The Atlantic Declaration reflects the continuing evolution of America and Great Britain’s Special Relationship, reaffirming the importance of their commercial and political ties at a period of tremendous change for the global economic order.

Delivering the Atlantic Declaration, the second report in Policy Exchange’s new programme, Industrial Policy in an Age of Global Economic Uncertainty, addresses the agreement as an opportunity to reconcile the United Kingdom’s climate, security, and industrial strategy through a closer partnership with our rules-based allies and trading partners.

Coronavirus, Russia’s invasion of Ukraine, and China’s growing belligerence towards Taiwan has exposed the fragility of the western world’s industrial supply chains and energy security dependencies. Concurrently, national climate strategies are evolving beyond commitments of decarbonisation into opportunities for domestic re-industrialisation and commercial advantage. Beijing’s abuse of open markets and domination in the clean tech sector – particularly critical mineral supply chains – is forcing a revolution of our foundational market structures and a decoupling from adversarial nations.

After three generations of steadily expanding free-trade, there is a growing momentum around the world towards market interventionism and protectionist measures. In the United States, this has taken shape through the Inflation Reduction Act, which will deliver up to a trillion dollars of subsidies and tax credits throughout the climate economy – on conditions of abiding by Local Content Requirements (LCR), a major cause for alarm for the WTO and America’s trading partners.

Since its passage last August, the IRA has helped stimulate over $100bn of clean tech capital investment, a 10-fold increase since 2019. While America’s manufacturing output increased by 2.8% last year, the UK’s declined by 2.7%. The Atlantic Declaration opens the door to Westminster aligning with Washington D.C. on a robust green industrial strategy that improves Britain’s competitiveness for climate investments and restores our economic sovereignty. We set out the following recommendations:

• Urgently conclude negotiations to ensure British firms can be eligible suppliers for US companies seeking tax credits under IRA.
• Adoption of a Carbon Border Adjustment Mechanism (CBAM) to allow energy-intensive industries – such as steel and cars – can compete on a level-playing field with high-carbon, polluting manufacturers in China.
• Collaborate with allies to build a Strategic Critical Minerals Reserve to improve our industrial resource security.
• Revive negotiations over the stalled Environmental Goods Agreement at the World Trade Organisation, affecting up to $1 trillion worth of global trade, and expand the scope to include environmental services.
  
• Establish a green ‘Climate Club’ with like-minded nations to promote green trade.
  
• Speed up the building of green infrastructure – such as wind farms, solar and gigafactories – by using ‘Permitted Development Rights’ to streamline the planning process.