The core issue of the conflict is whether "made in Israel" can be written on products that aren't made in the official territory of Israel as set by the UN.

I don't think that produces of products labeled "product from the West Bank (Israeli settlement)" want to write "produced in Palestina" on their products, so I see no problem with offering them that label. Furthermore those products simply might not be covered by the trade deals with the Palestianian authority and therefore there might be a need to distinguish them from other West Bank products.