The Guardian

PM signs pact with Biden as hope of trade deal vanishes

• Closer links with US will boost economic security, claims Sunak • ‘Atlantic declaration’ marks revival of ties after chaos of Brexit

Peter Walker

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.

Announcing 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 minideals, with relatively few details and no attempt to estimate any overall economic benefit.

Nevertheless, its symbolism is significant, marking a shift away from the recent UK orthodoxy of unfettered free trade in favour of mutual protectionism. The announcement also signalled the end of any hope of a substantive trade deal with the US – as promised in the 2019 Tory manifesto.

Questioned about the lack of a wider deal, Sunak insisted the declaration would nonetheless benefit British companies, and “responds to the particular opportunities and challenges that we face right now, and into the future”.

Responding to the announcement of the declaration, David Lammy, the shadow foreign secretary, told PA Media the government had “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”.

Biden played up the economic benefits of the agreement, saying Britain could have “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 Britain could become home to a regulator on artificial intelligence, 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.”

The declaration was signed off in White House talks that began with jokey exchanges in the Oval Office before a waiting mass of reporters. It yokes Britain into economic policies that some of Sunak’s ministers have accused of being protectionist, allowing British businesses, for example, to take advantage of US subsidies.

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 war in Ukraine.

Setting aside a full-blown postBrexit free trade deal, it instead 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 sentimentally, a reset of transatlantic relations. Sunak talked of “the indispensable alliance”, a new formulation of the much-discussed special relationship.

Asked about the status of this by reporters, Biden replied with a thumbs up: “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 related to minerals needed in battery technology would 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 Britain’s economic security requires at least some acceptance of Biden’s economic world view.

Notably, British 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.”

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 yesterday, some of which will come into force very swiftly, are new moves to designate British defence suppliers as domestic contractors under the US’s Defense 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 important industries including artificial intelligence, 5G and 6G telecommunications, 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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