UK-Israel Trade Negotiations

Debate between Matthew Offord and Ranil Jayawardena

Thursday 20th January 2022 Westminster Hall

[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.