I am pleased to raise Government policy on bilateral trade with Israel in this half-hour debate. First, let me draw Members’ attention to my entry in the Register of Members’ Financial Interests, in which I declare my trip to Israel and the Palestinian Authority in September.
The relationship between the UK and Israel has always been strong, and the UK has always been a constructive partner in the peace process. Britain can and should be a force for good in the region. With a balanced approach, we can exert our influence as a strong and impartial mediator with the ability to corral both parties to the table.
Alongside our role in the peace process, Britain should be making the most of investment and trade opportunities with the economic success story that is the modern state of Israel. Since its creation in 1948, Israel has been involved in near-continuous conflict. In 1948, 1967 and 1973, Israel’s Arab neighbours vowed to destroy the Jewish state, but, despite being vulnerable on all borders, Israel fought back and prevailed in those wars. The state has also survived several intifadas imposed on it by the Palestinians. The continuous threat of terrorism and suicide bombings has affected life in the country in ways that the UK cannot truly understand. Despite those near-impossible conditions, Israel has developed into an economic and industrial power that is admired the world over.
Israel is a country that is low in natural resources, and, to succeed, it must depend on the inventiveness of its people. Indeed, its people are its greatest asset. Israel has done well not because it has vast mineral wealth, oil or huge natural resources, but because its people are enterprising, extremely innovative and able to apply high technology.
I have had first-hand experience of those qualities, as I spent many years working for HP Indigo with Israeli entrepreneur Benny Landa, who pioneered the invention, development and commercialisation of ink-based electro-photography—digital printing. It was Benny’s vision and determination to bring the printing industry into the 21st century, despite the difficulty of overcoming traditional thinking and aggressive competitors, that were most impressive. The fact that Indigos are still made in Israel and Hewlett-Packard is the country’s second largest employer after Intel is indicative of Israel’s creative and entrepreneurial culture.
My perceptions were further reinforced when on my first visit to the country last year I had the privilege of visiting the world-class Weizmann Institute and meeting some of the professors of science.
I congratulate the hon. Gentleman on bringing this matter to the Chamber. Many of us are interested in this subject and are keen to see how we can advance the relationship between Israel and the United Kingdom. One of the areas in which Israel clearly leads the world is medical and pharmaceutical innovations. Does he feel that those advances and opportunities in the medical and pharmaceutical industries should be exchanged, so that we can build up a trade exchange that would advance both Israel and the United Kingdom?
The hon. Gentleman makes a good point. I totally agree that we can work more closely with Israel, and later in my speech I will bring in some specific examples of medical advances in Israel and show how they have helped citizens in the United Kingdom.
Meeting some of the professors of science at the Weizmann Institute was most welcome and inspiring. Institutions such as the Weizmann, the Hebrew university of Jerusalem and the Haifa Technion are all rightly considered to stand alongside top institutions throughout the world, especially in the US and the United Kingdom, in academic excellence. The energy and resourcefulness that I witnessed working for Indigo and at Weizmann and among the population in general explain how Israel has converted what was once a land of citrus groves and kibbutzim into a high-tech powerhouse. Israel is now a modern industrial state, producing some of the most advanced and sophisticated technology in the world.
I congratulate the hon. Gentleman on securing this important debate. Does he agree that a distinction must be drawn between trade with the state of Israel and trade with illegal settlements in occupied Palestinian territory, and does he intend to address that aspect of the relationship in his speech?
I am grateful to the right hon. Gentleman for raising that matter. The institutions that I have visited are not on any so-called settlements. Israeli settlements occupy roughly 1.5% of Palestinian land. I appreciate the question, but this debate is really on bilateral trade, and to my knowledge, I have never done any trade with those settlements. If I may, I will now carry on with the point of the debate.
The state is a world leader in medical devices. The hon. Member for Strangford (Jim Shannon) has just referred to medical advancements, devices and electronics. Military electronics, civilian and military aviation, agri-technology, telecommunications, computerised graphics, cellular telephones, microchip, voicemail, and water technology and desalination are just a few areas of Israel’s expertise.
Agricultural technology is playing a pivotal role in efforts to alleviate disease, hunger and poverty throughout the developing world. When asked to explain the $4.5 billion investment in an Israeli company, Warren Buffett replied:
“Some Americans came looking for oil, so they didn’t stay in Israel. We came looking for brains, so we stayed in Israel.”
I congratulate the hon. Gentleman on securing this debate. I want to follow up on the comments made by my right hon. Friend the Member for Oxford East (Mr Smith). I hope that the hon. Gentleman is not seriously saying that we should not consider the political climate in Israel when we talk about the important bilateral aid relationship. We need to consider the activities that are taking place in illegally occupied territories. Yes, we need to consider the tremendous innovations that are helping to fight poverty and to create opportunities rightly around the world, but what about the poverty and the killing of opportunity that is taking place in the illegally occupied territories as well as in the west bank and Gaza strip?
I am most grateful to the hon. Gentleman for that intervention. I merely point out that the illegal settlements are a relatively small part—1.5%—of the Palestinian territories. One of the best ways in which we can encourage and influence solutions to these issues throughout the world, especially in Palestine, is through trade. It gives us an opportunity as a nation and as a member of the European Union to speak to both parties about a two-state solution that is right for both parties. The point that I am trying to make is that trade is vital and that Israel can play a role in global economics and technological and scientific development.
On that very point, will my hon. Friend join me in welcoming Israeli high-tech firms partnering with British manufacturers? For example, Eurocraft Enclosures in my constituency of Dudley South has partnered with ECI Telecom to provide the technological internals that are encased in high-quality British engineering. That is providing jobs in my constituency. Does he agree that that is an example of what we need in the future?
My hon. Friend makes a valuable point, and I wholeheartedly agree with him. This is about creating wealth and jobs in our country and within Israel. Partnering with such innovative companies in Israel will lead to job security and wealth creation in all our constituencies and in the whole country. In the 21st century, Great Britain has to pay its way in the world. If we look at the growth in the Israeli economy, we can see that Great Britain has a few things to learn.
I thank the hon. Gentleman for giving way again and for his graciousness in doing so. Perhaps one of the best ways to build relationships between the Palestinians and the Israelis is to build up economic relationships and the job opportunities that come from those relationships. Does he feel that Britain can perhaps have a greater influence on what takes place in Israel by building those economic and employment opportunities?
I am most grateful to the hon. Gentleman for that intervention. I totally agree with him that the more that we work with nation states and create innovation, jobs and wealth, the more everybody benefits from that creativity and bilateral trade. It benefits all nations.
A little earlier, the hon. Gentleman mentioned some Israeli medical advances. The example of such an advance that I should like to give shows Israeli ingenuity and brain power. In April, I participated in the London marathon. I might not look as though I am fit enough to run the London marathon, but I ran it with my hon. Friend the Member for Dudley South (Chris Kelly); I hasten to add that he beat me, but there we are. A lady called Claire Lomas, a paraplegic British woman, was able to walk the entire route of the 2012 London marathon, thanks to a futuristic Israeli medical device. Her amazing achievement was made possible only because of Argo Medical Technologies’ ReWalk, which is a futuristic Israeli product. ReWalk is the world’s first commercially available upright walking technology for people with lower-limb disabilities. The 44 lb device comprises a brace support suit that integrates motors at the joints, sensors and a computer-based control system, and it has rechargeable batteries. Sophisticated algorithms analyse body movements, and then trigger and maintain gait patterns, as well as stair-climbing and shifting from sitting to standing. ReWalk transforms the lives of paraplegic people.
Claire Lomas was permanently paralysed below her chest as a result of a riding accident in 2007. However, she was determined to participate in the 26.2-mile marathon, even though she could cover no more than 2 miles a day. It took her 16 days to reach the finishing line—
Sitting suspended for a Division in the House.
As I was saying, it took Claire 16 days to reach the finishing line, accompanied by her husband, Dan Spicer. That is an inspiration to us all.
Aside from the inventiveness of its people, what is it about Israel that makes it such an economic and high-tech success story? A well-established and fully functioning democracy, a western legal system, the full infrastructure of transportation, communication and utilities, and an educated and motivated population make the country attractive to foreign investors and industry. For that reason, virtually all major US high-tech companies have installations in Israel, and companies such as IBM, Intel and Motorola have established plants in the industrial parks that are expanding around the country’s academic institutions.
It is most heartening to see how we in the UK are now taking advantage of the business opportunities provided by Israel. Israel is one of the UK’s key strategic business partners and has become its largest individual trading partner in the near east and north Africa. Over the past 10 years, the value of bilateral trade in both directions has increased by 60%, from £2.3 billion to more than £3.7 billion. In 2011, the value of British exports to Israel reached £1.57 billion, and Israel’s exports to the UK, primarily machinery, diamonds, technology and pharmaceuticals, totalled £2.18 billion. In fact, the Israeli pharmaceuticals company, Teva, is the largest supplier of generic drugs to the NHS. More than 300 Israeli-related firms operate in the UK, of which 34 are listed on the alternative investment market and 11 on the main market of the London stock exchange, and more than 75 major UK companies have offices in Israel.
Israel’s success in integrating into the global market has been facilitated by an enormous number of free trade agreements with the US, Europe and other countries, including Canada and Mexico. In fact, Israel’s approach to free trade is one that we in this country could learn from. UK-Israel business is strongly assisted by the existence of a free trade agreement between the EU and Israel, which provides import duty exemptions for most Israeli-made products arriving in the EU. I urge the detractors who argue that that trade agreement benefits only Israel to reconsider in the light of the bilateral trade figures. It is in the interest of both the UK and Israel to develop bilateral trade, which is hugely significant to the UK’s economy in encouraging growth, employment and the creation of wealth—factors that we all know to be crucial in our economic recovery. To that end, will the Minister give assurances that trade that benefits both countries will not come under threat from pressure by politically motivated groups and organisations?
In addition, are there any plans to develop a bilateral investment treaty between the UK and Israel along the lines of the one between Israel and Germany? A 2011 UK White Paper, “Trade and Investment for Growth” pointed to Israel as a pivotal strategic partner for Britain’s future. The White Paper stated:
“The Government will encourage a stronger partnership between British and Israeli companies to exploit the potential synergies between Israel’s high levels of innovation and British strengths in design, business growth and finance, as well as the UK’s own high technology and scientific strengths.”
I was therefore delighted to learn of the work that our excellent ambassador, Matthew Gould, is doing to build a stronger partnership between Israel and the UK.
As part of that, the UK-Israel technologies hub was launched in October 2011. It is tasked with promoting economic growth and innovation in the UK and Israel by creating lasting partnerships in technology between the two countries. It is also important to note that, since both nations boast active fields of research and development, the UK has been particularly committed to enhancing ties in that area. For that purpose, £10 million will be awarded over the next five years to the Britain-Israel research and academic exchange, whose aim is to bring together British and Israeli scientists on academic research projects. Furthermore, the recently established UK-Israel Life Sciences Council was formed to enhance scientific collaboration. To that end, 19 leading scientists from both countries, including four Nobel prize winners, three Members of the House of Lords and presidents of universities, among others, have come together.
I applaud those initiatives and collaborations in the fields of business, science and academia. What discussions has the Minister had with his Israeli counterpart to increase such co-operation? Israel is a phenomenal source of innovation, with more start-ups per capita than anywhere else in the world. Israeli companies need foreign partners for capital, business and product development, and access to global markets. With market access to Europe, the world’s strongest financial centre, world-class professional and creative services, and complementary strengths in technology emerging from our world-class academic institutions, Britain can and should be a natural partner for Israel.
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.
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?
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.