[Mr Nigel Evans in the Chair]
It is quite warm, so if anybody wishes to remove an item of clothing, please feel free to do so.
I beg to move,
That this House has considered UK-Israel trade.
It is a pleasure to serve under your chairmanship, Mr Evans.
Before I came here as a Member of Parliament, I worked in the mass spectrometry industry for nearly 20 years. The great pleasure of that was travelling across the world, from Cuba to Taiwan and so many places in between. It was an absolute delight in 2001 and 2002 to do a little bit of work in Israel. A particular highlight for me was working at the Hebrew University of Jerusalem. While there, I had my first opportunity to visit a synagogue. The one I visited had the spectacular stained-glass windows designed, created and made by Marc Chagall, representing the 12 tribes of Israel. It is a spectacular vision in the synagogue, and it is particularly important to recognise the value of not only industry, universities and academia, but art and culture that we can share around the world.
Last week, His Royal Highness the Duke of Cambridge made the first ever official visit by a senior royal to Israel. Speaking in Tel Aviv, the economic heart of Israel, he proclaimed:
“The ties between our two countries have never been stronger, whether in our record levels of trade and investment, our cooperation in science and technology; or the work we do together to keep our people safe.”
The Prince’s visit to Israel last week was a strong symbolic sign that the relationship between our two great nations is better than ever. One can also point to the remarkable record levels of trade to see how tangible this flourishing relationship truly is. In his words and actions, I believe His Royal Highness the Duke of Cambridge captured what today’s debate is about.
Many people, as I did before my visits to Israel nearly 20 years ago, think of the country through the prism of its biblical narrative. They think of deserts, mountains and the Sea of Galilee, but the reality for many Israelis is very different. The Israelis have created a country that is every bit as advanced as Britain and the United States of America, which shows what can be done with talent and an immense amount of hard work. That entrepreneurial culture has resulted in what many now describe as a start-up nation. Every day Israel hosts delegations from across the world, looking to understand the secrets of the country’s success—a country that, we must not forget, is the size of Wales with a population of less than 9 million people.
The UK-Israel friendship runs deep, from our shared democratic values to our extensive co-operation in the fields of intelligence, defence and cyber-security. Prince William was right to point out our record levels of bilateral trade, which reached £6.9 billion last year. In the first five months of 2018 alone, UK-Israel trade reached £3.3 billion—a 22% increase compared with the same time last year. This year-on-year increase in the value of bilateral trade has been happening now for almost a decade.
I should declare to the House my entry in the Register of Members’ Financial Interests, following my recent trip to Israel to discuss trade matters. Does my hon. Friend agree that Israel has become a global powerhouse for research and development, with quite a lot of the big software houses and companies such as Google and Facebook, but that the level of research and development co-operation between the UK and Israel is probably not as high as it could be? Does he think there are further opportunities there for British companies to take advantage of the R&D powerhouse being created in Israel?
I agree entirely. Israel has attracted talent and is creating its own talent within the country. That relationship is improving around the world and it is yet to do so, and we ought to be taking advantage of that as we look to the future.
Trade has been increasing and improving for almost a decade and there are no signs of it stopping or slowing down. Britain is, after all, Israel’s second largest export destination after the United States of America and its principal trading destination in Europe. About 30 Israeli companies are registered on the London stock exchange and about 300 Israeli companies operate in the UK, employing thousands of Britons.
I congratulate my hon. Friend on securing the debate. If necessary, I will certainly declare my interest, having recently visited Israel. Is he aware that Israel has the highest density of start-up companies in the world? There is one start-up company for every 1,600 people within the population. That is the basis of the economic success in the country and internationally.
Those are incredible statistics and they show the innovative and entrepreneurial nature that so many Israelis have and the culture that the wider society embraces. As I mentioned and as has been highlighted, Israel is renowned as the start-up nation—a true high-tech start-up powerhouse. Israel is widely viewed as a desert country with few natural resources, which is perhaps one of the drivers behind that, although there have been discoveries of natural gas off the coast. Despite the geographical challenges and some security threats, an enormous number of innovations and inventions have emerged from the country. Israel has gone from being a desert to the land of milk and honey, and now the land of Apple and Microsoft. Indeed, most of the world’s leading tech companies now have a research and development presence in the country, which is testament to the character and qualities of the people, which my hon. Friend highlighted.
The country’s prowess in the fields of high-tech, energy, medical science and FinTech is in large part due to the need to adapt as challenges arise.
My hon. Friend is making an extremely important point. Does he agree that the extraordinary levels of inward investment into Israel by high-end, high-value companies in the tech space and pharmaceutical space demonstrate that when British companies do business with Israel they are plugging themselves into some of the highest-value sectors of the global economy, which is exactly what we need to do to make Brexit a success?
I agree entirely; my right hon. Friend is absolutely right. That highlights the connectivity and relationships that underpin so much of high tech, culture and the arts.
The necessity of adapting and developing solutions to the challenges Israel faces is a key part of its impressive start-up ecosystem. The culture of entrepreneurship and striving to achieve is reflected in the fact that there have been 12 Israeli Nobel prize winners in the fields of peace, literature, physics, chemistry, medicines and economics; I think that is a 100% record across all the different fields in which they could achieve Nobel recognition. Israelis will be the first to tell you that the Israeli autonomous driving company Mobileye was sold to Intel for a remarkable £12.5 billion and is just one of many success stories, including Waze, the USB storage device and internet firewalls.
As we debate here, dozens of Israeli scale-up founders are in London sharing their experience as part of Innovate Israel 2018. The event, co-ordinated by UK Israel Business, has become a major event in the UK high-tech calendar and is another example of how British and Israeli businesspeople work together every day.
Israel’s cultural exports are no less significant. Netta famously captured the hearts of a continent this year when she won the Eurovision song contest. Hers was an amazing performance that delighted all those who watched it on the evening and on YouTube or other sources afterwards.
Will my hon. Friend demonstrate that performance?
I have been practising, but I understand that there is a convention against singing during debates.
I am not sure that I would enforce that.
As a traditionalist, I will adhere to the convention.
It is no surprise that the first bilateral tech hub was launched by the British embassy in Israel in 2011. The UK-Israel tech hub is one of the first of its kind to promote partnerships in technology and innovation between the two countries. It has generated 175 tech partnerships in deals worth £85 million since it was established, and it has helped to boost the UK economy by an estimated £800 million. I have been to Israel to hear about this excellent initiative, and as we prepare for Brexit it is heartening to hear that this model will be replicated in other countries across the world, ensuring that Britain is well placed in the ongoing tech revolution.
I congratulate the hon. Gentleman on securing the debate. Does he agree that it is gratifying to hear that the UK has prioritised a free trade agreement and trade links with Israel post Brexit? The whole UK—all its countries and regions—should be actively involved in seeking the opportunities that will exist through better UK-Israel trade.
I wholeheartedly agree. As a Greater Manchester and Lancashire MP, I certainly want the north-west of England to participate in this tech revolution, and Northern Ireland certainly should as well. I was born in Ballymena, so I have a personal interest in that.
Other success stories that spring to mind include the landmark £1 billion agreement between Rolls-Royce and El Al in 2016, and I recently heard that the fastest growing Aston Martin dealership in the world is based in Israel.
The UK has signed countless agreements with Israel in science and innovation, and Israeli and British scientists work together every day on cutting-edge research. The Britain Israel Research and Academic Exchange Partnership is a significant part of that, bringing researchers from both countries together to tackle some of the world’s most challenging medical conditions and diseases, including cardiovascular and liver disease, diabetes and Parkinson’s. Each of these research programmes stands to benefit Israeli and British citizens, and no doubt many other people right across the world. That ought to be celebrated.
We should also consider that some 74% of Israeli exports to Britain in 2017 were in the medical equipment and pharma sector. It is undeniable that this relationship keeps Britons healthier, so will the Minister join me in restating the importance of this sector of trade, and will he provide assurances that it will be uninterrupted as we leave the EU?
Israel was one of the first countries that we began discussions with following our vote to leave the European Union. Last year we created the UK-Israel trade working group, which will ensure a smooth post-Brexit transition and is exploring opportunities to maximise further trade.
The hon. Gentleman talks about Britain’s post-Brexit trading relationship with Israel. Does he agree that the definitions in the EU-Israel association agreement, particularly in relation to the settlements, should carry through into any bilateral trading relationship that Britain has with Israel? The trade preferences available under the EU-Israel association agreement do not extend to illegal settlements in the west bank.
I think we ought not to bind ourselves. Any trading relationship or ongoing process evolves over time, and we need to keep an open mind in any ongoing negotiations. Both sides of that divide here should seek an ongoing negotiation because, for example, there might be the possibility of land swaps. We in the United Kingdom ought not to put down lines in the sand. The Minister may develop that further.
For clarity, any new agreement will clearly have to be negotiated on its own terms, for better or for worse. I think the point that my hon. Friend the Member for Birmingham, Northfield (Richard Burden) was making related to issues of illegality, and it is unquestionably the Foreign Office’s view that the settlements are illegal under international law. Article 2 of the EU-Israel association agreement provides that human rights considerations should be instrumental. Surely he would want that to carry through, irrespective of any other terms?
I did not quite catch all of the hon. Gentleman’s question. However, I would not want, in this room, to set in stone anything that will evolve over time.
We have to recognise that strengthening businesses, businesspeople and the economies on both sides—in Israel and the occupied territories—is how we will achieve a viable two-state solution. Doing as the Boycott, Divestment, Sanctions movement wants, which is to discriminate against businesses in Israel without distinguishing where they are, will damage the economy and the interests of not only Israelis, but Palestinians seeking to earn a living.
Absolutely. The impoverishment of people, whether in the Palestinian territories or in Israel, is one of the drivers of violence. People who do not believe that they have a future sometimes turn to violence. We ought to ensure that, so far as possible, the whole region becomes increasingly economically successful.
Is my hon. Friend aware that more than 500 Palestinians lost their jobs after the SodaStream factory in the west bank was forced to close after the campaign by the BDS movement? Those people will now not have livelihoods, but they will certainly have families to provide for. Does he agree that that was a disgraceful campaign against people in the west bank?
I think it is a disgrace. Forcing people to be unemployed and kicking them out of their jobs is appalling and damaging to them, their families and the wider communities.
Will the hon. Gentleman give way?
I will move on from this particular point; hon. Members from both sides of the House have had an opportunity to explore it.
I understand that the existing EU-Israel association agreement will form the basis of a future trade deal, but that there are great opportunities for further collaboration, particularly in the agriculture sector, in which Israel excels.
The House will shortly consider the remaining stages of the Trade Bill, which seeks to convert from EU law into UK law all the EU’s existing third-country trade deals. That will apply to the EU-Israel deal, which, as my hon. Friend says, will give businesses both continuity and the flexibility to enact the changes that he refers to.
I agree. We need in our ongoing relationships a sense of bringing down barriers, enhancing agreements that we already have and creating new and much more comprehensive agreements. Is the Minister able to clarify whether the association agreement will indeed form the basis of a future trade deal with Israel, and is he able to provide an update on discussions regarding agricultural trade?
I had a particular interest in science and industry before my election to Parliament, and I have a particular interest in Israel’s relationship with Horizon 2020. It was the first non-European country to have such a relationship, and in that sense the United Kingdom has something to look up to, to respect and to admire in Israel’s collaboration with European scientists on Horizon 2020. As we look forward to the opportunities presented by our leaving the European Union, we may look forward to framework programme 9—the successor to Horizon 2020—and wish to participate in that. Israel, by already having that kind of relationship, shows us what could happen.
When we look to the United States of America, we get a sense that the world is creating new barriers against trade and people. We ought, especially when looking at the European Union, to have the sense that right across Europe, the United States and the wider world, we are trying to bring down those barriers. In particular, we ought not to be promoting or increasing barriers with the state of Israel. We need to create ever stronger cultural, academic and social ties and, with trade being so important, to have the freedom to trade with countries around the world. We may wish to buy oranges from Spain or other countries, but I look forward to buying my first Jaffa orange post Brexit.
Order. As Members can see, there is considerable interest in taking part in this debate. I will not impose a time limit at this moment, but I ask hon. Members to show restraint and stick to four to five minutes in order that everyone is able to speak.
I draw attention to my entry in the Register of Members’ Financial Interests. I congratulate the hon. Member for Bolton West (Chris Green) on securing this important debate and providing an opportunity to show the strength of the trading ties between Israel and the United Kingdom, and the benefits that those trading links bring.
Israel is a vibrant start-up country with a strong business sector, a strong trade union sector, through the Histadrut, and a strong co-operative sector. It also has a strong welfare state and excellent universal healthcare. The value of bilateral trade between the UK and Israel soared to £6.9 billion in 2017—up 25% on the previous year and still rising. Trading links bring mutual benefit. Thousands of people in this country manufacture products and goods that are sold in Israel, and more than 300 Israeli companies employ thousands of people in the UK, in areas such as high tech, finance and pharmaceuticals. There are very strong educational links between our two countries.
I will focus on one area that benefits people in this country: Israeli medical technology. PillCam is the first pill that can be swallowed to record images of the digestive tract. It was invented and developed in Israel. Babysense is a system that protects babies from sudden infant death syndrome. It was invented in Israel. I could also mention cancer probes, heart catheters, the bedside blood count device developed by PixCell Medical Technologies and the artificial cornea developed by CorNeat Vision. All are positive developments that help people to lead a better life. Reference has already been made to the Boycott, Divestment, Sanctions campaign, which advocates boycotts between the UK and Israel—it is against UK-Israel trade. I wonder whether it has dared to campaign against the use of those lifesaving products. I suspect not.
I will not ask my hon. Friend about the BDS campaign, but could I ask her at least to endorse the statement in the Foreign Office’s own advice to UK businesses? It states:
“Settlements are illegal under international law, constitute an obstacle to peace and threaten to make a two-state solution to the Israeli-Palestinian conflict impossible. We will not recognise any changes to the pre-1967 borders, including with regard to Jerusalem, other than those agreed by the parties.
There are therefore clear risks related to economic and financial activities in the settlements, and we do not encourage or offer support to such activity.”
Will my hon. Friend endorse that statement from the Foreign Office advice?
Settlements are one barrier to peace, but they are not insuperable and not the only barrier to peace. The most fundamental barrier to a peaceful solution of this tragic conflict, and the key factor that prevents the setting up of two states, Israel and Palestine, is the Palestinians’ refusal explicitly to recognise the legitimacy of Israel as a national Jewish home.
The hon. Lady is, as always, making a very well informed speech on this subject. Does she agree that the benefit of the technologies that she is talking about, particularly the medical technologies, is that they benefit both Israelis and Palestinians and people in Britain, and it is wrong to see investment in trading links in the field of medical tech, research and life sciences through the prism of an historical conflict? We should be looking forward and considering the potential benefits of future academic and research links, rather than looking at things through that historical prism, which is to the detriment of both Israelis and Palestinians, and patients generally around the world.
I agree with the hon. Gentleman. Inventions and improvements in the human condition are about all of humanity and should benefit everyone; they are not about conflict. Trade is constructive; boycotts are negative. The BDS movement is fundamentally opposed to the state of Israel, and partial boycott campaigns, however presented, are part of the same movement. BDS has not affected Israel adversely. Israel’s trade is rising, both with the UK and with the rest of the world.
I congratulate my hon. Friend the Member for Bolton West (Chris Green) on securing the debate. The hon. Lady is entirely right to focus on pharma and on our trade links with Israel. I understand that in seven of the past 10 years the UK has had a trade surplus with Israel. Does she agree that we can build on that, and that it shows the strength of our trading relationship both now and for the future?
I agree with the hon. Lady. Trade is beneficial, and it is beneficial to both countries; indeed, it should be international as well. I look forward to the day when the state of Israel and the state of Palestine establish good trading relationships with each other and with the UK, in accordance with the late Shimon Peres’s vision of a new middle east.
It is a great pleasure to serve under your chairmanship, Mr Evans. I should first refer to my entry in the Register of Members’ Financial Interests, which I will spell out a little more fully in the debate.
I was recently on a trip to Israel with a number of Conservative colleagues, and it was specifically focused on trade and investment. I particularly wanted the trip to be focused on trade and investment, for two reasons. One is obviously the context of Brexit and Britain looking outwards to a more global future. My hon. Friend the Member for Bolton West (Chris Green), who very ably opened the debate, focused on the growth in trade between Britain and Israel and the fact that Britain is Israel’s largest trading partner. Also, I wanted to understand the extent to which economic growth and development could at some point, when the political conditions are right, contribute to strengthening and enabling the two-state solution that I think we all want to see.
In the limited time I have—I will try to obey your injunction to be relatively brief, Mr Evans—I will focus on just two areas. First, when we were in Israel we saw a number of examples of its strength in cyber-security. The Prime Minister of Israel spoke at a science gala taking place on the first full day of our visit. He talked specifically about IT and cyber. I come from Gloucestershire, where GCHQ is based, but there are also a number of companies in the cyber sector. The work that Britain and Israel, and their companies, do together does not just develop business relationships; it helps keep both countries safer in a very dangerous world. Those companies work together to keep businesses and consumers safe from the threats from organised crime, but they also help our Governments and security agencies keep us safe from those who would do us harm. That partnership working is therefore very valuable.
Secondly, I want to focus on the specific example of a company that provides a good illustration of how business can help bring communities together. As my hon. Friend the Member for Bolton West said, we visited the SodaStream factory. He mentioned that it had been forced to move from the west bank and that a number of Palestinians were unable to continue working there. When we visited the factory, we saw a company that employs Israeli Jews, Israeli Arabs, Bedouins and Palestinians. We met a Palestinian manager who travels there from the west bank. He manages a team of employees, including Israelis. I thought it was a very powerful symbol. There are people coming together, from a range of different communities, and working together to make their business successful.
One of the things that struck me about how business can be powerful was something that one of the Israeli managers at SodaStream mentioned. They had recently had a day when they could bring their sons or daughters to work, as we do in the UK. When his son came to that business, meeting his father’s colleagues and their children, it was one of the first times he had met Palestinians in an environment that was conducive to sharing ideas and furthering understanding between those two communities.
During the week, we spoke to a number of business people from individual companies, but also from some business organisations, such as those that further business development between Israel and the Palestinian territories. All of those business people were up for, and encouraging of, growing the Israeli economy and the Palestinian economy. I hope that the Minister will take away the message that Britain should encourage economic development in the Palestinian territories as well as growing our trade with Israel, so that when the political conditions are right—I know that they are challenging—we will have a thriving economy to underpin the success of a two-state solution.
I came away from our visit optimistic about the future trade relationship between Britain and Israel, and the prospects for growing our trade in the parts of the economy that will make both countries prosperous. I also came away more hopeful about the prospects for Israeli civil and business society to help create the conditions that will allow politicians on both sides to achieve the two-state solution that the hon. Member for Liverpool, Riverside (Dame Louise Ellman) talked about. That was summed up well by the Duke of Cambridge’s visit, during which he visited both communities and spoke powerfully about the opportunities and hope for the future. I hope that we have more such visits, to help bring Britain and Israel closer together and to heal some of the divisions within Israeli society. I think that business can contribute to that, and I hope that we will see more of that.
It is a pleasure to serve under your chairmanship, Mr Evans. I congratulate the hon. Member for Bolton West (Chris Green) on securing the debate. I declare an interest: I, like many other Members here today, am a friend of Israel and have been involved in the all-party parliamentary groups, both here and in Northern Ireland. I am an unashamed friend of Israel, by nature, choice and conviction. Therefore, when debates like this one come up, it is always a pleasure to contribute.
We have forged deep ties with Israel in cyber-security, which is vital not only for our national security, but for the private and public sectors. Israel is at the cutting edge of that industry, with Israeli start-ups receiving around 20% of global investment in the cyber market. I believe that we must continue our staunch partnership in that area. Israel has strong historical links with Northern Ireland and the rest of the United Kingdom. Some people joke that perhaps we in Northern Ireland are the 13th tribe. I am not sure whether that is true, but many people might look at us and say, “Yes, perhaps we are.” The main thing is that we have a very strong relationship with Israel.
During one of our recent visits to Israel we saw how a university there had made links with cyber aspects. Is there not a great opportunity for UK universities to become joint partners on the world-leading technologies that are being brought forward?
My hon. Friend is absolutely right. I was going to mention education and universities, but he has done it, so I can relax on that. We can do something strong. Queen’s University in Belfast and Ulster University can be part of that partnership. Maybe the Government should be looking at how they do that with other universities across the United Kingdom of Great Britain and Northern Ireland.
Israelis see the UK as an ideal country to trade with. They are attracted by our culture, language and institutions, and by our honesty, integrity and business acumen. Those are all qualities that business people like to see, and we have them in abundance in the United Kingdom. I welcome the Duke of Cambridge’s historic visit to Israel last week and share the view that it was fitting for him to meet Israeli high-tech companies ReWalk and AlgoBrix, which have developed innovative medical solutions. They epitomise the start-up nation and we want to be part of that, as other hon. Members have said. I am also glad that he took the opportunity to visit the Palestinian territories, because it is good to reach out to both sides and try to bridge that gap. He did that in such a good way.
In the light of the Duke’s visit to Israel last week, during which he saw a showcase of Israeli technology at the British embassy in Tel Aviv, what steps are the Government taking to increase the sharing of innovation between our two countries? There are many things that we can do, and I believe that this is one of them. I welcome the growing collaboration between our two countries and recent agreements signed to increase co-operation in the field of science. How is the Minister working to strengthen that relationship?
Israel has become renowned for its high-tech capability and innovative technological solutions. The UK and Israel share a close relationship in research and development, yet there is still more that can be done. What are the Government doing to unlock that potential? The UK and Israel have a strong and growing partnership in R&D with British companies such as Barclays and HSBC—the latter launched a cyber-hub in Tel Aviv last September—but we still lie behind Canada, China and the US in utilising Israeli expertise. Does the Minister share my concern, and that of many other Members, that further co-operation on R&D should be a priority? Whether it is pre-Brexit or post-Brexit, let us get ourselves into a position in which we can take advantage of the opportunities to create jobs.
Does my hon. Friend agree that the converse of what he has just eloquently described is the regrettable and reprehensible actions by a small number of people who advocate disincentives and actions against Israeli businesses, which disadvantages not only Israelis but Palestinians?
My hon. Friend succinctly reminds us of the negatives of not supporting Israel-UK trade links, which can achieve much. There are opportunities, jobs, expertise and a chance to move forward.
In conclusion, Israel spends 4.27% of GDP on R&D, which is more than any other developed country. There remains large untapped potential in the form of British investment in R&D in Israel. Does the Minister agree that there is more to do in this area, and how will his Department ensure that happens?
I ask hon. Members to keep their speeches closer to four minutes now, in order to get everybody in.
It is a pleasure to serve under your chairmanship, Mr Evans. I congratulate my hon. Friend the Member for Bolton West (Chris Green) on securing the debate. I, too, was part of the recent trade delegation to Israel, and I draw attention to my entry in the Register of Members’ Financial Interests.
For many years Israel has had a reputation for developing the technology solutions to many of the world’s challenges. For many years it has had an effective irrigation system to water a very dry part of the world. That technology is exported, particularly to developing countries that face similar challenges—if this heatwave continues, we might want to deploy that technology here. That technology was developed many years ago. Today Israel is addressing some of the new challenges in the world. We visited Gigawatt Global, which is providing solar energy solutions to many developing countries around the world and making their communities energy-sustainable.
As other colleagues have mentioned, research into cyber technology and security is now a key part of the Israeli economy, and we spotted many opportunities for deepening trade links between the United Kingdom and Israel. I will give three brief examples to illustrate the point. We visited a start-up company called CommonSense Robotics, which is innovating with a very efficient packing system for food distribution within a particular factory or unit, but at the moment it uses traditional delivery methods. There are companies in the United Kingdom piloting robotic delivery systems. In my constituency we have the Starship delivery robot, which is a fancy robot that goes around the streets delivering packages to people’s homes. I have put the two companies in contact with each other, as they potentially have a synergy of interests.
We also visited the Israeli aerospace industries. One of the most exciting ideas that they are developing is an autonomous electric taxiing system at airports, so that aircraft can move from the stand to the runway without having to switch on their engines. Cumulatively, that will save a considerable amount of emissions at airports, which is very pertinent to current debates on air quality.
My final point is more general. We discovered a sophisticated ecosystem in the new technology space where academic and commercial bodies and the Israeli Defence Force could combine their knowledge for innovative new solutions. They have developed a powerful ecosystem of co-operation, which is something that this country, and indeed all countries, will have to take notice of. Individual sectors on their own will not deliver the solutions we need. Israel is already having that cross-fertilisation of ideas and solutions. I chair the all-party group on the Oxford-Milton Keynes-Cambridge corridor, and our ambition is to have the United Kingdom’s creative centre. I am already putting different bodies in touch with their Israeli counterparts to see what lessons we can learn from them. Israel has a long tradition of providing solutions and will do so in future. I very much hope that will be part of a deepening of UK-Israel relationships.
It is a pleasure to serve under your chairmanship, Mr Evans. I refer to my declaration in the Register of Members’ Financial Interests. I travelled to the Occupied Palestinian Territories, including the village of Khan al-Ahmar, last November. I appreciate being given a few minutes of the debate, and I apologise to the Minister if I am not here when he comes to reply. For that reason I will be brief and will make just three points that relate to the elephant in the room: relations with the Occupied Palestinian Territories. I wondered until the interventions whether we would hear anything about that from the hon. Member for Bolton West (Chris Green), who secured this important debate.
My hon. Friend the Member for Birmingham, Northfield (Richard Burden) read out the Foreign Office position, which I am sure the Minister will adhere to, even if the Foreign Secretary sometimes does not. The position is straightforward, if somewhat illogical: settlements are illegal under international law, but buying settlement products should be a matter for consumer choice. There seems to be an illogicality in that. I do not know whether the Minister, the shadow Minister or the Scottish National party spokesperson will wish to comment on that. The situation is unique: a 50-year occupation of territory and Israeli settlements.
The principal governing treaty at present is the EU-Israel association agreement, which came into force in 2000. As I referred to earlier in an intervention, article 2 of that agreement makes it clear that all the trade preferences it bestows are conditional upon respect for human rights by both sides. What is meant by that? I can give three quick examples. First, the settlements are a transfer of population to occupied territory and are therefore considered a war crime under the fourth Geneva convention. Secondly, I referred to Khan al-Ahmar, a village that is under imminent threat of demolition. It is a Bedouin village on the west bank, which Israelis visited at the weekend preparatory to its demolition. I know that the Minister made representations, along with many other people, but that demolition would constitute forcible transfer and a war crime under international law, and demolitions are increasing across the west bank.
Thirdly, there are the disgraceful events that we saw on the Gaza border last month in which more than 130 Palestinians, including children and medics, were killed. Such use of lethal force constitutes wilful killing and, again, is a grave breach of the fourth Geneva convention. The EU trade association agreement could be criticised in that article 2 is not being enforced, but it is there at the moment, so my third point is addressed directly to the Minister. If we are in a post-Brexit situation—if we are—and an agreement is being negotiated, will those terms be carried across?
On that point, is not one of the issues with the agreement, as pointed out to us earlier by the European Council on Foreign Relations, the fact that Israel defines the borders? We have the issues of the green line, the blue line, the purple line and the status of Jerusalem. If we are to negotiate ourselves, should there not be international recognition of what the borders are, not Israeli definitions?
Absolutely. We are dealing with matters of law here, and there is a lot of picking and choosing. It is all very well for Members to say, “Well, there was a business in the occupied territories.” How would Members here like it if foreign entities were operating in this country without our consent, which is what happens to the Palestinians? The demands placed on business could equally be placed on the Government in negotiating a new treaty.
Will my hon. Friend give way?
I am sorry, I do not have much time.
Companies should not carry on business activities in the settlements or with individuals in the settlements. They should not trade in goods originally from the settlements, nor provide goods or services that are used for the benefit of settlements. They should not engage in any business activity that contributes directly or indirectly to the maintenance, development or expansion of the settlements. Those are the criteria and standards we should set. Once we have done that, we can perhaps go on to talk about trade. This matter is not about BDS. It is about international law and our treaty obligations as a democracy that believes in the rule of law.
I refer to my entry in the Register of Members’ Financial Interests. I am just about to make what is my seventh or eighth visit to Israel in the past four or five years. I hope that I will see some more change; I have seen a lot over the past few years.
Like you, Mr Evans, I am a member of the Parliamentary Assembly of the Council of Europe. That is an important organisation in Europe, because it contains both the Israelis and the Palestinian Authority and is unique in being able to tackle the issues that they both present. I want to organise an exhibition in the foyer of this Chamber that looks at projects that are done jointly between the Israelis and the Palestinians. The problem is that there are so many projects to call on.
We have heard today that Israel is renowned for its high-tech capability. That is still growing. There is still an enormous amount of research and development to do, and we still need to move that on, but that development has not happened by accident. It has happened because there has been a growing self-confidence in Israel and a growing confidence among British businesses that have found a willing partner. From my constituency perspective, I want to concentrate on water management and the excellent approach to water conservation in Israel.
I have been to a desalination plant on the coast of Israel. Sadly, the technology that was envisaged for the plant had been offered to the people who live in Gaza, but had been rejected. I think that is a great shame. Israel recycles some 90% of its domestic waste water, which is mostly used in agricultural production. By way of comparison, in Spain, the next biggest user of recycled water, only 20% is used for agriculture. Israel’s drip irrigation technology is exported throughout the world.
I agree with the hon. Member for Liverpool, Riverside (Dame Louise Ellman) about the boycott, divestment and sanctions regime. It affects the livelihoods of Palestinians as much as those of Israelis and prejudges the outcome of the debate; it is an issue to be tackled in the debate, but it does not define the whole debate. Where are the similar boycott, divestment and sanctions calls in relation to the Turkish occupation of northern Cyprus, or the Moroccan occupation of the controlled Western Sahara? We have a blinkered view of Israel in some sections of this country, and we need to overcome it by encouraging more companies to do business there.
Like just about everyone else in the Chamber I want to draw my attention to my entry in the Register of Members’ Financial Interests. I, too, have been to Israel on many occasions. One of the last couple of times was as an International Trade Minister—it is good to see my successor in his place—and the other was as a member of the trade delegation.
We have heard a great deal about Israel, including a lot of statistics, but we need to note the vibrant atmosphere there, which has led to its becoming one of the greatest countries for technology start-ups in the world. The combination of an extremely energetic population, national service that seeks out elite individuals for elite units, a willingness to support innovative technology and the ability to network results in Israel having the greatest density of technology company start-ups. There is one start-up for every 1,600 people, 4.25% of GDP is invested in research and development, and it has one of the best start-up company success rates. As a result, extraordinary things are done in areas such as telecoms, cyber-security, information technology, biomed, environmental sciences and FinTech. All those are things that this country wants to take advantage of. They are the cutting edge of technology, and where we trade with Israel in those areas we will improve our productivity and intelligence. We welcome those companies coming to invest in the UK, and we need to do as much as we can to help them.
As to comments that have been made about problems in Israel, only someone with a completely tin ear would not understand that there are worries, but, as we heard from the hon. Member for Liverpool, Riverside (Dame Louise Ellman), the best way to get positive outcomes for populations is by trading with the countries in question, doing as much as we can to bring wealth and prosperity to Israel, the occupied territories, the west bank and the Gaza strip. We need to do as much trade as we can.
My hon. Friend the Minister has one of the best jobs in the world and works with some of the best civil servants that the Government have to offer. It is a great pleasure to see some of my former colleagues from my private office here. They work extraordinarily hard. My hon. Friend’s job is to go out and make companies and businesses wealthy. By creating wealth through the Department we can generate more tax revenue and, as a result, we can have more hospitals, police on the streets, schools and all the good things that taxation brings.
I shall not let the Minister off without a task: will he share with us the budgeting decisions that have been made about our Department for International Trade friends in Tel Aviv? As his predecessor I am worried to see that there has been a 9% budget cut for the DIT in Israel. The Government are under a certain amount of pressure, but is it not right to increase the budget for a wealth-creating Department such as DIT, rather than decreasing it, particularly in a country such as Israel?
It is a pleasure to serve under your chairmanship, Mr Evans. I congratulate my hon. Friend the Member for Bolton West (Chris Green) on securing the debate. I, too, draw the attention of the House to my entry in the Register of Members’ Financial Interests, which shows that in May I joined other colleagues on a visit to Israel, to meet Jews, Palestinians and Bedouins, strengthen the trade relationship between the UK and Israel, and promote my constituency as a destination for inward investment by Israeli businesses. As the House will know, Havant is a centre of excellence for technology, trade, investment and science, and I am pleased to say that, following my visit, a number of Israeli businesses are in discussions with me about opening offices there. I look forward to continuing those discussions.
The debate is timely, as trade between the UK and Israel is at a record high level. Obviously I welcome the visit to Israel made by His Royal Highness the Duke of Cambridge last month. Israel is the original start-up nation and a global powerhouse for science, technology and innovation. It is a key driver of the fourth industrial revolution. It has the highest density of start-ups in the world, and has earned its title as the start-up nation by, amazingly, having the equivalent of one start-up for every 1,600 people.
As the fourth industrial revolution accelerates, our two economies will increasingly be powered by artificial intelligence, big data, robotics, advanced manufacturing, precision medicine and other advanced sciences. I hope that the Minister will join me in championing Israel as one of the UK’s leading partners and will make sure that both countries benefit from the present exciting period of technological innovation. There has never been a more important time to strengthen our links with Israel, a beacon of democracy in the middle east with which we share strong values, and with which we can partner as the new technological revolution accelerates. It is vital, in particular, as we leave the European Union, that we take the opportunity to secure our prosperity by strengthening links with our most important trading partners.
As I have mentioned, last month I had the opportunity to visit Israel on a trade-focused trip with several other colleagues who have spoken in the debate, to see and maximise opportunities for developing our trading relationship. At SodaStream I saw Palestinians, Jews and Bedouins working together to manufacture products for export—something that will not only drive prosperity and increase trade but is also a good model for the peace process in the future. I also visited cyber-security firms that do vital work helping to safeguard both our countries. Israel is second only to the US in its number of cyber-security firms, and has a 20% share of the global market in that important sector—a truly astonishing figure, on which I hope the UK can capitalise.
I also visited the Gav-Yam Negev advanced technologies park in Be’er Sheva, which gave us an insight into the spill-over effects in the Israeli economy, utilising leverage between the military, universities, civil society and the corporate world. Such collaboration was key to the cyber-park’s success, and I hope we can replicate that in parks in this country as well. On our visit we also had a glimpse of some of the medical innovations that the hon. Member for Liverpool, Riverside (Dame Louise Ellman) mentioned. As precision medicine becomes an increasingly important part of the fourth industrial revolution, that is an area for expansion in both the UK and Israel. I hope that we can deepen our collaboration in that area.
This is an exciting time for our two countries, and as the UK leaves the European Union and the fourth industrial revolution accelerates, I hope that the Government will do all that they can to strengthen the trade relationship between the UK and Israel for the years ahead.
It is a pleasure to serve under your chairmanship, Mr Evans. I congratulate my hon. Friend the Member for Bolton West (Chris Green) on securing the debate. I draw Members’ attention to my entry in the Register of Members’ Financial Interests, as I recently made a trip to Israel with colleagues.
As has been mentioned, trade between the UK and Israel is at a record high, and the UK is Israel’s second largest trading partner. It is often said of trade, particularly now that we are leaving the EU, that it should be as free and frictionless as possible. How do we apply that idea? I believe that the answer is through technology, with partner countries that appreciate the same idea. Israel is certainly one of those. It spends about 4.27% of its GDP on research and development—more than any other developed country. I am sure that we in the UK can admire that, and of course we shall be only too keen to emulate it in the coming years, as I expect the Minister will agree.
There are many types of technology that can facilitate trade between our two nations as we lead digital disruption across the world. One of the key examples is distributed ledger technologies. Some Members may have heard of blockchain, which is one type of DLT. For those who have not, DLTs are the building blocks of the internet of value and can record interactions of peer-to-peer value without the need for a centrally co-ordinating entity. In that sense, value can refer to any record of ownership of an asset, be it money, land, commodities, or even music industry ownership rights. Its decentralised nature makes that data safer from hackers who could try to compromise it. As hon. Members can see, DLT could be something big that could enhance every industry, and if we seek to use it we will need partner countries that are as technologically advanced as we are. Israel is pioneering DLT with world-class projects in Tel Aviv.
It is important that we prepare the UK for its future trade beyond Brexit, and we must follow in Israel’s footsteps and put technology and digital innovation at the forefront of our trade strategy. I commend the efforts of one UK organisation, FinTech Central, which is working hard to promote the UK’s financial technology industry and ensure that it benefits trade across borders. UK-Israel trade is strong, and by harnessing the potential of distributed ledger technology, I believe it could be stronger still.
It is a pleasure to sum up this debate on behalf of the Scottish National party, and I commend the hon. Member for Bolton West (Chris Green) for securing it and for the measured and well-informed way in which he introduced his remarks. I cannot say I agree with everything he said, but I compliment him on the eloquence with which he presented his case.
I have always thought that Israel is something of an enigma in the world. As we have heard from a number of Members, there is no doubt that the advances in knowledge and research that Israel helps to promote have the potential, and sometimes the actuality, to benefit humankind well beyond that country’s borders. At the same time, however, Israel is almost an outlaw; it is a criminal, and it is acting against international law every day of the week. There have been a number of serious, lethal attacks on civilians for which nobody in Israel has yet been held to account. Just as it would be wrong to completely demonise Israel and treat it as a pariah state, and wrong to ignore the atrocities committed by some on the Palestinian side, so it is wrong to talk about Israel only as a place from which Britons may get rich, and to ignore some of the human rights issues that perhaps do not affect many people living within Israel’s borders, but that certainly affect many who live within the borders of Palestine.
I visited Israel recently and met the Israeli-Palestinian Chamber of Commerce. Does the hon. Gentleman agree that, irrespective of some of the obviously complex issues in that region, trade between Britain and Israel, and between Israel and Palestine, is a key lever for creating the conditions for a two-state solution?
I will come on to that in a minute. There is no doubt that trade relationships can lead to wider relationships and be used as a way of influencing—for good or sometimes for ill—the actions of other countries and Governments. Today’s debate, presumably not by accident, is not about trade with Palestine; it is about trade with Israel. If someone applied for a debate on UK-Palestine trade, and enhancing and expanding fair trade networks between the United Kingdom and Palestine, I wonder how many of the people who were so desperate to speak in this debate would be as desperate to speak in that one.
Will the hon. Gentleman give way?
No, I am afraid I do not have a great deal of time.
Although trade in general between the UK and Israel is to be welcomed and promoted, we should not get things out of context. Israel accounts for less than 0.5% of UK exports—it will not fix the huge absence of trade that we will have if discussions with the European Union go wrong. We could increase exports to Israel by a factor of 10 and it would still be only a relatively minor trading partner compared with the European Union and a number of others.
We must try to negotiate an equivalent of 40 trade deals in just a couple of years, if we are lucky—possibly not even that long. I must take to task the hon. Member for Milton Keynes South (Iain Stewart), who said that the Trade Bill will replicate all the current trade deals in British legislation. No, it will not. The Trade Bill will convert EU legislation into UK law, but the only way that the UK can replicate its trade deals with the 40 countries in question is if those 40 countries agree to that. This Parliament cannot unilaterally agree to extend a trade deal after we have left the European Union, and the European Union cannot do that on our behalf.
Although we can speak positively about trade with Israel in general, there are two aspects of that trade about which I cannot speak positively. As the hon. Member for Hammersmith (Andy Slaughter) mentioned—I was very disappointed by the response he received—trade with the Occupied Palestinian Territories should not be treated as if it were trade with Israel. Indeed, at the moment, under the EU agreement with Israel that cannot happen, and Gordon Brown was in office, he said that it would be an offence to take goods from the occupied territories and sell them marked as produce of Israel. I want the Minister to give an absolute assurance that after we leave the European Union, nothing will be done to land a deal with Israel that will make it easier for goods that have been produced illegally in the illegally occupied territories to be exported here. We should regard those goods as the proceeds of crime.
On that specific point, the hon. Gentleman seems to be mushing two things together. The hon. Member for Hammersmith (Andy Slaughter) was talking about settlements, which is one issue, but the hon. Gentleman seems to be saying that we should not trade with any businesses based anywhere in the occupied territories. That sounds like a recipe for putting out of business every Palestinian-owned business, and subjecting them all to economic devastation. Is that really what he is saying?
To clarify, I am talking about trade with areas that are under illegal occupation by Israel, and where Israel has illegally occupied parts of Palestine. I do not think that “settlements” is the correct term; this is an illegal occupation, and we should not be looking to trade with any business carried out under the illegal Israeli settlement or occupation—call it what you will. Plenty of other Palestinian businesses in Gaza and the rest of Palestine would welcome our trade, if only the Israelis would let that trade get through to Gaza.
Another area that has not yet been touched on but must be mentioned is the UK’s massively increasing weapons sales to Israel. UK arms sales licences to Israel have increased by 1,100% in two years, and in 2017 the value of licences awarded was £220 million. Israel is about our 45th biggest export customer, but it is our eighth biggest arms export customer. Consider what the Israel defence forces have been using some of those small arms to do over the past two or three months—it is time for those arms sales to stop.
I do not deny, and I would never argue about, the right of Israel to exist or defend itself against aggressors, and I would never argue about the fact that Israel faces an aggressor in some of the more militant elements within Palestine. However, children being shot with high velocity sniper rifles; medics whose only weapon is a first-aid box being shot from a distance with high-velocity precision rifles by highly trained and skilled snipers—those are not acts of self-defence, those are acts of unlawful killing and should be called out as that. The United Kingdom should not be selling weapons to anybody who is still under investigation for such crimes.
Will the hon. Gentleman give way?
No, I will not give way. As I have said, I am not against trade with Israel—I know that some of my colleagues might be, but I am not. [Interruption.] No, it does not sound like that at all. Perhaps hon. Members should bother to listen, instead of just spouting forth their own prejudices.
Will the hon. Gentleman give way?
As I have said a number of times, I cannot keep giving way. Perhaps Members should listen to what I am saying, then they would not have to intervene and lay bare their misinterpretations of what is being said. The SNP does not support an all-out boycott of Israel.
Order. You are into your last minute now.
Thank you, Mr Evans. We do not support an all-out boycott of Israel, and I do not think that would work. I have good friends who believe that that is the right thing to do, but I think they are mistaken. I do not think they are being dishonest or disingenuous, but I think they are simply mistaken about what is the best tactic to use.
I will return to the point that I made before: if we had a debate this afternoon about expanding the opportunity for Palestinian producers with fair trade products to export those products to the United Kingdom, how many hon. Members would be desperate to come here and speak in that debate? Perhaps that is part of the problem. When we talk about our relationship with Israel, the debate is always oversubscribed. When we talk about trade with Palestine, which has the potential to ease significantly the poverty of people there, we do not get the same level of interest from Members of this Parliament. That unfortunate imbalance should be addressed.
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.
Will the hon. Gentleman give way?
I will not give way, because we have been given so little time.
But the hon. Gentleman said he was interested in parliamentary scrutiny.
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.
Will the hon. Gentleman give way?
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—
Order. I call the Minister.
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.
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.
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.
I give way to my predecessor.
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?
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 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.
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—
Will the Minister give way?
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 licenses 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.
I thank the Minister for such a positive speech and for dealing with so many of the issues that came out during the debate.
It has been an incredibly positive debate about the relationship between the United Kingdom and Israel, and about our trade, covering everything from agriculture to medical technology, and on to the fourth industrial revolution.
I will highlight something the hon. Member for Liverpool, Riverside (Dame Louise Ellman) said, which I myself might not have picked up on: the importance of trade for the trade union movement and the co-operative movement. It is so important that we have strong trade, because good trade is good for workers and I am therefore delighted to see the level of UK-Israel solidarity.
Question put and agreed to.
That this House has considered UK-Israel trade.