UK-Israel Trade Negotiations

Thursday 20th January 2022 Westminster Hall

[Ian Paisley in the Chair]

15:00

[Ian Paisley (in the Chair)]

Before we begin, I remind Members that they are expected to wear a face covering when they are not speaking in the debate. This is in line with the current guidance that the House of Commons Commissioners would like to be enforced.

I also remind Members that they are asked by the House to take a covid lateral flow test before coming on to the estate. Please also give each other and members of staff space when seated, and when entering and leaving the room, where possible.

[Bob Blackman (Harrow East) (Con)]

I beg to move,

That this House has considered UK and Israel trade negotiations.

It is a pleasure to serve under your chairmanship, Mr Paisley, which I think is for the first time.

I declare my interest up front: I am the chairman of the all-party parliamentary group on Israel. In the last year, we released an excellent report, which I commend to my hon. Friend the Minister, on the health tech part of our industries. It is a very good read, which demonstrates the importance of Israel-UK negotiations and having them set up. Moreover, we are just about to release a report on research and innovation, which I also commend to him.

Israel and the UK’s partnership on the technology front extends to the fact, of course, that we have the Israel tech hub in the embassy in Tel Aviv. This morning, I was talking to the all-party parliamentary group on Romania, which wants to mirror that tech hub, demonstrating that the relationship between the UK and Israel is not only good for the UK and Israel but means that we can set up similar arrangements for like-minded countries across Europe and across the world. So I welcome the Government’s commitment to further strengthening the ties with Israel, which of course is a close friend and ally of the United Kingdom.

It is of course timely that we are having this debate, because I know that very shortly we will embark on new trade talks to enhance the UK’s trade relationship with Israel still further, which is extremely welcome.

I also thank the Backbench Business Committee, on which I sit, for granting this debate. I am not sure whether my sitting on the Committee had anything to do with it; I suspect that possibly it did. And I note that the hon. Member for Strangford (Jim Shannon) is here in Westminster Hall today; he has a season ticket to the Backbench Business Committee, as well. [Laughter.]

Israel is not just the sole democracy in the middle east; it is also a true global high-tech start-up powerhouse, with huge prowess in the fields of high-tech energy, medical science, fintech and cyber-security, to name but a few areas. The UK is Israel’s largest trade partner in Europe and its third largest trade partner in the world. That gives us something to aim at; we want to be Israel’s largest trade partner in the world.

Given the strength of our relationship, it is perhaps little surprise that Israel was among the first countries with which the UK agreed a free trade agreement in principle, in January 2019, on our departure from the EU. After successive record-breaking years, UK-Israel trade has remained healthy, even during the pandemic, with an estimated value of £5 billion. Whether it involves pharmaceuticals, plastics, fintech or agri-tech, the UK-Israel trade relationship covers all our major industries and has a natural focus on the technology and services of the future. That is a key reason why there are boundless opportunities for improvements in the UK-Israel trade relationship. The signing of a strategic agreement with Israel last November was an important point in the process. In our ever-strengthening bilateral relationship, that is the next step towards negotiating the full post-Brexit trade deal with our friends in Israel that we want to see.

So we are natural trade partners. As progressive liberal democracies, our nations share the same values and the same commitment to the open and free market. Israel’s business community regards the UK as the gateway to Europe. The UK is an appealing market. We have a shared language, as an estimated 85% of Israelis speak English as their first language. We are also obviously in close proximity to Israel and have an enterprising business culture.

Israeli businesses hold the UK market in the highest regard. We have seen many of them achieve great success here. I will mention one or two of them shortly. Israel’s tech ecosystem does not just provide economic benefits to our two great nations. Every day, Israeli businesses will be enriching and improving the lives of British citizens and making them healthier. A cab driver or parent on the school run uses Israeli sat-nav app Waze to efficiently complete their journey. A water engineer will be alerted to a leak in the network by Takadu, a start-up based in Tel Aviv. The cherry tomatoes that a shopper buys in the local supermarket are an invention from Israel. I could go on. Many constituents of mine are issued generic prescription drugs from their local GP surgery. These drugs are manufactured by Israeli pharmaceutical giant Teva, which produces an extraordinary one in six prescription drugs used in the NHS. That fails to scratch even the surface of Israeli companies operating in the UK.

There are 500 Israeli companies operating in the UK, employing thousands of our constituents. A number of UK companies have major operations in Israel, including Barclays, Rolls-Royce, GlaxoSmithKline and Unilever. Rolls-Royce was responsible for the UK’s largest ever export deal to Israel back in 2016 when it signed a £1 billion agreement with Israeli airline El Al to provide Trent 1000 engines for El Al’s new fleet of Dreamliner aircraft. A British visitor to Israel could not fail to notice the ever-growing number of UK-manufactured cars in the Jewish state.

In terms of high tech, the rapid expansion of UK-Israel trade over the last decade has closely followed Israel’s emergence as one of the world’s leaders in high tech. Israel is now home to the highest density of start-ups anywhere in the world. That impressed me, because I thought India was. Clearly, Israel is more dense in that respect. It deservedly earns its title as the start-up nation. It is also home to the world’s major technology powerhouses, including Google, Microsoft, Intel and Motorola. I have had the privilege of visiting Israel on a number of occasions with the Conservative Friends of Israel, and the dynamism and forward-thinking nature of its high-tech sector and young entrepreneurs is palpable. I particularly remember visiting an early electrical vehicle pioneer back in 2011. Remember 2011? That was 11 years ago. As is often the case, the Israeli company was many years ahead of the market. The only thing holding it back was battery technology at the time.

Israel has achieved this success with intellectual power in the face of geographic and geo-political disadvantages, conflict and a lack of natural resources. Another reason behind Israel’s success story is that the country is an investor in research and development, spending as much as 4.9% of its GDP on R&D in 2018. That is more than double that of the UK—something else we should think about. It offers us very serious food for thought.

Increasing trade with Israel has been a long-standing UK objective. The UK-Israel tech hub, which was established at the British embassy in 2011, was the first of its kind to promote partnerships in technology and innovation between the UK and Israel. It has successfully generated hundreds of tech partnerships between the UK and Israel and is so far worth more than £85 million. It has led to the additional tech hubs in India, Indonesia, Kenya, South Africa, Nigeria, Brazil and soon Romania.

Brexit has presented us with an exciting opportunity to negotiate a bespoke UK-Israel free trade agreement. Our two nations are closer than ever and share the same values and outlook on international trade. There are endless possibilities for the UK and Israel to work together to become the world’s leading tech centres. I encourage my hon. Friend the Minister to be ambitious in the forthcoming negotiations. The trade continuity agreement, which was signed in February 2019, ensured the continuation of the trade terms covered by the EU-Israel association agreement. That should be the bare minimum we seek to negotiate in the new UK-Israel trade deal.

The International Trade Secretary said last month that her Department would be opening a public consultation on this important free trade agreement this January. We do not have long to go, so I am looking to the Minister, and I do not want to hear “soon” as an answer. Given the importance of the UK-Israel bilateral deal, I wonder whether the Minister can shed some light on the commencement date. I very much hope that the starting gun will be fired in the forthcoming days.

I know many colleagues in this place are looking forward to the UK hosting a joint innovation summit with Israel in March this year, but I wonder whether the Secretary of State has any plans to visit Israel in the near future to see for herself the many trade opportunities emerging from this tech powerhouse. I trust that she will visit and that that can kick off the negotiations properly.

My hon. Friend the Minister has spoken of the UK’s desire to expand opportunities in financial services, infrastructure and technology. Can he provide an update on the progress of these sector-specific ambitions?

The UK and Israel can boast the world’s two most successful covid-19 vaccination programmes, which is a source of great personal pride to both countries. Our beloved NHS has delivered a vaccination programme at a speed and scale that is truly the envy of the world. Israel’s digitalised healthcare system played an instrumental role in that success. The Department for International Trade has previously expressed the desire to seek a trade deal with a chapter focused on advanced digital data and technology, including med-tech. Can my hon. Friend the Minister assure me that that remains the plan? What discussions has he had with his counterpart in Israel on the subject?

Israel’s success in R&D is commendable. Will the Minister consider using free trade negotiations to explore a binational research and development programme to the mutual benefit of both countries? Israel has such a programme in place with the United States, known as BIRD—Israel-US Binational Industrial Research and Development—and cumulative sales of products co-developed by Israeli and American companies through BIRD have exceeded $10 billion. Given the immediate strategic challenge posed by disruptive actors on the international stage, it is more important than ever that we work with trusted allies to produce the technologies of the future.

As we move to deliver on our net zero commitments, I call on my hon. Friend the Minister to work closely with Israel. The country has been known as the superpower of sustainability. While we will not be able to recreate here the solar tower that harnesses Negev sunshine to generate electricity, we can certainly learn much from Israel’s world-leading water reuse programme to avoid future droughts. The UK and Israel boast sector-leading green-tech and agri-tech start-ups, and there are many opportunities to expand on that.

With this ambition in mind, I call on the Minister to seize the opportunity of the historic Abraham accords, which have ushered in a ground-breaking new chapter for peace in the middle east, between Israel and her neighbours in Bahrain and the United Arab Emirates. While the accords have been in effect for less than two years, they have already had a seismic effect on the region in terms of trade and investment, which has rapidly expanded.

The breakthrough water-for-energy deal between Jordan and Israel, brokered by the UAE, demonstrates that the peace is far-reaching and gives us, tentatively, an opportunity for proper peace in the middle east. I hope the UK will actively consider the ways in which we can support these new links, and use our own strong relationships in the region to further build on the Abraham accords.

There are challenges. The Government have prioritised the relationship with Israel and have put in place frameworks to stimulate collaboration, but there is much more we can do to ensure that Israeli companies make the UK their natural first stop internationally to trial and scale their products.

I had the pleasure of releasing “A shot in the arm: Israel and UK healthtech innovation”, a report from the all-party Britain-Israel parliamentary group and UK Israel Business. The report identified several impediments that face Israeli health-tech companies seeking to enter the UK market. Many of the proposals would also work across different sectors. For example, the report recommends creating new UK-based landing pads to assist Israeli companies touching down in the United Kingdom, which should include advice on how best to position their value proposition and achieve adoption at pace and scale in the UK.

Another challenge facing Israeli start-ups is the constraints imposed by short-term visas. We contend that as part of the Israel-UK landing pad, start-ups selected and incubated through the scheme should be automatically awarded a start-up visa as part of the scheme. A visa awarded to landing pad companies would be time-bound by the landing pad programme horizon—a scheme that already takes into account other critical factors such as capital requirements, pilot testing and scale horizons. Will the Minister take the time to read the report, consider its recommendations and, I hope, act upon them?

While there is much to celebrate in our burgeoning trade relationship with Israel, it would be remiss of me not to quickly touch on the so-called Boycott, Divestment and Sanctions movement—or BDS, as it is more commonly known. Simply put, BDS is a harmful, politically-motivated campaign that seeks to delegitimise Israel. BDS does nothing to advance the Palestinian cause; in actuality, it is anti-peace. I applaud the Government for their rejection of BDS and their clear commitment to ever-greater trade with Israel.

The fact that many of those targeting Israel with economic boycotts also actively seek to extend their harmful boycotts to those in the cultural and educational spheres says everything we need to know. It is unthinkable to me that anyone could seek to minimise collaboration between UK and Israeli scientists tackling some of the greatest health challenges facing our societies, such as Alzheimer’s, covid-19 and Parkinson’s disease.

It is deeply regrettable that Ben & Jerry’s—the ice cream makers owned by British company Unilever—has engaged in its own recent boycott of Israel; the controversial move rightly provoked strong condemnation. I call on Unilever to challenge such harmful measures.

The Government’s forthcoming legislation to stop public bodies across the UK discriminating on grounds of country and territory of origin must feature provisions to prevent procurement policy being used as a tool of foreign policy or an attempt to regulate international trade. Legislating on this important manifesto commitment will be warmly welcomed by many of my constituents, and I call on the Minister to work closely with colleagues in the Department for Levelling Up, Housing and Communities to counter discriminatory policies that are harmful not only to community cohesion here in the UK but to the UK’s trade interests and foreign policy goals. I commend the UK Government’s response to BDS, which has been to seek ever-closer economic relations with Israel. Now is the time to go one step further and ensure that the principles of fairness and non-discrimination are enshrined at the heart of the UK’s public procurement regime.

Having experienced a decade of record-breaking growth in trade, the United Kingdom and Israel are natural partners across a wide range of innovative fields—from financial to agricultural technology, spanning government, the private sector and higher education. We therefore have before us an invaluable opportunity to reshape our trading relationship for the future. The UK-Israel trade deal is much anticipated for its many important economic benefits, but it also presents an opportunity for the UK to expand its ever-tightening relationship with a close ally. Given Israel’s status as a world-leading tech power, it is important for the UK to make the most of the many advantages of the trade deal by taking an ambitious approach to trade negotiations.

Done right, this deal could serve as a model for UK partnerships with other advanced, innovation-intensive states, including South Korea, Singapore and Taiwan. My colleagues and I stand ready to support work on an enhanced trade agreement. I hope that the Minister can assure me and my hon. Friends that the call for input is about to begin, and that we can look forward to an excellent free trade deal with our friends in Israel.

15:16

[Jim Shannon (Strangford) (DUP)]

It is always a pleasure to serve under your chairmanship, Mr Paisley, and to be in your company—I want to have that on the record. We are close friends and colleagues, having come into this House at the same time.

I congratulate the hon. Member for Harrow East (Bob Blackman) on setting the scene. We missed him this morning at International Trade questions. I figured if he was not there, something must be seriously wrong, but he was there later on—he was alright. His question was still asked—I do not know how he did that. He is always very helpful to me when I go to the Backbench Business Committee to ask for a debate. I am not aware of any occasions—touch wood—when I have been refused a debate by the Backbench Business Committee, and the debates have always been on topical issues, so it is good to have them. Today’s issue is very close to my heart, and the hon. Gentleman outlined it incredibly well.

I see that the hon. Member for Hendon (Dr Offord) has a debate scheduled for Westminster Hall under a slightly different topic heading; we will probably repeat the points that we have addressed today. If God spares me until then, I will be here at 9.30 on Wednesday morning to support the hon. Gentleman in the debate, as will others.

The hon. Member for Harrow East often raises the importance of securing a trade deal with Israel, and I agree. In 2017, Israel was voted the fifth most innovative country in terms of technology and cyber-security. There is absolutely no doubt that we need to increase our co-operation, business and economic growth alongside Israel, so that both countries can benefit. It is imperative that we continue to improve trade relations with our friends and partners.

When I was at the Northern Ireland Assembly—I was there for 12 years—I was a member of the Northern Ireland Friends of Israel group. When I came here, I continued that relationship with the Friends of Israel. I am keen to see relations between the United Kingdom and Israel continuing and, indeed, increasing. The hon. Member for Harrow East said that, too. We should appreciate that that is for everyone’s benefit. Figures from the year 2017 show that UK exports to Israel were £2.3 billion, making it the UK’s 42nd largest export market—accounting for 0.4% of all UK exports. UK imports from Israel were £1.6 billion, making it the UK’s 47th largest import source, accounting for 0.3% of all UK imports. Most recent figures from 2020 also show that the UK had bilateral trade with Israel amounting to £5.1 billion. It is clear that we have a good relationship, but we always want to do better; that is the reason for this debate. It is what the hon. Member for Harrow East is looking for.

There is certainly evidence that there is a need for progressive trade relations with Israel in regards to security—that is an important factor for us all and a key one for me. The Foreign Secretary stated back in November, along with her Israeli Counterpart, that,

“there is a need for a new strategic plan for the next decade, spanning cyber, tech, trade and defence.”

The opportunities are enormous. It was also mentioned that the two countries would work night and day, 24/7, to prevent the Iranian regime from ever becoming a nuclear power. That would be to the benefit of everyone, and to the benefit of world peace, not just the UK and Israel. That is brilliant and we should all try and achieve that. Even the couple of Members here who do not have active participation with Israel should want to make sure the Iran does not achieve nuclear power.

It was former Secretary of State William Hague who labelled science and business ties

“one of the cornerstones of the relationship between Israel and the UK.”

The strategic agreement signed with Israel is the starting post for a series of activities that will deepen our trading relationship. I understand a public consultation on our enhanced bilateral free trade agreement will be opened this month, and there will be further trade strategies in March, as the hon. Member for Harrow East said. It is crucial that we do all we can now to progress this trading relationship. It is important to remember that our trade connections help to strengthen our relationships not only with Israel, but with the rest of the world. It is only right that trade connections benefit every one of us, and Israel is a key friend and trading relationship.

The Minister says that there will be a joint innovation strategy. With that in mind, will there be discussions with Education Ministers? There is the possibility that we can do things in that area, such as combining specialised research through our universities. We have been very good at that with other countries, so maybe the Minister could tell us what could be done in relation to that with Israel.

Israel has proven successful through some of the world’s leading companies, such as Teva Pharmaceuticals, which is worth over £57 million, and computer specialist Intel, which is worth over £27 million. Combined, both of those companies employ over 53,000 people. In addition, UK exports to Israel amounted to £2.6 billion in the four quarters to the end of 2021, which represents a slight decrease—I find that hard to comprehend, but it was probably due to the pandemic and other factors. Could the Minister give us an explanation of why there was a small decrease? Total UK imports from Israel amounted to £9.1 billion at the end of 2020, which was also a decrease of 10.8% from 2021. Again, was the pandemic the reason for that? If it was, then we know that those numbers can only go one way, which is upwards. We must do all we can to ensure that those figures do not decrease any further. I am sure the Minister will respond to that point.

Israel was the UK’s 40th largest trading partner at the end of 2020. I encourage the Foreign, Commonwealth and Development Office to do all it can to ensure that we continue to show interest through trade. I understand that trading figures may have decreased due to the covid-19 pandemic, but it is essential that we do not continue to let this become a problem. Our economy is essential to our success, for jobs and for the benefit of all of us in the UK, Israel and, of course, the world.

I understand that other Members want to speak, so I will conclude my remarks. It is crucial that we prioritise our trading links with other countries. More discussion must take place between the Minister and his counterparts to expand our products’ scope, and how we can build on what we have and perhaps even develop it more. When it comes to trade deals, our Government have been very successful so far, so we look to see where we are with Israel. We all welcome the prospect of an enhanced trade deal with Israel, as well as strong support from UK Export Finance to help finance exports into Israel. With that in mind, I very much support what the hon. Member for Harrow East has said, and look forward to the Minister’s response. It is good to see him in his place: he has been missing for a while, but wherever he has been, it is good to see him back.

[Ian Paisley (in the Chair)]

The Minister will be able to explain those sleepless nights very soon.

15:27

[Damien Moore (Southport) (Con)]

As always, Mr Paisley, it is a pleasure to serve under your chairmanship, and I congratulate my hon. Friend the Member for Harrow East (Bob Blackman) on securing this important and timely debate. The bilateral relationship between the UK and Israel runs deep, from intelligence sharing and security co-operation to our trade ties, which have flourished over many years. For example, the Britain-Israel research and academic exchange partnership has brought together scientists from both countries to tackle some of the world’s most challenging medical conditions and diseases, including cardiovascular and liver disease, diabetes and Parkinson’s. That cutting-edge research and co-operation benefits citizens in the UK, Israel, and further afield.

Israeli innovations benefit the British people, and our close partnership keeps us all safe. I will take this opportunity to reflect on those ties in my contribution today, and I urge the Minister to explore further areas for collaboration in our ongoing trade negotiations with Israel. To list a few examples, we have the Israeli pharmaceutical company Teva, which has been mentioned, and which is a leading provider of medicines to the NHS. With over 200 Teva tablets or capsules taken on average by patients in the UK every second, not only does Teva improve the health of millions of people in this country every day, but it employs hundreds of British workers at sites across our country. There is also the Israeli-designed PillCam, a capsule camera that patients swallow painlessly to get checked for cancer that is currently being trialled across the NHS, and the Israeli-developed phone app that reads the results of urine tests by using AI and colour metric analysis, sharing the results instantly with the individual’s GP practice. These home testing kits, which detect early stage chronic kidney disease, have already started shipping to half a million UK patients.

The brave men and women of our armed forces also benefit greatly from Israeli technology, which protects our soldiers on the battlefield. Israeli-developed virtual reality training scenarios have prepared British soldiers for a range of hostile battle situations, and Israeli intelligence-collecting drones help to keep our troops safe. The list goes on. However, there remain those who seek to dismantle our close ties with Israel and call for a trade embargo, as mentioned by my hon. Friend the Member for Harrow East. Boycott campaigns that seek to undermine this important cooperation, and to make peace harder to achieve, must be opposed. Boycotts of Israel harm the Israeli and Palestinian people, and they threaten our close collaboration in defence, science and medicine. I warmly welcome the Government’s commitment to stopping public bodies from imposing needless boycotts on foreign countries. All too often, these aggressive campaigns target the state of Israel and single out the world’s only Jewish state for criticism.

I am sure that the Minister will reiterate the importance of our close ties with Israel in his remarks. I urge him to do everything possible to oppose needless boycotts and sanctions against Israel, including introducing the legislation committed in the manifesto on which we were both elected, and I urge him to continue working to further strengthen the bilateral relationship between Israel and the United Kingdom.

15:31

[Greg Smith (Buckingham) (Con)]

It is a pleasure to serve under your chairmanship, Mr Paisley. It is an equal pleasure to follow my hon. Friend the Member for Southport (Damien Moore), who delivered a powerful speech that I entirely endorse, particularly those parts towards the end of his remarks about the dangerous nature of those who seek to boycott Israel in trade, which has a knock-on impact on peace, people’s jobs and prosperity. I also congratulate my hon. Friend the Member for Harrow East (Bob Blackman) on securing the debate and on setting out the case so eloquently and powerfully at the start of it. The facts and case studies that he outlined speak for themselves.

Israel has cemented itself as a major economic partner of our United Kingdom and is on an upward trajectory, and a more extensive trade deal between two of the world’s most technologically advanced economies will reap enormous benefits for both nations as well as the wider world. We have heard how omnipresent Israeli-made technology is in our day-to-day lives in the United Kingdom, and I was interested to learn recently that many of the banking transactions made by customers online or via smartphones are protected by Israeli-made software running in the background. From digital printers to USB sticks—they might seem like old hat now—and car safety cameras, Israelis have played a huge role in the rapid advancement of our digital economy and digital society in recent decades. Tesco recently opened its first fully autonomous store in London after partnering with the Israeli company Trigo, which uses computer vision technology and advanced artificial intelligence algorithms to enable shoppers to choose their items and leave without having to stop at the tills, providing a seamless experience and saving time. I look forward to visiting Israel in the near future to see for myself more of the exciting technologies and the companies, scientists and innovators behind them.

Now that we are free of the European Union, the opportunity afforded to us to become a proud free-trading nation, with one of the world’s largest and most forward-thinking economies, must not be wasted. I join hon. Members of different parties who have spoken in the debate—I notice that the hon. Member for Strangford (Jim Shannon) has left the room, but I endorse his speech as well—in urging the Government to make concerted efforts to secure the much-anticipated deal with Israel as early as time affords.

Tourism should be an important consideration for the trade talks ahead. Prior to the pandemic, Israel was establishing itself as a go-to destination for many Brits, and the UK remains ever popular with tourists from Israel. Travel between the countries has become so popular in recent years that we have seen the likes of Virgin Atlantic open a route, Wizz Air about to expand its number of flights to Israel, and Israel become one of easyJet’s busiest routes.

I join other speakers in welcoming the important work of the UK-Israel tech hub, which connects businesses in both countries, but there is so much more that can be done to support British companies seeking to increase their presence in Israel. As I conclude my remarks, I ask the Minister what action he is taking to explore those further ways to expand this market and to support British businesses in my constituency and beyond to partner with Israeli companies. I am extremely optimistic about this unique opportunity for our two countries to negotiate an ambitious and wider free trade agreement that looks to the future. I look forward to hearing from the Minister when he expects the consultation to begin.

15:36

[Dr Matthew Offord (Hendon) (Con)]

It is a pleasure to serve under your chairmanship, Mr Paisley. It is custom and practice in a Westminster Hall debate to pay tribute to the hon. Member who proposed the debate, so I thank my hon. Friend the Member for Harrow East (Bob Blackman) for his promotion of his UK-Israel trade negotiations debate. However, as the hon. Member for Strangford (Jim Shannon) pointed out, I too had a debate on UK trade with Israel, hence the word “negotiations” not being part of my title. I have to disappoint the hon. Member by saying that I have decided there is no need for my debate to go forward, and I can only wish that he is able to have a more leisurely breakfast next Wednesday. Indeed, other hon. Members may decide to go for an early morning run instead of coming to hear probably the same speech that I will give now.

On a serious note, I welcome the growing collaboration between our two countries, including the new UK-Israel bilateral road map, which will extend and deepen our relationship over the next decade. In recent years, the UK Government have worked to build on our existing ties with Israel, securing a multitude of agreements in cyber-security, academia and medicine, as well as Israeli investment bringing more jobs to the United Kingdom. Israelis see the United Kingdom as an ideal place to trade, as they are attracted by our culture, language and institutions.

I was pleased to see the former International Trade Secretary visit Israel last year for meetings to discuss the forthcoming trade agreement and to increase bilateral ties. Many people in the Chamber have visited Israel and I look forward to my hon. Friend the Member for Buckingham (Greg Smith) being able to visit the country. Colleagues who have travelled to Israel will no doubt agree that visiting the start-up nation is an eye-opening experience. I repeat the call of my hon. Friend the Member for Harrow East for the current Secretary of State to visit Israel in the near future.

The relationship between the United Kingdom and Israel is one that dates back to Israel’s creation, but it has certainly accelerated at a remarkable rate in the last decade. I hope that, in some small way, I have played my part in that. In 2013, I asked David Cameron on the Floor of the House of Commons if he would be the first serving British Prime Minister to visit the country, and I was very pleased that the following year he did so, and I was able to accompany him on that visit. It was a great opportunity for him to not only see the workings of the country, its culture and its history, but his remarks in the Knesset were equally prescient. There was a small dispute going on between Members and he said, on this particular Wednesday afternoon, that it was quieter than he would usually experience in the House of Commons.

While others may reflect on the expansion of Israel’s tech scene, it is important to note that this Conservative Government and those of the last 11 years have made Israel a real strategic priority. The UK’s high regard for Israel was evidenced by the fact that it was one of the first countries to agree a free trade deal in principle following the referendum. The ever-strengthening trade relationship is to be welcomed, and it has clearly paid dividends, with over 500 Israeli companies operating in the United Kingdom. Thousands of people, including many in my own constituency of Hendon, are directly benefiting from that employment. Those companies are creating wealth and encouraging growth between our two countries.

Importantly, strong ties are also being forged between our two countries by non-governmental organisations in both the UK and Israel. Accordingly, I pay tribute to UK Israel Business and the Israel British Chamber of Commerce, which in 2017 was recognised with an award of excellence by the Council of British Chambers of Commerce in Europe. It is worth noting that that was the first time that an Israeli chamber of commerce has won such an award from a European organisation.

Given the scientific and engineering excellence of our two countries, I repeat the calls for the Minister to explore establishing bilateral centres and incubators to enable British and Israeli companies and scientists to come together and tackle the great challenges of the day. One of those issues may be covid, which we are now passing by, but there are many more that we can work on. A trade deal will enable us to work jointly to tackle climate change, strengthen cyber-security against some of the malign actors that have been mentioned—mainly Iran—and produce the next generation of med-tech, which my hon. Friend the Member for Southport (Damien Moore) mentioned, to keep us all healthier and improve our wellbeing. All that would come of a good trade deal.

There are several barriers to address, however, before we can take advantage of the opportunity before us. To better facilitate the important opportunities that I have outlined, I encourage the Minister to review visa and entry requirements to enable Israelis to work more easily in the UK. In my humble opinion, the Minister should also review the existing regulations, such as on opening a bank account, which can make it difficult for Israelis to start businesses in the UK. There is also an opportunity to consider tax tariffs on a range of goods, including food and beverages and medicines. I am sure the Minister also recognises the importance of reaching an agreeable position on data protection matters so that organisations are not unduly burdened—although I welcome the fact that the UK has deemed Israel one of the countries that provides adequate levels of data protection.

I will make two points further to those made by my hon. Friend the Member for Harrow East. First, Israel spends about 5% of its gross domestic product on research and development, which is more than most developing countries around the world. However, there is large, untapped potential for UK investment in research and development in Israel. Does the Minister agree that there is more work to be done in that area? It would be a great opportunity for people in this country to benefit financially.

Secondly, boycotts do not work—I am sure the Minister can accept that. When the SodaStream factory in the west bank was forced to close following pressure from the BDS movement, more than 500 Palestinians lost their jobs. Those people were all in employment, with a wage and a standard of living higher than people in other employment in that part of Israel. All that does is force those Palestinian people into the arms of Hamas and Hezbollah. We all want peace and security in the middle east—we certainly want a two-state solution—but the divisive actions of the BDS movement will not allow that to happen. Will the Minister bring forward as soon as possible legislation to prevent such divisive activities in the UK?

Although it is not strictly the subject of this debate, I also think it is important that the Government restate their commitment to the religious practice of shechita, which is very important to my constituents and which contributes to the economy of both the UK and Israel.

My constituents and I are fully supportive of the Government in their ambition to secure a comprehensive trade deal with Israel, and we look forward to the formal process beginning in earnest in the coming days. I am sure that the Minister has listened closely to what colleagues have said and that he will take this opportunity to ramp up and lead the way on trade deals. Israel would certainly be a good place to start.

00:00

[Ms Anum Qaisar (Airdrie and Shotts) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Paisley. I congratulate the hon. Member for Harrow East (Bob Blackman) on securing this debate. He brought a significant amount of knowledge to the House. The hon. Member for Strangford (Jim Shannon) spoke passionately, as he always does. The hon. Members for Southport (Damien Moore) and for Buckingham (Greg Smith) both gave interesting contributions, providing a lot of food for thought. It was a delight to hear from the hon. Member for Hendon (Dr Offord); I was due to speak in his debate next week, but I appreciated the opportunity to hear his contribution today.

The UK and Israel have only recently signed a strategic plan that is entirely devoid of human rights demands on Israel, and it is a real concern that this free trade deal will be similar. The UK Government will open a call for input on an enhanced bilateral free trade agreement with Israel this year, and the Scottish Government will provide a submission. However, there is no substitute for ongoing, meaningful engagement with Scottish Government officials on FTA negotiation matters—something that was not there in the talks with New Zealand and Australia.

We in the SNP are neither anti-trade nor anti-free trade. We recognise that there are many avenues for more trade co-operation, such as in the spaces of digital, data, science and technology.

Once we gain independence, the SNP will seek for Scotland to rejoin the EU. In doing so, it would rejoin the EU’s deal with Israel. That deal, of course, makes it categorically clear that trade with the Occupied Palestinian Territories should not be treated as if it were trade with Israel.

Until Scotland gains her independence, we in the SNP urge the UK Government in the strongest possible terms to use every opportunity—indeed, this rare opportunity of trade negotiations—to end the persecution of the Palestinian people. As with any negotiation, there are trade-offs, but turning a blind eye to persecution should not be one of them. It must remain a priority for the UK Government, and a red line throughout every single stage of the negotiations. If human rights demands are not met, a free trade deal must come off the table. A life free from persecution and, to quote Human Rights Watch, “apartheid conditions”, and a decent standard of living—something we all deserve as human beings—are worth much more than a few tariff reductions between two already incredibly rich countries.

There is no doubt that trade relationships can lead to wider relationships and can often be used as a way of influencing—for good and sometimes for ill—the actions of other countries and Governments. The safety of the Palestinian people and their freedom from an illegal occupation should be a condition for any UK-Israeli free trade deal. Human rights concerns must be consistently raised throughout every stage, including at the inaugural UK-Israel joint committee to be held in the UK this year and the joint UK-Israel innovation summit in March. If previous free trade deals are anything to go by, it is no surprise that the Department for International Trade has not yet published its objectives and scoping assessments for this set of negotiations. I would appreciate clarification from the Minister on when they will be available.

Israel accounts for much less than 1% of UK exports. Anything it does will not fix the huge absence of trade caused by Brexit, which, I remind the House, Scotland did not vote for. The UK’s total bilateral trade relationship with Israel stood at £5 billion in 2020. In comparison, UK exports to the EU were £251 billion, representing 42% of all UK exports. We could increase exports to Israel by a factor of 10 and it would still be only a relatively minor trading partner compared with the EU and others. This deal will not compensate for what we have lost because of Brexit.

In 2019, Scottish exports were growing consistently in all directions—to the rest of the UK, the EU and the rest of the world. We now have clear evidence that that is no longer the case, as Scottish goods exports fell by 25% in the year to June 2021, compared with the equivalent period in 2019-20.

An industry that has a significant number of farmers contributing to it, including in my constituency, is the food and drinks industry. House of Commons research found that Brexit is costing the industry £62 million a week. That is £62 million a week that farmers and producers cannot afford to lose, but I do not remember seeing that figure on the side of a bus.

We seek assurances that nothing will be done to land a deal with Israel that will make it easier for goods that have been produced in the illegally occupied territories to be marked, sold and exported as produce of Israel. These goods should be regarded as the proceeds of crime. We know that a free trade deal solely benefiting Israeli products and not products that have been produced in illegally occupied territories will reduce the competitiveness of Palestinian produce, put Palestinian producers at a disadvantage and potentially distort the comparative prices of similar goods from both sides of the wire fence for UK consumers.

I would therefore appreciate clarification from the Minister on two points. First, so that customers across the four nations can decide for themselves where to buy from, we seek assurances that the Department for International Trade will follow a policy of non-divergence from our European partners when it comes to labelling. The possible free trade deal must include clauses that mandate accurate labelling of Israeli goods and settlement goods, so as not to mislead the consumer.

Secondly, we urge the Department to engage in every effort to improve the competitiveness of Palestinian products and the trade links between the UK and the occupied territories. That should include redoubling diplomatic efforts to see the end of the blockade of the Gaza strip—an embargo that covers trade. It should also include looking at the merits of advising UK businesses against trading with illegal settlements, as a disincentive to Israeli settlement-building in the Occupied Palestinian Territories. It must be remembered that aid cuts by the Conservative Government have hit the occupied territories hard and badly impacted livelihoods, and they are hampering trade growth. Improving trade with Palestine is also a way out of poverty.

I will make a final point about the UK arms trade with Israel. Over the last three years, £76 million of arms sales have been exported to Israel. The Minister must categorically state today that offensive arms and small weapons—the weapons most commonly used against civilians—will be outside the free trade agreement negotiations.

Ultimately, what cannot happen is that these trade negotiations decouple Israel’s behaviour in the occupied territories—behaviour that is categorically illegal under international law.

15:53

[Ruth Cadbury (Brentford and Isleworth) (Lab)]

It is a pleasure to serve under your chairship, Mr Paisley. I congratulate the hon. Member for Harrow East (Bob Blackman) on securing this debate. I hope he will pass on our thanks to his fellow members of the Backbench Business Committee for allowing us to have this debate. I thank the hon. Member for Hendon (Dr Offord) for graciously saying that we do not all have to come back here again next Wednesday morning. Otherwise, I would be reusing, rather than recycling, my speech. I also thank the other speakers we have heard so far, and I will try to refer to them all during my speech. I refer Members to my entry in the Register of Members’ Financial Interests, as I have previously visited Jerusalem, the west bank and the Knesset as part of a parliamentary delegation.

Successive Israeli leaders, from Golda Meir to Yitzhak Rabin, were proud members of the Israeli Labour party and proud socialists. In the case of Yitzhak Rabin, he was murdered because of his historic work and commitment to peace through the Oslo accord. The British Labour party has strong and historic links with Israel through the Israeli Labour party.

It is in that spirit that we welcome and support increasing and improving the UK’s trade links with Israel. Of course, we welcome any trade deals that support jobs here in the UK and British businesses. That is why our Government should be taking advantage of trade with countries such as Israel—to ensure that UK exporters and businesses can do well and that British business can bounce back after the pandemic.

Speakers today have pointed out that the UK and Israel are two of the world’s most high-tech economies. That is surely a benefit, and a key issue, as speakers have said, in future negotiations with Israel.

The total trade in goods and services with Israel was worth £4.6 billion in the last available figures. I thought that Israel was the UK’s 40th largest partner, but the hon. Member for Strangford (Jim Shannon), who has temporarily left the room, said it was 42nd. Either way, as the hon. Member for Airdrie and Shotts (Ms Qaisar), the SNP Front-Bench spokesperson, said, this is a proportionately small amount of the UK’s total trade. Let us get these things in proportion.

UK exports to Israel are, however, worth more than £2 billion and support about 37,000 jobs in the UK, including, as speakers have said, many in skilled manufacturing industries, such as the car industry, but also technology, health-tech, security, data and so on. According to Her Majesty’s Revenue and Customs, 6,600 VAT-registered businesses currently export goods to Israel. I would welcome the Minister’s providing further information about what targets the Government want to reach for the number of businesses exporting to Israel in the future. I am talking about both the level of jobs and the level of investment. Is that a target for any future trade negotiations? There are also a number of important areas where Israel provides crucial imports for consumers here in the UK. That is especially the case, as others have said, in relation to pharmaceuticals and companies such as Teva, whose largest customer is of course the NHS.

There are other business links. The hon. Member for Harrow East mentioned the tech hub run through the UK embassy and the importance of technology and data in the economy. The hon. Member for Southport (Damien Moore) told us about the trials of the very interesting camera that people swallow for cancer checks and about VR training. The hon. Member for Buckingham (Greg Smith) mentioned digital security, which I did not know about. It is very important for any of us—all of us—who have bank accounts and do our banking online and on our phones. He also mentioned tourism, which is of course an important source of business for Israel, and of course for Palestine, because in and around Jerusalem we have the holiest sites for the three largest monotheistic religions in the world. Also, the world centre for the Baha’i faith is in Haifa, I think.

Additionally, more than 300 Israeli high-tech companies have bases in the UK, with 100 of those having been established in the last decade. Those firms bring jobs and investment to the UK. I look forward to hearing from the Minister about what steps the Government are taking to support our tech industry and to build strong partnerships between UK and Israeli tech hubs.

The Government have recently signed a further deal with Israel, which builds off the continuity FTA signed in 2019. This “road map” commits to further action around issues ranging from cyber-security to improving business links through the UK-Israel innovation summit in March of this year. We welcome these steps and hope that our Government continue to work with the Israeli Government on these important bilateral issues. The memorandum of understanding says that the UK and Israel will work on the

“development of a new, higher ambition free trade agreement.”

I look forward to hearing more details from the Minister about this and the benefits it could bring to so many sectors of our economy in the UK. We want trade deals that support well-paid and skilled jobs here, and we will support those that do so, as an Israel trade deal would.

It is equally important, however, that the Government ensure that human rights issues are considered and addressed when any trade deal is being struck. Trade should not happen in a vacuum, and British values are important in our trade deals. Around the world there has been a worrying pattern of the Government seeming to adopt an “any deal will do” approach, with key issues being jettisoned and ignored. We have already seen evidence of this in the Government’s recent deal with Australia, with British farmers thrown under the bus. I am extremely concerned that in future negotiations, such as those with the Gulf Council, human rights and rule of law issues could be cast aside. The Minister for Trade Policy did not take the opportunity this morning to answer my question about the Gulf Council deal.

The SNP Front-Bench spokesperson, the hon. Member for Airdrie and Shotts, made a number of key points about human rights and illegal settlements. Illegal settlements are possibly the top human rights issue, and they are in breach of international law. We have seen their continued expansion at a rapidly increasing pace, especially since the start of the Trump Administration in the US. Our Government must object in the strongest possible terms in all relevant forums, not least in trade negotiations, to the expansion of illegal settlements.

We know that settlements in the occupied Palestinian territory are illegal in international law, and that includes settlements in East Jerusalem, as well as in the west bank. United Nations Security Council resolution 2334 states that

“the establishment…of settlements in the Palestinian territory occupied since 1967…has no legal validity and constitutes a flagrant violation under international law”.

These settlements entrench divisions, and I know from meeting Palestinians when I visited the west bank that these settlements make a just and lasting peace deal even harder to achieve. I was told that around five years ago, and I fear the prospects have only got worse since then.

The recent change of Government in Israel offers an opportunity for a change in approach, especially as the previous Government’s formal proposal in which they threatened to annex the west bank has been stopped after widespread and near universal opposition, including from parliamentarians across all parties here in Westminster. Although the formal annexation has been stopped, the expansion of illegal settlements continues, and Palestinian families in East Jerusalem and the west bank continue to experience eviction from their homes and even demolition of their homes and property.

Both the EU’s agreement and the subsequent continuity agreement between the UK and Israel mandated that goods from illegal settlements would be excluded from the preferential terms of any UK-Israeli trade agreements. On this issue, I have a few questions for the Minister. First, will he confirm that the UK Government still support the principle of non-preferential trade for goods from illegal settlements, and will the Government uphold that non-preferential treatment in any future FTA or deal with Israel? Secondly, are the Government aware of the current level of known UK trade with Israeli settlements? Additionally, will the Minister make it clear that British companies have an obligation to ensure that their products and services are not used in grave breaches of international law?

I know that some people have called for the UK to block all trade with Israel, but that is not an action that we support. Such an indiscriminate measure would hurt millions of ordinary Israelis and Palestinians, both in Israel and in the west bank and Jerusalem, and it is not a policy applied to other countries. We do not support a ban on goods from the state of Israel, nor do we support the policy of boycott, disinvestment and sanctions, which is often known as BDS. The hon. Member for Hendon explained how the boycott has affected Palestinian businesses. They already suffer from a lot of difficulties, and this boycott could make things even worse. I therefore share the concerns about BDS that were raised by the hon. Members for Harrow East, for Southport, for Buckingham and for Hendon and others in this debate.

In the wider context of our overall relations with Israel, the Labour party insists on a renewed focus on negotiating a two-state solution that ensures a viable and sovereign Palestinian state alongside a safe and secure Israel. We welcome the Government taking this step towards a new free trade agreement with Israel, which we hope will benefit UK businesses and consumers, but we also want to ensure that the Government address the key issues around human rights and specifically those relating to settlements. I look forward to the Minister’s response.

16:05

[The Parliamentary Under-Secretary of State for International Trade (Mr Ranil Jayawardena)]

It is a pleasure to serve under your chairmanship for the first time, Mr Paisley, and I welcome the hon. Members for Brentford and Isleworth (Ruth Cadbury) and for Airdrie and Shotts (Ms Qaisar) to their places. I should also like to thank my hon. Friend the Member for Harrow East (Bob Blackman) for securing this important debate and all Members who have been present this Thursday afternoon and made important contributions.

The hon. Member for Strangford (Jim Shannon) raised the question of why I had been away from the House in recent weeks. In his absence, but for the record, I should say that I have been away for a couple of weeks due to the birth of my son. [Hon. Members: “Hear, hear.”] Thank you.

That explains why the hon. Gentleman has not seen me in the Palace, but I am delighted to be back and discussing this important topic, because Britain is strongly committed to her trade and investment relationship with Israel, one of the middle east’s most dynamic and innovative economies. Israel is a key ally and friend to the United Kingdom. We share the same values and are key strategic partners in the middle east. The bilateral trade relationship is very strong, and we want to continue to work with Israel to strengthen our relationship as we emerge as an independent trading nation for the first time in 50 years.

Let me be crystal clear at the outset: we are strongly opposed to boycotts. Open, honest conversations best support peace efforts. The United Kingdom is very clear about this—always has been and always will be. We have also made clear our commitment to supporting the Abraham accords and to working with Israeli and Arab partners to promote our shared prosperity and regional security.

The continuity agreement that we signed on 18 February 2019 was one of Britain’s first. It replicated the scope of the EU-Israel agreement, with key provisions covering tariff liberalisation, customs, regulation and public procurement. This trade and partnership agreement, which entered into force on 1 January last year, secured the future of our bilateral trade relationship. Anglo-Israeli trade was worth £4.6 billion in the four quarters to the end of Q2 2021, making Israel—I am pleased to say that I agree with my counterpart, the hon. Member for Brentford and Isleworth—the United Kingdom’s 40th largest trading partner globally. The United Kingdom is Israel’s second largest trading partner, behind only the United States.

While it is difficult to disaggregate trade figures, it is certainly true—to respond the comments by the hon. Member for Strangford—that covid has depressed trade around the world, but that makes trade with Israel all the more important. Co-operation between us in sectors such as science and technology—and particularly medical science, which we have heard a lot about this afternoon—is already very strong, with Israel’s status as a start-up nation and the United Kingdom’s as a science superpower going hand in hand.

We have heard some great examples from so many colleagues, including my hon. Friend the Member for Harrow East. I was also particularly drawn to the examples given by my hon. Friend the Member for Southport (Damien Moore), which showed the huge scale of imports that we benefit from here in Britain, but we export to Israel too. We should not lose sight of that benefit to both countries. The London Electric Vehicle Company, for example, makes taxis in Warwickshire—I am sorry to say that to my hon. Friend the Member for Harrow East, although I am sure Members from Warwickshire will be pleased with that news. LEVC vehicle exports totalled something like £1.46 million in 2021—a year when trade was depressed because of covid—and the company anticipates purchases of something like £730,000 a month this year. That is just one example but, to the point made by the hon. Member for Brentford and Isleworth (Ruth Cadbury), as far as I am concerned, the sky is the limit.

As my hon. Friend the Member for Hendon (Dr Offord) said, around 500 Israeli firms operate in the United Kingdom. That investment from overseas is creating thousands of jobs in high-value sectors, and over 20 Israeli firms are listed on the London Stock Exchange or AIM—its alternative investment market—demonstrating the benefit and strength of capital markets in the City of London. Of course, we can always do more to assist the relationship, and I know that Ministers across Government will look carefully at the comments made by Members, including their suggestions on changes to the visa regime.

We can always do more to help businesses succeed, and the Department for International Trade is doing that right now. We have a dedicated team of trade advisers in Tel Aviv, and UK Export Finance has a risk appetite for Israel of at least £4 billion, which is helping firms operating from the United Kingdom to win contracts, insure their operations and obtain trade financing. The United Kingdom and Israel share a world-leading culture of entrepreneurial, tech-savvy and innovative businesses, which will be celebrated in an innovation summit later this year—a clear opportunity to highlight our ambitious trade, science and innovation relationship, and a chance to showcase the shared talents and skills of world-leading British and Israeli businesses. My hon. Friend the Member for Harrow East asked about what more we could do to enable binational approaches to research and development, and I am pleased to say that the UK Science and Innovation Network is already making great strides in that direction.

Outwardly, the stock of foreign direct investment from the United Kingdom to Israel was £1.4 billion as of 2019. We trade across a huge range of sectors, as I have said, but both our economies are also highly oriented towards services, which represent over 70% of GDP for each country. After the United States, we are Israel’s second-largest collaborator in pharmaceuticals and medical products, and the pandemic has catapulted the need for digital health solutions, with Israel already being the world’s leader in this area. It has therefore become even more important. Beyond that, we seek opportunities in business services, research and development, and professional and management consulting services—the biggest traded services between our countries, making up 12.5% of the overall trade relationship. Although our trading relationship continues to be predominantly goods-based, at around 65% of our trade, our economies are highly services-oriented, and I believe that huge scope for the future lies in our trade in services.

As two like-minded partners, with expertise in areas such as technology, innovation, data and digital, we are confident that the United Kingdom and Israel can agree an ambitious deal that will complement both our economies. On 29 November, the Prime Minister announced that we would begin talks with Israel this year on an enhanced free trade agreement. Given both the political and economic importance of our trading relationship with Israel, we expect the FTA to form a substantial part of our bilateral trading relationship. I should emphasise that Her Majesty’s Government are committed to scrutiny and openness in our FTA negotiations. We aim to be transparent, consultative and accountable throughout our trade agenda, and we believe we compare favourably with other parliamentary systems around the world.

On 2 December, the Secretary of State for International Trade announced that the United Kingdom would open our formal call for evidence very shortly. This call for input will allow the views of businesses, the British people, civil society and others—not only parliamentarians —to be fully heard during the mandate development process, helping us shape the negotiations for our comprehensive FTA. The specific coverage of the objectives for an FTA, as asked for by the hon. Member for Airdrie and Shotts, will be concluded following this call for input, to ensure that we have fully listened to the views of all British people, businesses and civil society. It simply would not be appropriate to speculate on the contents of such a call for input—and, indeed, on our objectives—before completing that work. However, I am pleased to be able to say that the Secretary of State plans to travel to Israel in early February.

We will publish our strategic approach, an initial scoping assessment and a Government response to the call for input before starting negotiations, giving the House the means to scrutinise our negotiation approach, its projected impact, what we have been told by British people and businesses and our response to their views. We will, of course, update the House in the usual manner after each negotiation round and when requested to appear before the relevant parliamentary Committees.

[Jim Shannon]

I must apologise for not being present when the Minister mentioned me. I have a private Member’s Bill tomorrow and the Minister responsible has been trying to catch me, so I had to speak to her. I just wanted to ask if, when those meetings are held with the Minister’s counterparts in Israel, we could have some indication of the input of Northern Ireland companies in that process? Obviously we want every part of the United Kingdom—all the regions—to benefit.

[Mr Jayawardena]

The hon. Gentleman can be absolutely assured that the views of every part of our United Kingdom will be fully taken into account. In fact, the Board of Trade recently visited Belfast to demonstrate our commitment to ensuring that the Department for International Trade works for every corner of our United Kingdom. The timings of the negotiations will very much depend on the readiness of both sides, which, of course, means agreement with the Israeli Government.

My hon. Friend the Member for Harrow East and the hon. Member for Strangford raised the potential opportunities that a future FTA might provide. While British businesses already benefit from our existing trade and partnership agreement and we would not, of course, want to prejudice the call for input, I believe the potential to take our trading relationship to the next level through an enhanced and improved FTA is very clear. There is the opportunity to remove or significantly lower tariffs for major British exports, such as in the food and drink sector. We see opportunities to give easier access for all British companies—whatever corner of the country they are from, and including small and medium-sized enterprises—to set up, do business and access the Israeli market.

There is significant scope to expand our trade in services, including digital services, which grew a remarkable 73%, albeit from a low base, between 2010—remember 2010?—and 2020. Co-operation in this area is, frankly, very limited in the existing trade and partnership agreement, and we see real opportunities for an enhanced FTA to supercharge the trade in services, which would complement our services-based economies, as we have discussed during the debate, and cement the United Kingdom as the international services hub.

My hon. Friend the Member for Harrow East and the hon. Member for Strangford asked how such an agreement would fit into the United Kingdom’s wider trade agenda. Of course, our potential FTA with Israel is just one component of our ambitious wider international trade strategy. As an independent trading nation, the United Kingdom has the freedom to forge new bonds of trade with partners, friends and like-minded souls worldwide, based on British interests and shaped by British priorities. We will continue to carefully plan and sequence our negotiation programme to ensure that it delivers the maximum benefits for the United Kingdom. No longer restricted by anti-competitive and protectionist one-size-fits-all regulation from the EU, the United Kingdom will pursue prosperity through free and fair trade with sovereign nations, based on our shared interests and underpinned by the agreements we are forging worldwide.

We have signed deals covering 70 countries, plus the EU, that account for more than three quarters of a trillion pounds-worth of trade, and we intend to continue that record of success in 2022. We have a clear and ambitious goal that will put global Britain in pole position to pursue new opportunities to connect British businesses to the most dynamic economies of the decades ahead.

The International Trade Secretary recently kicked off negotiations with India, one of the world’s largest and fastest-growing economies. We are looking to accede to the trans-Pacific partnership, one of the world’s largest free trade areas, and we have launched our consultation on a potential deal with the Gulf Co-operation Council. Of course, Members will already know that we have secured an agreement in principle with New Zealand and have finalised our agreement with Australia. Those deals are aimed at unlocking growth in every corner of our United Kingdom.

The hon. Members for Brentford and Isleworth and for Airdrie and Shotts raised the matter of the Occupied Palestinian Territories and their status in a potential FTA. The United Kingdom has an interim political, trade and partnership agreement with the Palestinian Authority, which entered into force on 1 January 2021, which we are committed to implementing. That will help protect our bilateral trade relationship, which was worth £24 million in the four quarters to the end of Q2 2021. We value our bilateral trade relationship with the Palestinian Authority and will continue to work closely together to build on our trade continuity agreement.

[Dr Offord]

Is the Minister aware that the Palestinian Authority themselves do not agree with any kind of boycott? In December 2013, the Palestinian Authority President, Mahmoud Abbas, stated:

“We don’t ask anyone to boycott Israel itself. We have relations with Israel, we have mutual recognition of Israel.”

[Mr Jayawardena]

I am delighted to have that contribution on the record. Just as we stand clearly against boycotts and support the Abraham accords, the United Kingdom’s position on the settlements is clear. Settlements are illegal under international law, damaging to peace efforts, and call into question, I am sorry to say, Israel’s commitment to the two-state solution. We have urged Israel to halt its settlement expansion, which threatens the physical viability of a Palestinian state. Britain’s view is that the settlements in the Occupied Palestinian Territories are illegal under international law, so they are not covered within the scope of our trade agreement. This means that goods imported from illegal settlements are not entitled to the benefits from trade preferences, and we remain committed to that approach. This shows that more trade need not come at the expense of our values.

The hon. Member for Airdrie and Shotts raised the matter of arms exports to Israel. Her Majesty’s Government take their arms export responsibilities very seriously. We do not want any British equipment to be misused, and we aim to operate one of the most robust arms export control regimes in the world, complying with all our international obligations. We consider all export licence applications thoroughly against a strict risk assessment framework, and keep all licences under careful and continual review as standard.

The Government will not grant an export licence if to do so would be inconsistent with the strategic export licensing criteria. Those criteria provide a thorough risk assessment framework for assessing export licence applications, and require us to think hard about the impact of providing equipment and its capabilities. These are not decisions we take lightly. We continue to monitor the situation in Israel and the Occupied Palestinian Territories closely and keep relevant licences under review. If necessary, we will take action to suspend, refuse or revoke licences in line with the criteria, but only if circumstances require.

The economic relationship between Israel and the United Kingdom is strong, based on the trade and partnership agreement that allows British and Israeli businesses, exporters and consumers to buy and sell freely and with confidence. Israel is a friend and ally in the middle east, with an innovative and dynamic economy. Tech, science and innovation co-operation between businesses of both countries continues to grow, with real benefits for consumers across our United Kingdom. Through an ambitious, forward-looking and comprehensive free trade agreement, founded on the strength of the Israeli and British economies, we look forward to developing and improving that relationship even further in the future as an independent trading nation.

[Ian Paisley (in the Chair)]

Mr Blackman, you have some time for your winding-up speech. You do not need to take it all.

16:26

[Bob Blackman]

I will try not to abuse your offer, Mr Paisley. I thank colleagues across the Chamber for their contributions on this important debate. I thank the Minister for his replies to some of the questions. The one that he did not answer was when these trade negotiations would actually begin. We look forward to those beginning and bearing fruit as we come forward.

To update the hon. Member for Strangford (Jim Shannon), I was stuck in a tremendous traffic jam on the way to the House. That is why I was not there for the beginning of International Trade questions, but I got there in the end. I put that on the record.

I thank my colleagues and friends who have made contributions. We have highlighted, in many aspects, the opportunities for trade. I say to the hon. Member for Airdrie and Shotts (Ms Qaisar) that one of the issues here is that we are not seeking to replace trade anywhere else, but to enhance trade. By expanding trade, everyone gains. The fact is that Israeli businesses and Palestinian businesses gain from trade agreements that we have with both Israel and the Palestinian Authority. Those individuals in Palestine who work for different companies—some work for Israeli companies—actually benefit directly as a result of free trade being created and enhanced.

I thank the hon. Member for Brentford and Isleworth (Ruth Cadbury) for her contribution. I noted, of course, that she referred to the historical ties between the British Labour party and the Israeli Labour party. Of course, the Israeli Labour party is now currently in the coalition Government, and has agreed to further settlements in the west bank, so I am not sure quite where that fits with the hon. Lady’s particular speech as we went along.

I thank everyone here for this debate, my colleagues on the Backbench Business Committee for allowing it to take place, and my hon. Friend the Member for Hendon (Dr Offord) for enabling everyone to have a morning off next Wednesday—in preparation, presumably for Prime Minister’s Question Time, so we can hone our skills. I look forward to the Secretary of State for International Trade, my right hon. Friend the Member for Berwick-upon-Tweed (Anne-Marie Trevelyan) visiting Israel and hopefully announcing on her visit the start of those trade talks, so that we can look forward to that free trade agreement being in place by the end of this calendar year.

Question put and agreed to. 

Resolved,  

That this House has considered UK and Israel trade negotiations.

16:27

Sitting adjourned.