Rishi Sunak and Joe Biden announce sweeping new economic pact to tear down trade barriers

U.S. President Joe Biden and Britain's Prime Minister Rishi Sunak arrive to hold a joint news conference in the East Room at the White House in Washington, U.S., June 8, 2023. REUTERS/Evelyn Hockstein

RISHI Sunak and Joe Biden charged the batteries of the Special Relationship tonight – shaking on a sweeping economic security pact.

The new Atlantic Declaration will see the UK and US tear down protectionist trade barriers on critical minerals vital to power electric cars.

Rishi Sunak and Joe Biden hold a press conference at the White House

Rishi Sunak and Joe Biden signed a new deal today

At a press conference in the White House, President Biden said the US has “no closer country to us” than Britain.

And in turn Mr Sunak heralded the Anglo-American relationship as “indispensable” – saying: “When the United States and the United Kingdom stand together, the world is a safer, better and more prosperous place.”

The new accord will also forge closer ties on defence spending, qualifications AI, bio-tech and space – as the West closes ranks against China.

But it comes at the cost of a post-Brexit free trade deal covering goods and services – with the PM admitting the talks were all but dead.

Hitting back at claims he had failed in his bid to secure a Free Trade Agreement, Mr Sunak said: “Be in no doubt, the economic relationship has never been stronger. The trade between our countries is worth hundreds of millions of pounds and dollars every year.”

He insisted: “Our agreement today focuses on the particular challenges we face and opportunities we have.”

Mr Biden said: “Never in the history of human endeavour has man faced such a potential for technological change. The potential of AI is staggering.

He added: “We are looking to Great Britain to help lead a way through this. There is no country we have greater faith in to help negotiate our way through this.”

No10 insisted it was a “conscious decision” to seek this new economic security deal in an increasingly dangerous world dominated by Communist China and a reckless Russia.

The deal also eases some of the issues caused by Mr Biden’s Inflation Reduction Act that injected mass-subsidies into US industry.

And it could allow British manufacturers to qualify for some of those state handouts by the black door.

Electric vehicle batteries produced in the rest of the world must currently compete with crippling American subsidies.

The new deal will make it easier to import and export the vital resources like lithium and cobalt that are used in the production batteries and solar panels.

The IRA provides a $3,750 subsidy for each electric vehicle produced, as long as the critical minerals used are sourced from the US or a country they have an agreement with.

Negotiations for the UK to qualify for this will begin immediately.
It will also allow British and American engineers to work in both countries without needing extra qualifications and cut red tape for small firms relating to computer data.

Congress will have to vote to approve a defence spending deal – which is vital to the AUKUS submarine production pact signed by the the Brits, Americans and Australians.

It will allow UK arms firms to be treated exactly like US firms when vying for massive US defence contracts.

The agreement comes after hopes of a full-blown free trade deal were abandoned, with UK officials insisting the new, targeted approach was a better response to the economic challenges posed by Beijing and Russia’s invasion of Ukraine.

Work will also be carried out to improve the resilience of supply chains and efforts will be stepped up to shut Vladimir Putin’s Russia out of the global civil nuclear market.

A deal on data protection will ease burdens for small firms doing transatlantic trade, potentially saving £92 million.

The two nations will also collaborate on key industries – artificial intelligence, 5G and 6G telecoms, quantum computing, semiconductors and engineering biology.

Speaking at the White House, Mr Sunak said: “The UK and US have always pushed the boundaries of what two countries can achieve together.

“Over generations we have fought alongside one another, shared intelligence we don’t share with anyone else, and built the strongest investment relationship in world history.

“So it’s natural that, when faced with the greatest transformation in our economies since the industrial revolution, we would look to each other to build a stronger economic future together.”

But earlier in the day Mr Sunak had tried to blame the war in Ukraine and Covid for the failure to secure a post-Brexit free trade deal with the US.

Quizzed why trade talks with the Biden White House have been iced, the PM said the economic situation had changed in recent years.

But the PM refused to accept the Government’s failure to strike a free trade accord with the US amounted to a “broken promise” – despite such a deal being pledged in the Tory election manifesto.

Asked about the Conservative’s promise at the 2019 general election to complete an US agreement within the first three years of Government, the PM said the war in Ukraine and the pandemic meant that the “macroeconomic situation” made it impossible.

But Mr Biden had frozen negotiations long before Russia’s 2022 invasion of Ukraine.

The PM told reporters on his trip to the US: “Since then we’ve had a pandemic, we’ve had a war in Ukraine, and that has changed the macroeconomic situation.

“The right response to that is ensure that we’re focusing our engagement economically on the things that will make the most difference.”

The PM is in Washington DC for his first trip to the Oval Office