Israeli peace talks chief negotiator and Justice Minister Tzipi Livni said on Monday that if there isn't any progress toward peace with the Palestinians, the European Union (EU) may ban Israeli exports.

The EU may ban products from across Israel and not just those produced in the controversial territories it annexed from the Palestinians during the 1967 Mideast War, said the Israeli minister during her party's weekly meeting at the Knesset ( parliament).

"True, it started with the settlements," Livni said. "But the European Union's problem is with Israel which it views as a colonialist state. It won't stop with the settlements but rather spread to the rest of the country."

"We can't deal with our internal economic issues while ignoring the diplomatic issue and the importance of the two-state solution, " said the dovish minister.

Arguing that U.S. Secretary of State John Kerry did not fail in his efforts to bring both parties back to the negotiations table, Livni said "Kerry spent a brief period of time here... he left people behind to continue the efforts. He deserves our gratitude, and we will continue to try and resolve the problem."

Although no major breakthrough was reached, Kerry, who visited the region for the fifth time in three months, claimed that some progress had been made and that he would continue to work in order to bridge over the gaps.

For his part, Israeli Prime Minister Benjamin Netanyahu reiterated Monday that Israel is willing to go into direct talks with the Palestinians and that Israel wants peace.

"We want to restart the negotiations as soon as possible, without any obstacles," said Netanyahu during his meeting with his Italian counterpart Enrico Letta, adding that, "We have to get into the tent and seek to end this conflict between Israel and the Palestinians."

Peace talks between Israel and the Palestinians came to a halt in 2010 over Israel's construction in territories it annexed amid the 1967 Mideast War in West Bank and east Jerusalem.

The Ha'aretz daily reported Monday that Kerry made a new proposal to Palestinian President Mahmoud Abbas to resume the peace talks during the two's meeting on Sunday, including a line of Israeli good will gestures. Endi