Israel and the UK have launched talks for an updated, innovation-focused free trade deal.

With the trading relationship between both countries already worth $6 billion, Israel and Britain are in negotiations for a revamped trading relationship that would benefit the services and digital sectors of both economies, with discussions launched on June 20.

“Last week we had the formal launch of the negotiations between the UK and Israel for a new trade deal and it's a really exciting moment for the UK and I think it's great news for Israel as well because it's a great opportunity for us to boost trade between our two countries, particularly in areas like innovation and services,” UK Trade Envoy to Israel Lord Ian Austin said in an exclusive interview with Israel National News.

“That's going to boost and increase prosperity in both countries, create lots of good new jobs and it'll bring the UK and Israel closer together as well. It's great news for both Israel and the UK, and we're really excited about this.”

With the existing free trade agreement dating from the 1990s and not including specific provisions on digital services, the talks are focusing on that sector as well as boosting exports in computer and technology services, and reducing high-tech industry trade barriers.

The new deal for the two high tech superpowers would benefit 6,6000 UK businesses that employ over 1.7 million people who export their goods to Israel and currently rely on an aging agreement signed in 1995, before smartphones, the rise of the internet and digital service delivery.

“That was signed before the internet transformed every area of the economy, every area of our lives, long before the boom in service sectors in both countries when both countries were much more reliant on manufacturing and long before Israel emerged as really one of the world's innovation superpowers. If you think about it back then nobody was using smartphones, nobody was ordering goods online, companies weren't delivering services digitally,” he says. “So the existing trade deal only really covers trading goods, it doesn't cover trading services and if we can eliminate barriers to trade trading services then I think that'll be fantastic for increasing trade, boosting prosperity in Israel and the UK.”

With both countries being service-led economies focused on world leading high tech sectors, the negotiations are an opportunity for exporters, especially digital innovators, to have increased access and opportunity to travel and work in each economy.

In 2020, around 325 Israeli-owned businesses operating in the UK employed more than 7,000 people across the country. Its services sector has grown by over 45 percent in the last decade, and Israel’s total imports are expected to double by 2035.

Israel is also the global leader in R&D expenditure as a proportion of national income, spending almost 5% of GDP on it. And more international money than ever is flowing into UK tech – $34 billion in 2021.

“If you think about Israel's economy, it's growing rapidly – 45 percent growth over the last 10 years in the service sector alone, particularly in areas like insurance, computers, and tech services. So the opportunity [is there] for the UK to capitalize on that, for Israelis to invest here in the UK, this is a fantastic thing for both countries,” Austin says.

Austin, whose father was a child Holocaust survivor from Czechoslovakia who was adopted at the age of 10 by a British family, explains that he has always been very interested in Israel, and that he has Israeli relatives who he is very close to.

“I was absolutely appalled when antisemitism took root in the Labour Party over the last few years,” he recalls. “I thought it was a complete disgrace and I know how appalled people in the Jewish community in the UK were and also people in Israel who followed British politics very closely, how appalled they were about this. I thought it was a complete disgrace and it led to me in the end leaving the Labour Party and sitting as an independent and that's the position I’m now in, so I sit as an independent member of the House of Lords and I continue to campaign against antisemitism and to campaign for closer relations between the UK and Israel, which is the Middle East’s only democracy, an open free and fair society. It’s certainly our closest ally in the Middle East and I want to do everything I can to bring our two countries closer together.”

Austin also denounced businesses and companies that support boycotting Israel.

“There are people in the UK who are not in favor of a close relationship with Israel or campaign for BDS,” he says. “I think they are completely wrong. Israel is a great country, the only democracy in the Middle East, and I want to see closer ties between the UK and Israel, more trade, closer academic links. There's so much we can learn from each other in areas like fintech, cyber, AI, defense technologies, renewables – all sorts of areas where our two great countries can learn from each other, cooperate much more closely. There's amazing work going on.”

He continues: “People talk about campaigns against Israel on campuses in the uk but the truth is that there are fantastic partnerships between universities in the UK and universities in Israel that are tackling some of the biggest problems the world faces in terms of the aging society, dementia, cancer, all of these sorts of issues. There's fantastic work going on between the UK and Israel in trade, in in academia, in defense, in all sorts of areas.”

“I want to see that deepen and strengthen to benefit both countries in the future. You know, the truth is the closer we are together, the stronger we are. Both countries, Israel and the UK, working together,” Austin adds.