What is the UK-Israel trade partnership agreement?
The new UK-Israel trade agreement came into force on 1st February 2022. It almost replicates the previous EU-Israel trade agreement to facilitate a continuing trading relationship between the UK and Israel post-Brexit.
The new agreement allows businesses to trade freely without tariffs and barriers to the extent that they could when the UK was part of the EU. The agreement is a firm step towards strengthening the ties between Israel and the UK, opening up many opportunities for businesses in both countries by further liberalising and expanding the scope of current trading arrangements.
What are the key areas of the trade agreement?
The trade agreement between Israel and the UK includes a number of key areas:
- Tariff rate quotas: These will remain the same as in the EU-Israel agreement, however, they vary depending on the goods and services being provided. It is advised that businesses check the individual tariff rates according to the sector in which they operate.
- Rules of origin: In order to receive preferential treatment, all goods imported into the UK from Israel will need to include a certificate of origin.
- Government procurement
- Intellectual property protection
How will the trade agreement with the UK benefit Israeli companies?
The UK government acknowledges that the bilateral trade between Israel and the UK is already worth £4 billion, with the UK being Israel’s third-largest trading partner in the world after the United States and China.
The UK values Israel as a key trading partner with exports to Israel rising from £1.1 billion in 2009 to £2.4 billion in 2016. As such, the commitment to maintaining and developing this trading relationship is important to both the UK government and the economy.
As a result, Israeli businesses are in a good position to take advantage of trading opportunities and preferential treatment as the ease of doing business with the UK is likely to increase further.
Notably, Israeli pharmaceutical and digital health tech companies are in high demand in the UK. Currently, the UK relies on such companies to supply goods and services to the National Health Service, with over 100 million prescription items for medicines used in England alone coming from companies based in Israel. The new trade agreement is said to provide protection for intellectual property rights and high trading standards in this industry.
Despite the uncertainty surrounding Brexit, Israeli companies continue to invest and do business in the UK since the UK Israel Tech Hub was launched in 2011. The governmental scheme was founded to boost economic growth by encouraging UK companies to partner with Israeli tech firms. As the support is already in place for such tech companies, it is likely that the new trade agreement will only make that relationship more prominent.
What negotiations are being made to expand the trade agreement?
The UK’s Secretary of State for International Trade, Ann-Marie Trevelyan acknowledges that expanding and improving on the existing trade agreement to cover cyber security, artificial intelligence, and other technology sectors, along with the development of natural gas in Israel are the next steps in the future UK- Israel relations.