UK-Israel Trade

Bill Esterson Excerpts

Tuesday 3rd July 2018 Westminster Hall

[Bill Esterson (Sefton Central) (Lab)]

It is a pleasure, as always, to serve under your chairmanship, Mr Evans.

I congratulate the hon. Member for Bolton West (Chris Green) on securing the debate and I welcome the hon. Member for Beverley and Holderness (Graham Stuart), who is responding to his first debate as a Minister after his enforced Trappist-monk silence in the Whips Office in preceding years—I will not go into what happened before that. I welcome the Duke of Cambridge’s comments on his timely visit. He was right to speak about the importance of economic and trade ties between the UK and Israel, but it is also right to debate where we agree and where we have reservations about our relationship.

The EU-Israel association agreement has governed trade relations between Israel and the UK since it came into force in June 2000. It grants Israeli exports preferential access to the UK market, along with the markets of other EU member states. It was supplemented by an agreement on agriculture that came into force at the beginning of 2010, and by a mutual recognition agreement on pharmaceutical products that came into effect in January 2013. Labour would welcome a new trade agreement with Israel to maintain the same market access opportunities for goods, and to deepen a potential relationship in the trade of services, where the UK has an obvious comparative advantage.

As we argued in the Trade Bill Committee, however, no Government should have a blank cheque to introduce new terms of trade without first undergoing a process of external consultation with business and other stakeholders, as well as a proper process of parliamentary scrutiny. The Government’s delegated powers memorandum to the Trade Bill makes it explicit that all the UK trade agreements needed to replace the 40 existing EU trade agreements with countries such as Israel will be legally distinct treaties. Moreover, the same memorandum acknowledges that the powers afforded to the Government under the Bill would allow the

“implementation of substantial amendments, including new obligations.”

Business representatives giving evidence to the Trade Bill Committee expressed considerable concern.

[Mr Harper]

Will the hon. Gentleman give way?

[Bill Esterson]

I will not give way, because we have been given so little time.

[Mr Harper]

But the hon. Gentleman said he was interested in parliamentary scrutiny.

[Bill Esterson]

This is relevant, because the Israeli trade agreement will roll over, which is covered by the Trade Bill.

However, the Government have so far failed to confirm that they would inform business of any substantive changes to the terms of trade between the UK and its trading partners in the trade deals being negotiated to replace the existing EU ones. Will the Minister take this opportunity to reassure business that the Government will let it know in advance about any proposed changes to the terms of trade under which companies will be required to conduct their operations, so that they can have the required input into those negotiations before it is too late?

The existing EU trading relationship with Israel is predicated on an understanding that export preferences are available to goods produced in Israel only, and not to any goods produced in the occupied territories. Furthermore, Gordon Brown’s Government introduced labelling guidelines to ensure that consumers are properly informed as to the origin of the produce that they see in the shops and as to whether goods are from settlements in the illegally occupied territories. I trust that the Minister will confirm that that crucial distinction will be honoured in any future UK-Israel agreement. I look forward to hearing what further measures the Government are proposing to take to reinforce clarity on that point.

[Mr Harper]

Will the hon. Gentleman give way?

[Bill Esterson]

I will not give way; I have told the right hon. Gentleman that already.

Will the Minister confirm that any UK-Israel trade agreement will maintain the existing clarity about the fact that market access preferences offered to Israeli exports into the UK do not extend to goods produced in settlements in the illegally occupied Palestinian territories? It is extremely important that we maintain cross-party recognition of the status of the settlements in the west bank.

The Government have consistently reiterated that the UK considers those settlements illegal under international law, and they have continued to speak out forcefully against Israel’s expansion of settlements. Last October, the Foreign Secretary expressed his concern at Israel’s approval of settlement construction permits in Hebron for the first time in 15 years:

“Settlements are illegal under international law and undermine both the physical viability of the two-state solution and perceptions of Israel’s commitment to it.”

We agree with those concerns about the occupied territories.

From the Trade Bill Committee, we know that Ministers intend to replicate the existing EU-Israel trade agreement exactly. Will the Minister confirm that that will also apply to the human rights clauses and that the Government intend to enforce those clauses once we have left the European Union? Will he confirm that the Government fully support the human rights of all those who will come under the ambit of any future trade agreement between the UK and Israel? The trade preferences granted under the EU-Israel association agreement are conditional on respect for human rights by both sides. Article 2 of the agreement reads:

“Relations between the Parties, as well as all the provisions of the Agreement itself, shall be based on respect for human rights and democratic principles, which guides their internal and international policy and constitutes an essential element of this Agreement.”

I trust that the Minister will confirm that respect for human rights and democratic principles will be an essential element of any new UK-Israel agreement.

Last year, Labour’s manifesto said that trade policy should prioritise human rights through our agreements with other countries. We reiterated the importance of human rights in trade agreements during the Trade Bill Committee proceedings in January. They are particularly important in the light of ongoing human rights concerns in Israel and Palestine, yet in February, in a written answer in the House of Lords, the Government stated that they had as yet made no assessment as to Israel’s compliance with the condition in article 2 of the EU-Israel association agreement that it respect human rights and democracy. Will the Minister assure us that the Government will undertake such an assessment as part of a due diligence process when they move towards a new UK-Israel agreement?

Concerns about human rights can dominate the public debate, and if we had longer, we could go into arms sales as well. Perhaps the Minister will comment on the Government’s commitment to the consolidated criteria on arms export controls and the review of whether UK-produced equipment was involved in the use of lethal force by Israeli forces in the last few months.

It is important, however, to recognise the potential for successful trade with Israel. Together, pharmaceuticals and motor vehicles account for almost 30% of our exports to Israel, so supporting those sectors is important. The jobs that they and their supply chains bring are vital to supporting communities, but if the broader trade picture is botched, both sectors will be at risk from the non-tariff barriers that affect their supply chains, due to the just-in-time nature of vehicle components and the risk of drugs degrading in transit.

Our relationship with Israel does not exist in a vacuum; it is directly affected by our relationships with third countries and the wider world. Trade with Israel currently benefits from the fact that we are part of the EU and from the application of rules of origin and regulatory alignment. This weekend, the Cabinet needs to resolve its differences and produce a third way that delivers the certainty needed by business about border arrangements and non-tariff barriers.

Any trade deal that the UK makes with Israel must include strong guarantees that democratic principles and a fundamental respect for human rights will form a large component of that deal. Our policy on trade with Israel is to support a progressive trading relationship that brings jobs and prosperity at home and that also delivers benefits to the Israeli and Palestinian peoples. Any future UK-Israel trade deal must be judged against those goals—

[Mr Nigel Evans (in the Chair)]

Order. I call the Minister.