UK-Israel Trade

Graham Stuart Excerpts

Tuesday 3rd July 2018 Westminster Hall

[The Parliamentary Under-Secretary of State for International Trade (Graham Stuart)]

It is a great pleasure, Mr Evans, to serve under your chairmanship on the first outing for this ingénue Minister.

I congratulate and thank my hon. Friend the Member for Bolton West (Chris Green) for raising this important topic. It is a pleasure to follow the hon. Member for Sefton Central (Bill Esterson), who served with me on the Education Committee for many years.

It is now 70 years since Israel was founded, and the UK-Israeli relationship is firm. In the last month alone, the Prime Minister has met Prime Minister Netanyahu, and Prince William, as has been discussed, has made the first ever official visit to Israel by a senior royal—one that was very well received.

That relationship is also backed by a strong trade and investment relationship, which many Members have discussed this afternoon. As of 2016, our total trade with Israel was worth £3.6 billion per year, with a £570 million surplus for the UK, according to our figures. We are Israel’s largest goods export market in the European Union and its second largest in the whole world. We are also a significant destination for Israeli investment. I will give just a few examples. British brands, from Superdry to Jo Malone London, are continuing to expand in Israel, and Israel’s largest investment house, Psagot, is now owned by a UK private equity firm.

British brands that are already in Israel are going from strength to strength. For instance, easyJet is now Israel’s second most popular airline for international flights after El Al, and 2016 saw the signing of our biggest ever trade deal—Rolls-Royce will provide £1 billion worth of engines for El Al’s new planes. The strength of British exports to Israel is felt across the UK. For example, sales of Scotch whisky have increased by 245% since 2012. UK-Israeli trade is a vital component of the UK’s economic growth and we hope to strengthen it further in the coming years, including as we leave the European Union.

Last December, we signed a new aviation agreement, to make sure that travel between the UK and Israel remains open after Brexit. In March 2017, we launched the UK-Israel trade working group, which is designed both to maximise existing trade opportunities and to ensure a smooth transition of our existing relationship as we leave the EU.

As members will be aware, the draft withdrawal agreement text provides that, during the implementation period, the UK will continue to benefit from the EU’s third-party trade agreements, including those with Israel. We are committed to ensuring continuity for our existing EU trade agreements—that issue came up several times in the debate—and are working to transition the existing EU-Israel association agreement as it stands.

[Mr Harper]

First of all, it is a great pleasure to see the Minister in his place and, frankly, I congratulate him on taking an intervention and on giving us a lesson in how debate is conducted, unlike the hon. Member for Sefton Central (Bill Esterson), who speaks for the Opposition.

As we think about our relationships with Israel, may I just ask the Minister to ensure that we look for opportunities, notwithstanding the complexities around settlement, and that we give every opportunity to the Palestinian economy to grow and to thrive? That matters, because if we do not generate wealth and successful businesses in the occupied territories, we will have no hope of achieving a successful two-state solution, which needs that strong economic partnership between the two future states.

[Graham Stuart]

My right hon. Friend is absolutely right. The Department for International Trade was set up precisely to promote trade around the world, not only to enrich this country but in the sure knowledge that trade and an open, liberal, rules-based system enriches everybody, and most of all the poorest. In places such as Palestine, which are on a developmental path, it is absolutely essential that we engage with business, and it was inspiring to hear stories of businesses acting as a facilitator to bring different communities together. I am sure he is right that, through the building of prosperity, security and development go hand in hand.

[Mark Garnier]

rose—

[Graham Stuart]

I give way to my predecessor.

[Mark Garnier]

This is just a very quick intervention. May I gently press the Minister to make a comment about the budget for the excellent—indeed fantastic—Department for International Trade staff in Tel Aviv?

[Graham Stuart]

I thank my hon. Friend for that intervention. Of course, it is always a pleasure to take a job and have one’s predecessor giving instructions on how to carry out that job.

Any decision about the resourcing in Israel is subject to a decision by Her Majesty’s trade commissioner for Europe, and that will come about in due course. However, I will take this intervention as strong lobbying by someone with a clear knowledge of the importance of DIT that it needs to be resourced appropriately in the future.

I will turn, if I may, to the effect of the trade agreements on the Occupied Palestinian Territories. I want to be absolutely clear that we believe that the level of control that Israel has over the west bank, East Jerusalem and the Gaza strip amounts to occupation under international law. As has been said, the existing EU-Israeli agreements do not extend to Israeli settlements in the Palestinian territories, and we intend there to be a technical transfer of those agreements as they stand.

A particularly strong area of co-operation is science and technology, which is another subject that came up in so many speeches, not least that of my hon. Friend the Member for Bolton West who secured the debate and began it. The respective strengths of Israel and the UK complement each other. The UK has one of the world’s strongest science bases, with four of the world’s top 10 universities, and we are ranked third worldwide for academic citations.

Meanwhile, Israel—as has been said—is the start-up nation, and it spends 4.3% of GDP on research and development, which is the highest figure in the OECD. We are seeing UK-Israel business-to-business links grow and grow. For example, Israel’s Orbotech, a micro-electronics company that has had a Welsh-based subsidiary since 2014, last year won the Queen’s award for enterprise in international trade.

[Mary Robinson]

rose—

[Graham Stuart]

I really have very little time, so if my hon. Friend will allow me, I will not take any more interventions.

We are seeing our links grow on an institution-to-institution basis, such as the Royal Society’s co-operation agreement with the Israeli Academy of Sciences and Humanities, which was signed in 2015. We are also seeing growing co-operation between our Governments. In May, we signed a £4 million science agreement to strengthen joint research in artificial intelligence, ageing and other priority areas. In response to the hon. Member for Strangford (Jim Shannon), that is an example of what we are doing, and that comes on top of the existing UK-Israel tech hub—

[Mary Robinson]

Will the Minister give way?

[Graham Stuart]

I am afraid that I will not give way. As I was saying, that comes on top of the existing UK-Israel tech hub at our embassy in Tel Aviv—the first country ever to establish a tech hub at an embassy. That kind of co-operation, as the hon. Member for Strangford and others have said, will not only help our trade; it will have a real effect on our nation’s health.

I have very little time left, Mr Evans, so I will just say something briefly on the subject of arms, which was mentioned, including the specific case of sniper rifles. Only four licences were granted last year for targeting equipment: two were temporary licences for demonstration purposes; one was to return an item to its Israeli manufacturer after tests in the UK; and one was for laser illuminators for end use by the Israeli Prime Minister’s Office. On the subject of sniper rifles, the UK has not licensed the export of sniper rifles to the Israeli defence forces. We have granted only two licences in the last decade for a total of six sniper rifles and magazines, and they were for an Israeli defence company to test ammunition on its own firing range.

With that, I will cease.