Across the Atlantic US-UK free trade deal: What’s going on?

By Jo Harper

WASHINGTON: US President Joe Biden’s upcoming European trip, where he will be popping in to see UK Prime Minister Rishi Sunak, will no doubt reinforce the optics of the “special relationship” between the two countries. At the same time, it will also conceal the underlying fact that London needs Washington far more than vice versa. Sunak was, of course, polite and diplomatic when signing the “Atlantic Declaration” with Biden in June, a watered-down version of a full-fledged free trade deal with the United States. But the unilateral recalibration of UK-US ties wasn’t hard to miss.

Sunak said a free trade agreement was no longer “a priority” for either side, and his officials said the declaration marked a “less sentimental and more pragmatic” approach to the UK-US “special relationship.”

For many, it was a watershed moment — the moment when Brexit’s dreams of unfettered UK global trade came crashing down to earth. For others, it was simply a reminder that the UK outside the European Union is weaker and less attractive to the US. For Brexiteers in the UK, a free trade deal with the US was one of several promises made before and after the 2016 referendum that have failed to come to fruition. A potential deal with Washington was widely seen as partly compensating for the loss of free access to the EU, the UK’s largest trading partner.

Why is the UK unable to get the US to sign a free trade deal? “Policy priorities in the US have changed [...] The US has moved away from the concept of traditional free trade agreements,” said Emanuel Adam, executive director of trans-Atlantic trade association BritishAmerican Business. While the UK struggled to get former US President Donald Trump to walk the talk on his promise of a “massive” trade deal during his time in the White House, it hasn’t been any easier with Biden at the helm. Protectionist pro-American trade policies remain the order of the day. Biden’s irritation with London’s inability to solve its “Irish question” after Brexit has also played a role. “US trade policies have become fairly unsentimental, self-interested and protectionist in tendency. And if they negotiate trade agreements at all they prefer larger partners with bigger markets, such as the EU,” said former EU diplomat Albrecht Rothacher.

US businesses are losing confidence in the UK as a place to invest in as a result of Brexit, rising corporate taxes and a year of political turmoil in London, according to a recent survey by BritishAmerican Business and consultant firm Bain & Company.

The survey of 56 US companies operating in Britain showed confidence in the UK falling for a third consecutive year.

Responding to the survey, the UK Department for Business and Trade said it was “not supported by the facts,” noting that the US had been the UK’s largest single investor for the last two decades.

The declaration pledges to ease some trade barriers, strengthen defense industry links and set up a data protection deal. It also includes an agreement to collaborate on key industries — AI, 5G and 6G telecoms, quantum computing, semiconductors and engineering biology — and work on a trade pact on critical minerals, those used to make electric vehicles, solar panels, flat-screen TVs and so on. The two nations also pledged to negotiate an agreement that would allow some British firms to access tax credits available under the US Inflation Reduction Act, a major climate and health care law passed in 2022.