The special relationship gets recharged
“The economic relationship between our two countries has never been stronger,” declared Rishi Sunak, after announcing a new economic alliance with US president Joe Biden during his first trip to the White House.
On his jam-packed two-day visit to Washington, Sunak discussed security and economic co-operation with the US president in the Oval Office away from the smog engulfing the city, met with some of America’s biggest business leaders, attended a Washington Nationals baseball and even gave Biden a Barbour jacket, embroidered with the words: “Mr President.”
The visit culminated in the unveiling of the Atlantic Declaration – a series of economic mini-deals, which aim to strengthen UK-US co-operation on critical mineral supply chains and give British green energy and defence companies access to US markets, allowing British businesses to take advantage of US subsidies.
The new accord will also see the two countries co-operate more closely on the regulation of Artificial Intelligence – with Biden suggesting he is receptive to Sunak’s pitch to make London a capital for global AI governance. “We are looking to Great Britain to help lead a way through this,” said the US president, remarking on the challenges posed by this emerging technology.
As the two biggest donors to Ukraine’s war efforts, Washington and London have been pretty aligned in terms of security and defence in recent months. But economic co-operation has been more of a sore point.
A free trade deal with the US was a key ambition for Brexit Britain – one which featured in the Conservative manifesto pledge.
Yet a pandemic, war in Ukraine and pressure to both decarbonise and decouple from China saw the Biden administration look inwards instead. The Inflation Reduction Act which provides billions of dollars in green subsidies to US business was the result. It’s a deal that has been criticised by the British government, with ministers claiming that the huge economic support being given to US companies is protectionist and harmful to world trade.
Today’s new mini-deals suggest a change of tack from the UK government. Sunak appears to have abandoned hope of a full blown US-UK trade deal, at least for the time being. Instead, he is focussed on securing narrower trade deals – and findings ways to help Britain take advantage of Biden’s “protectionist” economic policies, as opposed to railing against them.
A critical minerals pact is a win as it would allow British carmakers that export electric vehicles to the US to benefit from some of the subsidies offered to American firms under Biden’s generous economic package.
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