Sunak Leaves US With Some Deals, But Not the Big Trade Prize

(Bloomberg) -- UK Prime Minister Rishi Sunak leaves Washington after a two-day visit, armed with President Joe Biden’s backing for his efforts on artificial intelligence and agreements for closer economic cooperation to shore up green industries and supply chains.

The two leaders agreed to start work on an accord that could ultimately give British-based manufacturers access to the massive package of US subsidies and tax breaks enshrined in Biden’s signature Inflation Reduction Act. And the UK will be designated a “domestic source” for defense contractors, opening up US investment to British companies.

The two nations also agreed to recognize each other’s data protection regime, a change the UK estimates will benefit 55,000 companies to the tune of £115 million ($144 million). And there was agreement to cooperate more closely on civil nuclear power, bolstering supply chains and coordination on export control for sensitive technologies.

Yet the collection of collaborative initiatives, packaged together as an “Atlantic Declaration,” falls well short of the sweeping free-trade agreement that successive Conservative administrations have held up as a key prize of Brexit, the UK’s separation from the European Union.

Sunak tried to brush off a charge that Thursday’s declaration marked a failure because it didn’t fulfill the Tory promise of a free trade agreement, telling journalists in Washington that it was “ambitious in what it seeks to achieve” and “will deliver real benefits to people as quickly as possible.”

‘20th-Century Tool’

The UK had held five rounds of trade discussions with the US during the Trump administration. But Biden put them on ice and his administration has shown no sign of wanting to resurrect them, calling such agreements a “20th-century tool.” 

Asked at a joint White House press conference on Thursday why he wouldn’t agree to free trade deal with the UK, Biden failed to answer, instead listing the areas in which the two countries are collaborating.

Even so, the interaction between the two leaders has been intensive: this week’s visit marked the fourth time they have met in as many months, and the fifth time in all as leaders of their nations. And on artificial intelligence, Biden appeared to give Sunak what he wanted.

The British prime minister is lobbying hard for the UK to have a leadership role in the regulation of AI, and during his visit to Washington announced that Britain would convene an AI summit in the autumn. Biden said “there is no one country we have greater faith in” to talk about AI than the UK.

The Stanford-educated Sunak has repeatedly waxed lyrical about the spirit of innovation he encountered during his time in California’s Silicon Valley, saying he wants it to be a model for Britain. The prime minister met his wife, Akshata Murty, at Stanford, has a home in California and until recently held a US green card — even while serving as Chancellor of the Exchequer.

Biden, by contrast, has appeared to take a more hands-off approach when it comes to the UK. On a trip to Belfast and Dublin in April, ostensibly to mark the 25th anniversary of the Northern Ireland peace agreement, Biden spent far more time south of the border in Ireland, exploring his family’s heritage. Along with setting aside the trade talks, he declined to attend the coronation of King Charles III, though no American president has traveled to such an event.  

The president in the past has mispronounced Sunak’s name, and on Thursday referred to him as “president” at one point.

The two men, however, clearly get on — and that may be in part because of the potential alternatives. Biden has had to work with two premiers before Sunak — Liz Truss, whose time in office was very brief, and Boris Johnson, whose past remarks on President Barack Obama’s heritage rankled Biden. Sunak is no doubt aware of Theresa May’s fraught relationship with Donald Trump when she was premier — as the possibility of another Trump presidency approaches.

During his joint press conference with Biden, Sunak said that he and Biden have met so often in recent months, that their wives have started to take spin classes together. The prime minister will have to do a fair bit of spinning himself to persuade the British public the US is giving him everything his Conservative Party has promised.

©2023 Bloomberg L.P.