Rishi Sunak and Joe Biden have announced a landmark 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.
While the so-called “Atlantic declaration” unveiled by the two leaders at the end of Sunak’s visit to the US capital is little more than a series of economic mini-deals, its symbolism is significant, signalling a major shift away from the recent UK mantra of unfettered free trade in favour of mutual protectionism.
The deal, which will give British green energy and defence companies access to US markets, will allow British businesses to take advantage of US subsidies as the UK moves away from complaining about Washington’s economic policies to trying to take advantage of them.
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 biggest economic challenges of our time”, the declaration is intended to allow the two countries to “move faster and cooperate more deeply” over areas such as supply chains.
Finally abandoning any hope of 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.
What details were given were notably slim, with some elements building on existing deals, and without any assessment of the potential overall economic benefits.
Announced as Sunak held a joint press conference with Biden at the White House, the declaration is billed as a pragmatic, forward-facing and less sentimental reset of US-UK relations in the wake of Russia’s invasion of Ukraine.
As members of the two countries’ media crammed into the Oval Office before the talks, Biden was asked if the much-discussed special relationship was still there. He 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 the way the agreement ties the UK to Biden’s mantra of allies seeking mutual economic security against threats from the likes of China.
In one detail that could alarm Conservative free marketeers, 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 related 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 worldview.
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.
The agreement provides something tangible for the prime minister’s brief US visit, which had otherwise been heavy on ceremony but 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 had 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 very swiftly, are new moves to designate UK defence suppliers as domestic contractors under the US’s Defence Production Act, meaning they can get US government contracts.
A deal on data protection is aimed at reducing difficulties for small firms doing UK-US trade, with No 10 saying this could save more than £90m a year.
The two countries will also collaborate on key industries including artificial intelligence, 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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