Context: The United States and Britain have announced a new strategic pact as their leaders rededicated the “special relationship” to counter Russia, China and economic instability. The leaders (Joe Biden and Rishi Sunak) further concluded that the UK-US relationship was an “indispensable alliance”. The leaders acknowledged the importance of the partnership as the U.S.-UK bilateral investment relationship is the largest in the world, with over $1.5 trillion in stock supporting more than 2.7 million jobs in both countries. There was also discussion on current geopolitical crisis and challenges to international stability from authoritarian states such as Russia and the People’s Republic of China; disruptive technologies; non-state actors; and transnational challenges like climate change.
Recent Developments – Atlantic Declaration
- An “Atlantic Declaration” was adopted by the leaders aims to boost industry ties on defence and renewable energy, in the face of growing competition from China. This is seen in furtherance of the Atlantic charter that was signed in 1941. The Atlantic Declaration, includes commitments on easing trade barriers, closer defence industry ties and a data protection deal and steps up co-operation on AI.
- 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
- Expansion of subsidies: The Atlantic Declaration includes plans to mitigate some of the impact of US Inflation Reduction Act (IRA) on the UK economy, with proposals to remove barriers which affected trade in electric vehicle batteries.
- Under current policy, the IRA provides tax credit worth $3,750 (£3,000) for each electric vehicle (EV) manufactured in the US, or which use components mined, processed or manufactured in the country. The UK is already a net exporter of raw materials for EV batteries to the US. But nations without a US trade deal are barred from accessing IRA subsidies
- Critical mineral Partnership: The Atlantic Declaration commits the UK and US to working on a new critical minerals agreement which would give buyers of vehicles made using critical minerals processed, recycled or mined by UK companies access to tax credits.
- Data partnership: The declaration also includes a commitment to a “new UK-US Data Bridge” which would allow UK firms to transfer data freely to certified US organisations without paying a levy. Experts have estimated the change will affect around 55,000 UK businesses and translate close to £100m in direct savings per year.
- Emerging Technologies: The leaders recognized the greatest transformations in global economy since the Industrial Revolution with the concrete materialization of AI (Artificial Intelligence).United states also supported UK’s plan to set up an international summit on AI safety.
- Focus on Euro-Atlantic and Indo-pacific: The leaders reaffirmed their commitment to deepen unrivalled defence, security, and intelligence relationship across every theatre in the globe and recognized the indivisibility of security in the Euro-Atlantic and the Indo-Pacific and other regions.
- Indo-Pacific dialogue: Through the U.S.-UK Indo-Pacific Dialogue leaders agreed to continue find new opportunities to coordinate our approaches, to support ASEAN and ASEAN centrality, to partner with the Pacific Islands, to coordinate on economic and technological advancement, and to contribute to regional peace and stability.
- Reaffirming faith in NATO: The leaders agreed to continuing strengthen NATO’s ability to deter further attempts to undermine Alliance security, in support of NATO’s new Strategic Concept.
