Rishi Sunak and Joe Biden sign ‘Atlantic declaration’ but hope of trade deal ends

  • 6/8/2023
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Rishi Sunak and Joe Biden have announced a deal for transatlantic cooperation that moves the UK firmly into the US administration’s economic orbit and marks a revival in ties after the turbulence of Brexit. Unveiling the so-called “Atlantic declaration” at a joint press conference with Biden at the White House, Sunak was explicit that the closer links were designed to bolster economic security in response to threats from China and Russia. “Countries like China and Russia are willing to manipulate and exploit our openness, steal our intellectual property, use technology for authoritarian ends or withdraw crucial resources,” the prime minister said. “They will not succeed.” The declaration, published at the end of Sunak’s visit to Washington, is in some ways little more than a series of economic mini-deals. Relatively few details have been revealed, and no attempt has been made to estimate any overall economic benefit. However, its symbolism is significant, marking a shift away from the recent UK mantra of unfettered free trade in favour of mutual protectionism. The announcement also signalled the end of any hope of a full trade deal with the US, a key promise in the 2019 Tory manifesto. Questioned about the lack of a wider deal, Sunak said the declaration would nonetheless benefit UK companies, and “responds to the particular opportunities and challenges that we face right now, and into the future”. Labour said the Conservatives had “failed to deliver the comprehensive trade deal they promised”, PA Media reported. Responding to the announcement of the declaration, David Lammy, the shadow foreign secretary, said: “Labour has consistently called on the government to secure closer economic ties with the United States to work together on the critical issues of our time … but this statement shows the Conservative government has failed to deliver the comprehensive trade deal they promised in the 2019 manifesto, or to secure the ally status under the Inflation Reduction Act that is so important for the automotive sector and for the green transition. “While the Biden administration have enacted the Inflation Reduction Act to de-risk its economy from China and create jobs at home, the Conservatives have left Britain’s cupboards bare.” Biden played up the economic benefits of the agreement, saying the UK could play “a major role” in providing the US with green technology such as batteries. In a welcome move for Downing Street, the president had warm words for Sunak’s idea that the UK could become home to a regulator on artificial intelligence (AI), with a conference on the issue planned for the autumn. “We are looking to Great Britain to help lead a way through this,” Biden said. “There is no country we have greater faith in to help negotiate our way through this. We are in lockstep.” Signed off in White House talks that began with jokey exchanges in the Oval Office before a waiting mass of reporters, the declaration yokes the UK into economic policies that some of Sunak’s ministers have labelled protectionist – for example, allowing British businesses to take advantage of US subsidies. After a visit in which Sunak was feted with full diplomatic pomp, it also shows an inclination for Biden and his team to work more closely with an ally whose stock had fallen under Boris Johnson and Liz Truss. Billed by No 10 as “a new action plan for cooperation on the biggest economic challenges of our time”, the declaration is intended to allow the two countries to “move faster and cooperate more deeply” on areas such as supply chains disrupted by Covid and the invasion of Ukraine. Setting aside a full-blown post-Brexit free trade deal, it sets out a series of sector-by-sector agreements on everything from defence procurement to data and professional qualifications. It was described in advance by UK officials as a pragmatic, forward-facing and less sentimental reset of transatlantic relations, and Sunak talked of “the indispensable alliance”, a new formulation of the much-discussed special relationship. Asked about the status of this by reporters as the talks began, Biden replied with a thumbs-up, adding: “In real good shape.” While Downing Street will be pleased to end the trip with a tangible achievement, there is an element of political risk. In one detail that could alarm Conservative free marketers, it brings the UK into the orbit of Biden’s Inflation Reduction Act (IRA), which lays out vast subsidies for green infrastructure, previously condemned by some UK ministers as market-skewing. One element of the declaration relating to minerals needed in battery technology will allow UK electric car manufacturers to benefit from some of the IRA subsidies regime. Amid the series of thus far mainly vague commitments is an acknowledgment by Sunak that UK economic security requires at least some acceptance of Biden’s economic world view. Notably, UK officials explicitly linked the move to the “new Washington consensus”, a US vision for economic security set out in March in a speech by Jake Sullivan, Biden’s national security adviser, which repudiated the era of unconstrained globalisation and reliance on markets in the face of new threats. Asked whether he was embracing a Biden-led protectionist mantra, Sunak insisted this was not the case. “I’m absolutely of the view that this president does not believe in zero-sum competition amongst allies. That’s what we declared together with our G7 partners just a few weeks ago in Hiroshima,” he said. “This is a president and an administration that is completely attuned to the needs and concerns of his allies on these issues.” The agreement provides something tangible for the prime minister’s brief US visit, which had been heavy on ceremony but was mainly devoted to meetings with US politicians and businesspeople, plus a visit to a baseball game. Speaking to reporters on his way to the US, Sunak insisted he remained opposed to protectionism but said there was a need to seek economic security and guaranteed supply chains in the global situation that had evolved, one taking in not just Russia’s invasion of Ukraine but Chinese threats to Taiwan. Among the specifics set out on Thursday, some of which will come into force swiftly, are new moves to designate UK defence suppliers as domestic contractors under the US’s Defence Production Act, meaning they will qualify for US government contracts. A deal on data protection is aimed at reducing difficulties for small firms doing UK-US trade. No 10 said this could save more than £90m a year. The two countries will also collaborate on key industries including AI, 5G and 6G telecoms, quantum computing, semiconductors and engineering biology. Other ambitions will take longer. While Sunak and Biden have signed up to further moves to mutually recognise professional qualifications for engineers, this will need state-by-state approval in the US.

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