The EU's consistent policy towards the Israeli-Palestinian conflict has been that Israel's presence in the West Bank, East Jerusalem, the Gaza Strip (prior to the 2005 disengagement) and the Golan Heights is subject to the laws of belligerent occupation, that any purported Israeli annexation is illegal and null and void, that Israel's settlements in the Territories are in breach of public international law and constitute a serious obstacle to peace, and that Israel and Palestine should settle their conflict on the basis of public international law and through the two-state solution. In recent years the EU attempted to concretize this policy through its trade and trade-related agreements with Israel, withholding the benefits of EU-Israeli co-operation from companies and research institutions based in the Territories or operating therein, as well as from products produced therein (the New Approach). Thus, from the EU perception, the New Approach towards the long-standing conflict and its reliance on international law may be seen as an instrument to reinforce internal and external legitimacy, buttress identity cohesiveness and as a manifestation of its more robust effectiveness. But this article seeks to conduct a more careful and balanced analysis of the New Approach and in doing so to reveal that the EU's (almost) exclusive focus on non-governmental entities, such as corporations situated in the Territories, and on Territories’ products, is misplaced in terms of public international law and effectiveness. The New Approach's deficiencies, in abstracto and in concreto, as evaluated in this article, are likely to prevent it from serving as a paradigm shift in EU-Israel relations.