UK-Israel Trade Negotiations

Matthew Offord Excerpts

Thursday 20th January 2022 Westminster Hall

[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.

--- Later in debate ---

[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.