Rishi Sunak and Joe Biden announce green funding agreement

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Sam Francis Political reporter, BBC News June 8, 2023 19:27 GMT

Updated 27 minutes ago

British companies can access US green financing as part of plans to strengthen UK-US relations announced by Rishi Sunak and Joe Biden.

The two revealed the Atlantic Declaration, to strengthen economic relations between the two countries, at a press conference at the White House.

The prime minister said the agreement, which falls short of a full trade agreement, would bring benefits “as soon as possible”.

UK electric vehicle companies may gain access to US green tax credits and subsidies.

As the couple revealed their partnership to enhance economic security, Sunak said the relationship between the UK and the US was an “indispensable alliance”.

The Atlantic Declaration includes commitments on easing trade barriers, closer defense ties, a data protection agreement and stepping up cooperation on artificial intelligence.

Asked by Chris Mason, the BBC’s political editor, whether the new deal was an “acknowledgment of failure” to secure a broader UK-US trade agreement, Sunak said today’s deal “responds to certain challenges and opportunities that we now face”.

A UK-US free trade agreement was a key pledge in the Conservative Party’s 2019 general election manifesto.

Mr Sunak insisted that a more targeted approach to advertising is about “what can bring the greatest benefit to our citizens as quickly as possible”.

“There is no doubt that the economic relationship between our two countries has never been stronger,” Sunak said.

Plans for a full free trade agreement were abandoned months ago. “For a while, it wasn’t a priority for the United States or the United Kingdom,” Sunak said, as he boarded the plane to Washington.

Biden said the special relationship with the UK was in “really good shape,” referring to their cooperation on Ukraine.

“Together we provide economic and humanitarian aid and security systems to Ukraine in its fight against a brutal invasion from Russia,” he said.

New green financing

Under the current policy, the IRA provides a $3,750 (£3,000) tax credit for every electric vehicle (EV) that is made in the US, or that uses components that are mined, processed or manufactured in the country.

The UK is already a net exporter of raw materials for electric vehicle batteries to the US. But countries that do not have a trade agreement with the United States are barred from receiving IRA support.

The Atlantic declaration obliges the UK and US to work on a new critical minerals agreement – which will give buyers of vehicles made using critical metals processed, recycled or mined by UK companies access to tax credits.

The announcement says the agreement will begin after consultation with the US Congress.

Japan already has a similar deal in place, which also allows Japanese companies to remit export duties on metals used in the production of electric vehicle batteries.

The declaration also includes a commitment to a “new UK-US data bridge” that would allow British companies to freely transfer data to authorized US organizations without paying tax.

Downing Street estimates that the change will affect around 55,000 UK businesses – translating to £92.4m in direct savings annually.

Biden also backed Mr. Sunak’s plans for an international summit on AI safety, which the UK will host later this year.

The Prime Minister said: “The UK and the US have always pushed the boundaries of what the two countries can achieve together.

“So it is only natural that, as we face the biggest transformation in our economies since the Industrial Revolution, we look to each other to build a stronger economic future together.

“The Atlantic Declaration sets a new standard for economic cooperation, propelling our economies into the future so we can protect our people, create jobs and grow our economies together.”

Both Biden and Sunak agree that work will be done to improve the resilience of supply chains and efforts to wean Vladimir Putin’s Russia out of the global civilian nuclear market will be intensified.

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