The legal basis for relations is the EU-Israel Association Agreement that entered force in 2000. This includes provisions on regular political dialogue, on freedom of establishment and liberalisation of services, the free movement of capital and competition rules and the strengthening of economic and social cooperation.

The agreement states that the respect for human rights and democratic principles is an essential element of the agreement. It also establishes an Association Council held at the level of ministers of foreign affairs to be supported by an Association Committee. 

EU-Israel relations are underpinned by the 2005 Action Plan under the European Neighbourhood Policy. The Action Plan aims to gradually integrate Israel into European policies and programmes and also established 10 sub-committees that meet regularly to discuss priorities and exchange views.  

Trade relations are governed by a Free Trade Area agreement that is part of the EU-Israel Association Agreement (2000). 

The EU is Israel's largest trade market and accounts for about a third of Israel's total trade. In 2020, Israel was ranked the EU's 24th trade partner.  The most traded goods are chemicals and related products, machinery and transport equipment, and manufactured goods. 

The EU and Israel’s main economic agreements are:   

• Agreement on agriculture and fisheries which greatly improved market access (2010). 
• "Open Skies" agreement (fully entered into force in 2018) which liberalized EU-Israel air travel, and the related Eurocontrol association agreement (2016).  
• Agreement on Conformity Assessment and Acceptance of industrial products (ACAA) (entered into force in 2013), bringing mutual recognition of pharmaceutical certification. 

Both sides hold annual sub-committee meetings on mutually relevant trade and economic matters. The EU also supports Israel in aligning its legislation with the EU acquis (e.g. in the field of SPS, food safety, standards) via Twinning and TAIEX instruments. 

Israel benefits from the European Neighbourhood Instrument (ENI), which provides most of the funding under European Neighbourhood Policy.  For the period 2014-2020, the sum of 2 million euros per annum in ENI funding is foreseen for cooperation with the government of Israel to cover Twinning projects.  Israeli non-governmental bodies are eligible for support under a variety of programmes funded under ENI and other EU budgets.