UK-US cooperation on the digital economy: reasons to celebrate?

Headlines coming out of Rishi Sunak’s recent visit to the US focused on the UK-US ‘Atlantic Declaration’. The Declaration covers a range of areas for bilateral cooperation, with a significant focus on digital and tech. This includes substantive commitments on the UK-US data bridge and cooperation on emerging technologies including AI, as well as a public endorsement from Biden of the UK as a ‘global leader’ on AI.  

This is a positive for the UK from the perspective of both government and business, particularly as the UK has struggled to bring the US to the table on economic cooperation and Sunak’s personal commitment to tech policy. To take advantage of this opening, businesses will need to follow developments closely as the focus turns to delivery.

What has been agreed? 

The Declaration contains two ‘pillars’ that directly relate to digital and tech: 

  1. Ensuring US-UK leadership in critical and emerging technologies; and 
  1. Partnering on an inclusive and responsible digital transformation 

There are some clear wins for the UK in both of these pillars. The agreement to finalise the UK-US data bridge is not only a longstanding government priority, but it will also cut costs and remove administrative burdens for businesses moving data between the UK and US.  

The commitment to joint research on key technologies, including AI and semiconductors, provides clear opportunities for businesses. A UK-US Strategic Technologies Council will be established to work with investors from both countries to drive private sector investment in critical and emerging technologies. The increased movement of talent between the UK and US to support technological innovation and R&D will also be pursued by both governments. 

Taken together, it demonstrates clear willingness from the US to work with the UK to promote the benefits of the digital economy. If both sides can deliver on their commitments and find ways to open up data flows and take a balanced approach to AI regulation, there will be upsides for business.  

What are the limitations? 

All international agreements have limitations and businesses need to understand the weak points as well as the strengths. 

The data bridge is unlikely to be agreed immediately as there are still tricky outstanding technical issues to be finalised. How long this will take will likely depend on political will and bandwidth on both sides. The agreement will also be an extension of the US-EU data bridge, which itself is not yet finalised, rather than a standalone bilateral agreement. This adds complexity – for example, issues in the implementation of the US-EU agreement, such as a “Schrems 3” challenge, could have some impact downstream on the UK’s agreement with the US.   

Cooperation on AI standards between the UK and US will also only be one part of the global debate. While there is an opportunity for leadership, the approaches of other major powers will remain influential, with possible consequences for business. For example, the EU has committed to passing an AI Act, the proposed provisions of which follow the EU’s instinctively cautious approach to standards-setting (although this approach is not universally supported – Macron, for instance, is an outlier). This contrasts with the US’s historically more innovation-friendly approach.  

China will not be invited to the UK-hosted AI Summit, due to be held in December, despite its growing strength in AI, and may instead turn its attention to influencing emerging economies. This is likely to make negotiations on any UN-based agreements harder in the future.

Looking ahead 

The outcomes of elections in the UK and US in 2024 could have a significant impact on domestic policymaking which could feed through to diplomacy on key tech issues.  

On the UK side, there is likely to be appetite to engage with the US regardless of the election outcome. But key differences are emerging between the Conservatives and Labour. So far, the Conservatives have taken a more liberal approach to tech and AI regulation, while noting its potential disruptive effects. On the other hand, Keir Starmer has been vocal about ensuring emerging technology works “for the public good” and that an overarching regulatory framework for AI is required to protect jobs. 

The Labour approach to tech regulation, as well as wider economic vision, is also more closely aligned to Biden’s much more interventionist industrial policy – as demonstrated by Rachel Reeves’ support for the Inflation Reduction Act during a recent visit to the US. Labour may yet want to put emphasis on digital industrial policy, in line with the CHIPS Act.  

Should 2024 see the Democrats win in the US and Labour win in the UK, we could see even closer UK-US cooperation on digital and tech. A Republican victory would mean a different dynamic, the nature of which would depend on who ended up in the White House. Businesses will need to carefully monitor developments both domestically and internationally to ensure that they are not being caught out by political shifts. 

This blog was written by Will Haworth, a Consultant based in London and former UK foreign and trade official, and Alessandra Venier, a Consultant based in London and expert in emerging technologies and AI.  

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