements in the West Bank and east Jerusalem which Israel occupied in the Six-Day 1967 war.
Haaretz quotes Ashton as saying in the letter that EU member states must ensure "the correct labelling of imported products originating beyond Israel's pre-1967 borders that are marketed as Israeli products."
"The Commission needs to ensure effective implementation of existing legislation relevant for the correct labelling of settlement products by adopting EU guidelines and other implementing acts."
Ashton's spokeswoman confirmed the European Union's intention to label settlement products.
"We have committed to correctly implement the EU legislation relevant for origin labelling," Maja Kocijancic told AFP.
However, she said it was "too early to confirm the timeline for next steps."
Settlement building in the territories occupied by Israel in the 1967 was is considered illegal under international law.
The preamble to the guidelines say: "The EU does not recognise Israel's sovereignty over... the Golan Heights, the Gaza Strip and the West Bank, including east Jerusalem... and does not consider them to be part of Israel's territory, irrespective of their legal status under domestic law."
Israel has warned of a serious crisis between it and the EU over the move and said the guidelines undermine efforts by US Secretary of State John Kerry to resume peace talks which were frozen three years ago over Israel's settlement drive.
Commentators say the EU guidelines create a dilemma for Israel over whether to continue occupying the West Bank and risk damaging its relations with the international community -- not to mention its trade prospects -- or to comply fully.
According to 2012 World Bank figures, the EU imports 230 million euros ($300 million) of goods a year from Israeli settlements -- or 15 times more than from Palestinians themselves.