JUSTICE - No. 66

44 No. 66 JUSTICE recognized (i.e. cumulated) in UK exports to Israel. 15 The latter appears to be a significant benefit to the UK granted by Israel. It is unclear as to what, if anything, Israel was given in return and this may simply be a result of the UK’s apparent stronger bargaining position, being Israel’s second largest export market. It should be noted here that the EU-Israel trade agreements did not apply to products originating from settlements in Judea and Samaria. The UK followed this approach and declined to extend the Continuity Agreement to such products. 16 Some amendments to the EU-Israel Agreements were necessary with a view to eliminate obsolescence and to ensure operability in a bilateral context. These changes include the following: a. Articles mandating or promoting the gradual approximation of legislation between the EU and Israel have been removed, as this is obviously inappropriate in a UK specific bilateral context. 17 b. Tariff-rate quotas (TRQs) have been re-sized to reflect the fact that the UK is a smaller importer and exporter than the EU-28. 18 The approach adopted in this regard was to attempt to set quotas at a level that will allow continuity of historical trade flows, in most circumstances, for importers and exporters from both sides. Where possible, TRQs have been re-sized based on three years of customs data. Where there are not three years of customs data, trade flow data have been used. 19 Opportunities for Increased Scope of Free Trade Between the UK and Israel As stated above, the strategy behind the Continuity Agreement was firstly, to maintain existing arrangements following the UK’s departure from the EU and, secondly, to provide a platform for further trade negotiation. As a result of this, the Continuity Agreement did not go beyond areas of trade covered within the EU-Israel Agreements. There is therefore a significant opportunity to ameliorate the continuity arrangements and agree upon a wider-reaching FTA. The Continuity Agreement retains the provisions of EU-Israel Agreement in relation to trade in services. 20 These provisions are of limited effect. Given the significance of services in relation to the UK’s exports to Israel, a more extensive agreement in relation to trade in services, such as financial services, banking and insurance, would well serve the UK’s interests. However, it should be noted that trade in services is an especially complex area, and this may therefore necessitate a two- speed approach; rapid movement towards a broader free trade agreement in goods and a slower approach towards a hoped-for agreement on trade in services. It is well known that Israel excels in high-tech fields such as cyber security, R&D, fin-tech, artificial intelligence and medical products (both appliances and pharmaceuticals). None of these areas lay within the scope of the EU-Israel Agreements (save in relation to the mutual recognition provisions of the CAA) and therefore none of these areas have been included within the Continuity Agreement. There is a large potential market for British investment in R&D in Israel. A report by Start-Up Nation Central showed that 87 companies from 18 countries – including Booking.com, Hyundai and Dropbox, opened offices in Israel after 2014 to pursue R&D or innovation. However, only five of these companies were British. The UK lags behind Canada, China, and the U.S. in utilizing Israeli expertise in this field. 21 The UK Department for International Trade recognizes that technology is the driving force behind Israeli economic growth and that UK technology has much to offer, especially in the growing niches of smart cities, mobility and autonomous driving. 22 The Department for International Trade also notes that there are opportunities for UK companies specializing in data and technology equipped to help improve efficiency/ output of Israeli plants and factories. 23 In light of this, it seems that technology products would be an obvious choice for inclusion in any future free trade arrangement. In agriculture, there was opportunity to go beyond the EU-Israel Agreements and provide Israeli exporters with access to a larger share of the UK market. The quotas 15. The cumulation arrangements are set out in detail in Title II (Definition of the concept of “originating products”) of the Rules of Origin Protocol and are subject to satisfying certain conditions. The text of the Rules of Origin Protocol can be found in its Appendix 3. 16. Supra note 1. 17. Art. 6 of the Continuity Agreement, supra note 9. 18. See Appendices 1 and 2 of the Continuity Agreement, supra note 9. 19. Supra note 1. 20. See supra note 9, annex II, para. 2. 21. Supra note 2. 22. Supra note 1. 23. Ibid .