European Union officials were said Wednesday to be in talks with their Israeli counterparts in an effort to end a diplomatic row over the EU’s new labeling guidelines for West Bank and Golan Heights products.

The EU announced last November it was instructing member states to begin labeling products manufactured by Israeli-owned companies in the West Bank, East Jerusalem and the Golan Heights as made in those areas rather than “made in Israel.” At the same time, EU foreign ministers voted to required any future agreements signed between the EU and Israel to stipulate that they do not apply to the West Bank, East Jerusalem and Golan Heights.

The decisions, especially over labeling, infuriated Israeli leaders, with Prime Minister Benjamin Netanyahu charging that the moves gave the Palestinians an incentive to continue their campaign of international appeals instead of engaging in direct peace talks with Israel. In November, Netanyahu ordered that Israeli government agencies exclude the EU, a member of the peace process Quartet, from any Israeli-Palestinian engagement or negotiations efforts.

According to a report in the Haaretz daily Wednesday, the EU and Israel have launched quiet talks aimed at healing the breach.

While EU officials were quoted as saying the labeling recommendations would not be withdrawn, sources spoke of an unspecified concession the EU could grant Israel in compensation.

The talks may have been first proposed when Netanyahu and the European Union’s foreign policy chief, Federica Mogherini, met at the World Economic Forum in Davos last month.

European External Action Service Deputy Secretary General for Political Affairs Helga Schmid at the OSCE's Annual Security Review Conference in Vienna, June 26, 2012 (OSCE/Jonathan Perfect)

European External Action Service Deputy Secretary General for Political Affairs Helga Schmid at the OSCE’s Annual Security Review Conference in Vienna, June 26, 2012 (OSCE/Jonathan Perfect)

The talks were reportedly launched in the last two weeks, including during an unpublicized visit to Israel last week by the EU foreign service’s Deputy Secretary General for Political Affairs Helga Schmid, Mogherini’s top policy adviser, who met with Foreign Ministry Director General Dore Gold and officials from Israel’s National Security Council, among other government agencies.

During the meetings in Jerusalem, Israeli officials told the EU diplomat “that the decisions of the foreign ministers’ council of the European Union and the decision to mark [settlement] products were unilateral, and in practice adopted the Palestinian narrative,” an unnamed senior Israeli official told Haaretz. “That’s not how one conducts a respectful dialogue.”

Another unnamed official was quoted as saying that the EU “is very unhappy that we’ve frozen [all contacts] connected to the peace process. They understand they have to give us something in words and deeds.”

The tension between Israel and the EU has seen the union’s officials, especially European Union Special Representative for the Middle East Peace Process Fernando Gentilini, all but absent from discussion with the Quartet and other forums. Meanwhile, Israel has begun demolishing EU-built Palestinian housing it says was constructed illegally in the Israeli-controlled Area C of the West Bank.