According to the news site Euractiv, which has reviewed leaked proposals ahead of the EU foreign ministers' meeting on Monday, the Commission believes the sanctions must be seen as political rather than trade-related.
This goes against the line put forward by Sweden and France, which hope to get sanctions through with the help of a majority of EU countries instead of total unity.
According to Euractiv, three options are being put forward: introducing a special import licence for the settlements, special tariffs or a total ban.
Several EU countries have long called for measures against Israel over its actions in Gaza, the West Bank and Lebanon, but have been hindered by resistance from more pro-Israel member states.
