Bilateral Trade (Israel)

Alistair Burt Excerpts

Wednesday 13th June 2012 Westminster Hall

[The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Alistair Burt)]

It is a pleasure to serve under your chairmanship, Mr Weir. I thank my hon. Friend the Member Weaver Vale (Graham Evans) for securing the debate, how he has raised the subject and his courtesy in sending me an advance copy of his remarks, which I appreciate. I salute his personal interest and commitment to enhancing the UK’s relationship, particularly its commercial relationship, with Israel. He made reference to several high-tech and research developments, some of which I will refer to.

My hon. Friend particularly mentioned the London marathon. He will know, as will my hon. Friend the Member for Dudley South (Chris Kelly), that we share that interest; I have done nine. This year, we saluted the extraordinary courage of Claire Lomas in taking part as she did. It was absolutely proper for my hon. Friend the Member for Weaver Vale to draw attention to the suit and kit she wore and the part played by Israel and its scientists in their development.

I welcome the opportunity to reiterate the importance the Government attach to developing our trade relationship with Israel as part of our overall efforts to broaden and deepen our bilateral relationship. I will cover the issues about settlements that have been raised by other colleagues as part of my response, if I may.

Israel, with its strong economic performance, low inflation and falling unemployment rate, continues to provide a growing export market for UK companies. Israel has an excellent reputation for innovation and invention, and it is a world centre for research and development. I have seen for myself that its reputation is well earned; on my visits to Israel, I have paid particular attention to visiting high-tech and innovative businesses.

Over the past 10 years, the value of bilateral trade between Israel and the UK has flourished in both directions. It has increased by 60%, and it reached a record high of £3.75 billion in 2011. Currently, Israel is the UK’s largest individual trading partner in the near east and north Africa region. It ended 2011 as the UK’s third biggest export market in the middle east. This successful partnership continued to thrive in the first quarter of 2012. UK imports were more than £500,000 from January to March 2012, an increase of 65% on the same period in 2011. The UK exported £439 million of goods from January to March 2012, an increase of 13% on the same period in 2011. I am sure that colleagues will agree that such trade figures are extremely encouraging.

The Government fully agree with my hon. Friend the Member for Weaver Vale that the UK and Israel are natural economic partners. However, our efforts to develop that economic partnership are fully consistent with our strong commitment to an early solution to the Israeli-Palestinian conflict as essential to the long-term security of Israel and the region, and for the economic prosperity of all in the area. Our policy is also fully consistent with our condemnation of Israeli settlements in the occupied territories and our efforts, with our European partners, to demonstrate that concern through, for example, steps with regard to settlement produce.

[Mr Andrew Smith]

Does it surprise the Minister that the UK and EU guidelines on procurement, as I have been told in answers to parliamentary questions, do not differentiate between products emanating from Israel and those emanating from the Occupied Palestinian Territories? Will he comment on that?

[Alistair Burt]

The voluntary guidelines available in the EU and put into effect here enable greater choice for consumers and they are important, but the area is developing in relation to both goods and services. We are constantly considering ways to ensure that choice is available without going down the route of a boycott, which the Government oppose.

There are two things in particular. The first is the importance of clear choice and clear labelling of goods and services. Secondly, we set the issue in the context of what we believe to be most important, which is the negotiated settlement between Israel and the Palestinian Authority. We do a great deal of work in the occupied territories in relation to business development. We are working to strengthen the Palestinian private sector by sponsoring numerous trade and investment-related meetings in both the Occupied Palestinian Territories and the UK. We continue to urge Israel to remove the barriers preventing greater trade between Israelis and Palestinians. They are natural trading partners, and greater trade between the two would enhance both. That is why we set the growing and important bilateral trade relationship with Israel in the context of what we believe is still possible and would enhance economic prospects for all.

The hon. Member for Strangford (Jim Shannon) said that confidence is built by people trading. That is a view that we share, which is why we are against boycotts and in favour of trade. We think that enhancement of trade in the region will help the process of negotiating an arrangement between Israel and the Palestinian Authority, which is why we encourage it, but we do not see that there is any reason for us to slow down the bilateral relationship with Israel. Quite the contrary; we think that a thriving Israel is good news for the region.

Having spent a bit of time on that part of the issue, I return to the meat of the debate as introduced by my hon. Friend. With our full support and encouragement, British companies have a growing presence in Israel. Barclays Capital recently opened a research and development centre in Tel Aviv. Major British companies such as Lloyd’s, GlaxoSmithKline, British Airways and HSBC also continue to have significant interests in Israel.

Equally, Israeli companies have increased their trading presence in the UK. There are now about 300 Israeli firms operating in the UK, providing thousands of jobs. They cover a wide spectrum of sectors, most notably in pharmaceuticals, defence, information and communications technology, mining, food processing and plastics manufacturing.

Despite the excellent trade links that already exist, there is huge potential to build on UK-Israel collaboration. As my hon. Friend made clear, Israel is a powerhouse of innovation and entrepreneurship, leading the way in the fields of digital, life science and technology. There are excellent opportunities for UK companies to pursue agreements with Israeli high-tech companies.

Our partnership in high-tech could become an important contribution to Britain’s economic growth. At present, America remains the Israeli entrepreneur’s first thought for international partners. As my right hon. Friend the Chancellor of the Exchequer has said:

“We believe that Britain should be a natural partner for Israel in high tech”,

sentiments echoed by my hon. Friend. I also gave that message to a number of high-tech entrepreneurs in Tel Aviv in January.

We have taken important steps towards achieving that goal. In October 2011, during a visit to Israel, my right hon. Friend the Chancellor of the Exchequer launched the UK-Israel tech hub. The creation of this new team at the British embassy in Tel Aviv follows an agreement between our respective Prime Ministers to build a UK-Israel partnership in technology. The hub has already identified key areas and projects in which the UK and Israel offer each other complementary advantages, and it acts to create closer collaboration in those areas.

For example, the hub has focused on delivering Israeli innovation in water technologies to UK utilities, and on building connections between the UK’s leading media and creative industries and leading Israeli new media-tech companies. As part of this, the Government have sent several high-level delegations to explore those opportunities, led by my right hon. Friend the Minister for Universities and Science and the Under-Secretary of State for Culture, Olympics, Media and Sport, my hon. Friend the Member for Wantage (Mr Vaizey). We have also launched the UK-Israel tech council, a body of senior Government and business individuals dedicated to advancing the partnership.

The high-tech hub team—the first in the world—consists of qualified staff from the business and high-tech sectors, including Digital, Biomed and Cleantech. They will help to find partners for Israeli companies, bring the best of Israeli innovation to British companies, and help each of our economies to exploit the potential of the other.

Last year the embassy in Israel also launched the regenerative medicine initiative within the framework of BIRAX—the Britain-Israel research and academic exchange programme. The £10 million fund, raised mostly from private resources, enables UK and Israeli researchers to apply for joint research grants in the field of regenerative medicine, an area of collaboration recommended by the UK-Israel Life Sciences Council. The first call for proposals was followed by the first UK-Israel regenerative medicine conference, which took place in Israel and had 60 UK participants. Both were a huge success. The proposals are being evaluated and the first eight BIRAX regenerative medicine research programmes will start operating in the forthcoming academic year.

Looking ahead, our next major event to promote UK-Israel bilateral trade will be the UK-Israel business awards dinner on 26 June in London. The dinner, in conjunction with UK-Israel Business, the Israeli embassy and the UK-Israel tech hub, will celebrate our tech partnership. I commend the contribution that UK-Israel Business is making to promote the UK to the Israeli business community as a central destination for global expansion. The dinner will come just after a major tech event that day called “Innovate Israel”, which will aim to reinforce that message and will be the most prolific attempt to date to promote trade relations.

There is also significant potential for new UK-Israeli co-operation in developing oil and gas fields in the eastern Mediterranean—co-operation that could expand to include further partners, such as Cyprus. This is an exciting new opportunity for both countries and offers the prospect both of energy independence and of closer, more co-operative relations across the region.

In conclusion, the UK-Israel trade figures for 2012 so far are extremely promising. Our new initiatives—the tech hub and the tech council—are taking root, and we are establishing new UK and Israel business partnerships. We strongly expect continued growth throughout 2012 and 2013.

It is clear from those endeavours that we greatly value our bilateral trade relationships with Israel. I assure my hon. Friend the Member for Weaver Vale that the British Government will continue to develop and strengthen this important relationship, which we set in the context of greater prosperity and greater security in the region as a whole, which will help everyone.