Written by Mr. Kunal Sawhney, CEO, Kalkine Media
After coming out of the European Union (EU), Britain has been making an all-out effort to fill the gap created by the new arrangement. Free trade pacts and negotiations have been on the prime list since the very first day of separation from the EU. The UK has so far signed in-principle agreements with around 70 countries, major being the deals with Japan, New Zealand, and Australia.
Armed with the freedom to pursue its own trade deals, a new trade deal with Israel is a step forward in that direction. It is worth noting that a free trade agreement (FTA) between the two nations was signed in 2019 and is in effect from the beginning of 2021. But as the deal was based on the trade agreement with the EU, an updated and modern deal was required.
What could be new in the new trade deal with Israel?
An eight-week consultation has been launched for the new trade deal, seeking public and businesses views before the final negotiation starts later this year. The UK, at present, is the third-largest trading partner of Israel. The total trade in goods and services between the UK and Israel, which includes exports and imports, was £4.7 billion as of Q3 2021.
Both the countries have a dominance of Services in their economies with a contribution of about 70%, but services form just 35% of the bilateral trade. As the UK can now negotiate freely, the new trade deal is expected to result in an obstruction-free goods and services trade between UK and Israel. More importantly, it could lead to lessening the imbalance of services in the bilateral trade, which was difficult due to the limited provisions and lack of innovations in the EU-era trade deal.
An improved trade deal can bring better opportunities for UK businesses
Israel possesses a vast opportunity for trade with its strong GDP growth and low inflation when compared to others in the region. The nation is highly developed, with a stable and mature economy and a business community which is familiar with UK business practices. There are ample of Israeli companies successfully operating in the UK, employing thousands of individuals.
If we talk about the UK, the exports to Israel have seen steady growth, while many British companies have been able to register a formidable presence in the Israeli market. The new improved deal with fewer red tapes and focus on services will help UK businesses to capture the new growth opportunities in the changed scenario. Businesses like food and drink, healthcare, education are likely to reap the reward of lower tariffs and friendly market access.
Technology has played a crucial role in the economic growth of Israel, and the UK can explore partnership opportunities in businesses like telecommunication, digital, life sciences etc. The new deal can open an avenue for UK tech companies, and they can partner with Israeli technology companies as fellow tech superpowers.
Hopes are high with the revamp of the trade deal with Israel, one of the biggest economies of the Middle East. Sectors like pharma, power, automobile, textile, and minerals are among the many to benefit. Israel has high prospects of consuming the UK’s superior exports and premium services offerings, and amid the volatility presented by Covid-19 and Brexit, an improved trade tie will embolden UK’s position in global trade.
