Chamber and committees

The Scottish Government’s assessment is that the UK’s pursuit of a US-UK trade deal when compared with our EU membership delivers a net negative impact on GDP and employment in Scotland. Our 2018 publication, Scotland's place in Europe: people, jobs and investment , showed how loss of friction-free trade with the EU would lower GDP by 6.1% by 2030. By contrast, the UK Government’s assessment shows an FTA with the US would only increase UK GDP by up to 0.16% - this fails to make up for the loss of trade from leaving the single EU market. In 2019, the Treasury and the National Institute of Economic and Social Research estimated that signing free trade agreements with countries including the USA, Canada, Australia and New Zealand, as well as the so-called BRICS emerging market economies, would increase GDP by less than 0.2-0.4% by 2030.

Assessment of the UK Government’s recent publication, ‘approach to trade negotiations with the US’, carried out by the Office of the Chief Economic Advisor (OCEA), found the benefits to Scotland of a US free trade agreement emerging in the UK modelling would largely be through derived demand for energy consumption, due to energy production being disproportionately based in Scotland, rather than a significant increase in Scottish exports. The UK Government’s analysis showed that young people will be disproportionately negatively affected by a US trade deal, and that an FTA could increase outputs from carbon intensive sectors, and increase emissions by diverting trade to a distant market. The UK’s analysis took no account of the short term impacts and potential economic or social dislocation but instead presented the impact for 15 years’ time once the economy had adjusted. This misses potential risks for employment and wages and localised problems as sectors and regions adapt.

The Scottish Government has continually put the risks of UK-US trade deal on record with the UK Government, whether this be that it could conflict with Scotland’s transition to a low carbon economy, and our net zero commitments, or that it endangers the protection of food safety, plant health, animal health and welfare standards and environmental regulation.

The Scottish Government does not feel this is the right time to engage with the US on free trade negotiations. Dealing with the economic consequences of the Covid-19 pandemic and a comprehensive agreement and close relationship with the EU must be the UK Government’s priority. An FTA with the US or any other country must not come at the expense of this.

The USA is already an important market, and Scotland exported an estimated £5.5 billion of goods and services to the USA in 2018. In contrast to the UK Government’s approach, our export growth plan “A Trading Nation” identified a set of actions that the Scottish Government has already started putting in place to increase our exports to the USA on current trading terms.