Pre­pare for Bri­tishIs­raeli trade bo­nanza

The Jewish Chronicle - - FRONT PAGE - BY HENRY NEW­MAN

THIS WEEK, Open Europe pub­lished its Global Bri­tain re­port, which ar­gues that deep­en­ing the UK’s trade ex­ports with Is­rael in both goods and ser­vices should be a top pri­or­ity. As a mem­ber of the EU, the UK’s trade and com­mer­cial pol­icy has been made in Brus­sels for over four decades. In two years’ time we will be able to shape our own fu­ture. Where should the fo­cus be?

Some sug­gest we should look to the USA or Ja­pan — ma­jor, de­vel­oped economies with which the EU has failed to sign a Free Trade Agree­ment. Oth­ers ar­gue that it is all about the emerg­ing economies in Latin Amer­ica or south-east Asia. Or that we must con­cen­trate on what some have (of­fen­sively) termed Em­pire 2.0.

We thought it would be use­ful to model the UK’s trade and pro­ject how it’s likely to look by 2030. The gov­ern­ment needs to plan to­day for the world of to­mor­row.

Our eco­nomic model re­lies on “grav­ity” in trade. The the­ory, which is de­vel­oped from ob­serv­ing the pat­terns of global trade, is that a coun­try trades more with a big­ger coun­try than a smaller coun­try, and that closer coun­tries trade more with each other. Us­ing th­ese facts it’s pos­si­ble to pre­dict ex­pected lev­els of trade. The ac­cu­racy of th­ese data is im­proved when you fac­tor in other el­e­ments, par­tic­u­larly so-called com­mon­al­i­ties: shared lan­guage, his­tory or le­gal sys­tem, eco­nomic free­dom, diplo­matic re­la­tions and so on.

Our find­ings were sur­pris­ing. The model showed that Bri­tain should pri­ori­tise three coun­tries above all: Canada, In­dia, and Is­rael.

In 2030, our anal­y­sis sug­gests that we will have around £27 bil­lion of un­tapped ex­port trade po­ten­tial in goods and ser­vices with th­ese three economies. For Is­rael alone, the UK will have over £2 bil­lion of po­ten­tial for goods ex­ports and nearly £3 bil­lion for ser­vices ex­ports. Th­ese fig­ures do not rep­re­sent a ceil­ing for trade lev­els with Is­rael. This is sim­ply where our trade ought to be.

Given that Is­rael shares so much with the UK, our mu­tual trade ought to be much stronger. English is widely spo­ken. The coun­try (mostly) shares our com­mon law le­gal sys­tem. And this year’s cen­te­nary of the Bal­four Dec­la­ra­tion is a poignant re­minder of Bri­tain’s role in the creation of Is­rael. There are thou­sands of du­al­na­tion­als and peo­ple who travel reg­u­larly back­wards and for­wards. Is­rael’s pop­u­la­tion is highly-ed­u­cated and rel­a­tively wealthy.

So why is trade not where it ought to be? There are many po­ten­tial rea­sons. One is the bar­ri­ers on the Is­raeli side: a scle­rotic bu­reau­cracy; re­stricted rights to for­eign ac­qui­si­tion and pro­cure­ment; strict res­i­dency tests for the tem­po­rary pro­vi­sion of ser­vices; and a re­quire­ment for the chair of a board of di­rec­tors to be Is­raeli.

The UK should work with Is­rael to en­cour­age greater open­ness. Then there is of course the po­lit­i­cal and se­cu­rity risk, from fears of all-out con­flict to ter­ror­ism or in­tifada. It’s easy for busi­ness to feel in­tim­i­dated, par­tic­u­larly when so much of the main­stream cov­er­age of Is­rael is framed through the con­flict and se­cu­rity sit­u­a­tion. And busi­ness has seen too of­ten how com­pa­nies doing per­fectly le­git­i­mate trade with Is­rael have been hounded and ha­rassed with protests, end­less le­gal chal­lenges and neg­a­tive pub­lic­ity. Many will look at all this and de­cide it’s just not worth the bother.

That’s why the gov­ern­ment needs to do even more to clamp down on the dis­crim­i­na­tory BDS cam­paign, and pro­tect com­pa­nies trad­ing with Is­rael in the same way they would with any other coun­try.

A fur­ther prob­lem is the risk that vis­its by Is­raeli min­is­ters and of­fi­cials are still be­ing threat­ened and dis­rupted with spu­ri­ous le­gal chal­lenges. The gov­ern­ment needs to look again at the rel­e­vant le­gal land­scape and en­sure that it’s work­ing ap­pro­pri­ately.

For decades the UK Em­bassy in Tel Aviv fo­cused on the peace process to the ex­clu­sion of al­most any other as­pect of our bi­lat­eral re­la­tions. That changed with Am­bas­sador Matthew Gould, whose pas­sion and en­ergy helped fo­cus minds on mu­tual trade. Gould es­tab­lished the UK-Is­rael Tech Hub. It’s still go­ing strong. And in Fe­bru­ary, dur­ing Prime Min­is­ter Ne­tanyahu’s visit to Lon­don, the gov­ern­ment launched a new UK-Is­rael Trade Work­ing group to smooth any po­ten­tial is­sues re­lated to Brexit. It needs to also fo­cus on ad­dress­ing ex­ist­ing bar­ri­ers to trade.

It won’t be pos­si­ble to do all of this overnight. But the point is to fo­cus minds on the size of the prize. For many out­side the Jewish com­mu­nity not fa­mil­iar with the coun­try’s suc­cesses and achieve­ments, Is­rael may be a sur­pris­ing choice to fo­cus on. But it is the right one.

Henry New­man is di­rec­tor of Open Europe http://openeu­rope.org.uk

PHOTO: GETTY IMAGES

Port of Ash­dod, Is­rael

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