Brexit & UK trade, Perspectives

Perspectives: The trade factor in the battle for Scottish independence

The nation’s limited ability to influence United Kingdom trade policy is helping Scottish proponents of independence make their case. But the possibility of a future land border with England is a problem.

Dedicated followers of ‘Brexit’ might currently be feeling they are destined to relive the subject endlessly.

For just as the UK and EU should be looking towards building a new relationship, the push for Scottish independence sees the return of many of the issues discussed for five years. This includes questions as to the relative importance of economics and national identity, options for relations with the EU including full membership or joining the single market, and under what circumstances a border will be needed between England and Scotland.

One of the least attractive parts of the debate is a somewhat shameless reversal of positions by many involved. We see some strong Brexiteers arguing that Scotland should put economics ahead of national identity, while former Scottish ‘Remainers’ arguing that they can, in future, have the best of both worlds of EU membership and no land border with England.

Prime Minister Boris Johnson meanwhile argues that there should be no future referendum, given that the last was only in 2014.

Public opinion in Scotland will be tested this week by Assembly elections. All polls suggest that similarly to Brexit there is a nearly 50:50 split, reducing the chance of a decisive outcome. Most likely there will be a majority in the new Assembly for independence, meaning the debates continue.

These debates include current UK trade policy as well as the hypothetical choices of a future independent Scotland. Indeed there is probably only one area of agreement between the governments in Edinburgh and London, though it is an important foundation and puts both in the minority in Europe. The governments of both Scotland and the UK are supporters of trade.

Scotland has a trade strategy – but little influence over the UK government

In January “Scotland’s Vision for Trade” was published, something the UK government has not managed since 2016. It is an impressive document, looking at many of the hot issues of trade policy globally including digital trade, winners and losers, climate change and global value chains. The basic tenet, supporting trade but thinking carefully about the policy choices, seemed to strike a better balance than, for example, we have seen in the EU.

Unfortunately the document is likely to remain aspirational for the time being, as there is no formal role for Scotland in UK trade policy. The Assembly does not have to give consent to trade agreements, and the Department for International Trade is not obliged to share any particular information with their Scottish equivalent. Wallonia probably has more control over EU trade policy than Scotland has in Britain.

As a result of the UK’s Internal Market Bill Scotland also has no power to vary product regulations, for example over food. At senior levels in the Scottish government this legislation is believed to be directly related to London’s pursuit of a US trade deal and potential changes that might mean for UK food law. Wales and Scotland would be forced to accept these changes, though under the Withdrawal Agreement Northern Ireland continues to follow EU rules.

Independence is likely to mean an English border

As it was for the ‘Leave’ voters of England, control of trade policy is likely to be an important issue for any future Scottish independence referendum. The difference this time is that the previously hypothetical border checks between the UK and EU have now become real, leaving little doubt that these would be applied to the England-Scotland border if Scotland was to seek a closer relationship with the EU than the remainder of the UK.

Thus far Scottish leaders have been reluctant to admit the possibility of future checks with England, given the likely economic impact. Hilly country means there are few border crossings, and realistically checks would have to happen on the two main crossings on the west and east coasts.

Impacts on trade from such checks should be offset to an extent by renewed close ties with the EU, including Northern Ireland for goods, assuming this could be negotiated. Though England would be surrounded by countries with closer EU trading relations, the net effect would probably be negative for all concerned for some time.

Given over 400 years since Scotland had a separate monarch to England, and 300 years since the act of union, there would be a huge number of details to resolve in any split. From currency to defence, fishing grounds to debts this would probably be less straightforward than Brexit. Adding on the time likely to be needed for any Scottish accession to the EU makes independence seem the tough option. However, the power of national identity may well overcome the practical difficulties.

UK trade policy would be improved by Scottish input

Scottish independence or continued London dominance over trade policy are not the only possible outcomes. If Scotland remains a part of the UK it is likely that over time that a more collaborative trade policy will emerge. Particularly in the event of a change of governing party it is likely that the votes of Scotland’s Members of Parliament will be needed for future legislation, and one of their conditions may be meaningful engagement with devolved authorities.

As mentioned, Scotland and the UK share a broad support for free trade. The Scotch Whisky Association has for many years been the most powerful trade policy lobbyist in the UK, an influence which has generally been rewarded by increased global sales. Since 2016 the UK government has typically been suspicious of too much transparency or outside involvement, but engaging more meaningfully with Scotland could create benefits not least in giving a more practical reading of what it means to be pro-trade in 2021.

The battle for Scotland’s future, just as with Northern Ireland, shows that Brexit remains far from settled. There remain no easy answers about the UK’s internal organisation or neighbourly relations. While all parties recognise the importance of trade in theory, in practice it remains heavily entangled with sovereignty.

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David Henig runs the column ‘Perspectives’ on the politics of global trade for Borderlex. He is also a UK director at the think tank ECIPE.

Views expressed by columnists at Borderlex are strictly their own.

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