After visiting a winery in the Jewish settlement of Psagot in the West Bank, Secretary of State Mike Pompeo announced a new policy on Thursday of allowing products from the settlements to be labeled as “made in Israel.”

Why it matters: The policy announced by Pompeo is more radical than the Israeli government’s policy regarding the settlements. It signals U.S. recognition of de facto Israeli annexation of much of the West Bank and seems to be a violation of the spirit of the “Abraham Accords” and the recent UAE-Israel peace treaty, under which Israel agreed to suspend its annexation plans.

Behind the scenes: The move was pushed by Pompeo and U.S. Ambassador to Israel David Friedman. It’s unclear if the White House approved or even knew the announcement was coming.

The big picture: While the rest of the world views the settlements as illegal under international law and not as part of Israel, the Trump administration has taken several steps intended to legitimize them and blur the differentiation between Israel and the West Bank. Pompeo was the first ever secretary of state to visit the settlements.

Driving the news: Pompeo met this morning with Israeli Prime Minister Benjamin Netanyahu in Jerusalem and briefed him on the change in policy.

• He also announced that the State Department would regard organizations that promote boycott, divestment and sanctions against Israel or against areas controlled by Israel — like the West Bank settlements — as anti-Semitic.

The state of play:

• Pompeo said the new policy recognizes that producers in the settlements operate within the economic and administrative framework of Israel. They will be required to mark goods as “made in Israel” when exporting to the United States.  
• According to the new policy, goods from areas of the West Bank where the Palestinian Authority maintains relevant authorities shall be marked as “West Bank” products. Goods produced in Gaza will be marked as products of  “Gaza.”  
• The U.S. will no longer accept “West Bank/Gaza” markings, in recognition that Gaza and the West Bank are politically and administratively separate and should be treated accordingly, Pompeo said.

Background: Since 1967, all previous U.S. administrations had treated the West Bank and Golan Heights as occupied territory and the settlements as illegitimate.

• In 1995, after the Oslo Accords were signed and the Palestinian Authority was formed, the Clinton administration issued guidelines that required goods from the settlements to be labeled as “made in the West Bank.” The guidelines were not really enforced.
• In 2016, the Obama administration republished the guidelines and warned that labeling settlement goods as “Made in Israel” could lead to fines. This was seen at the time as a diplomatic signal to Israel over settlement expansions.

What to watch: Pompeo’s announcement — two months before the end of the Trump presidency —puts another hurdle in place for Biden if, as expected, he seeks to roll back Trump’s policies on settlements.