As the Prime Minister returns from his talks with President Biden in the US, he faces questions about progress on a US-UK trade deal and that on the US Inflation Reduction Act, which heavily subsidised renewable energy. Here Jae Sundaram, Reader in Trade and Maritime Law at Buckingham University, assesses the ‘sector by sector’ gains – and loss.
The UK’s greatest opportunity in bidding adieu to the EU was the freedom it brought to shape its destiny as a sovereign nation, and not be dictated to. It also meant the UK could decide who it wanted to trade with and how it wanted its trade to be conducted. Trade is the life blood of nations, and the economic progression and prosperity of any nation strongly hinges on trading beyond the seas.
The UK Prime Minister Rishi Sunak has just returned from a two-day ‘official working visit’ to the US during which he held talks with US President, Joe Biden. There are numerous questions that one may want to pose, but in the post-Brexit era one important question stands out – did Mr Sunak strike a free trade deal with Biden?
No, not yet! Instead, they signed a transatlantic cooperation partnership, Action Plan for a Twenty-First Century US-UK Economic Partnership (ADAPT), or ‘The Atlantic Declaration’. The partnership will witness the UK firmly moving into the US administration’s economic orbit, in the post-Brexit era. In Sunak’s opinion the Atlantic Declaration will bring about economic security in the face of threats posed by the likes of China and Russia.
The economic partnership includes a narrow trade pact containing an in-principle agreement for a deal on critical minerals that are needed for electric car batteries and solar panels; closer defence cooperation; easing of trade barriers; professional qualifications; and a new data protection agreement. The agreement on critical minerals will give UK electric car manufacturers access to the $370 billion green subsidies programme introduced under the Inflation Reduction Act (signed into law in August 2022), initiated by the US President. The Act directs new federal spending towards reducing carbon emissions, lower healthcare costs, etc., and aims to catalyse investments in domestic manufacturing capacity, and is expected to witness big green investment in the US.
The UK-US Partnership, is in short, is a collection of sector-by-sector agreements designed to strengthen economic ties of the two nations, which will also see China being cut out of key supply chains. It is also claimed by Sunak that he and the US President will work together on AI safety. Some sort of agreement, then, has been reached, but how far does it go?
The Atlantic Declaration may lift the UK’s economic growth a little but is unlike a comprehensive free trade agreement which is capable of harmonising trade growth between the signatory nations. A free trade agreement with the US per se would have been capable of making a real difference to the average person on the street. The deal the British public want is a comprehensive UK-US free trade agreement that was promised in 2019.
Mr Sunak’s reaction to the accusation that he has broken this manifesto promise, is that the macroeconomic situation has evolved since 2019 due to the pandemic and the war in Ukraine.
The Atlantic Declaration is, he says, the answer for today’s threats to our economic security.
It may indeed be true that the macroeconomic situation has evolved, but does it justify taking a UK-US free trade agreement off the table? It should not be forgotten that the UK, undeterred by the pandemic and the war, was able to strike deals with other countries since Brexit and is in active negotiations with a few others. The Prime Minister (en route to the US) contended that a free trade agreement with the US had not been a priority for a while. It should have been. A free trade deal ought to have been prioritised and the groundwork laid on striking a free trade agreement with the US. This visit provided the opportunity to take a bold approach with President Biden to start to negotiate such a trade deal and reap the true benefits of a post-Brexit Britain. That was, after all, the promise we were made.
University of Buckingham
Jae Sundaram is a Reader in Trade and Maritime Law at the University of Buckingham, having practised for several years before moving to academia. He specialises in Maritime Law, International Trade, World Trade, Conflict of Laws, and public international law relating to the proportionality in the use of weaponry in modern conflicts.
His recent books include, WTO Law and Policy: A Political Economy Approach and Pharmaceutical Patent Protection and World Trade Law: The Unresolved Problems of Access to Medicines.