Analysis | Is the U.S.-U.K. relationship still special? A tale of awkward bedfellows
An uptick in U.S.-U.K. diplomacy could provide an opportunity to negotiate a free trade agreement.
Christian McNally
Rishi Sunak’s first trip to Washington as British prime minister earlier in June re-energized efforts toward a possible U.S.-U.K. free trade agreement. Sunak has made constructive steps with President Biden, as demonstrated by a recent joint declaration on the two countries’ economic relationship. This announcement is a welcome improvement relative to the stagnant efforts of Sunak’s two predecessors Liz Truss and Boris Johnson. Russia’s war in Ukraine and China’s militarism in the South China Sea, however, have shifted the focus to matters of security. Consequently, a free trade agreement appears to have been relegated to the back burner, and the core promise of the Leave campaign during the Brexit referendum so far remains unfulfilled.
A free trade agreement is in the strategic interests of both countries, and reaching one should be afforded greater effort than present levels. Greater global instability is more, not less, of a reason to pursue such an agreement. It is a proven tool for building resilient regional supply chains on a myriad of commodities. The importance of military readiness notwithstanding, it is important to remember that national security includes economic security, and a free trade agreement between the United Kingdom and the United States is the most robust avenue to achieve that.
The current status of a U.S.-U.K. free trade agreement
Since officially leaving the European Union on January 31, 2020, the United Kingdom has been legally able to independently negotiate its own trade agreements with other countries. (In contrast, the European Commission negotiates trade deals on behalf of E.U. member states.) The U.K. Department for International Trade estimates an agreement would increase trade by approximately £15.3 billion ($19.3 billion) in the long term and would deliver a £1.8 billion boost to British workers’ wages. Negotiations began in earnest in May 2020, against the backdrop of the Covid-19 pandemic. U.S. Trade Representative Robert Lighthizer desired greater access for U.S. agricultural products in the British market; reduced tariffs on U.S. manufactured goods; and duty-free access to an array of American industrial goods, including textile and apparel products.
The United Kingdom, for its part, sought expanded access to America’s procurement market that would allow more U.K. firms to bid for lucrative U.S. government contracts. Mirroring U.S. objectives, the U.K. government also requested to remove tariffs on textiles and ceramics to make British products more competitively priced for American consumers. On the intellectual property (IP) front, the British government proposed building upon foundational standards in lockstep with the United States. An expanded joint framework would protect brands while incentivizing innovation brought about by greater collaboration between American and British private industries and subject matter experts.
However, British negotiators, led by then-trade minister Liz Truss, were keen to point out certain non-negotiable positions at the onset of talks in May 2020. Chief among them was the protection of the U.K. National Health Service (NHS) and specifically the price of medications. This should come as no surprise due to the simple fact that tampering with or privatizing the NHS to even a small degree carries severe political costs domestically. The thorniest issue between both sides involved agricultural products, owing to strong British opposition to U.S. genetically modified crops and antibacterial treatments of poultry.
Under Biden’s administration, however, a free trade agreement has become a much lower priority, putting an end to four rounds of initial talks. The President avoided the issue during his recent trip to Northern Ireland in April 2023. President Biden’s position is reminiscent of remarks made by former House Speaker Nancy Pelosi, who warned Britain that a U.S.-U.K. deal would not be reached if the United Kingdom proceeded to threaten peace in Northern Ireland. With the Northern Ireland issue resolved, following the landmark Windsor Framework, will the Biden administration be more willing to entertain economic talks?
Biden’s position has forced Sunak into an awkward diplomatic situation, compelling him to instead pursue smaller and more target-specific economic deals, or deals with individual U.S. states. Exactly why President Biden is starkly less interested in a free trade agreement compared to his predecessor is a matter of speculation given the silence of his administration on this topic. Perhaps it simply boils down to priorities, with the United States looking into securing a trade deal with the European Union. This would echo Obama’s warning that the U.K. government would be at the “back of the queue” should the British public vote to leave the European Union.
A new “Atlantic Declaration”
Despite the stall in free trade negotiations, Prime Minister Sunak has made inroads with his American counterpart, culminating in the recently announced “Atlantic Declaration.” Sunak’s trip to Washington comes at a time of heightened global tensions and a continued effort by London to showcase its close partnership with America. Amid the aforementioned security threats, Western nations are reverting to increased independence, relegating the globalization project to the back burner. The “Atlantic Declaration” is a further demonstration of this growing pattern.
The Atlantic Declaration for a Twenty-First Century U.S.-U.K. Economic Partnership, announced by the White House on June 8, 2023, primarily builds on pre-existing bilateral agreements to promote further collaboration between both countries in key technological and financial sectors. Specifically, the U.S. and U.K. governments will share research on technologies including semiconductors, quantum technologies, artificial intelligence, modern telecommunications, and synthetic biological models. This plan will facilitate mutual investments in each country’s private industries, in close collaboration with national security subject matter experts. The creation of the U.S.-U.K. Strategic Technologies Investor Council will endeavor to identify funding gaps that currently exist and help unlock areas where private investment in critical and emerging technologies can benefit the national security of both countries simultaneously. The White House stresses the importance of shielding technological advances and expertise from “countries of concern.” Indeed, the declaration warns that Western technological breakthroughs might inadvertently benefit the military and intelligence capabilities of China and Russia, through IP theft.
Meaningful progress or throwing a dog a bone?
It is no secret that a post-Brexit United Kingdom is anxious for a rebound in diplomatic relevance and deeper economic ties with the United States. A free trade agreement with the United States has been on top of Downing Street’s foreign policy agenda since leaving the European Union. After the chaos that has plagued the past three U.K. premierships, Rishi Sunak appears to be closer than his predecessors. He has met with President Biden four times, in as many months, with the last meeting securing the AUKUS nuclear-powered submarine agreement between the United States, United Kingdom, and Australia. Despite the significance of this latest military deal, Sunak has arguably achieved only modest results on the diplomatic front. For starters, the “Atlantic Declaration” reaffirms pre-existing economic ties rather than creating any new ones. The few new councils on transatlantic cooperation are strictly advisory, and a far cry away from a legally binding treaty. In addition, the spirit of the agreement is primarily protectionist insofar as it seeks to decouple Western dependency from Chinese and Russian natural resources, in light of growing geopolitical instability.
With rising tensions around Chinese militarism in the Pacific theater and the ongoing war in Ukraine, British foreign policy objectives fall victim to the times we live in. The focus has clearly shifted to matters of security at the expense of free trade talks. The White House has just announced that President Biden will visit London later in July, where he is expected to meet with Sunak as well as King Charles III. Right on the heels of the Atlantic Declaration, this trip could provide the opportunity to further build on the economic talks held during Sunak’s visit to Washington. Should London and Washington fail to achieve a free trade agreement in the near future, however, economists may look back at this period as a time of missed opportunity.
Christian McNally is a second-year master’s student in the security studies program at Georgetown University’s School of Foreign Service. He has split his higher education between the United States and the United Kingdom, affording him insight into the professional cultures of both countries.
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