While a UK-US trade deal was ultimately abandoned a few months ago, signs that a future deal could take place were enhanced with the recent announcement made by UK Prime Minister Rishi Sunak and US President Joe Biden.
The two political figures have unveiled the Atlantic Declaration during a White House press conference this week, a plan aimed to fortify the economic bond between the two nations.
While the declaration cannot be interpreted as a full trade deal between the two countries, Mr Sunak was enthusiastic about the swift advantages the declaration could offer.
A particularly eye-catching part of the declaration for British industry is the prospect that UK electric car companies might soon be eligible for US green tax credits and subsidies.
As Sunak and Biden outlined their partnership designed to bolster economic stability, Sunak asserted the strength of the UK-US relationship, referring to it as an “indispensable alliance”. The Atlantic Declaration encompasses pledges on reducing trade barriers, enhancing defence industry ties, instituting a data protection deal, and elevating cooperation on AI.
When questioned about the lack of a broader trade agreement between the UK and US, Sunak argued that the current deal was a direct response to the specific challenges and opportunities both countries are presently facing.
He emphasised that the declaration’s targeted approach is about providing rapid benefits to citizens. While a full UK-US free trade agreement was a key promise of the Conservative Party’s 2019 election manifesto, Sunak confirmed that plans for such a comprehensive agreement had been put on hold, as it was no longer a priority for either nation.
US President Biden expressed optimism about the special relationship with the UK, citing their cooperation in Ukraine as an example of their productive partnership.
The Atlantic Declaration includes plans to lessen the impact of the US Inflation Reduction Act (IRA) on the UK economy, particularly in relation to trade barriers affecting the electric vehicle (EV) battery market.
As it stands, the IRA grants a tax credit for each EV manufactured in the US, or using components sourced from the country. With the new declaration, there is a commitment to work towards an agreement that would give buyers of vehicles made using critical minerals from the UK access to these tax credits.
This ground-breaking move would massively support UK businesses in the EV sector, who currently face exclusion from IRA subsidies due to the lack of a full US trade deal.
Another pivotal aspect of the Atlantic Declaration is a commitment to the UK-US data bridge, which would aid UK firms in transferring data to certified US organisations.
The UK Government estimates that 55,000 UK businesses would benefit from this change, amounting to a staggering £92.4 million in direct savings per year.
Mr Sunak affirmed the strength of the UK-US alliance, stating, “The Atlantic Declaration sets a new standard for economic cooperation, propelling our economies into the future so we can protect our people, create jobs and grow our economies together.”
Ultimately, both UK and US Governments believe that the Atlantic Declaration promises a strong, collaborative future between the UK and US, with the potential to spur the green technology sector, driving it towards new heights. There are hopes it will also strengthen the supply chains of each country, and develop technologies.
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