Written evidence from the Foreign and Commonwealth Office (USA 12)

Contents

Introduction              3
The Bilateral Relationship              4
       Our Objectives              6
Working together on Foreign Policy Priorities              7
       MEPP              7
       Syria              8
       Iran              8
       Libya              8
       Egypt              9
       Iraq              9
       Afghanistan              9
       Pakistan              10
       Somalia              10
       Sahel              10
       Western Balkans              11
       Emerging Powers              11
       Asia Rebalance              11
       Working together in International Institutions              12
       Overseas Territories              14
The Defence Relationship              15
       Defence Sales to the US              15
       ITAR              16
       Partnerships with the US              16
       NATO              16
       Nuclear Cooperation              16
Wider Security Issues              18
       Intelligence Relationship              18
       Cyber Security              18
       Counter Terrorism              19
       Building Stability              19
       Extradition              20
Shared Prosperity              21
       Transatlantic Trade and Investment Partnership              21
       Climate and Energy              21
Working Through Our Network to Achieve Our Objectives              23
       Staffing across the US Network              23
       Soft Power              24
Conclusion              26

Introduction
 

1. The Foreign and Commonwealth Office is grateful to the Foreign Affairs Committee for the opportunity to contribute to its Inquiry into Government Foreign Policy Towards the United States. The US relationship is our single most important bilateral relationship. It is a strong alliance built over generations and in many fields of activity.  It is a relationship that supports the achievement of our international objectives and the prosperity of our economy. At its heart, the US-UK special relationship is an alliance of values: values of freedom, of the importance of maintaining international peace and security, of making sure that we live in a rules-based world. It is based upon extensive historical, cultural and people-to-people links.  The United Kingdom thus works very closely with the United States across the full scope of our foreign and defence policies and on our shared objectives in the area of prosperity.
    
2. We have set out below information addressing the four strands of your Inquiry. 

• The extent to which the UK’s foreign policy approach to the US has changed under the Coalition Government, and with what results for UK national interests, especially with respect to areas of unique UK-US cooperation;
• The relationship between the UK Government’s policy towards the US and its increased focus on UK relationships outside the Transatlantic area;
• How the UK Government is responding, and should respond, to the US ‘pivot to Asia’; and
• How, in its relations with the US, the UK Government can build on the lessons of post-2001 interventions involving both states in third countries.

3. We would be happy to provide more detail on any point. We look forward to the opportunity to supplement this evidence when the Committee holds oral hearings following its visit to the United States.

The Bilateral Relationship

4. The United States remains the United Kingdom’s most important bilateral ally.  As the Prime Minister said on his visit to Washington in May 2013, it is a “partnership without parallel”.   

5. Historically, the US and UK have worked together on some of the world’s greatest challenges.  We continue to do so.  Our diplomats and intelligence agencies work together, our soldiers serve together, our scientists collaborate, and our businesses trade with each other. The values of democracy, the rule of law, and free markets have shaped our approach, and we continue to defend these values and advance our shared interests.

6. The relationship is strengthened through the personal links between our peoples.  Through our common language, our shared spirit of innovation and creativity, our popular culture and sport, our nations have always had a special affinity that continues to grow.  An estimated 829,000 British citizens live in the US, with around 180,000 US citizens living in the UK.  Over 3.7 million Britons visited the US in FY2012/13, and 2.8 million Americans visited the UK in 2012. 

7. Our economies are inexorably linked.  The US remains the largest investor in the UK, and the UK is the US’s number one investment destination in Europe.  We have almost one trillion dollars invested in each other’s economies, supporting over 1 million jobs in both the UK and US.  The US is the UK’s top export destination for both goods and services. 

8. The UK’s ability to achieve its international objectives is significantly improved if we share those objectives with the US.  For these reasons, maintaining a strong Transatlantic relationship has long been a cornerstone of British foreign policy.  Cooperation between the British and US governments remains second to none. 

9. The 2012 Presidential elections saw President Obama re-elected to serve a second term.  The President has set out priorities for his second term focusing on continuing economic recovery with a programme of balanced fiscal consolidation and targeted public investment.  Jobs and growth remain his top priorities, in a clear parallel with UK objectives.  Immigration reform and an ambitious approach to international trade policy are also priorities for the President’s second term.

10. The Foreign Secretary has already built a strong relationship with the new Secretary of State and former Chair of the Senate Foreign Relations Committee, John Kerry.  They have met many times since Secretary Kerry’s appointment in February, and speak regularly on the top foreign issues.  2013 will have seen the Prime Minister, Deputy Prime Minister, Foreign Secretary, Chancellor, Defence Secretary and Home Secretary all meet their opposite numbers in Washington during the course of the year.  Many other Ministers from across Whitehall have established early contact with their new counterparts. 

11. President Obama has set out his foreign policy priorities for his second term.  In speeches in 2013 the President has highlighted defeating Al Qaeda and its allies; stopping Iran from obtaining nuclear weapons; drawing down US troops in Afghanistan, reviving the Middle East Peace Process, and promoting democratic transitions across the Arab world.  These are goals shared by the UK and we welcome the significant effort the US Administration has put into trying to achieve them.  Both President Obama and Secretary Kerry have also devoted much time to the ongoing crises in Syria and Egypt.  Further afield, the Administration has continued its policy of ‘Rebalance’ to Asia, including through working towards the early conclusion of the Trans-Pacific Partnership trade deal.  As an extension of this, the Administration is looking to reinforce its efforts in Latin America, as set out in a speech by Vice President Biden in May.  In May, President Obama said the US continues to value “a strong UK in a strong European Union” and agreed with the Prime Minister’s goal of a reformed, outward-looking EU.  During President Obama’s visit to Africa in July he stressed his desire to help increase investment in the continent, including via the Trade Africa initiative.

12. The UK-US economic and financial relationship remains extremely strong. Our close collaboration in the wake of the financial crisis has been important in supporting the progress we have made since 2010 to tackle deficit and debt, and to support economic recovery, jobs and growth.

13. In other areas too, the factors underpinning UK-US cooperation also remain strong.   On energy, we both want secure, sustainable sources of energy to ensure national security and economic prosperity. Both the US and UK are working to achieve a global agreement on the post 2020 Climate Framework in 2015 and we work closely together in support of this challenging objective, while recognising the differences in our national positions and the UK’s position within the wider EU.

14. Looking to the future, the relationship will be further strengthened as the EU and US embark on the largest and most significant free trade deal in history, the Transatlantic Trade and Investment Partnership.  The UK has demonstrated a clear leadership role in this undertaking, and our guidance and coordination led to the successful launch of negotiations at the June G8 summit at Lough Erne. A comprehensive deal could be worth up to £10 billion to the UK economy.

15. The strategic foreign policy objectives of HM Government and the Obama Administration are closely aligned. But there will inevitably be occasions when foreign policy priorities and the political context in the US and UK differ, and when we therefore choose to pursue different courses of action.  But the foundations that bind us so closely together – our deep trade and investment linkages, our shared values, our linguistic and cultural histories – remain.  Indeed, these factors all underpin our ability to maintain an honest and open dialogue, even when we disagree.  This is rare among international partners and is valued by both sides. 

Our Objectives

16. The Government’s overriding objective in its relations with the United States is to continue a strong, close, and frank relationship that brings concrete benefits for the UK and advances our shared objectives.  To achieve this we will continue to:

-          Work with the US to safeguard Britain’s national security and support UK objectives worldwide;

-          Help build Britain’s prosperity;

-          Provide modern and efficient services to British citizens in the US;

-          Facilitate understanding and communication between the UK and the US; and

-          Promote Britain’s standing and reputation in the US to build our influence across the country.

17. Among our specific foreign and security policy objectives we aim to:

-          Strengthen the bilateral defence relationship;

-          Maintain close collaboration with US security authorities to reduce the threat to the UK from terrorism, organised crime, and cyber attacks;

-          Coordinate closely on the top foreign policy issues, including the Middle East Peace Process, Syria, Iran, Afghanistan, and Iran;

-          Increase cooperative engagement with the US in Asia, and support our broader objectives with the emerging powers; and

-          Leverage US influence in support of the UK’s objectives in international institutions, including through our Presidency of the G8 and the Foreign Secretary’s Preventing Sexual Violence in Conflict Initiative.

18. Our prosperity objectives include a commitment to:

-          Increase UK exports to the US, and inward US investment into the UK;

-          Make significant progress on negotiations towards an ambitious EU/US Transatlantic Trade and Investment Partnership;

-          Maintain the UK’s position as the US’s scientific, cultural, and education partner of choice;

-          Encourage the US to play a leadership role in international climate negotiations;

-          Increase collaboration on energy governance, security, and research; and

-          Promote UK academic institutions in the US, including through the Marshall Scholarship programme.

19. To provide modern and efficient services to UK nationals in the US we will:

-          Provide a high quality consular service;

-          Ensure the US network is ready to respond effectively to natural disasters or other types of crisis such as terrorist attacks;

-          Campaign against use of the death penalty, with particular focus on cases involving British Nationals.

Working Together on Foreign Policy Priorities

20. The Foreign Secretary set out his vision for an enduring UK-US relationship in the context of a changing world in June 2013 at the Reagan Presidential Library. The speech reaffirmed the UK position that foreign policy is not a zero-sum game. Both the UK’s and US’s increasing focus on strengthening relationships around the globe will not be at the expense of our deep bilateral relationship. Rather, the stronger our relationships are elsewhere in the world, the more we can do to support each other as allies across the full range of shared interests. Furthermore, the strength of the UK-US relationship means that the leaders of our countries can, as the Foreign Secretary said in his speech, ‘share thinking about how to maintain clear leadership, bold thinking and decisive foreign policy in a shifting world’.

21. Clearly the Middle East and North Africa region represents a significant focus for our cooperation.  The region has witnessed major change since the Arab Spring began in 2011, driven by citizens demanding their political and economic rights. From the outset of the Arab Spring, the UK and US have shared a common goal in working to support more democratic, accountable societies in the region, as a route to long-term stability and prosperity. Our approaches towards countries that have experienced revolutions have been closely aligned, and we have worked together both bilaterally, and in multilateral fora, notably the G8 Deauville Partnership to provide practical support for the region. Under the UK lead on the Deauville Partnership in 2013, we have built on the US’s Presidency last year, including making progress on the Broader Middle East and North Africa (BMENA) civil society-government initiative.

22. The foreign policy issues discussed below represent only a selection of our joint work with the US, not the entirety of our cooperation.  Cooperation on Latin America, Sub-Saharan Africa, and many other parts of the world that are not covered below continues to be strong.

MEPP

23. Achieving a negotiated two-state solution to the Israeli-Palestinian conflict is an urgent foreign policy priority for both Britain and the US. Over the past year, the Foreign Secretary has spoken repeatedly of the need for the international community to revive the peace process in efforts led by the United States and supported by European, Arab and other nations. Secretary Kerry has now led successful efforts to resume formal negotiations, with a view to resolving all final status issues.

24. The Foreign Secretary has welcomed the focus Secretary Kerry, with the support of President Obama, has brought to bear on the MEPP. The Foreign Secretary and Secretary Kerry discuss the issue regularly.  Secretary Kerry also updated EU Foreign Ministers at the Gymnich in Vilnius on 7 September 2013. Officials in London, Washington and the region are also in close contact with their counterparts across the US government to share information, ideas and expertise on the MEPP.  

Syria

25. Since the conflict in Syria began over two and a half years ago, the US and the UK have been at the forefront of international efforts to tackle the crisis, including close co-ordination on the use of chemical weapons by the Assad regime. We have shared objectives and are focussed on getting the international community to unite to bring all sides together to achieve a political solution that is needed to end the conflict.  We strongly support US efforts to organise a second Geneva conference.  Although the British Government’s position on involvement in military action in response to the use of chemical weapons is clear, the UK will continue to be highly active in addressing the Syria crisis, making the case internationally for a robust response.

26. The UK and the US are two of the largest providers of humanitarian assistance to those affected by the conflict in Syria and we will work intensively with the US, including at the UN, to secure aid access and address the shortfalls in funding.  We continue to lead the core group of eleven countries most actively supporting the Syrian National Coalition opposition group and will also continue to cooperate to counter the threat of extremism from Syria.

Iran

27. Iran – in particular its nuclear programme – is an important area of foreign policy co-operation between the UK and the US.  We consult closely on the E3+3’s approach to the nuclear negotiations, but also on how the international community can address the military threat from the Iranian nuclear programme through the effective implementation of sanctions.  Without strong UK-US cooperation, we and our partners would have been less effective on Iran policy.

28. Our cooperation on Iran also includes exchanges on political and economic developments (including President Rouhani’s recent election), the human rights situation in the country, and Iran’s foreign policy - in particular in relation to current instability in Syria, Lebanon and the wider Middle East.

Libya

29. In Libya itself, through our Embassies in Washington and London, and through direct contact at Ministerial and official levels, the UK and US governments work closely together to support the Libyan people and government at this critical stage in the country’s transition to a stable, democratic and prosperous state.  Our Embassies in Tripoli have an exceptionally good working relationship – the political and military teams work particularly closely together and the Ambassadors make joint calls on the Prime Minister and other government figures to emphasise our common objectives.

30. Following up the agreement at the G8 meeting at Lough Erne, when the Prime Minister and President Obama met Libyan Prime Minister Ali Zeidan, we have developed our training proposals for the Libyan army together and presented our ideas and concerns to the Libyans jointly. This has helped mobilise the Libyan system so that we can get the training programme started as quickly as possible.  

31. This close working relationship also extends to dealing with the at times very dangerous security situation on the ground in Libya.  Our Embassies in Libya work very closely together in assessing the security situation in Libya and alter their security posture accordingly, as well as coordinating public and political activity.

Egypt

32. The UK and US share an interest in a stable, prosperous, secure and democratic Egypt that plays a positive role in the wider region.  We have had close and long-standing cooperation with the US on Egypt, including regular and broad-ranging discussions at official and Ministerial level as part of our wider foreign policy dialogue.  We have worked together closely in response to the events in Egypt on 3 July.  Like us, the US is deeply concerned about the situation in Egypt.  The UK supported recent EU and US-led efforts to reach a peaceful resolution in Egypt.  We continue to work together with Egyptian interlocutors and our partners, including the US Government, to support the swift return of a democratically-elected civilian government.

Iraq

33. The US and UK have common aims in Iraq: to enhance its stability and develop its democratic institutions, to enable it to realise its economic potential, and to encourage it to play a positive and constructive role in the region.  We have both pressed the Government of Iraq to exercise restraint in dealing with the ongoing Sunni protests, and establish a political process for addressing the protestors’ legitimate demands.  Likewise, we have worked together to encourage the Iraqis to do everything possible to prevent Iranian support reaching the Assad regime via Iraq.

34. The US and the UK share concerns over the difficulties in the relationship between the Government of Iraq and the Kurdistan Regional Government, and we have a joint interest in resolving ongoing disputes.  The UK has also worked with the US to assist Iraq’s efforts to normalise its relations with countries in the region and the United Nations Security Council.

Afghanistan

35. The UK supported the US intervention in Afghanistan in 2001 and provided a significant number of troops to the initial phases of Operation Enduring Freedom and throughout the period of the International Security Assistance Force combat mission in Afghanistan. This close cooperation and coordination is continuing through the transition to Afghan security lead and the drawdown of all international combat forces by the end of 2014.

36. Throughout the last 12 years, the UK and US have worked to shared objectives in Afghanistan and cooperated on all aspects of our work, including support to the Afghan National Security Forces, counter-terrorism, counter-narcotics, the rule of law, development assistance and support to Afghanistan’s political system.  UK-US cooperation on Afghanistan will continue to 2015 and beyond. The UK will maintain its current development assistance of £178 million a year until 2017, and we will also contribute £70 million towards sustaining the ANSF post-14. This is in addition to our commitment to take the coalition lead in supporting the Afghan National Army Officer Academy.

Pakistan

37. The series of high-profile bilateral incidents in 2011, including the Abbottabad raid that killed Usama bin Laden, substantially reduced cooperation between the US and Pakistan. This has meant the UK has taken a more visible role as a ‘Western’ partner to Pakistan. However, over the last twelve months the US has been slowly rebuilding its relationship, culminating in a visit by Secretary Kerry to Islamabad on 31 July, which resulted in the resumption of the US-Pakistan bilateral Strategic Dialogue.

38. The UK and US work especially closely to support economic development, strengthening electoral participation and gender equality.  DFID works closely with USAID, and is an important like-minded donor in health and humanitarian assistance. 

39. We are working closely together to support Pakistan’s efforts to tackle terrorism effectively and to co-ordinate our own CT programmes. The UK and US also work together and engage with Pakistan on countering violent extremism through international organisations such as the Global Counter Terrorism Forum.

Somalia

40. The UK and US have shared objectives for Somalia to bring about greater security, increased political and economic stability and reduced poverty.  We worked closely together in the run-up to the UK-hosted Somalia conferences in February 2012 and May 2013.  High level US representation at both helped generate wider international support for ambitious political and security outcomes.  The US’s forward-looking statements at the conferences were backed up with significant political and financial support to priority issues, including: pre-deployment training for African Union (AMISOM) troops in Somalia, and contributing towards paying the salaries of the Somali National Security Forces. 

Sahel

41. The UK is working with the US to develop and implement a coordinated international response to the political, security and development challenges facing the Sahel region.  The US is an important partner in supporting African and UN efforts to restore greater security to Mali.  They provided significant logistical and training support to AFISMA troops.  And in the UN context US-UK coordination was crucial in successfully passing a series of Security Council Resolutions, culminating in UNSCR 2100 in April 2013, which authorised the UN Mission for Mali.  The US also forms a central part of our P3 burden sharing initiative on CT activity in the region, and is a leading light in the Global Counter-Terrorism Forum’s work on the Sahel.

Western Balkans

42. The UK and US share a common strategic interest in stability in the Western Balkans.  We continue to work closely together, particularly by supporting all countries in the region on the path to NATO and EU membership.  The UK and US are firm supporters of an independent, stable Kosovo, and the US provides powerful political support for the EU-facilitated Dialogue between Kosovo and Serbia.  Across the region, US funding complements UK bilateral spending to support necessary reforms and capacity building.  

Emerging Powers

43. The UK and US share a broad analysis about the way the world is changing. Like us, the US are actively seeking to deepen and broaden their relationships with the leading powers of the future. This presents us with opportunities to work together in the many areas where our interests overlap, in the US and in third countries themselves. Our discussions with the US are part of a wider plan of engagement with traditional allies on our approaches to the Emerging Powers, both to share best practice and identify areas where we might work together to achieve specific results. As well as our dialogue with the US, we already have a Ministerial process underway with Australia and Canada, and official level discussions with France and Germany.
     
44. The British Embassy in Washington has launched a series of policy discussions, working in conjunction with the German Embassy. These bring together UK and US policy makers alongside future leaders from the cadre of Emerging Power diplomats based in the US to discuss the challenges and opportunities presented by the rise of the Emerging Powers and the changing international landscape. The purpose is to strengthen the UK’s relationships with the Emerging Powers, reinforcing efforts in capitals, identify areas for further UK-US cooperation in the Emerging Powers, and provide new perspectives and ideas on how to operate in tomorrow’s world. The discussions will continue throughout the autumn and consider important areas such as international security, the global economy and people-to-people links.

Asia Rebalance

45. The US ‘Rebalance’ (or ‘Pivot’), first announced in October 2011 by the then Secretary of State Hillary Clinton, involves “strengthening bilateral security alliances; deepening working relationships with emerging powers; engaging with regional multilateral institutions; expanding trade and investment; forging a broad-based military presence; and advancing democracy and human rights." This has been brought out in President Obama’s commitment to attend every East Asia Summit meeting, US efforts to conclude the Trans-Pacific Partnership, the increased US military presence in the region, including the stationing of 2500 US marines in Australia and shifting of 60% of US naval assets to the Pacific by 2020, and the renewed US focus on South-East Asia including an increase in high-level visits and the establishment of official level bilateral dialogues.

46. The UK has also looked to increase its relationships outside the Transatlantic area, whilst still maintaining the current UK-US relationship.  The FCO has refocused its diplomatic resources towards the Asia region to strengthen our presence and build durable and wide-ranging bilateral relationships with the Emerging Powers in the Asia region.  For example, we have:

        Re-opened our Embassy in Laos;

        Recruited over 100 new staff in our missions across the region;

        Reinforced our Asia teams in Washington and Brussels;

        Increased by 50% the number of diplomats in our China network who speak Chinese. 

There has also been a significant increase in UK ministerial visits to the region and we have encouraged closer EU-US engagement on Asia.

47. An important aspect of the Asia Rebalance is the development of the Trans-Pacific Partnership (TPP), a free trade agreement being negotiated by 12 Asia Pacific countries, including the US.  The size and scope of the TPP mark it out in terms of both economic and strategic implications.  In common with the Transatlantic Trade and Investment Partnership (TTIP), the reduction of non-tariff barriers will provide greater economic benefits than reduction in tariffs alone.  Increased regulatory coherence will be central to both agreements and will provide significant positive spillover effects.  While the two agreements are separate, we expect there will be read across between them, with the US playing a critical role.  In his speech to the World Affairs Council in Los Angeles, the Foreign Secretary said, “[T]he impact from reduced tariffs will be even greater if we can ensure that the Trans-Atlantic and Trans-Pacific partnerships are mutually reinforcing.  Together they can form the basis for a radical reinvigoration of the global trade agenda, offering a once-in-a-generation opportunity to rebuild trust in trade and investment as the engine for job creation and economic growth.”

48. The UK welcomes the recent shift in the US focus to Asia, which is in line with our own shift in resources towards the Emerging Powers.  The US rebalance towards Asia was perceived by some as a disengagement from traditional areas of focus such as Europe and the Middle East.  But the latter region continues to occupy significant US time and attention, and this has not been diminished by their increased focus on Asia.  We do not see the shift as a disengagement from Europe, but as a move that is in direct support of our interests.

49. In fact, we aim to capitalise on renewed US engagement to further our own major security and economic interests in Asia.  We are working increasingly closely with the US in policy areas relevant to Asia where we have common aims. On cyber security, the South China Sea and North Korea, on Burma, in the Pacific, and on getting China to commit to rules on transparency and good governance, corruption, intellectual property and open markets.  We have regular UK-US discussions at working and ministerial level on Asia and our missions in the region work closely together, coordinating on policy and sharing best practice. For example, in Burma the UK and US jointly called for humanitarian action ahead of the possible Cyclone Mahasen in June which resulted in the re-housing of 60,000 Rohingya; and USAID and DFID contribute to the Livelihoods and Food Security Trust Fund in Burma. We have also worked on collaborative projects on the ground in the Pacific, including jointly donating a solar desalination system to the Government of Tuvalu in 2011.
     

Working Together in International Institutions

50. The UK and US work together closely throughout the UN system on a wide range of security, development and human rights issues. The UK and US are important partners on all work in the United Nations Security Council. As a fellow member of the P5 group of permanent members of the Council, we coordinate positions at every level.

51. As two of the major contributors to UN budgets, we have a common interest in ensuring that the UN provides value for taxpayers’ money.  The UK and the US work together closely on this in the UN General Assembly and across the wider UN system, in cooperation with other like-minded countries. The UK and US are co-chairs of the Geneva Group, an informal group of sixteen of the major financial contributor countries to the UN created in 1964.  The Geneva Group works across the UN system to encourage international institutional reform with a focus on management reform, budgetary discipline, encouraging sound human resources, audit and accounting practices, and monitoring capital projects.

52. The UK worked closely with the US on the Arms Trade Treaty (ATT), to encourage US engagement and support as one of the major exporters of conventional arms and as a country with a robust export control system.  Despite initial concerns, the US was a firm supporter of the ATT by the end of the negotiations in April 2013.  Not only did it vote in favour of the adoption, it also co-sponsored the resolution to put the ATT to UN General Assembly after Syria, Iran and the DPRK blocked it. The UK will continue to work with the US to support strong and transparent implementation of the ATT.

53. During the UK Presidency of the G8 in 2013, the close relationship and shared objectives with the United States helped with achieving ambitious outcomes in this forum.  The US was very supportive of the Transparency element of the G8 3T’s agenda, vocally backing the UK’s proposals in G8 discussions at official and political level.   On implementation of the Extractives Industry Transparency Initiative and mandatory reporting requirements for extractives companies, the US helped set the pace with its own domestic policy and legislation, providing a positive case study for other G8 members to learn from.   With a strong push by the UK and support from the US, both in formal meetings and behind the scenes, the G8 was able to agree ambitious commitments to greater transparency in the extractive sector. 

54. The G8 made a clear commitment to break down barriers to trade at home and abroad by resisting protectionism and finalising a set of ambitious trade deals.  As part of this, the US and UK worked closely on plans to begin negotiations for the Transatlantic Trade and Investment Partnership which was launched at Lough Erne. This is covered further below.

55. Within the G20 there is excellent contact between the UK and US Sherpa offices. A notable recent example of co-operation is our work with the US, and other G7 partners, to release a statement calming “currency wars” tensions in financial markets in February 2013 (later adopted by G20 Finance Ministers). We also worked earlier this year with the US to obtain G20 consensus on fiscal policy, agreeing that G20 countries should set out strategies for medium-term fiscal consolidation.
     

Overseas Territories

56. The UK’s Overseas Territories (OTs) are an important asset in our strategic partnership with the United States.  The OTs provide occasional logistical and other support to US forces.  Two of them – Ascension and the British Indian Ocean Territory (Diego Garcia) – host substantial and long-standing US military bases.  Given the strategic significance of some of the OTs, these arrangements with the US constitute an important UK contribution to the bilateral defence relationship (discussed below).  The OTs also cooperate with the US in other respects.  In the Caribbean, for example, law enforcement authorities from the Overseas Territories, UK and US work closely on regional drugs and international crime issues.
     
57. The agreement with the US on Diego Garcia expires in December 2016, though there is a provision to extend it for a further twenty years if both parties agree.  Recognising the importance of the Diego Garcia facility to our shared strategic interests, the Government supports a continuation of the US presence in BIOT.  We are currently discussing this with the United States but the details of any agreement will be finalised after the current review of our policy towards resettlement of BIOT has concluded.

The Defence Relationship

58. The defence relationship has for decades been one of the foundations of the broader bilateral UK-US relationship.  Our strategies, policies and plans have been well aligned.  UK and US forces are now more interoperable than ever, and we have worked effectively together to find solutions to the challenges of the current operational environment.  Other staples of the defence relationship have continued to flourish during this period, notably cooperation on Nuclear, Carrier Strike, Joint Strike Fighter, Science & Technology, amongst others.  We are focused on sustaining the close bilateral defence relationship as we plan the drawdown in Afghanistan, just as within the NATO Alliance more generally.

59. The US ‘Strategic Guidance’ published in January 2012 provided the policy rationale for the reduction in the defence budget of half a trillion dollars over the next decade.  This guidance included a change to US defence planning assumptions and also re-emphasised the Middle East and Asia Pacific as the US’s top strategic priorities.  The US will look to replace protracted land-based stabilisation operations with stealth, precision and stand-off operations whenever possible.  The emphasis on high end capabilities is about deterrence and power projection rather than intervention.  The President’s defence budget request for FY14 (Oct 13-Sep 14) asked for $526 billion for the Department of Defense (DOD) base budget (a small reduction from previous plans) and $80 billion for current operations.  As the budget sequester came into effect during 2013, we expect to see further substantial reductions in defence expenditure over the next 10 years; the full sequester level budgetary caps would foresee the DOD face an approximate $52 billion cut to the 2014 Defence budget.

60. Secretary of Defense Chuck Hagel continues to direct the DOD to examine opportunities to engage with allies (especially, but not exclusively, the UK) on the management of financial pressures and the changing global environment.  With the publishing of our International Defence Engagement Strategy (jointly signed by both the Defence Secretary and Foreign Secretary) we are seeking opportunities to work together in line with Secretary Hagel’s plan.  This strand has been protected even when the DOD considered what lesser priorities needed to be dropped as a result of the sequester. MOD will engage and lobby for the US to remain outward looking in the light of budget pressures and to protect UK interests in the next Quadrennial Defense Review.

Defence Sales to the US

61. We continue to promote Defence Exports to the US in support of UK prosperity. The balance of trade currently favours the US defence industry by a factor of 2:1 - $2 billion exports to the UK per annum compared to about $1 billion to the US.  There are a number of capabilities and platforms well suited to meet US requirements and we will continue to promote them, along with the Defence Trade Cooperation Treaty. Its purpose is to remove some of the obstacles to defence exports, to help British companies export into the US, and to encourage US investment in the UK. 

ITAR

62. ITAR (International Traffic in Arms Regulations) is the set of rules by which the US governs export of its defence equipment and technology.  The US requires recipients to sign up to their regulations before an export is approved and whenever, once exported, items are re-exported.  Approval often requires Congressional notification. This does not prevent the UK obtaining equipment, but can add significant delays, affect our ability to manage our supply chain efficiently and increase uncertainty for UK defence sales incorporating US items or information. The likely impact and additional burden of ITAR on MOD’s intention to introduce the private sector into the Acquisition and Support functions is currently being assessed.

Partnerships with the US

63. We have continued to see good progress in stepping up UK-US defence collaboration on major projects and programmes.  HMS Vigilant conducted a successful Demonstration and Shakedown Operation (DASO) in October, and the US is making significant investment to ensure that the UK’s Successor programme can be completed on time.  We have taken delivery of a second Standard Take-off and Vertical Landing (STOVL) Joint Strike Fighter and have our first two pilots in conversion training at Eglin Air Force Base, along with the associated ground crew.  There has also been good progress on strands of the UK-US Carrier Operations Statement of Intent.  The Army has strengthened its institutional and formation-level ties, explored cost-avoiding opportunities to share training environments, formation-level interoperability, combined training and upstream activity.  We have also developed still stronger ties on Personnel issues.  Science and Technology collaboration continues to develop.

NATO

64. NATO is one of our primary vehicles for defence and security cooperation with the US.  The political weight and deterrent effect that NATO carries as a result of this Transatlantic bond cannot be overstated.  In practical terms, NATO brings continued military interoperability with the US and a unified Command Structure, which have demonstrated their importance in operations such as Afghanistan and Libya.  The US are clear that its European Alliances are unique and that it will remain committed to NATO.  But the changing nature of threats and broader strategic environment have contributed to heightened calls from the US for Europe to make a greater contribution to security.  Given our unique relationship, we continue to work closely with the US to ensure they understand the European context. We also work closely with European partners so they appreciate the need to step up to their responsibilities as part of the effort to keep the US – including the US public – assured of the value of the commitment to Europe.

Nuclear Cooperation

65. The 1958 Mutual Defence Agreement and the 1963 Polaris Sales Agreement provide the framework for an extensive programme of UK-US cooperation on nuclear deterrence.  This includes co-operation on missiles, warheads, and submarines, including on naval nuclear propulsion and a common missile compartment.  All such cooperation is in compliance with the Nuclear Non-Proliferation Treaty and exemplifies the mutual support and commitment of each country to ensuring an operationally independent, effective, safe and secure nuclear deterrence.  Building on more than fifty years of extremely close cooperation in our nuclear programmes, we are exploring opportunities for further collaboration.

Wider Security Issues

66. The threats we face today require a much broader security relationship.  Central to protecting the people of our countries, and their prosperity, is our unique and indispensible relationship with the United States in the fields of intelligence, cyber, and counter terrorism.

Intelligence Relationship

67. For the UK and its intelligence agencies (GCHQ, SIS and MI5), the intelligence and security relationship with the US is very close. It is one in which both the UK and US rely on and benefit from to protect their national security. Following allegations about intelligence gathering in early June, the UK-US intelligence relationship has come under intense scrutiny. The Foreign Secretary made a statement to the House of Commons on 10 June on the work of the Government Communications Headquarters and its legal framework. In his statement the Foreign Secretary said that:

“Since the 1940s GCHQ and its American equivalents, now the National Security Agency, have had a relationship that is unique in the world.  This relationship has been and remains essential to the security of both nations, has stopped many terrorist and espionage plots against this country, and has saved many lives.  The basic principles by which that cooperation operates have not changed over time. Indeed I wish to emphasise to the House that while we have experienced an extremely busy period in intelligence and diplomacy in the last three years, the arrangements for oversight and the general framework for exchanging information with the United States are the same as under previous Governments.  The growing and diffuse nature of threats from terrorists, criminals or espionage has only increased the importance of the intelligence relationship with the United States.  This was particularly the case in the run up to the Olympics.  The House will not be surprised that our activity to counter terrorism intensified and rose to a peak in the summer of last year.”

68. Answering questions following the statement, the Foreign Secretary noted the expanding importance of the UK’s close and unique cooperation with the United States. The Foreign Secretary strongly refuted suggestions that GCHQ uses its partnership with the United States to evade UK law. The Foreign Secretary was absolutely clear that this accusation was baseless. Indeed, following a thorough investigation, the Intelligence and Security Committee issued a statement on 17 July saying that the accusations were unfounded.

Cyber Security

69. The US is a very significant ally on cyber relations and we share mutual aims. The Prime Minister and President Obama signed a communiqué on cyber security in May 2011 which confirmed our shared commitment to international engagement, strengthening rule of law, public private cooperation, capacity building, R&D and continuing bilateral cooperation. Officials also regularly share information and coordinate cyber security work with other allies.

70. There are compelling reasons for ensuring that the US and British governments remain closely aligned on this issue. Our infrastructures are tightly coupled, and our most important industry players are Transatlantic or multinational. The dominance of US industry in internet service provision makes partnership with the US essential for the UK, and the UK's position as a global communications hub and as a major inward investor in critical infrastructure services in the US provides incentives for the US to engage with the UK as well. Cyber security is also becoming an increasingly important component of overall security collaboration between our two countries. There are, however, countervailing pressures. For example, our ICT sectors are intensely competitive, which makes companies nervous about sharing threat and vulnerability information widely. In both countries, data protection concerns may inhibit industry from sharing information with governments.

71. We cooperate closely on shared international objectives including building capacity in third countries to tackle cybercrime, online threats and to increase the resilience of cyberspace, as well as ensuring that cyberspace remains open to support economic and social development and the trust and innovation that underpin that.

72. We are broadly aligned on Internet governance issues, with both the UK and the US in favour of maintaining the multi-stakeholder model of Internet governance (i.e. governments, business and civil society all having a role).  We coordinate well in international meetings on this to counter those, such as Russia and China, who want an increased role for governments and greater controls on the Internet in the name of state security at the expense of Freedom of Expression.  

Counter Terrorism

73. The counter terrorism relationship between the UK and the US is vital to the protection of UK interests at home and overseas from the threat posed by Al Qaeda and allied terrorist groups, and for reducing the global threat of terrorism. 

74. The US remains our most important counter terrorism partner, granting us privileged access to their intelligence and an openness in discussing common problems and approaches that does not apply to other countries.  The UK-US counter terrorism relationship encompasses a wide spectrum of activity, including intelligence sharing and law enforcement, and is supported by an active dialogue at all levels across Government.  This collaboration is focussed on denying terrorist groups the space to operate, developing the capabilities of vulnerable countries and working to overcome the injustices terrorist that exploit and the ideologies that they deploy.

75. In addition to our bilateral cooperation we continue to work with the US through multilateral fora, including the Global Counter Terrorism Forum, which aims to mobilise expertise and resources to address and enhance global cooperation on counter terrorism.

Building Stability

76. The British Government is addressing instability and violent conflict overseas because it is both morally right and in Britain’s national interest.  Since the launch of the Building Stability Overseas Strategy, we have worked to have an integrated approach, working together across our diplomatic, development, defence engagement and intelligence efforts.  We continue to work closely with the United States to establish common positions and approaches in those fragile and conflict-affected states which matter most to our shared interests, including Afghanistan, Pakistan, Somalia and Libya (see “Working Together on Foreign Policy Priorities”, above).

77. The Stabilisation Unit (SU) has worked closely with its counterpart, the US Bureau for Conflict & Stabilisation Operations (CSO), since our inception as the Post-Conflict Reconstruction Unit in 2004. We have previously seconded staff to CSO, and are currently hosting a US secondee within the SU. Our relationship supports greater collaboration and coordination between SU and CSO activities in high priority fragile and conflict affected states, as well as enabling best practice and lessons learnt in facilitating integrated approaches to stabilisation to be shared. We also identify evidence of ‘what works’ in a range of conflict and stabilisation contexts, and have shared lessons as to how to maintain and deploy appropriate capability to respond to current and future crises. Together we co-host a six-monthly Stabilisation Leaders Forum involving Stabilisation Unit equivalents from UK, US, Canada, Australia, the Netherlands and Germany to discuss best practice and lessons learned across the operational conflict and stabilisation spectrum.

Extradition

78. The UK has strong extradition relations with the US.  Effective extradition processes between the two countries are crucial to fighting cross-border crime.  The Home Secretary has made it clear that the Government believes the UK-US Extradition Treaty is fair and balanced. The US has never refused to extradite anyone to the UK, has complied with requests received from the UK, and has extradited its citizens to the UK.
     
79. New forum provisions were introduced in April 2013 to ensure that the possibility of a domestic prosecution has been properly explored as part of the extradition proceedings.  These allow a judge to bar extradition, on forum grounds, if the extradition would not be in the interests of justice. 

Shared Prosperity

80. The UK-US trade and investment relationship continues to develop and prosper. The US is the UK’s largest export destination, and we are the US’s largest trading partner in the EU.  In 2011, UK-US trade in goods and services accounted for £129 billion in total.  The UK and the US also continue to be largest foreign investors in each other’s economies: over £400 billion (£204 billion of US investment in the UK; £210 billion of UK investment in the US in 2011). 

Transatlantic Trade and Investment Partnership

81. Creating the conditions for a global economic recovery and stimulating jobs and growth for the UK remains the Government’s top priority. The launch at the G8 Summit in Lough Erne of negotiations towards an EU/US Transatlantic Trade and Investment Partnership (TTIP) could represent a step change in the US-UK trade relationship. The principal benefits from an EU trade deal with the US are expected to come from improving the coherence between US and EU regulatory systems, in order to eliminate unnecessary rules, differing standards for goods and different approval processes. Eliminating tariffs on goods could also save UK exporters almost £1 billion. Overall, a comprehensive deal could be worth up to £10 billion (0.35% of GDP) to the UK economy, and £80 billion (0.4% of GDP) for the US.

82. The British Embassy in Washington has commissioned a study examining the impact of TTIP on jobs and exports in the fifty US states.  The Embassy and the US Network will use this data to seek to generate support at both Congressional and state level for the agreement. After the official launch, the data will be shared with the European Commission and other Members States.

83. The negotiations are in their initial stages.  We will have significant interest in achieving liberalisation of the procurement market in the US, bringing about increased regulatory coherence in the financial services sector and securing tariff reductions in sectors such as automotive.  Such a comprehensive agreement will be challenging, in particular in areas such as procurement where there is state-level competence, and also in agriculture.

Climate and Energy

84. UK objectives in our energy and climate work with the US are to achieve a global deal that limits global temperature rise to 2 degrees, to reduce emissions, to strengthen energy governance and to open energy markets.

85. Multilaterally we work through the UN Framework Convention on Climate Change, the Major Economies Forum, the International Energy Agency, Clean Energy Ministerial, the Carbon Sequestration Leadership Forum, the International Energy Forum, the Climate and Clean Air Coalition to Reduce Short-Lived Climate Pollutants and on climate finance. Bilaterally we work closely with the US where we have a shared approach, where we feel we can learn from each others’ experience and where we need to promote or protect UK companies active in the US. This includes specific work to learn lessons from the US shale gas experience, where we have benefited from US Government reports and first hand information from regulators, industry and other interest groups in Washington, Houston and Pennsylvania. It also includes discussions on climate change, where in June this year, the Foreign Secretary and Secretary of State John Kerry met and discussed climate change including efforts to shape conditions and remove obstacles towards a 2015 agreement.  

86. We also engage with states, businesses and thought leaders as well as the Federal Government and seek to support Science and Innovation Network and UK Trade and Investment objectives in the area of our carbon policies, regulation and technology.

Working Through Our Network to Achieve Our Objectives

87. In addition to our Embassy in Washington, the UK has Consulates General in Boston, New York, Miami, Houston, Atlanta, Chicago, Denver, Los Angeles, and San Francisco.  We have one Consulate in Orlando (devoted entirely to consular issues), and a UK Government Office was opened in Seattle in January 2013 to promote business, economic, and political ties with Washington State.

88. This network of posts is the platform from which HMG pursues UK objectives in the US.  They promote trade and investment, foster science and innovation, and provide consular support to British citizens throughout the country.  They also build relationships with local political, business, and other leaders, from governors and mayors, to CEOs and university vice-chancellors.  Many important political figures in Washington cut their teeth in local politics, and the close relationships built up in these early years can prove invaluable.

Staffing across the US Network

89. Staffing of the US Network is set out in the table below, with comparative figures for our Networks in the EU, India and China.

Notes:

i)      FCO US Network figures include 60 UK-based FCO staff in Washington and 18 in the Network.

ii)    The MOD has 130 personnel based in the Washington Embassy (included above).  There are a further 573 MOD personnel working in the United States not supported by the FCO Network of posts.  These range from military personnel in operational units or headquarters and exchange officers in each of the Service to technical experts working on joint acquisition projects.

iii)  The figures provided are a snapshot of the named posts data as recorded on 31 July 2013.  There may be some discrepancies with current figures, in particular between numbers of FCO and other government department locally-engaged staff.   

90. The FCO regularly reviews the size and make up of our footprint in the US to ensure we are achieving our objectives in the most efficient and cost effective way possible. Recent shifts in the network include the opening of the Seattle office and increased resources in Washington to engage with the US’s activity in Asia.

Soft Power

91. To achieve our policy objectives in the US, the FCO seeks to influence not just those who make the decisions, but also those who shape the environment in which those decisions are made, and those who will shape it in the future.  A key part of this work is the Marshall Scholarship programme that seeks to build networks of long term influence for the UK in the US.  The programme has run since 1953 and enables talented postgraduate students from the US to study in the UK.  There are Marshall scholar alumni in each branch of the US federal system, including Deputy Secretary of State Bill Burns and Associate Justice of the Supreme Court Stephen Breyer.  LinkedIn founder Reid Hoffman is a Marshall scholar.

92. The make-up of the US population is changing, becoming even more diverse, and will make the US a minority-majority nation by 2050.  The Hispanic community is predicted to grow the fastest, tripling from 42 million in 2005 (16% of the population) to 128 million in 2050 (30%).  The Asian population will also nearly triple to around 40 million 2050 (9% of total population). It has been argued that this shift could lead to a decline in the UK’s influence with the US, as elites from this group look more naturally to South America and Asia rather than across the Atlantic.  Our US Network play an important role in ensuring that we continue to understand these changing demographics, and retain our ability to influence. 

93. In Texas for example, Hispanics are currently the largest minority group (38%) and growing fast.  Their influence in politics and business is already strong.  The British Consulate General in Houston has worked hard to engage with leaders and influencers in this demographic and we were delighted to host San Antonio Mayor and Democratic Party member, Julian Castro, in London last year.  Their outreach work into Hispanic media and business groups is also paying dividends.  The UK has a great reputation and standing – the challenge is to ensure that the emerging political and business classes from across the demographic spectrum see us as a partner of choice in the future.

94. Traditional diplomatic tools are not the only or most effective means of reaching the widest audience.  The US Network is a leader in digital diplomacy, using modern and innovative forms of communication to forward and promote our objectives.  The visit of HRH Prince Harry was an example where social media was used to achieve maximum impact and reach.  Using the full array of its digital platform – including Twitter, Facebook, Flickr, and Storify – the Embassy was able to bring the visit to many more people than conventional forms of communication would have reached alone.
     

95. Our Network also works closely with the British Council throughout the United States, with the aim of continuing to build engagement and trust in the UK.  UK-US cultural relations have always been important and are now even more so with the changing US demographics.  The relationship needs to be refreshed to ensure the UK is relevant to the growing Hispanic population in years to come.  The British Council plays an important role in helping UK partners and stakeholders in the fields of culture, arts and education gain access to the US.   The Council also supports the work of the GREAT campaign in the US.

Conclusion

96. The UK-US bilateral relationship is in good health.  As this document has sought to illustrate, we remain essential and valued partners in taking forward our objectives across a vast range of issues and regions of the world.  It is also critical to our national security, our prosperity and our defence capability.  In short, it is a relationship from which we benefit.

97. Our ability to work together with the US is based upon our shared values, our shared history and our shared objectives. As set out above, the UK’s ability to achieve its international objectives is significantly improved if we share those objectives with the US.  Addressing MPs and Lords in Westminster Hall during his state visit to London in May 2011, President Obama described the US-UK relationship as “one of the oldest, one of the strongest alliances the world has ever known”.  We continue to work to ensure that the relationship remains strong, close, and frank, in order that both our countries continue to benefit from that partnership.

98. The FCO welcomes the Committee's continuing interest in the UK-US bilateral relationship and looks forward to its report.  We stand ready to provide supplementary material as required at any stage during the Inquiry.

3 October 2013