Mr. Sunak Goes to Washington: A Debriefing on the PM’s First Official White House Visit
Prime Minister Rishi Sunak’s June 7-8 visit to Washington sought to achieve a visible victory in key areas of trade, technological, and security cooperation—specifically aligning on a global AI regulatory partnership, digital trade, and coordinated support for Ukraine and for the Australia–UK–US trilateral security pact (AUKUS).
However, domestic political conditions in the US, as it approaches the presidential election season, and the current administration’s prioritization of economic and technological initiatives with the EU, could limit any meaningful policy successes for the Prime Minister.
During the visit, the US and UK:
- Announced the “Atlantic Declaration,” a policy focused on deepening economic and data security cooperation, reducing trade barriers, and increasing jobs and investment in both countries.
- Agreed to start talks on a critical minerals pact to support British car manufacturers and pursue joint development of advanced weapons systems.
- Agreed to the Prime Minister's wish to host a global AI conference in London this fall.
- Failed to confirm US support for the UK Defence Secretary’s candidacy as the next Secretary General of NATO.
A shaky economic outlook, the continued fallout of Brexit, and the recent May 2023 Tory electoral defeat threaten Mr. Sunak’s control over his party and his chances of securing a victory in the upcoming general election.
US business confidence remains positive in its seventh-largest trading partner, as evidenced by the announcement from Prime Minister Sunak that US firms have committed more than £14 billion (about $17.6 billion) of new investment in the UK, although the amount may include previously distributed funds.
That said, American companies operating in the UK believe that post-Brexit uncertainties coupled with inimical government policies are the main obstacles to an improved business and investment climate.
Nearly 80 Years and Counting
Although this was not Prime Minister Sunak’s and President Biden’s first meeting in an official capacity (both met in Northern Ireland this past April to mark the 25th anniversary of the Good Friday Agreement, and in San Diego last March to discuss AUKUS), this was Sunak’s first official visit to Washington. Building on eight decades of intimate defense, intelligence, diplomatic, and economic cooperation, interest on both sides for continued partnership remains strong.
Even with the challenges posed by Brexit, investors from both countries report moderate to strong levels of economic confidence. The second annual Transatlantic Confidence Index found in 2022 that US investors were only slightly less confident than they were a year ago operating in the UK market; on a scale of 1 to 10, it went from an average confidence level of 7.8 in 2021 to 7.3 in 2022.
A lack of UK-EU collaboration is the main issue affecting US foreign direct investment confidence levels, in addition to the following domestic UK economic issues:
- PM Sunak’s support of increasing the corporate tax rate from 19% to 25% in 2023, a policy shift which would undermine Britain’s traditional business friendly tax environment
- Systemic labor shortages
While there is interest in a US-UK free trade agreement (FTA), core objectives for US companies such as improved business mobility, a data transfer agreement, and joint initiatives surrounding sustainability can be achieved outside an FTA framework.
On the UK side, there is a desire to move beyond Brexit and the ruptures it created within the Euro-Atlantic community. The embodiment of this is the Windsor Framework, the UK-EU agreement negotiated earlier this year to address the impact of Brexit on Northern Ireland. Under Sunak, the UK dropped its confrontational approach of unilaterally amending the terms of the UK-EU Northern Ireland Protocol in favor of a joint approach which accepted that Northern Ireland would remain aligned with some EU rules. Given his Irish roots, this was an issue of particular interest to President Biden and its resolution has unlocked further opportunities for UK-US cooperation.
Local Opportunities in the US
In lieu of a bilateral FTA, individual US states have taken a lead on strengthening commercial ties with the UK. The UK’s Americas and Caribbean Minister, David Rutley, has been travelling to the American Midwest meeting with key state political and business leaders, culminating in the June 2-5 91st US Conference of Mayors in Columbus, Ohio.
As part of Prime Minister Sunak’s five-point plan, which includes increased economic growth and the creation of higher-paying jobs, the UK has signed Memorandum of Understandings (MoU’s) with Indiana, South Carolina, North Carolina, and Oklahoma. Downing Street’s own press release for the DC visit included quotes from several US corporate leaders on the importance of their transatlantic relationships, employees, and job creation.
Sunak’s Domestic Objectives for the Visit
Sunak came to Washington looking for a win to sell back home as his domestic difficulties mount—he is struggling to make progress on his five key policies as inflation remains stubbornly high, the health service continues to struggle, and irregular migration persists. Against this backdrop, the Conservatives suffered a major defeat in last month’s local elections, with opposition parties making gains all across the board, while Labour has maintained a healthy lead in the opinion polls.
The international stage therefore offers Sunak respite and an opportunity to appear statesmanlike, which Conservative strategists will translate into domestic credibility. However, the following realities could complicate a clear takeaway for Sunak:
- US political realities: The upcoming US 2024 Presidential election campaign season will make it difficult for the Biden Administration to marshal the political capital and support for a trade deal.
- AI work already underway: The US and EU are already discussing a voluntary code of conduct for AI and, given that the EU is a larger trading partner of the US than the UK is, any UK proposal would have to clearly illustrate the value added of a British led framework.
- NATO: President Biden remained non-committal on the topic of UK Defence Secretary Wallace’s candidacy for Secretary General of NATO. Wallace would need to win the support of the US, the primus inter pares of NATO, as well as the support from other member states (such as France) to secure his bid. There are also calls from some members for a first-ever female Secretary General (such as Danish Prime Minister Mette Frederiksen, Canadian Deputy Prime Minister Chrystia Freeland) or for someone from NATO’s eastern flank. When President Biden was asked by a reporter about Wallace’s candidacy, the President stated that while “he was very qualified it remains to be seen,” suggesting that he would need to confer with other member-states.
Defense and Security
The US’s and UK’s coordinated approach to sanctions and military aid to Ukraine, in response to Russia’s invasion, has demonstrated that in the sphere of defense cooperation, London remains one of Washington’s strongest and closest allies.
- As the second largest donor after the US to the Ukrainian effort, the UK has committed around $5.7 billion in military assistance thus far, it is also hosting a training program (Operation Interflex) supported by several allies, which aims to train 30,000 new and existing Ukrainian personnel by the end of 2023. It has also provided long-range precision strike missiles and is supporting the delivery of humanitarian and non-lethal aid.
- Nearly two years after announcing AUKUS, the Australia-UK-US trilateral security pact, Australian Prime Minister Albanese, Prime Minister Sunak, and President Biden met in San Diego, California on March 13, 2023, and announced a framework for Canberra to acquire a nuclear-powered submarine (SSN) based on the UK’s next-generation SSN design. It will also incorporate US submarine technologies, highlighting the continued military-to-military integration and security cooperation between the two countries as tensions develop with China in the Indo-Pacific.
Two Conflicting Agendas
PM Sunak appears to have needed this meeting more than President Biden. There seemed to be nothing concrete the White House or Congressional leadership wanted to proactively pursue with the British delegation, save perhaps a continued commitment from the British to support American efforts in Ukraine. The Prime Minister met with US business executives and has voiced strong support for greater business-to-business ties.
However, the Prime Minister's recent embrace of corporate tax increases as well as lingering post-Brexit frictions, even after the Windsor Framework agreement, could be concerning for American companies either operating or seeking to expand their UK-based operations.
Post-Trip Takeaways
The promise of Brexit was that Britain was “going global” and that London could secure more FTAs with better terms, including with the US. However, not only has the Conservative Party—the political party associated with advocating for Brexit—failed to deliver on this much trumpeted promise, but given American Democrats’ lack of interest in a free trade deal, it is unlikely Prime Minister Sunak will achieve a major trade agreement with the Biden administration.
There are signs that this has increasingly been recognized and processed in London. The UK has focused on other trade deals such as the UK’s recent accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) as well as ongoing negotiations with India and the Gulf states. And when it comes to the US, it is looking at economy-boosting measures short of an FTA, especially in emerging sectors such as green technology and AI.
This could change in the event of a Republican victory in next year’s presidential elections, however, even then the negotiations would be long and arduous, and it remains to be seen whether the Conservatives will still be in power by that point themselves. As such, at this stage both sides see the value of focusing on issues such as Ukraine and AUKUS, especially given the current kaleidoscopic geopolitical map. With a volatile domestic political and economic situation in the UK, including three prime ministers in the space of a few years, should American leaders wish to maintain the US-UK alliance another eighty years, there are other aspects of the “special relationship” that beg for greater attention.
For additional information, please reach out to Anne MacDonald, US Managing Director, Political Risk, anne.macdonald@edelmanega.com, and Pawel Swidlicki, UK Vice President, pawel.swidlicki@edelmanega.com. With gratitude to Ian C. Lovoulos for his research and writing on this report.
