UKE0013

Written evidence submitted by the Cabinet Office

Summary

1.            The Integrated Review Refresh 2023 set out a range of economic security challenges facing the UK and the world, including growing geopolitical competition, national security risks emanating from legitimate economic activity, and supply chains vulnerable to shocks and exploitation. The Government is committed to tackling these challenges in a way that makes sense for the UK as an open, mid-sized economy that benefits from trade and investment and which supports global norms.

2.            This written evidence draws on work underway across several departments to strengthen the UK’s economic security while preserving our competitiveness and prosperity. This includes work on export controls, sanctions, investment screening, research security, supply chains and economic deterrence. The evidence highlights some data and examples to demonstrate the impact of the Government’s steps, and we will continue gathering additional evidence on the impact of our actions - particularly of more recent policy interventions that are still in the process of being developed and implemented - on the real-world outcomes we are seeking to achieve. The evidence also explains the Government's approach and institutional capabilities to deliver this work, including the role of the National Security Council (Economic Security) sub-committee in overseeing policy work and delivery. Finally, this evidence highlights the work underway to develop international partnerships to deliver against these shared challenges, including through the G7 and our bilateral ties.

Introduction

3.            The Government is submitting written evidence to the Joint Committee to support the inquiry into the UK’s economic security.

4.            An open, stable and resilient global economy is a precondition of our security and prosperity. However, a highly integrated global economy presents some national security challenges to governments and businesses. These include the potential vulnerability of key supply chains - including those needed to support the UK’s clean energy transition - to sudden shocks, the importance of energy security, the risk of our economic ties being leveraged by adversaries, and systemic competition as the dominant geopolitical trend and the main driver of the deteriorating security environment. We have seen all of these risks manifest in Russia’s illegal invasion of Ukraine. We are also seeing them in the epoch-defining challenge that China - while remaining an important trading partner with whom the UK wants to have a safe, reciprocal and mutually-beneficial relationship - poses to the type of international order we want to see.

5.            This context presents particular challenges for the UK as an open, mid-sized economy that benefits from trade and investment. Total trade accounted for 64.5% of UK GDP in 2022. We are the 5th largest exporter of goods and services in the world. Our trade as a percentage of GDP is twice that of the US, and our FDI to GDP ratio (76%) is ahead of France (54%) and Germany (52%). Therefore, strengthening the resilience and security of the global economy while preserving its openness and our competitiveness, and collaborating with our allies and partners - including through our trade and investment partnerships - to achieve this objective, is key to the UK’s interests.

6.            As set out in the Integrated Review Refresh 2023 (IR2023), the Government is developing robust measures to address these challenges. We are ensuring the UK is better able to tackle economic-based threats in a proportionate and targeted manner. We are creating an economy that is more resilient to supply shocks and stronger in areas of strategic importance. We are working with allies to tackle threats to global norms. Finally, we are driving delivery of our strategy through a “whole of government” approach that draws on policy development and business engagement led by all relevant departments, and on a range of domestic and international structures, including the National Security Council (Economic Security) subcommittee (NSC(ES)) and the G7.

7.            The evidence provided below has been compiled by the Cabinet Office with support from the Department for Business and Trade (DBT), the Foreign, Commonwealth and Development Office (FCDO), HM Treasury (HMT), the Home Office (HO), the Department for Science, Innovation and Technology (DSIT), the Ministry of Defence (MoD) and the Department for Transport (DfT). All the evidence provided here is classified at OFFICIAL.

1. How best to define ‘economic security’, and the extent to which an overarching policy framework is possible (or desirable)

8.            There is no single, internationally recognised definition of economic security, though there is significant international consensus on what is needed practically to strengthen it.  Economic security is an umbrella term that covers a wide range of issues, including economic-based national security threats, economic statecraft, and economic strength and resilience in national security-relevant sectors.

9.            The Government considers economic security by reference to three objectives: (1) ensuring we are better able to tackle economic-based national security threats in a proportionate and targeted manner; (2) making our economy more resilient to supply shocks and stronger in areas of strategic importance; and (3) using economic strengths and international partnerships to tackle threats to global norms.

10.            As set out in IR2023, the Government will deliver these objectives by (i) expanding the tools we can deploy to tackle threats to global security and prosperity; (ii) proactively supporting the capabilities, supply chains and technologies that are of strategic importance to the UK and the wider world; (iii) providing clarity to business on our approach to ensure the UK remains a great place to invest; and (iv) working ever more closely with our allies and partners.

11.            This provides a framework in which different departments deliver specific policy work, including on export controls, supply chains, investment screening and sanctions.

2. The main risks to the UK’s economic security over the short, medium and long term, from which sources or vulnerabilities they arise (and in which sectors), and the capabilities that might be required in order to address or counter them effectively

12.            The National Risk Register 2023 provides an assessment of the most serious risks facing the UK, including from hostile actors and in key areas of the economy - such as our energy infrastructure.[1] This focuses on ‘acute’ risks, which are discrete events that require an emergency response.  The IRR2023 confirmed that the Government is establishing a new process for identifying and assessing chronic risks, which are enduring challenges that gradually erode elements of our economy, society, way of life and/or national security.

13.            There are a number of potential risks to the UK’s economic security, consisting inter alia of i) technology or knowledge being transferred that, either immediately or over time, enhances our adversaries capabilities; ii) access or influence emerging over the UK’s critical national infrastructure (CNI); or iii) supply chain dependencies emerging on individual countries or companies for critical goods and services, which could be leveraged by hostile actors and leave the UK more exposed to disruption caused by global shocks and crises. Legitimate international economic activity, such as foreign investment, international research collaborations and the export and import of goods and services, while being important drivers of our prosperity and growth, can give rise to these threats.

14.            These economic-based national security risks are particularly salient in certain sectors and in an environment of growing geopolitical competition. Through the National Security and Investment (NSI) Act, the Government has set out 17 of the most sensitive sectors of the economy where national security risks can arise from inward investment.[2] The UK’s International Technology Strategy (2023)[3] identifies five technologies of particular strategic importance that should be protected from national security threats. As announced in the IR2023, the Government will also publish a Critical Imports and Supply Chains Strategy in the first quarter of 2024. This will cover critical goods and supply chains that are key to the UK’s security and prosperity and where the government will work with businesses to increase resilience.

15.            Finally, as set out in the IRR2023, the global economic and trade order is changing and showing signs of fragmenting. Countries around the world are taking action to tackle national security threats and strengthen strategic domestic industries, including through ‘onshoring’ or ‘friendshoring’. Fragmentation will be costly to the UK and the world, with the IMF assessing the longer-term cost as ranging from 0.2% of global output in a limited fragmentation scenario to almost 7% in a severe scenario.[4]

16.            Some of these specific risks, and the capabilities needed to address them, are set out in more detail under questions three and five. 

3. The effectiveness of the Government’s overall approach to economic security, including key policy frameworks, governance and resourcing

17.            The Government is taking decisive steps to tackle the economic security challenges set out above, while protecting our strengths as an open and outward looking economy and supporting the rules-based international system.

We have used our economic tools to tackle threats to global norms

18.            We have used sanctions to deter and disrupt malign activity, and to demonstrate our defence of international norms. In particular, the UK has deployed an unprecedented package of sanctions against Russia, which is having a significant impact on the Russian economy and finances. For example, £22.7 billion assets have been reported frozen since the invasion due to the UK’s financial sanctions. £20 billion of UK-Russia bilateral trade is now under full or partial sanction, and we have also contributed to a 24% fall in Russia’s energy revenue through the oil price cap. Most recently, we have taken further action alongside G7 partners against Russia’s military industrial complex and remaining sources of revenue, including by banning imports of Russian copper, nickel, aluminium and diamonds.

19.            We have also made progress in delivering the Economic Deterrence Initiative (EDI).[5] The EDI is a funding programme that aims to improve sanctions implementation and enforcement, and prepare for future scenarios where the UK may need to respond to hostile acts. We are establishing a new Office for Trade Sanctions Implementation (OTSI) in DBT, which will increase business awareness of and compliance with UK trade sanctions and investigate potential breaches. We are reinforcing our ability to tackle sanctions circumvention through new data tools, new sanctions intelligence roles in the Joint Maritime Security Centre, and the establishment of a network of regional sanctions attaches. We are also preparing legislation to introduce civil monetary penalties for breaches of both trade and transport sanctions, and have launched training initiatives to deliver improvements in sanctions capability across departments.

We have deployed our protective tools to tackle national security threats arising through economic interactions in a targeted and proportionate way, while also strengthening our toolkit to ensure we can respond to evolving challenges.

20.            We are tackling threats emanating from investment flows. We have used the National Security and Investment (NSI) Act to scrutinise and intervene, where necessary, in acquisitions of control over entities and assets in or linked to the UK that may pose national security risks. While leaving the majority of transactions unaffected, the Government has made 17 final orders (interventions) under the NSI Act, including blocking acquisitions or imposing conditions to (i) protect technology, including through preventing its transfer, where there are dual-use, military applications or risks to the resilience of our supply chains; and (ii) safeguard the resilience of UK energy infrastructure and the security of services provided to the National Grid.

21.            We have an interest in preventing our companies’ capital and expertise from fuelling technological advances that enhance the military and intelligence capabilities of our adversaries. We are therefore also reviewing the risks around Outward Direct Investment, by undertaking an analytical exercise and engaging business and financial stakeholders to develop an evidence base to assess and inform how we can best calibrate our actions to respond effectively to these risks.

22.            We have used our export controls to ensure military equipment, technology and dual-use items do not get into the wrong hands or are used to facilitate international repression or serious violations of international humanitarian law. In 2022, we refused 423 licence applications to destinations including China, Russia and Pakistan. We also expanded the scope of our Military End-Use Controls to add China and the Special Administrative Regions of Hong Kong and Macao to the list of controlled destinations. This led to a more than doubling of licence refusals for China in 2022 compared to 2021. We have reviewed how our export controls can tackle sensitive technology transfers and will be launching a consultation on implementing the review’s recommendations, including on better industry engagement and guidance. We are also reviewing the implementation of the Military End-Use Controls to understand their impact and ensure they continue to operate as effectively as possible.

23.            We have taken steps to ensure the research sector can make informed decisions on research collaboration and manage national security risks. Our primary focus has been the science, technology, engineering and mathematics-focused institutions in the Higher Education sector, as this is where we see risks that UK universities are unintentionally generating research that is sponsored by, or may be of use to, military conglomerates of authoritarian regimes. In 2022, we set up the Research and Collaboration Advice Team (RCAT), which supports research institutions to fulfil their regulatory obligations, identify and manage national security risks in international collaboration, and improve their governance. Since the launch of the advisory service, RCAT has engaged over 130 research institutions, and answered over 500 specific queries. We have also worked with G7 partners to make our collective approach more robust, including by agreeing a common set of values and principles for research security and integrity. As announced in the Integrated Review Refresh, we are conducting a comprehensive review of legislative and other provisions to protect our academic sector, to identify what more we can or should be doing. 

24.            We have strengthened the scrutiny faced by companies that bid for public contracts through the Procurement Act 2023. The Act allows the Government to ban suppliers that pose national security risks from specific types of contracts, including where companies look to gain access to sensitive information or sites that could be used to compromise government and society. The Government has also created a new National Security Unit for Procurement (NSUP) to consider referrals from contracting authorities and bring together national security and procurement expertise. This will be operational by Autumn 2024.

25.            We have created an offence of obtaining or disclosing trade secrets in the National Security Act 2023. This criminalises espionage in relation to information that has existing or potential commercial, economic, or industrial value, such as a new technology developed in the UK. This offence protects UK innovation and research across a range of sectors that can be targeted by foreign states.

We have strengthened capabilities, technologies and supply chains that are strategically important to the UK and the wider world

26.            The Government has strengthened UK capabilities where there is a compelling strategic case to do so - including in defence and Covid-19 vaccine manufacturing. We have also taken steps, as set out in the Energy Security Strategy and Energy Security Plan, to improve the UK’s energy security, creating greater energy independence consistent with net zero. This includes the development of resilient global supply chains needed to support the UK’s clean energy transition.

27.            The Government is also taking additional steps to build resilience across key sectors.

28.            Science and technology is an area that is increasingly vital to our security, and where we are taking steps to deliver our strategic vision set out in the Science and Technology Framework and our goal of making the UK a science and technology superpower by 2030. We are acting across all five priority technologies:

○       growing our semiconductors sector, building on our strengths in R&D, design and compound semiconductors and investing up to £200 million over the next two years;

○       delivering a £2.5 billion commitment over the next decade to quantum technologies, to grow UK knowledge and skills, support businesses, and establish the UK as an integral part of the global supply chain;

○       making progress on AI, including by delivering £1 billion for the next generation of supercomputing and AI research, holding the first AI Summit, and launching the AI Safety Institute;

○       supporting engineering biology through a £2 billion commitment over the next decade, supporting foundational R&D, infrastructure, skills and businesses in the sector; and

○       fostering UK advantage in telecoms technologies, including through an initial investment of up to £100m in this Spending Review period and work with international partners as part of a new Global Coalition on Telecoms.

29.            Critical minerals are key to many aspects of our daily lives. The Critical Minerals Strategy sets out how we will accelerate the UK’s domestic capabilities, collaborate with international partners and enhance international markets. Recognising the changing global landscapes, the Government published a Critical Minerals Refresh in March 2023 and launched an independent Task & Finish Group on Industry Resilience for Critical Minerals. This reported its conclusions in December 2023 and made seven key recommendations to strengthen the resilience of the UK’s critical mineral supplies.[6] The Government will respond to the recommendations in the first quarter of 2024.

30.            We have also focused on building our strengths in other strategically significant growth sectors. This includes advanced manufacturing, where the government is making a £4.5 billion of funding available to strategic manufacturing sectors over five years to 2030; and batteries, where, as set out in the UK Battery Strategy[7], we are aiming to achieve a globally competitive battery supply chain by 2030.

31.            We have also published the UK Government Resilience Framework,[8] which sets out how we will strengthen the systems and capabilities that support our collective resilience through to 2030. We are making progress on delivery. The Deputy Prime Minister gave the first annual statement to Parliament on risk and resilience in December 2023. We have refreshed the National Security Risk Assessment process to make it more dynamic and published the most transparent ever National Risk Register.

We have stepped up our engagement with businesses to ensure the UK remains a great place to invest

32.            Business engagement is at the heart of the Government's approach to economic security. The Government regularly engages with businesses on a range of economic security policies to understand their impact and ensure businesses’ views are reflected. We also use our overseas network to engage businesses abroad looking to invest in the UK to help them identify opportunities and explain the operation of our protective tools, such as our investment screening regime. This is an area where the Government is committed to going further still, to ensure our economic security actions provide the right signals and stability to businesses and investors, and to work with businesses to tackle the evolving threats emanating from legitimate economic activity.

33.            Since the IRR2023, we have:

○       established the National Protective Security Authority (NPSA), to provide intelligence-led advice to businesses and institutions in sensitive sectors of the economy. Since publication of the IRR2023, NPSA has launched Secure Innovation, a joint campaign with the National Cyber Security Centre aimed at start-ups and spin-outs in the innovation sector. NPSA has also continued to promote, alongside DSIT and NCSC, the Trusted Research campaign, aimed at academia and research institutions; and

○       established the Economic Security Public-Private Forum, to allow better communication on our economic security activity and the challenges businesses face, and identify opportunities to develop joint solutions. The first meeting in December 2023 was chaired by the Deputy Prime Minister and the Secretary of State for Business and Trade. Attendees received a threat briefing from MI5, discussed the economic security risks from AI and provided feedback to the Government on the economic security challenges they face.

34.            The effectiveness of the Government’s approach to governance and operational capabilities is covered under question four. The effectiveness of our approach to international cooperation on economic security is covered under question seven.

4. The role and effectiveness of the National Security Council (and its sub-committee on Economic Security), National Security Adviser and national security machinery in providing leadership on this policy area, drawing in external expertise, and ensuring coherence across Government of the UK’s response to economic security risks

35.            The National Security Council (NSC), chaired by the Prime Minister, is the main forum for collective discussion of the government’s objectives for national security and about how best to deliver them in the current financial climate. The NSC(ES) sub-committee was established in January 2023 to oversee the delivery of the Government’s economic security objectives. It is chaired by the Deputy Prime Minister and acts as a forum for coordination on areas that cut across departmental responsibilities, overall strategy setting, and collective agreement on economic security issues.

36.            Different departments are responsible for taking forward specific economic security policy work. Teams of economic security officials are in place in all departments leading on elements of the Government’s approach, including HMT, DBT, FCDO and DSIT. Cross-departmental teams are in place where necessary, including the MoD/DBT/FCDO Export Control Joint Unit and the DESNZ/FCDO International Energy Unit. 

37.            The National Security Secretariat (NSS), within the Cabinet Office, coordinates this work. It ensures alignment and delivery with the Government’s overarching strategy and provides the secretariat function to the NSC(ES) sub-committee. It also ensures policies are developed in an open and collaborative way between all relevant departments, and enables trade-offs and opportunities across objectives to be considered - including with regards to how security and prosperity objectives can mutually reinforce each other, and to how the UK can use its international partnerships to maximise the impact of our actions. It operates under the leadership of the National Security Advisor, and the newly-appointed Deputy National Security Advisor for International Economic and Global Issues and Director for Economic Security and International Economics.

38.            Within the Cabinet Office, the Resilience Directorate also takes a strategic approach to national resilience and drives work across the system to strengthen it. The National Security Council (Resilience) sub-committee has been established specifically to consider issues relating to resilience at the most senior levels.

39.            The Government routinely brings external expertise and intelligence into the economic security policy process. Businesses’ views are gathered through the new Public-Private Sector Forum and from ongoing engagement by all relevant departments. Within the Cabinet Office, the Joint Intelligence Organisation provides authoritative all-source intelligence assessments to support decision-making for the Prime Minister, the NSC(ES) and senior policy makers on national security and foreign policy, including on economic security issues.

40.            The Government has also taken steps to strengthen wider capabilities on economic security issues, including through:

○       the Economic Deterrence Initiative, which is supporting programmes to further develop the UK’s capability to use economic measures in response to future threats, including by increasing the number of security-cleared economic security analysts and policy officials across government;

○       the UK College for National Security, which has been established to equip our national security community with the skills and expertise needed to respond to evolving threats, including economic security threats. The curriculum will include a module on economic statecraft that will provide an enhanced understanding of how economic measures and economic effects can be used to drive defence, security and foreign policy objectives; and

○       the UK Resilience Academy (UKRA), which the Government has committed to establishing by 2025 to ensure that all those who work on resilience have the capability and knowledge they need to play their part. UKRA will set the standards and provide leadership across traditional emergency planning, crisis management, organisational resilience, exercising capabilities, strategic prevention, personal resilience capabilities, and citizen preparedness.

5. The effectiveness of existing measures for intervening in the economy on national security grounds, such as the National Security and Investment Act, and the extent to which they strike the right balance between security and prosperity objectives

41.            As set out in the IRR2023, the UK is determined to remain an open and outward looking economy that welcomes safe foreign investment to drive growth across the country, and which protects and strengthens the rules-based international system. However, we must also ensure that we tackle the national security challenges emanating from legitimate economic activity. As set out above, these include the transfer of technology and knowledge that, either immediately or over time, provides an uplift to our adversaries’ capabilities; the increased access for foreign states to the UK’s supply chains or critical national infrastructure (CNI); and the emergence of vulnerabilities in areas of strategic significance. The actions we take to address these challenges must be carefully balanced and recognise that trade and investment are both key to our prosperity and growth and important tools in delivering wider economic security objectives, including building our resilience and tackling threats to global norms.

42.            The Government has a range of tools it can use to intervene in the economy on national security grounds, in particular the National Security and Investment (NSI) Act, export controls and our work in the research sector.

NSI Act

43.            The NSI Act applies to all sectors and ensures that certain acquisitions of entities operating in 17 particularly sensitive areas of the economy must be notified to and approved by the Government before they can be completed. If an acquirer wishes to have certainty on how an acquisition not subject to mandatory notification would be treated under the Act, they can submit a voluntary notification.

44.            The Act protects the UK’s national security while maintaining our strengths as an open and attractive place to invest by providing businesses and investors with predictable, legally-defined timelines and processes for decisions on acquisitions. The vast majority of businesses in the UK had no interaction with this screening process during the last financial year, nor any need to. All cases were decided within statutory timelines and the Government cleared the vast majority (93%) of notifications within 30 working days. Where necessary and proportionate, the Government has used the Act to protect against specific national security risks, including calling in 65 acquisitions for detailed scrutiny and issuing 15 final orders in the last financial year. This is in comparison to the 766 acquisitions reviewed in the same reporting period, showing the system is not hindering business activity.

45.            The Government wants to ensure the NSI Act remains a flexible and proportionate tool that can protect our national security without hindering safe investment. We have therefore launched a Call for Evidence to hone the scope, in particular of the mandatory notification requirements; improve notification and assessment processes; and provide additional guidance on how the Act works and where the Government tends to see risk arising.

Export controls

46.            These provide a powerful lever for promoting responsible trade and global security. The strategic export list provides clarity to businesses on the military and dual use items that require a licence.[9] Items not on the control list can be made subject to control on a case-by-case basis if they are intended for use in a weapons of mass destruction programme, or if they are intended for a military end-use in one of 18 embargoed destinations listed on gov.uk.[10] The criteria upon which applications are assessed are also publicly available.[11]

47.            The regime strikes a careful balance between promoting global security and facilitating responsible exports. Our published target is to process at least 70% of export licence applications within 20 working days. In 2022 we granted more than 13,000 individual export licences for exports of military and dual-use items valued at up to £66 billion. In the same period we refused 423 licence applications, a refusal rate of 3.1%. The Government continues to work to improve the efficiency of the export licensing regime to provide a better service to businesses, while maintaining the robustness of the controls. 

Research Security

48.            In the research sector, we have focused on the specific areas where national security risks are most likely to materialise,[12] to avoid the risk of chilling effects on legitimate international collaboration. Our approach is focused on supporting the sector to make informed decisions on research collaboration in a way that manages risks, without harming either the autonomy or competitiveness of research institutions. Almost 60% of UK publications result from international collaboration, and a quarter of UK patents in 2021 had a foreign co-inventor.

49.            The sector itself has broadly recognised the need to respond robustly to research security challenges. It has engaged constructively with RCAT and taken additional measures, including establishing the Higher Education Export Control Association, which provides shared practice and training to research institutions.

6. The effectiveness of the Government’s approach to economic deterrence, how it contributes to the UK’s economic security, and any reforms that might be required.

50.            As set out in the IRR2023, the Government recognises the growing importance of deterrence in preventing and responding to a range of threats, including to our economic security. Economic deterrence encompasses offensive measures to disrupt, deter and demonstrate; protective measures to protect the UK from national security threats; measures to increase UK economic resilience, which will strengthen the UK’s deterrence by denial; and positive international measures to provide support to international partners, including through investment and initiatives to support their resilience.

51.            Many of the measures set out in answer to question three have supported the effectiveness of our deterrence, including by improving our ability to protect key national assets, our resilience against threats, and our readiness to use economic tools as part of our wider response to threats to global security.

52.            In response to Russia’s illegal invasion of Ukraine, the Government brought together  a wide range of economic levers, including designations; financial, trade, transport and immigration sanctions; the Oil Price Cap; additional tariffs on selected goods from Russia and Belarus; and economic support to Ukraine. We have also taken steps to ensure Russia pays for the long-term reconstruction of Ukraine, such as introducing legislation to enable sanctions to remain in place until Russia pays for damage it has caused.

53.            We have since taken further steps to strengthen our economic deterrence, including through delivery of the Economic Deterrence Initiative (EDI). As set out above, we have made progress in strengthening the implementation and enforcement of our trade, financial and transport sanctions. We are also using EDI to prepare for future scenarios where the UK may need to deter or respond to hostile acts, such as through wargaming and future scenario planning. 

54.            While strengthening our domestic economic deterrence measures, we also continue to enhance our work with partners and allies, such as through the G7. Most recently, G7 Leaders agreed on 6 December 2023 to continue bearing down on Russian revenues used to finance Russia’s illegal war, such as oil, metals and diamonds; preventing Russia from accessing inputs to its military and industrial base, including stepping up efforts against evasion and circumvention of our sanctions; and demonstrating to Russia there is a price to pay for the damage it has caused to Ukraine.

55.            Economic deterrence is one element of the UK’s wider deterrence and defence tools, which also include cyber, information and military measures. In the IR2023, the Government identified the need for an integrated approach to deterrence and defence that brings together economic and wider levers of state power. We have taken steps to ensure the role of economic tools within our broader deterrence tools is fully understood and incorporated in policy initiatives, including by embedding economic statecraft principles in the planning and execution of defence activity, and developing an economic statecraft module as part of the College for National Security.

7. The opportunities and risks offered by international cooperation in ensuring the UK’s economic security, both bilateral (the recent Atlantic Declaration and the Hiroshima Accord) and multilateral (e.g. the G7 and the EU), and any potential obstacles to implementing them effectively.

56.            International coordination is essential to the delivery of our economic security priorities, particularly given the global context of intensifying systemic competition and challenges to the rules-based international system. Given the degree of interconnectedness of the global economy, our actions as an open and mid-sized economy can be more effective and impactful in tackling national security threats if they are done in concert with others. Our collective response to Russia’s illegal invasion of Ukraine has shown the value in countries pooling their respective strengths to tackle shared threats, as well as the benefits of making our economies more resilient in a way that avoids unnecessary and costly fragmentation.

57.            As set out in the IRR2023, the Government is committed to working ever more closely with allies and partners to defend global norms, build resilience and support low and middle-income countries.

58.            Building on our Presidency of the G7 in 2021 and working closely with our allies, we have established the G7 as a key forum for coordination on economic security issues. At Hiroshima, G7 Leaders established a framework for enhanced cooperation on a range of economic security threats - including economic coercion, supply chain resilience and risky technology transfers - and agreed to make year-on-year progress on this agenda. They also agreed practical commitments, including launching the G7 Coordination Platform on Economic Coercion and sharing information from supply chains stress-testing. We have made good progress in delivering these commitments, including by using the G7 Platform to share information on live economic coercion threats. The Government will continue to work closely with upcoming G7 Presidencies to ensure further progress.

59.            We have worked with the Five Eyes[13] to share information on economic security issues and set out a common position on key challenges. For example, we have agreed with Five Eyes partners and Japan the Joint Declaration Against Trade-Related Economic Coercion and Non-Market Policies and Practices, reiterating our commitment to work together to tackle these issues and support the rules-based multilateral trading system, including by sharing information and cooperating at the WTO.

60.            We have strengthened important bilateral relationships, including the following:

●       We have launched the UK-US Atlantic Declaration, which provides a framework for a twenty-first century US-UK economic partnership ensuring concrete and coordinated actions across five pillars - critical and emerging technology, economic security, digital transformation, clean energy and defence, health and space. As part of the Declaration, the UK and US are negotiating a Critical Minerals Agreement, have established the UK-US data bridge, deepened our sanctions dialogue and progressed cooperation on civil nuclear and clean energy supply chains through the UK-US Joint Action Group. The actions set out in the Declaration will help reduce our vulnerabilities across critical technology supply chains and those required to build the clean energy economy of the future.

●       We work closely with the EU on economic security as members of the G7 and other multilateral groups. More generally, we continue to engage with the EU on a wide range of issues under the framework of the Trade and Cooperation Agreement, including through exchanges on our respective approaches to supply chain resilience.

●       We have strengthened our strategic cooperation with Canada through the National Security Partnership, which provides a framework for bilateral cooperation on economic security. As part of this, we are taking forward joint policy projects on supply chain resilience, sanctions, investment security and economic coercion.

●       We jointly convened a UK-Australia Economic Security Dialogue in June 2023 and will reconvene in 2024. Alongside the UK-Australia Critical Minerals Joint Statement of Intent, the Australia-UK Supply Chain Resilience Initiative and the Australia-UK Technology Partnership, we are using this dialogue to collaborate with Australia a range of economic security objectives, including securing future supplies of critical minerals and strengthening global technology supply chains.

●       We have strengthened our bilateral partnership with Japan, agreeing the landmark Hiroshima Accord and committing to an even closer partnership on economic security, including through the Economic Security Dialogue, which met for the fourth time in December 2023. We are also using the UK-Japan Semiconductors Partnership and the UK-Japan Critical Minerals Memorandum of Cooperation to support our mutual strength in research and innovation and bolster our supply chain resilience.

●       We have built our partnership with the Republic of Korea (ROK), with the Prime Minister and President Yoon recently signing the Downing Street Accord, which established the UK-ROK dialogues covering finance and supply chains and a UK-ROK Framework for Semiconductor Cooperation.

61.            We are broadening our cooperation on economic security with middle income and developing countries through multilateral initiatives that can support their resilience. These include the G7 Partnership for Global Infrastructure and Investment (PGII) and the World Bank’s Resilient and Inclusive Supply Chain Enhancement (RISE) Partnership, which aims to support low and middle-income countries to play bigger roles in supply chains of clean energy products.[14] As set out in the Development White Paper, this will help low and middle income countries become increasingly significant trade and investment partners in the long-term, supporting economic security both at home and abroad.

62.            Finally, we are deploying our trade and prosperity tools to drive economic security objectives, including by using our FTAs to diversify access to critical goods and services. For example, we have joined CPTPP, one of the world’s most dynamic trading areas. The UK will help shape its development to fight unfair and coercive trading practices that threaten the future of international trade. We are also using our Dialogue Partner status with the Association of Southeast Asian Nations (ASEAN) to deepen our bilateral political, economic and security relations with a region that is key to strengthening global supply chains and tackling geopolitical challenges.

12 January 2024