Britain banned Israel arm sales. Both sides still want a trade deal.

LONDON — They may be publicly beefing over arms sales, but Britain and Israel insist they’re still fully committed to a trade deal.
Prime Minister Keir Starmer and his Israeli counterpart Benjamin Netanyahu have been locked in a high-profile war of words in recent days over Britain’s decision to ban a host of weapons exports to Israel on humanitarian grounds.
Just this week, Netanyahu accused Britain of emboldening its enemies by slapping restrictions on a swathe of British weapons exports to his country.
Starmer says he’s wrong, and, amid fears of an Israeli ground invasion of Lebanon, used a speech to the U.N. on Thursday to urge Israel and Hezbollah to step “back from the brink.”
Yet there are no signs of a freeze when it comes to a coveted trade pact between the two countries. In fact, Israel wants Britain to go further.
Free trade negotiations between Israel and the U.K. began in July 2022 and talks have continued throughout Israel’s war with Hamas in Gaza.
The fifth round took place in April this year, and in July, Britain’s new Labour government confirmed its plans to resume the talks.
A U.K. government spokesperson said its decision to suspend some arms export regimes in the world was “separate to our commitment to deliver our trade negotiations with Israel.”
“The U.K. continues to view Israel as an important ally and the bond between Britain and Israel continues to be of vital importance,” they added. “Boosting growth and jobs is at the heart of our mission and that’s why we’re building on the £6.1 billion of trade and 38,000 British jobs that the U.K.-Israel relationship already provides.”
The feeling is mutual in the Israeli administration, despite the public spat over the war in Gaza.
“Israel sees great importance in continuing business as usual — not only because it is vital and it is a forward-thinking approach, but also as it is a signal for our resilience and resolve,” Matan Safran, a trade attaché at the Israeli Embassy said in a written statement.
“This is true for Israeli foreign policy with the world in general and even more so with such a strategic partner like the U.K.”
He added: “Throughout its years of existence, Israel has known times of war and times of peace. Israel’s economy has always grown, in the long term, despite security challenges.
“Regardless of Israel’s economic resilience and its innovation, there was also a policy to keep driving the economy forward — to keep reaching out for foreign trade collaborations for the benefit of Israeli people and other nations. Namely, to separate the economy and foreign trade from politics.”
Safran’s words were echoed by the Israeli ambassador to the U.K., Tzipi Hotovely, who described the U.K. and Israel as “strong allies” at a Labour Friends of Israel reception at the Labour Party conference earlier this week. 
“Israel has so much to offer Britain, and Britain has so much to offer to Israel, on security, on intelligence, and on trade, and we are willing to move forward with the new government to strengthen those strong relationships,” she told the packed reception, which was peppered with government ministers and Labour MPs.
The British government announced its intention to resume negotiations with Israel shortly after the election in July. New Trade Secretary Jonathan Reynolds committed to start talks “as soon as possible.”
Then, at the start of this month, Britain blocked the sale of a raft of arms components being used by Israel in Gaza after concluding there is a real risk weapons could be used in violation of international humanitarian law. 30 licenses, including parts for fighter planes, helicopters and drones will be immediately put on hold.
That doesn’t appear to have snagged the trade talks, with both sides looking to go beyond a post-Brexit rollover deal inherited from the EU after Britain left.
Safran said the U.K.’s decision to resume the trade discussion “should not be surprising, in our view, given the U.K.’s policy towards expanding its trade agreements, the complementary nature of Israel’s and the U.K.’s economies, both countries being like-minded liberal democracies, longstanding strategic partners, foreign trade and innovation-driven markets.”
No date has yet been set for the next round of negotiations. But Safran said the Israeli government is in “consistent communication” with the U.K. and “awaiting the completion of their internal processes concerning the resumed negotiations.”
“We hope to progress soon and to formally schedule the next round of negotiations,” he added. “I believe that both sides are quite optimistic that with the right and constructive approach, a successful completion of the negotiations to the benefit of both sides is definitely doable.”
The new deal would replace the existing U.K.-Israel free trade agreement, a roll-over of the 1995 EU-Israel Association Agreement, primarily focused on goods trade.
“Both Israel and the U.K. are services-oriented in their exports,” Safran said. “Expanding the FTA to include chapters in trade in services sectors and digital trade will ensure that the agreement remains relevant and effectively supports these crucial and rapidly evolving areas, enhancing economic opportunities and fostering deeper trade relations between Israel and the U.K.”
In particular, he said it would benefit sectors such as financial services, cyber security, healthcare, AI and biotech.
Safran said the Israeli government was also pushing for an “Entry and Temporary Stay Chapter.” That will, he said “provide Israeli and U.K. businesses the legal certainty required to enable the movement of highly skilled and senior personnel between the countries.”
Not everyone is so welcoming of plans to continue the talks.
Tim Bierley, a campaigner at Global Justice Now, accused the U.K. government of appeasing “Israel’s frenzied campaign of violence” in Gaza.
“Not only does this move to deepen trade cooperation give Israel diplomatic cover for mounting atrocities, the deal itself is likely to strengthen sectors of the Israeli economy complicit in grave human rights violations, including emerging technologies like AI which are already used to entrench Israel’s illegal occupation of Palestinian land,” he said.
“Israel has consistently responded to calls for a cease-fire by ramping up its violence and it should be obvious by now that the U.K. needs to use more effective leverage to press Israel to change course. To turn its words into action that could have a genuine effect, the U.K. must suspend talks around deeper trade ties with Israel and enforce a full arms embargo now.”