Meeting date: Tuesday, September 25, 2018
Meeting of the Parliament 25 September 2018
Agenda: Time for Reflection, Topical Question Time, Mental Health Strategy: 2018 Annual Report, UK Trade Arrangements: Scotland’s Role, Business Motion, Decision Time, Eye Health Week 2018
- Time for Reflection
- Topical Question Time
- Mental Health Strategy: 2018 Annual Report
- UK Trade Arrangements: Scotland’s Role
- Business Motion
- Decision Time
- Eye Health Week 2018
UK Trade Arrangements: Scotland’s Role
The next item of business is a debate on motion S5M-14059, in the name of Ivan McKee, on Scotland’s role in the development of future United Kingdom trade arrangements. I invite all members who wish to ask a question of Mr McKee—[Interruption.] Sorry. I invite all members who wish to participate in the debate—they might also wish to ask Mr McKee a question—to press their request-to-speak buttons now.
I advise members that we have no spare time in this debate so I ask everyone to adhere to the timing guidelines.14:54
Scotland is a trading nation. For centuries, our businesses have travelled the globe to find and develop new markets. This Scottish Government understands the importance of trade to the success of our economy, which is why we take seriously Scotland’s role in trade negotiations.
I spend a large proportion of my time travelling the country, listening to businesses and business organisations and working with them to support their efforts to increase exports, and I hear their concerns about Brexit every day. They include the inability to plan due to uncertainty and potential disruption; the threat to livelihoods and jobs; the impact of tariff and non-tariff barriers on trade and on businesses’ ability to attract workers with the right skills; the risk to inward investment; and there being no guarantees to prevent a United Kingdom Government that is desperate to make a deal from bargaining away vital protections for some of Scotland’s most iconic products.
Those concerns are reflected in the recent Federation of Small Businesses poll of small businesses, which found that business confidence is decreasing as the threat of a no-deal Brexit grows. The concerns should be at the forefront of UK Government thinking in its exit planning. Instead, we hear UK ministers accusing businesses of using Brexit as an excuse. By contrast, the Scottish Government takes business seriously. That is why we need to address fears by ensuring that Scotland has a voice in our future trading environment.
The publication of our recent paper, “Scotland’s Role in the Development of Future UK Trade Arrangements”, forms an important part of the Scottish Government’s preparations for exit from the European Union. It clearly makes the case that we need to ensure that Scotland’s economic and social interests are protected and promoted, that the voices of Scotland’s consumers, businesses and wider society are heard, and that the Scottish Parliament, the Scottish Government and others must have guaranteed roles in formulating and agreeing future trade deals.
As members know, the Scottish Government continues to believe that the best option for the future wellbeing of both Scotland and the UK as a whole is to remain in the EU. That position is consistent with the will of the people of Scotland, who overwhelmingly voted to remain. They did so for powerful social and economic reasons.
The benefits of EU membership to Scotland are crystal clear. The EU is the largest single market for Scotland’s international exports. Six of Scotland’s top 10 export destinations are in the EU, and a further two of the top 10 have trade agreements with the EU.
Rather than choose to put our faith in new, unquantified trade deals that have yet to be negotiated, we recognise the value of current trading relationships. That is why we will continue to take every opportunity to put forward a robust case for remaining in the EU, the single market and the customs union.
The UK Government’s approach is chaotic and irresponsible. Its proposals have been exposed as being unworkable and unacceptable, and as taking us towards a no-deal Brexit. Analysis after analysis, including that by the UK Government, shows that continued membership of the European single market and customs union would be the least-damaging option for a UK outside the EU. Such membership would help to protect businesses, communities and individuals from some of the inevitable damage that Brexit will deliver. Even the most optimistic estimates of potential gains from new markets could not fully mitigate that damage, yet remaining in the single market and customs union is an option that the UK Government still refuses to consider.
The risks that we face are not of Scotland’s making but, as a responsible Government, we need to make preparations for all possible scenarios, including leaving the EU, the single market and the customs union. In Mike Russell’s recent statement to Parliament, he set out the Scottish Government’s coherent, consistent and collaborative approach to preparing for those scenarios. Those preparations range from ensuring that we have a working statute book after exit to the practicalities of maintaining access to essential medicines and ensuring that we have the right staff in place to meet the challenges that Brexit will bring.
Scotland’s exporters are among our most productive and innovative businesses. The global Scotland trade and investment strategy sets out the key actions and commitments that we and our partners are taking to boost export performance and attract inward investment. The measures that we have already taken to improve our trade performance are working, with Scotland’s exports growing faster than those of the rest of the UK.
We have established a trade board and appointed trade envoys to champion export opportunities at home and overseas. We have expanded our global network of offices, doubled our Scottish Development International presence in Europe and, working with the Scottish Chambers of Commerce, funded the establishment of local export partnerships around Scotland.
Additional support is being delivered through our enterprise and skills agencies to help businesses prepare for the future with a programme that includes help to create a Brexit-focused action plan, project support, online learning and skills workshops. There is also our £20 million programme for government commitment to support Scotland’s export drive, which will help the next wave of export-ready businesses and includes our peer-to-peer export mentor programme, which is being rolled out in conjunction with the Confederation of British Industry. Moreover, there is on-going work to develop our export plan, “A Trading Nation”, which is rigorously data driven and takes input from business organisations, industry bodies, trade unions and others to pinpoint where we should focus resources to maximise Scotland’s export growth potential.
The minister is more than five minutes into his speech, but we have yet to hear very much about the subject of the debate, which is future trade arrangements negotiated by the UK. Is it the Scottish Government’s position that devolved Administrations should have a right of veto over future trade policy?
If Mr Fraser had read the motion, he would know that the first part of it talks about the importance of trade to Scotland’s businesses, which is exactly what I have been talking about in the first part of my speech. If he listens to the rest of my speech, he will get the answer to his question. The short answer, however, is no.
Brexit might not be our choice, but we are working with businesses to give them the tools to best meet the challenges that it creates, and we are focused on the decision-making processes that should underpin how future trade deals—deals that will have profound consequences for our businesses and citizens—are made. Indeed, that is the purpose of our recently published paper.
Outside the EU, the UK will become a third country. As such, it will become responsible for negotiating its own international trade deals with the EU and with others. It will lose the EU’s substantial negotiating power, scrutiny and expertise. However, the arrangements that are currently in place in the UK for developing trade deals are already inadequate, out of date and in need of an urgent and radical overhaul. In affording such a minimal role to the UK Parliament, the devolved institutions and business and civic interests, existing arrangements have failed to keep pace with constitutional developments within the UK. That should be changed now. Even if the UK remains in the EU and the customs union, the UK Parliament, the devolved institutions and others must have a proper voice in the agreement of future trade deals.
Current arrangements have also failed to keep pace with global developments, including the nature of trade deals themselves. Earlier deals focused on tariffs and quotas; now their scope is much broader and potentially affects a wide range of devolved interests. Their effects are felt in all sectors of society and by our businesses and citizens, and democratic scrutiny of those arrangements and their enduring impact must be increased and improved to reflect that.
By way, perhaps, of balancing Murdo Fraser’s intervention, I wonder whether the minister, now that he is talking about the potential impact on devolved areas of future trade agreements, thinks that it is now clear that this Parliament and other devolved jurisdictions in these islands should have the ultimate say on whether those agreements impact on and curtail or constrain devolved competences.
Yes, indeed. Mr Harvie makes a very strong point, and he is absolutely correct.
The need for change, of course, becomes considerably more urgent and necessary if the UK leaves the EU, the single market and the customs union. As we know, Scotland often has very different trade priorities from other parts of the UK. Different sectors are important to Scotland’s economy—indeed, only one of Scotland’s top five EU export sectors appears in the equivalent UK list—and its key sectors need to be protected in the inevitable horse trading that will form a part of any trade negotiations. Scotland has specific protected geographical indications, and they are crucial to our export performance. When UK Government ministers are unable, even at this early stage, to commit themselves to ensuring that that protection remains in place in future deals, Scotland’s businesses have a right to be concerned.
How we trade tells us a lot about who we are as a society and the values that we have. In our approach to protecting our environment, our public services or workers’ rights, Scotland’s Parliament and Government have consistently shown a different set of priorities, reflecting wider Scottish public opinion. It would clearly be unacceptable for a UK Government to impose trade deals that, for example, opened up Scotland’s national health service to private competition or our markets to chlorine-washed chicken or hormone-injected beef. Scotland needs a voice at the table to ensure that our priorities are not ignored.
The development, conduct and content of future trade deals will increasingly have very important implications for Scotland, but the UK Government is making no proposals to change existing out-of-date arrangements. That cannot be right.
So far, the UK Government’s record on the issue is not a good one. Its approach to the European Union (Withdrawal) Act 2018, to the Trade Bill and to the imposition of common frameworks have all demonstrated its willingness to curtail devolved powers. The UK Government has talked a good game about giving the devolved institutions their proper place and about devising trade deals that work for the whole UK, but the reality is somewhat different. When put to the test, it struggles to treat Scotland and the other devolved nations as anything more than narrow sectoral interests. At best, we are merely offered the chance to comment on already well-developed proposals. Decision-making processes must recognise, respect and protect the economic and social interests of all four nations of the UK.
To ensure that Scotland’s voice is heard and respected, and to protect and promote the interests and ambitions of our businesses and citizens, the Scottish Government and Scottish Parliament must have a guaranteed role in all stages of the formulation, negotiation, agreement and implementation of future trade deals.
Will the minister confirm that it is still the Scottish Government’s policy to have a differentiated approach to Europe that would hand back all trade powers to Brussels?
Of course it is our objective to have a different policy from that of the rest of the UK with regard to Europe, but that absolutely does not mean that what the member said will happen.
Our paper sets out in greater detail what that involvement might look like. It also—and this is crucial—proposes the establishment, in statute, of a new intergovernmental committee to consider and agree a range of trade issues. Such an approach will be in everyone’s interests. Domestically, it will ensure that the conduct of negotiations is based on a full understanding of the issues. Further afield, it will provide reassurance to the UK’s current and future negotiating partners that there is consensus across the UK around potentially difficult and lengthy trade negotiations, and that once agreements are struck, they will endure.
Scotland wants to be a constructive partner to the other nations of the UK and a fair trading partner to countries around the world. The benefits of a more inclusive approach to the development of trading arrangements are widely recognised and welcomed internationally. The EU demonstrated the value that it placed on such an approach by ensuring that representatives from the Canadian provinces were fully involved in the comprehensive economic and trade agreement negotiations. Although we can learn much from such examples, the circumstances facing the UK are unique, as must be the response.
I close by emphasising that our paper seeks to open a discussion, recognising that others, including this Parliament, must have their say. I look forward to a wide-ranging and constructive debate this afternoon as the next stage in that discussion.
That the Parliament recognises the importance of international trade to the Scottish economy and the serious impact that future trading arrangements with both the EU and the rest of the world will have on Scotland; notes the publication of Scotland’s Role in the Development of Future UK Trade Arrangements and the intention of the Scottish Government to encourage a wide-ranging and urgent discussion about the best way to protect and enhance the interests of Scotland in the development of future trade deals, and calls on the UK Government to engage with the Scottish Government and the other devolved administrations to deliver a modern, inclusive process drawing on international best practice that ensures the interests and priorities of all parts of the UK are properly represented, protected and promoted.15:07
As members will know, I did not vote for Brexit, but I did think about it. Although I did not and still do not agree with everything that the Brexiteers said during the referendum campaign, they did have some powerful arguments on their side. The reduction of the influence over the UK’s legal systems of the Europe Court of Justice is one of the welcome opportunities that Brexit should deliver. Another is the opportunity to take back control—as the slogan has it—of our international trading links.
Britain is and always has been a trading nation. Our economic prosperity is rooted in trade, in the modern economy in services as well as goods. The UK has a long and proud history as a trading nation and global champion of free trade, because it benefits the UK economy and delivers benefits for businesses, workers and consumers alike. Trade is a key driver of growth and prosperity. It is linked directly to jobs. Free trade leads to higher wages, economic growth, business efficiency, higher productivity, knowledge exchange and innovation around the globe. At the same time, free trade ensures that more people can access a wider choice of goods at lower cost, making household incomes go further, especially for the poorest in society. To take back control of all that is perhaps the greatest opportunity that Brexit now affords.
I make those introductory—indeed, elementary—points because they need to be made. Today, we face not only a rising tide of protectionism in a number of the world’s major economies but, closer to home, real antipathy, especially on the hard left, to the idea of free trade. In taking evidence on the UK Trade Bill, the Finance and Constitution Committee has heard from a number of individuals and organisations that international free trade is a threat, not a route map from poverty to prosperity, and should be resisted not welcomed. That theme was echoed in Patrick Harvie’s amendment to the motion, albeit that his amendment was not selected for debate.
There are members of this Parliament who do not believe in growth and would seek to resist the role of free trade in delivering it. Those of us who are economic liberals, who believe in free trade, would be making a mistake if we assumed that the argument for it had been won and could be taken for granted.
If Adam Tomkins is so keen on extolling the virtues of free trade, with which I agree, why is he supportive of the largest single backward step that we have ever taken away from free trade, which is Brexit? Are we about to hear about a reconversion on his journey back to being a remainer?
Absolutely not. Brexit delivers exactly the opportunity for Scotland and the UK as a whole to trade more freely with the whole of the rest of the world’s economy, including all of the fastest-growing economies in the world, which are outside the EU. One would have hoped that a trade minister might know that.
It has always been—and continues to be—our firm belief that Brexit can and must be delivered compatibly with the United Kingdom’s devolution arrangements. That means respecting what is properly devolved to us, but it also means respecting what is reserved to Westminster. Under schedule 5 to the Scotland Act 1998, international relations, including relations with the European Union, and the regulation of international trade are all expressly reserved to Westminster. Those matters are not for us but for our parliamentary colleagues in the House of Commons. They are matters in respect of which Scotland is, of course, fully represented—not by the Scottish Government but by the 59 MPs that Scotland elects at every general election to serve in the House of Commons. Respecting all of that is part of what respecting devolution means. If that constitutional reality had been the foundation on which the Scottish Government’s paper, “Scotland’s Role in the Development of Future UK Trade Agreements”, had been based, the paper would have commanded far greater support not only across the political parties here but in Westminster and Whitehall too.
Will the member take an intervention?
I fear that I do not have time.
Of course, this is the paper of a Scottish National Party Government, so it does not respect the boundaries of devolved competence at all. Rather than being based on the division of powers and responsibilities that are set out in the Scotland Act 1998, it takes a wrecking ball to that piece of legislation.
For example, page 5 of the document says:
“The conduct and content of future trade policy, negotiations and agreements … have very important implications for Scotland, and it is vital that the Scottish Government is fully involved in the process for determining them.”
That is a nationalist power grab, asserting, as it does, that the Scottish Government must be fully involved in the processes for determining policy that is expressly reserved to Westminster. Worse, not merely content with trampling over reserved competence, the SNP is demanding a series of five vetoes over the exercise by UK ministers of their powers.
Will the member take an intervention?
No, let me make this point.
According to the document, the agreement of the Scottish Government should be required—not merely sought, but required, which, I say to Mr Russell, is what a veto is—before any proposed trade deal is prepared, negotiated, ratified or signed.
The Scottish Government’s motion for today calls on the Parliament to support international best practice in the negotiation of trade deals. However, what the Scottish Government proposes in its wrecking ball of a paper goes significantly further than international best practice, even that in mature federal jurisdictions such as Canada. In Canada, the provinces are consulted by the federal Government about the federal competence of international trade and international relations; they do not have a veto. In contrast to that, the Scottish Government is proposing not merely one veto but a series of five vetoes on a matter that is not even devolved.
Will the member take an intervention?
Mr Tomkins is in his last minute.
We agree with the Scottish Government that international best practice should be observed as the United Kingdom unfolds its future trade partnerships. However, international best practice is not understood by this Scottish Government—indeed, in its paper, it has been misrepresented by the Scottish Government.
International best practice has been articulated to the Finance and Constitution Committee of this Parliament by UK Government ministers, such as the Minister of State for Trade Policy, George Hollingbery, who said that the clear intent of the Department for International Trade is to
“take the concerns of the Scottish Government and the other devolved authorities about trade policy extremely seriously.”
“There are very important industries in Scotland and very important issues to consider … We will continue the contacts at official level, at as deep a level and for as long as we can, so that we can shape our overall trade policy such that it reflects the interests of the devolved authorities.”—[Official Report, Finance and Constitution Committee, 5 September 2018; c 10.]
That is exactly what international best practice requires, it is exactly what the UK Government has agreed to and it is exactly what our amendment to today’s motion calls for.
International trade will require effective and extensive collaborative working between all Parliaments, Assemblies and Governments in the United Kingdom. The UK Government has already signed up to that, and it would be nice if the Scottish Government could do so as well.
I move amendment S5M-14059.2, to leave out from “the intention” to the end and insert:
“notes that international relations, including relations with the EU and the regulation of international trade, are expressly reserved to the UK Parliament under the Scotland Act 1998; calls on all parliaments, assemblies and governments in the UK to ensure that the UK’s withdrawal from the EU is delivered compatibly with the UK’s devolution arrangements, respecting both that which is devolved and that which is reserved, and considers that this will require effective and extensive collaborative working between all parliaments, assemblies and governments in the UK.”15:15
The only word to describe the current Brexit negotiations is “shambolic”, and that is perhaps being too kind. We are witnessing a Prime Minister who is out of her depth in negotiations with the EU and whose Chequers proposals lie in tatters, while the prospect of no deal looks increasingly like becoming reality and members of her Tory Cabinet are more interested in fighting among themselves than in getting the best possible outcome for the country. The chaos and uncertainty are bad for business, for the economy and for the people of this country. With six months to go, the situation does not look like it is getting any better.
That chaos and uncertainty have manifested in the latest business confidence figures, which were published by the FSB and which the minister referred to. [Interruption.]
Excuse me, Ms Baillie. Mr Fraser, would you please stop muttering? You may get a chance to speak later.
I suspect that his muttering is better than his speech.
In the third quarter of 2018, business confidence has fallen in Scotland and the UK. In Scotland, it is down from 5.12 to -13.2, and most if not all of that fall is down to Brexit. When people hear that the Government is planning to stockpile medicines and foodstuffs, they begin to understand the severity of the consequences. Of course, none of those consequences was ever spelled out as a slogan on the side of a bus. We need to avoid rushing headlong into a disaster for our economy and for jobs, and one of the essential pieces of legislation to try to avoid that is the Trade Bill.
I say at the outset that the Scottish Labour Party is pro trade and investment. We want the Scottish economy to flourish and grow, and that means support for exporting and for inward investment to create jobs and economic growth. We know that trade is fundamental to economic growth and that an outward-looking economy will lead to future prosperity. However, we really need to do better now, never mind in the future. Only something like 70 companies account for about 50 per cent of our exporting, which is simply not good enough. Economists tell us that we do the most trade with our nearest neighbours, and we do some £12 billion of trade with the EU. We need to deepen and broaden that activity.
The Trade Bill should provide the framework for the way in which we do trade deals in future. A strong economy post-Brexit will depend on our having a robust and progressive trade policy that reflects the interests of the devolved Administrations as well as the UK Government. Unfortunately, the Trade Bill falls short of that ambition.
I want to touch on two main issues, the first of which relates to openness and engagement. What the UK Government is proposing is akin to doing deals behind closed doors. In Scotland and across the UK, we have a wealth of talent and experience in non-governmental organisations, trade unions and businesses. They should be central and involved in the process. To be brutally honest, there is little capacity or experience in Whitehall to negotiate trade deals, because we have not had to do it for 40 years. CBI Scotland has called for the
“setting up of a formalised engagement architecture for the UK that uses trade expertise from Scotland and across the UK, especially from the private sector”.
I see nothing like that proposed in the Trade Bill.
The second substantial issue is about the impact on devolved competence. As a constitutional lawyer, Adam Tomkins will understand that it does not really help that the Trade Bill and the European Union (Withdrawal) Act 2018 deviate from the Scotland Act 1998’s definition of devolved competence, as that creates confusion and uncertainty and, perhaps, more work for lawyers. Although competence for international trade agreements rests with the UK Government, we can all agree that the complexity and extent of modern agreements means that they will directly impact on devolved competence. Examples of that include food standards, animal welfare standards, access to fishing waters and regulatory and oversight bodies—the list goes on. It is essential and right that devolved parliaments are consulted and that consent is sought.
The Tory Government has singularly failed to make it clear that its powers do not allow for ministerial overreach and that UK ministers cannot amend laws that are a matter of devolved competence without consent. Instead, we see sweeping Henry VIII powers—I know that the SNP also likes those kinds of powers—to modify primary legislation.
I am very clear that the Tory Government must not be allowed to ride roughshod over devolved areas of responsibility and use its powers to undermine the devolution settlement. That said, I do not expect the Scottish Government to have a right of veto. The business community—indeed, the whole country—expects joint working, consultation and robust debate before and during the process so that we come to agreements about what is in the interests of Scotland and the whole of the United Kingdom.
To do that, we need Government machinery—perhaps a more robust version of the joint ministerial committee—through which agreement can be reached in the interests of the whole country. Unless there is formal and agreed machinery and a statutory role for the Scottish Parliament and the Scottish Government in the UK Trade Bill, we will not agree to legislative consent.15:21
We are three speeches in and I have already heard something from everyone that I can agree with: Jackie Baillie’s excoriating demolition of the chaos of Brexit could not be more accurate; I could not agree more with the minister, who very clearly made the case for the devolved countries of these islands having meaningful input to future trade agreements; and Adam Tomkins expressed his regret that Parliament does not have the opportunity to debate my excellently worded amendment, which is something on which we agree.
We have political and ideological differences, from left to right of the spectrum and from a more to a less-concerned attitude about environmental and green issues, so consequently there are differences in the trade policies that we would like to pursue. There are those who have a free-trade mantra and assume that free trade is always a good thing in every aspect. Just as Greens often criticise a single-minded and myopic obsession with growth in gross domestic product, which measures only one thing and tells us nothing about the diversity of the impacts of economic activity, we also critique the idea that ever-growing volumes of ever-freer trade are an objective good. There are benefits that will come from such activity, but there will also be social and economic harm.
We would like a trade policy that recognises that our responsibility is not merely to achieve short-term economic benefit for our own citizens or a fair share of those benefits in the different countries of these islands. Rather, we would like a trade policy that recognises a mutual interest of people around the world, as well as the need to live within the limits that our ecosystem lays down for us.
That might mean increasing the value, rather than the volume, of trade. It might mean trading things that are different from things that we have traded in the past. It certainly means recognising the importance of trade justice, rather than merely the desire of those pursuing trade opportunities to benefit their own businesses. The need to achieve trade justice is about the relationship with those with whom we are trading, not merely the interests of those in our country who wish to increase their exports.
When we debate trade and the future of trade in our economy, there is a range of philosophical, political and ideological objectives. That difference of views is exactly why the process of agreeing trading arrangements needs to be transparent and democratically accountable.
I want to make a contrast. I am not talking about the contrast between deciding trading arrangements in the future on a multilateral basis within these islands or merely deciding them at UK level; I am talking about the contrast between how such things are decided at EU level and how they might be decided in the future. There are people who are implacably hostile to everything that the European Union represents, but I do not think that such people are in the majority in this Parliament. When the transatlantic trade and investment partnership was being debated at European Union level, and when member states, including the UK, were supporting TTIP, a great wave of concern grew up in this country and many others across the EU about TTIP’s impact and the lack of accountability in the legal decisions that would be made when, in essence, panels of corporate laws would decide, behind closed doors, on dispute mechanisms. There was a need to have such ideas challenged, and the European Parliament was able to do that. People were able to campaign and to take their concerns to political parties, to their domestic representatives and to their MEPs. On that occasion, the European Parliament won the case on behalf of the public interest.
Of course, that kind of public concern does not always win out, but it is, at least, a possibility. In the UK Government’s proposals for the Trade Bill there was an absolute absence of that kind of democratic accountability mechanism, and the proposals have changed little—they have certainly not changed enough.
Adam Tomkins and others might make the case that trade policy is a reserved matter—end of story. That is not the end of the story: the making of trade agreements might well be a reserved matter, but the content of such agreements steps heavily into devolved areas of responsibility, which is why—as I think that Jackie Baillie said at the end of her speech—we need to ensure that there is not only dialogue between Governments but a formalised mechanism so that Parliaments can challenge the decisions that Governments make on these matters. That has to mean not just the Westminster Parliament but all Parliaments and Assemblies in these islands.
Let me finish by flagging up what some of the ardent Brexiteers are looking to do. In preparing for the visit of Liz Truss, the Chief Secretary to the Treasury, to the Finance and Constitution Committee this week, I read a speech that she made recently at the far-right, libertarian Cato Institute. I had to choke back my incredulity at some of her absurd speech. The Cato Institute is deeply implicated with the people who made a killing when they kicked off the climate denial industry and who have argued against sensible environmental measures to protect the public interest—the free-market ideologues who genuinely want a ripping up of regulations. Liz Truss’s speech, in which she complained about a thicket of regulations—regulations that protect people—is an absolute dire warning of what some people want to do if we do not have an accountable, democratic means of debating trade policy in future.15:28
Many speeches are being made in Blackpool today, but the speech that will probably lead the news tonight is the one that President Trump is making in New York at the General Assembly of the United Nations. My concern about the debate on trade—in Scotland and in the broader sense—is that we face yet another binary choice, as we do in so many areas of public policy; that is, the choice between economic nationalism and free trade. I suspect that there will not be much succour for Patrick Harvie or anyone else from Trump in New York this afternoon; it is trade his way or the high way, if I may use the phrase that seems to have emanated from Salzburg last week.
I wonder whether this debate is a little academic for most businesses that are out there in the real world, trying to make a living. I have been close to many businesses in oil and gas and other sectors in the past week, and I keep asking people what they expect of Government, wherever that Government might be, on trade policy and the imminent arrival of something on Brexit—I take Jackie Baillie’s point about what we might face. What businesses ask for is clarity, and if they cannot have clarity they would at least like to know that their Governments are planning on their behalf for whatever the eventualities might be.
I have dug through some of the UK Government’s EU exit notes. Interestingly, there is no exit note on fisheries, despite that being an important industry in many parts of Scotland. However, there is one on trade, and in particular on freight. The Freight Transport Association said on the “Today” programme this morning that if there is a no-deal Brexit, British truck drivers will no longer have automatic access to European countries, which will affect between 95 per cent and 97 per cent of the trucks that currently leave all parts of the UK and cross the border into Europe. There is no certainty on bilateral agreements. A business that exports fish from Lerwick or from Mike Russell’s constituency on the west coast of Scotland does not have a Scooby Doo what will happen next March. The vision of the whole of Kent becoming a lorry park is looking more and more serious.
I would ask our Government here in Scotland to spend considerable time planning what the Scottish response will be to those eventualities. It is all very well producing policy papers on a trade bill—I will come to that in a minute—but the hard reality for the export businesses that the minister mentioned in his opening remarks is what the devil will happen under the different scenarios that this country now faces. That is where Government attention should concentrate.
My second point is on intergovernmental machinery—a topic a number of us in the Devolution (Further Powers) Committee, under Bruce Crawford’s chairmanship, in the previous session of Parliament, spent all too much time on. There is nothing much in the Government’s policy document on that, and I would encourage the Government to do rather more. The document does not mention any kind of dispute resolution mechanism. Such mechanisms are a feature of most countries with federal or quasi-federal structures, and having such a mechanism was the advice that was given to the Devolution (Further Powers) Committee over many weeks in the previous session. That is the crux of the issue and, had the Liberal Democrat amendment been selected by the Presiding Officer, I would have talked to that in more depth. Any normal functioning country—we are not that at the moment—looks closely at dispute resolution mechanisms and constantly refines them for Governments in its different parts. It is not about vetoes; it is about dispute resolution. That is the experience of international affairs. The Canadian example is clear on that in relation to the role of the provinces and the way in which the federal structure ultimately decides policy. That issue of intergovernmental machinery is the issue that I wish the Government would take away from the debate.
My last point is on where we are with the Brexit negotiations. Why does that matter? It matters because of those businesses that seek the clarity that has never existed. No matter how long this goes on, and no matter what the meaningful vote is in the House of Commons later this year, the job of Government here in Scotland, in the context of trade policy, is to ensure that Scottish business has as much clarity as possible. That clarity certainly does not exist at the moment.
That concludes the opening speeches. We move to the open debate and I ask for contributions of six minutes please. We are very pushed for time, so I give due warning that I may have to give less time to later speakers.15:33
In just six short months, and against her will, Scotland will, in all likelihood, be leaving the European Union. My constituency, Stirling, voted by more than two thirds to remain in the EU. People right across my constituency face being greatly affected by the economic uncertainty and hardship that anything but full access to the single market and the customs union will bring. As we all know, analyses by the UK and Scottish Governments agree—which in itself is unusual—that in any circumstances, exiting the EU will have a negative impact on Scotland’s economy.
In the face of that evidence and the rhetoric from the Prime Minister, is it any wonder that the notion of a no-deal exit from the EU is causing huge concern? The current political impasse could easily lead us to feel deeply pessimistic about Scotland’s future relationship with the rest of the world.
I concede that I have moments of great despondency—not for myself, but for my children and my grandchildren—about the future that we face. How will I explain to my grandchildren, when they are old enough to comprehend it, why the UK chose to turn its back on an organisation that was brought into being in order to avoid future conflict and war in Europe?
I had a few of those moments of despondency during the Finance and Constitution Committee’s visit to Brussels last week—in particular, when some Bavarian elected members whom we met showed deep concern and were equally emotional about the prospect of the UK leaving the EU. It was a timely reminder for me that there are many millions of people across the EU who will, if the UK departs, feel a deep a sense of loss as keenly as many of us will feel it.
It was during the same visit that I came to realise that it is time for me to face up to the potential reality of our leaving the EU and to do all that I can to help to ensure that Scotland has a positive and constructive voice in helping to shape future trade deals. We all need to begin to work as constructively as we can to have a different dialogue, to build trust and to create a framework within these islands on how we can in the future deal positively with matters of trade.
It is in that light that I sincerely ask Opposition members to view the contribution of the Scottish Government’s discussion paper, “Scotland’s Role in the Development of Future UK Trade Arrangements”, which was published over the summer. The paper describes four models that enable sub-states to have a role in the development, negotiation and ratification of trading treaties, including international trade deals. Rightly, the Scottish Government has not indicated a preference for any one model, thereby giving all parties that have an interest in the debate an opportunity to discuss what is right for Scotland.
Whatever members’ views might be, it is time for us to begin a real debate on how Scotland can best be involved in developing the tools to make better decisions for the Scottish economy. For my part, I learned a huge amount from representatives from Germany, Switzerland, Norway and Canada whom we met during the committee’s visit to Brussels, about how to create more positive and sustainable working relationships. I am sure that my colleagues who took part in the visit would testify to having had the same positive experience.
It is interesting that in Canada, the provinces are involved in international trade negotiations: there is an opt-in process for them. That is a different prospect from imposition.
The most significant lesson for me, though, and which was a common theme across all the countries, was about the deep level of engagement of sub-states and regions in the development of their state Governments’ positions. It is clear that early and continual engagement and participation in the development of a state’s position are prerequisites to avoiding conflict and the need for the dispute resolution mechanisms that Tavish Scott rightly touched on. That inevitably meant investing more time in discussion and in exploring the areas of potential consensus.
Consensus and an agreed way forward are the normal outcomes, because they avoid the need to be involved in time-consuming and costly dispute mechanisms or court proceedings. I have no doubt that the facts that the structures for seeking agreement are normally formally laid down in statute, and that they recognise the distinctive roles and responsibilities of state and sub-state, have helped in obtaining successful outcomes. Imposition on sub-states of the state’s position is glaringly missing from the arrangements. Such are the confidence and trust that are created through regular meetings and discussion that, in some cases, the sub-states were involved in the negotiations, either as leaders or as observers.
I believe passionately in Scotland being responsible for its own decisions, as an independent country. Others will believe that devolution should be enhanced to give Scotland a much greater role in trade arrangements, while some will be content to accept the status quo. Whatever shape Scotland’s future constitutional arrangements take, we need to press the reset button on our relationship with the rest of the UK. We can begin that journey today by agreeing that it is time to engage in a positive debate about building a new landscape for future relations to enable mutual respect and trust to be built. That is crucial for the future. We owe it to future generations—my grandchildren and everybody else’s—to at least try.15:40
The starting point for this debate is that we are in new territory as far as the negotiation of future trade deals is considered. For more than 40 years, as a member of the EU, we have had no capacity to negotiate separate trade deals as part of the UK. As we leave the EU, that new possibility comes into play, and gives far greater opportunity for Scotland, its people and this Parliament to be involved in the negotiation process than was ever the case while we were members of the EU.
The UK plans for all future trade deals to go through extensive public consultation, including with the devolved Administrations, before then needing Parliament’s approval in order for them to be ratified. In case there is any doubt, that means that the Scottish Parliament and the Scottish Government will have a say in the approach to negotiations throughout the consultation period and the entire negotiation process.
That said, it is important to stress that there are few distinct interests for Scotland in trade policy from those of the rest of the UK. The international trade interests of Scottish farmers will be very similar to the interests of farmers in East Anglia; the interests of Scottish manufacturers will be the same as those of manufacturers in other parts of the UK, such as the midlands of England; and the interests of exporters of food and drink or anything else in Scotland, will be very similar to those of exporters in Wales or Northern Ireland.
Does the member accept that, although the interests in a sector may be similar, the size of sectors is different, and that a sector that is important in Scotland might not be so important in England?
I am not sure that size matters. More important is a Government that is aware of the importance of trade and is aware that sectoral interests are reflected across the whole United Kingdom: regardless of size, they must have their interests protected. I think that that is exactly the approach that the UK Government will take.
It is also worth making the point that our economy in Scotland is closely aligned with the economy of the rest of the UK, and that the UK’s domestic market accounts for 61 per cent of Scottish exports. Nothing should be done that disrupts that internal market place.
Different countries approach negotiations to trade in different ways, and according to their constitutional arrangements. Bruce Crawford mentioned last week’s visit to Brussels with the Finance and Constitution Committee. Members who met the Norway representatives heard that the negotiation of trade is a matter for the Norwegian Government, as part of the European Free Trade Association. There is no regional input in that process, but the Norwegian Parliament has a vote on whether to ratify trade agreements.
We also heard from the German Länder that although they have a consultative role in trade policy, trade negotiations are ultimately a federal matter, and it is the federal Government that takes the final decisions.
As Adam Tomkins said—
Will the member give way?
No, I need to make some progress. I hope that Mr Crawford will forgive me.
In terms of our UK devolution settlement, it is quite clear that trade policy is a reserved matter. However, that does not mean that there should not be consultation of the devolved Administrations. As the Minister of State for Trade Policy, George Hollingbery, said when he came to the Finance and Constitution Committee, the UK Government is committed to engaging with the Scottish Government and will listen to and take extremely seriously what it and the other devolved authorities have to say about trade policy. His stated aim in doing that is
“so that we can shape our overall trade policy such that it reflects the interests of the devolved authorities.”—[Official Report, Finance and Constitution Committee, 5 September 2018; c 10.]
There are, of course, two ways in which the Scottish interest in future trade policy can be represented. First, we have Scottish members of Parliament at Westminster who are fully engaged in the process. They have a direct route into the UK Government; ultimately, it will be the Westminster Parliament that must ratify any trade deal that is agreed.
Secondly, as we have heard, there will be consultation of this Parliament and the Scottish Government on trade policy. However, it is clear from the UK Government’s approach that although there will be a consultative role for the Scottish Parliament and the Scottish Government, and for the other devolved Administrations, there will not be a right of veto over trade policy. That would not be in line with our constitutional settlement; that would not respect the devolution process.
Consultation should not stop at Government or Parliament level: we must consider the interests of business, especially those of exporters who want to see frictionless trade around the world.
There is also the consumer interest; there has been extensive engagement from civic Scotland in the UK Trade Bill process. We should be wary of the scare stories about international trade agreements. It is not the case, for example, that future trade arrangements will see us force-feeding our children chlorinated chicken or selling off the NHS to the highest bidder from among US corporate interests. George Hollingbery was very specific on both those points when I put them to him at his recent visit to the Finance and Constitution Committee. UK trade policy is not going to allow either of those things to happen. The minister would be taken more seriously on the issues if he stopped the scaremongering and stopped scaring people, as he has been doing, and started to look at the opportunities in future trade.
Will the member take an intervention?
Mr Fraser is closing.
The negotiation of international trade arrangements is a great opportunity for the UK and Scottish economies. Giving evidence to the House of Commons Scottish Affairs Committee on 10 September, James Withers, the chief executive of Scotland Food and Drink, said that trade outside the EU is
“a game-changing opportunity for international exports.”
Similar views have been expressed by the Scotch Whisky Association and a range of other sectoral interests. Those are the views and approaches that we should champion in this Parliament, through seeing international trade as a real benefit to be promoted.15:46
It is now more than 18 months since Parliament’s Culture, Tourism, Europe and External Affairs Committee published its report, “Determining Scotland’s future relationship with the European Union”.
What strikes me, in listening to today’s contributions, is how little progress has been made since our report warned about Scotland’s vulnerability in post-Brexit trade policy. The committee explored future trading relationships as part of the inquiry, taking into consideration written evidence from more than 150 organisations and individuals, and oral evidence from key stakeholders and expert witnesses. It recognised at a very early stage the need for Scotland to be involved in negotiating trade deals after the UK leaves the EU. The report reached this unanimous conclusion:
“We recommend that a means is found to involve the Scottish Government in bilateral and quadrilateral discussions on future trade deals”.
It went on to suggest a joint ministerial committee on international trade, although since then it has become clear that the JMC that was set up has not respected the devolved Administrations and that, to be effective, an intergovernmental committee on trade must treat us as an equal partner in the UK.
The committee spent time examining the Canadian approach, under which every province sits around the table to negotiate the comprehensive economic and trade agreement with the EU. Christos Sirros, the former agent-general of the Québec Government Office in London, told us:
“even before the negotiations with the EU on CETA, there has been an ongoing permanent mechanism called C-commerce—Canada commerce—that brings together officials from the various provinces on the issues that are being negotiated by Canada.”—[Official Report, European and External Relations Committee, 22 September 2016; c 21.]
We also studied the situation in Belgium, where regional Parliaments conclude international treaties in respect of their exclusive devolved competences. Flanders, for example, is a partner to more than 600 treaties and other agreements.
The UK Government appears to be taking the opposite approach—a centralised approach. Earlier this year, the British Chambers of Commerce, the CBI, the Federation of Small Businesses and the Institute of Export and International Trade called for the involvement of the devolved Administrations and legislatures throughout the Brexit process, including their full involvement in mandate preparation, oversight and—critically—approval of trade deals.
That view is shared by the 27 organisations that make up the trade justice Scotland coalition. In a briefing for today’s debate, they say that, as it stands, the UK Trade Bill contains nothing that would give the Scottish Government or the Scottish Parliament the right to scrutinise or amend trade deals. In other words, Scotland will have no role in ratification of those deals, as things stand. The UK Government has argued that there is no need for that, and insists that the preferential trading agreements that the EU has negotiated with 60 third-party countries will remain in place after Brexit. That position is either extremely naive, arrogant or deeply mendacious. Expert trade witnesses who appeared before the committee told us that the rollover of existing trading relationships is by no means certain.
For example, Dr Matias Margulis of the University of Stirling emphasised that
“what we are talking about in the short to medium term is a renegotiation of the market access that the UK currently enjoys, not additional free-trade deals.”
He thought then that it will
“take years if not decades ... just for the UK to achieve the market access that it currently enjoys”.—[Official Report, Culture, Tourism, Europe and External Relations Committee, 3 November 2016; c 4.]
Two years on from those evidence sessions, our expert trade witnesses have been proved to have been correct. Earlier this month, in response to a freedom of information request, the UK Government confirmed that, even at this late stage, it has no clear agreement to roll over any deals that third countries currently enjoy with the EU and, crucially, no set date for asking those countries whether they are willing to do that.
We face complete chaos, even if a bad deal is cobbled together at the last minute. The clock is ticking: it is ticking for Scotland’s exports to the EU and around the world, and for our NHS, which could be served up to private medical companies in a free-trade deal with the US. You don’t know what you’ve got till it’s gone.
As others have pointed out, the European Parliament offers some protection against the most exploitative trade deals. For example, currently it must sign off trade deals that have been negotiated by the European Commission, and it has robust scrutiny arrangements whereby individual MEPs are able to look at confidential trade documents that will potentially impact on their constituents. During the transatlantic trade and investment partnership negotiations with the USA, 14 committees of the European Parliament scrutinised the proposed deal in detail. As a result of that forensic scrutiny, TTIP was shelved. Who will perform that forensic scrutiny after Brexit? Without the protection of Europe—the European Parliament in particular—who can we trust?
The Scottish social attitudes survey that was published this year said that 61 per cent of people in Scotland trust the Scottish Government to work in Scotland’s best interests, compared with 20 per cent for the UK Government. That is why it is absolutely crucial that every single member of the Scottish Parliament gets the chance to scrutinise future trade deals, and that the Scottish Government, which represents us, gets the chance to scrutinise their impact on the citizens of Scotland. We are elected to protect our constituents. That includes protecting them against secret international deals that could destroy their livelihoods, their public services and even their health.15:52
We are six months from the Brexit deadline in March next year, and we are not much clearer about the manner in which the UK will leave the European Union, nor do we have a detailed model for trade policy to replace the structures of the European Union. The Chequers deal appears to be dead in the water, no matter what I think about it. At the concluding summit in Salzburg last week, Donald Tusk said bluntly that the economic aspect of May’s Chequers blueprint for Brexit “will not work”. We are only now beginning to realise the full range of the implications of leaving the European Union. In the main, they look bleak to me.
Trade arrangements—the rules and agreements for business to operate across the world—are, of course, at the heart of any deal. They have major implications for domestic policy, and they are probably a central issue for the Scottish Parliament.
The Trade Bill is unacceptable in its current form, and it should be unacceptable to most democrats. The extensive use of ministerial powers without justification means that it is an undemocratic bill. It is certainly not transparent, and it is subject only to minimal scrutiny. We are asked to respect the result of the referendum, but I cannot respect the way in which the UK Government has chosen to take us out of Europe so far. There must be respect on all sides.
The Brexit plan must give businesses clarity and transparency, but it must also be transparent to elected members, who are expected to scrutinise it on behalf of the general public, whom they represent. The Trade Bill is set to replace all the EU’s existing trade agreements, so there must be dialogue with all the devolved Administrations. It is a new trade policy arrangement, and it will impact on all the UK’s Parliaments. It would be against the interests of the United Kingdom, which I believe in, not to properly involve and include nations, regions and Assemblies across the United Kingdom.
For that reason, I think that the Tory amendment is way off the mark. It asks the Parliament to respect the fact that trade and international issues are reserved, but the UK Government did not respect our debates on the European Union (Withdrawal) Bill and this Parliament’s right to sovereignty over its devolved powers.
There is nothing in the amendment that would allow this Parliament even a say in matters that affect distinctly Scottish interests, which is an issue that I thought we might be able to agree on. I do not argue for a veto, but I am deeply concerned that the devolution settlement, and the United Kingdom, will be totally undermined if the Tories do not recognise that it will be really important for the new arrangements to redefine what being part of the United Kingdom means and to give this Parliament its say in the creation of new trade agreements. Without such an approach, it is difficult to respect the outcome of the referendum, because we have had virtually no say in the construction of the new arrangements.
It is hard for ordinary people to follow how the process is playing out. According to The Times this week, Philip Hammond and Greg Clark called for businesses to be given more help to adapt to a new immigration system. They argued—rightly—against a cliff-edge policy, but they appear to have lost the argument. They were not backed by other remainers in the Cabinet and they have stopped speaking up for the many businesses that are deeply concerned about a new immigration policy that will not address their needs.
It is no secret that Scotland has a rapidly ageing population. We have many industries that rely on a lower level of skills. The pensioner population is expected to rise by 20 per cent over the next 25 years, which is in marked contrast to the size of the working population. The Scottish nation has different characteristics from those in the rest of the United Kingdom. That must be addressed in future arrangements.
Last week, a report that the Home Office commissioned from the Migration Advisory Committee said that Scotland’s economic situation is not sufficiently different from that of the rest of the UK to justify a different policy. That is not true. The report proposed blocking almost all workers from coming to the UK, with a new immigration system that is focused on attracting highly skilled staff.
Matthew Fell, who is CBI UK’s policy director, said that the plans that were outlined for low-skilled workers were
“inadequate, and risk damaging labour shortages”.
That is an important point for our Tory colleagues to get across to the UK Government. Jane Gratton of the British Chambers of Commerce said:
“Any sudden cutoff of”
European Economic Area
“skills and labour would be concerning, if not disastrous, for firms across a wide range of regions and sectors.”
Brian Berry, who is the chief executive of the Federation of Master Builders, criticised the ideas and suggested that they could devastate
“tens of thousands of small construction firms”
that rely on labourers from the EU. There is a long way to go before the new immigration system is fit for purpose and fit for our country.
The trade unions have had an important role—I declare my interest as a member of the GMB—in asking which industries might be under threat. The trade remedies authority, which is to be set up under the Trade Bill, will deal with crucial sectors for the Scottish and British economies. Steel and aluminium are already subject to tariffs from the United States, and the same is true of ceramics and tableware, for which high tariffs have been announced. We need a close relationship with EU trade policy; it is clear that the US will not give us preferential treatment in those areas.
I am sorry, but you must conclude, as there is not a second in hand.
I conclude, Presiding Officer.15:58
Scotland wants to be a constructive partner to other nations of the UK and a constructive and fair trading partner to countries around the world. The UK Government’s approach, which seems to place the devolved nations’ interests and involvement on a par with sectoral interests, must change.
The UK Government has talked about trade deals that work for the whole UK, but in some negotiations, Scotland, Wales and Northern Ireland could have very different interests from those of the rest of the UK. It would be best to address those differences before reaching the negotiating table.
The way in which trade arrangements are developed in the UK cannot remain the same. The development, conduct and content of future trade policy and agreements will have important implications for Scotland, because future trade agreements will almost certainly involve devolved issues.
For the reasons that I have outlined, it is clear that the chamber needs to send the UK Government the strongest message possible that there needs to be a guaranteed role for the Scottish Government and the Scottish Parliament in the development of trade agreements. That would benefit Scottish producers, exporters, consumers and our constituents and communities.
It is clear that the best future for Scotland and the UK lies in remaining in the European Union or—at the very least—in the single market and customs union. However, we must do everything that we possibly can to protect Scotland’s interests in future trade deals under all possible outcomes.
It is clear that the Scottish Government still has significant concerns about some aspects of the UK Trade Bill, and that it will continue to try to amend it. We have already heard some quotes from the UK Minister of State for Trade Policy, George Hollingbery, when he appeared before the Finance and Constitution Committee. He also spoke to the Delegated Powers and Law Reform Committee, where he stated:
“We are absolutely clear that there should be deep and meaningful consultation with the Scottish Government and that we should be open to modifying our proposals on the basis of the information that we receive. I am absolutely committed to that.
It seems to me that we will get much improved and much more deliverable free trade agreements if we can all agree on exactly what they should end up proposing and on how we should negotiate them. The fine detail of what form that mechanism will take is yet to be resolved, but I give the committee a political commitment that I believe that it is absolutely right that the devolved Administrations should have a real input”.
He also stated:
“I am absolutely determined—as is the secretary of state—that the consultations that we hold will be meaningful, wide and deep. We will take into account the interests of all interested parties, which certainly includes the devolved authorities. We are not yet set on exactly how we will involve the devolved authorities”.—[Official Report, Delegated Powers and Law Reform Committee, 5 September 2018; c 5-6, 18.]
That tells me a few things. First, here is a UK minister who understands one aspect of the issue. It is not about a veto, which Mr Tomkins talked about; it is about having an agreement with the devolved Administrations. I will read part of the quote again, in case Mr Tomkins did not look at that part of the Official Report. Mr Hollingbery said that we can get improved free trade agreements
“if we can all agree on exactly what they should end up proposing and on how we should negotiate them.”
That is not about a veto; it is about two Governments working together to try to get the best possible outcome.
I would never expect any Scottish Government minister to claim that the UK Government should listen to everything that they propose. However, a UK Government that is rife with internal division should attempt to work with the devolved Administrations. The Scottish Government has been willing to negotiate, discuss and have meaningful dialogue with the UK Government for the past two years. As the Minister for Trade, Investment and Innovation stated, the UK Government has “talked a good game”, but its actions have been somewhat different.
We have heard a lot about aspects of previous trade negotiations. We have heard about TTIP, chlorinated chicken, the selling-off of the NHS to the highest bidder, reduced food standards and a power grab, and about other negative aspects of the situation that we face. Bearing in mind that we have had trade arrangements via the EU for the past 40 years, and given that any future trade arrangements will clearly affect Scotland, our economy and devolved issues, surely the common-sense approach would have been for the UK Government to genuinely work with the devolved Administrations and Parliaments in order to have a stronger negotiating position in future trade negotiations.
The UK’s wrecking-ball approach needs to stop. There needs to be a reboot of the intergovernmental arrangements, as Tavish Scott said, to build trust and common ground in taking forward international trade discussions. If the UK Government does not take that approach, our constituents, our communities and our economy will not benefit.16:04
“On the Quay at Leith” is a 19th century painting depicting the important role that the port once played as the main trading route into and out of Scotland. That included the exportation of bottles—one million a week from the Leith glass works at its peak in 1770, according to figures that I have received. I have not researched the figures, nor was I around at the time to verify them, but the picture is one of a hive of activity, with ships being loaded and waiting to sail across the world. Indeed, until the building of the Kiel canal in 1895, for centuries there had been regular direct trade between Scotland and the coasts and islands of the Baltic Sea, including trade in Scottish herring by one of my own ancestors.
Let us fast forward to today. Leith may have changed dramatically, but the importance of building and maintaining trading relationships has not. Scotland now has a fantastic opportunity to play a key role in a more ambitious UK trade policy as we leave the EU. We are an outward-looking country with a distinct culture, providing products and services that are desired around the globe. The beauty of the sort of open and free trade that, as a member of the EU, the UK has always been in the driving seat of is that our businesses have the chance to export and show off their products around the world. More than that, our consumers are offered a wider range of products at more competitive prices, and jobs can be created as a result of investment in this country. We look forward to much more of that in the coming years.
On paper, of course, the EU negotiating position is formidable, with 500 million citizens and one market. However, with 28 different member states having their own interests, negotiations can be made very cumbersome indeed. Just ask the Canadian Government, which struggled on for seven long years before the EU eventually agreed to a deal that was in place, provisionally, for one year, only for Italy’s new Government this summer to threaten not to ratify it, which was enough to bring the deal crashing down around all member states.
Scotland’s voice will be stronger as part of a more agile United Kingdom of closely aligned economies that can mould trading relationships around interests closer to home.
Gordon Lindhurst argues that the UK might get a better trade deal, but would he not accept that there is at least a risk that the UK will get a poorer trade deal than the EU can manage?
As a result of leaving the EU, we will be able to have a more ambitious trade drive—we have already made clear our intention in that regard. That will free us up to negotiate proper deals. Consultations are already under way that give all Scots the chance to comment on what they want to see from proposed deals with the USA, Australia, New Zealand and the Pacific countries. We have not had such opportunities for some 40 years now as a result of being locked into the EU.
Although the Scotland Act 1998 categorises international trade as a reserved matter, Scottish Government officials regularly engage with officials from the UK Government’s Department for International Trade. They can offer devolved expertise on a range of issues that the UK Government might find valuable in its own positioning. That could be hugely important, in light of the potential negotiations in front of us, with vast untapped potential for broadening our horizons—not least because the International Monetary Fund predicts that 90 per cent of growth in the next 10 years will be outside the EU. There are also significant gaps where the EU has failed to deliver free trade and investment deals—for example, the lack of a comprehensive trade deal with India, with its marketplace of 1.3 billion people.
Will the member give way?
Not at the minute. I am seeking to make progress.
The position regarding India’s marketplace of 1.3 billion people, with which the EU has failed to make a comprehensive deal, is exemplified in the export statistics. Scottish exports to India sit at only £235 million, compared with those to the small country of Luxembourg at £370 million, which tells us that there is much more to be done on the world stage. Negotiating trade and investment deals after Brexit could therefore be a game-changing opportunity for international exports, as the chief executive of Scotland Food & Drink has said recently.
However, as well as looking to the future, more can be done now, as the Parliament’s Economy, Jobs and Fair Work Committee found recently. Internationalisation is one of the Government’s four key priorities, as set out in its 2015 economic strategy, yet in its report, “Scotland’s Economic Performance”, the committee found that Scotland needs 5,000 more companies to start exporting before it can move into the Organisation for Economic Co-operation and Development upper quartile.
Scottish Development International’s own evaluation of international activities noted improvement in Scotland’s trade performance but a shortage of exporting firms compared with other parts of the UK. Our report summarised the position: although the theory and principles of Scotland’s trade and investment strategy are sound, it lacks Government commitment and financial backing.
The Scottish National Party likes to talk about constitutional minutiae, but it should instead concentrate on how Scotland can commit to helping businesses export while working with others to make us the great trading nation that we know we can be.16:10
The point has been made repeatedly throughout today’s debate that trade agreements are not just about how many goods at what price. In today’s world, trade agreements reach far and wide. They encroach on public policy and impact deeply on our day-to-day lives, cutting across both reserved and devolved competencies.
If we believe in inclusive growth that values fairness and competitiveness, recognising that growing our economy and addressing inequality are not mutually exclusive but two sides of the same coin, the calls for an ethical, transparent and democratic framework to scrutinise and agree on future trade agreements should be heeded; indeed, they are timely.
If we believe in a modern, participative democracy, now is the time to be clear about how the UK Government, the Scottish Government and other devolved Administrations will work meaningfully together, in partnership, to pursue and protect our collective and individual interests, because—like it or not—the world around us is changing. The Scottish Government discussion paper is quite simply making the case that we now need better arrangements within the UK to pursue those interests.
We all know what is reserved and what is devolved—it is written in black and white. However, life—unlike the print on pages of a law book—is not two-dimensional. Making decisions is not a two-dimensional process. I know from experience that two sets of ministers in two different Governments reading out a list of what is reserved and what is devolved does not get us very far and delivers nothing for citizens. In the real world, reserved and devolved powers interact with each other—sometimes in competing ways. Although I have a simple solution to that conundrum, I will stick to the terms of today’s debate.
I was really struck by the findings of the House of Commons Public Administration and Constitutional Affairs Committee when it said in July this year:
“we are concerned that so much work still needs to be done 20 years on from the establishment of devolution in 1998. It is clear from the evidence to this inquiry that Whitehall ... operates ... on the basis of a structure and culture which take little account of the realities of devolution in the UK. This is inimical to the principles of devolution and good governance”
in the UK.
That says to me that it is in everyone’s interests for Whitehall to get with the devolution programme and that the biggest barrier is that the UK Government still does not really get devolution; it needs to understand devolution to respect it.
I was not a member of the Finance and Constitution Committee when George Hollingbery, the UK Minister of State for Trade Policy, gave evidence a few weeks ago, but I read his evidence with great interest and I found some of his language illuminating. As an aside, I was rather wickedly amused that Mr Hollingbery got Mr McKee and Mr Mackay mixed up; I thought that that happened only to women.
There were lots of warm words about a “commitment to engage”, but there was precious little on details, other than the references that were made to current engagement at official level, in which Scottish Government officials share their views and expertise “upstream”, which is an interesting word to use. Deep dives on technical matters, the role of Scotland’s 59 MPs and “territorial secretaries of state” were discussed, too. However, all that is a given and it was a poor deflection from the need to change how we currently work.
When Willie Coffey asked the minister to give an example of how a devolved Administration had shaped policy, a civil servant answered:
“I am sure that we could find some such examples.”—[Official Report, Finance and Constitution Committee, 5 September 2018; c 7.]
She could not identify an example.
What is needed is a respectful and mature process in which devolved Administrations are guaranteed a meaningful role in policy formulation, negotiation, agreement and implementation. There are clear arguments why respecting what we have in common and our differing needs is in the interest of the UK as a whole and not just Scotland. We heard from Joan McAlpine that the British and Scottish Chambers of Commerce, the CBI and the Federation of Small Businesses support the involvement of devolved Administrations in matters such as mandate preparations, oversight and approval.
The minister has outlined today a desire to be a constructive partner. We need a structure or system, whether that is an intergovernmental committee or another arrangement, that enables different spheres of Government to move on and to be able to work together on the substantive issues of the day, as opposed to constantly fighting about processes.
Issues of trust and integrity are of central importance, too. It is utterly unbecoming and despicable of Theresa May, as the Prime Minister of the entire UK—whether I like it or not, and I do not like it—to brief in Europe against Scotland and the Scottish Government.
There are many international examples to learn from. Many of the countries that we seek to learn from have different constitutional arrangements, such as written constitutions. Although we cannot cherry-pick or shift and lift carte blanche from other countries, we can look hard and apply learning from others and adapt it to our own experience, guided by clear principles and transparency. Now is the time to do that.16:17
As we know, trade agreements are the rules that govern our economic relationships with the rest of the world. For more than 40 years, those rules have been shaped by our place in Europe and for more than 40 years, as a willing member state, we have shaped those rules.
Exiting the European Union will inevitably change our relationship with the rest of Europe and the rest of the world. However, the extent of that change remains unclear because, even now, with six months to go until exit day, no agreement has been reached on a Brexit deal or on the rules that will come to govern our relationship with the EU. As Jackie Baillie said, the Prime Minister’s Chequers deal is dead, the Cabinet has been in open revolt and no deal looks more and more likely.
However, today’s Scottish Government motion is not about the wisdom of leaving the EU or the options that will have to be decided on. It is about trying to build something constructive when it comes to international trade agreements and surely, all around the chamber, we can agree on that. I welcome the tone and the content of the motion.
The intention of the UK Government is, from March 2019 onwards, to negotiate a series of bilateral deals. However, until we know what the nature of the UK’s relationship with the EU will be, we will not know the extent to which there can be an independent UK trade policy post-Brexit, and we will not know the full impact that it will have on the economy.
The Scottish Government publication on future UK trade arrangements sets out in detail the significance of trade to the UK and Scotland. Paragraph 23 of the report spells out in sobering terms what leaving the single market and customs union could mean. It says that a World Trade Organization rules scenario would lead to loss of 8.5 per cent GDP in Scotland by 2030 and that a free-trade agreement relationship would lead to GDP being “6.1% lower by 2030”. For all those reasons, the Brexit deal matters. We need to get it right, but we should also be prepared for all eventualities.
Promising a “transparent and inclusive” independent trade policy in July, the International Trade Secretary, Liam Fox, said:
“To develop and deliver a UK trade policy that benefits business, workers and consumers across the whole of the UK we need to reflect the needs and individual circumstances of England, Scotland, Wales and Northern Ireland.”
One of Labour’s six tests for any Brexit deal that the Government might come forward with is whether it delivers for all the nations and regions of the UK. We must apply that same test to any future trade agreement to which we sign up post-Brexit.
As we know, all the UK’s international trade deals are negotiated through the EU but, as the report points out:
“Losing the EU’s negotiating power, scrutiny and expertise will require a massive step change in the way the UK conducts its affairs in relation to international matters.”
Jackie Baillie and other members have said that that is a key challenge for us all—for decision makers, trade negotiators, regulators, Governments and leaders across party lines. We have to achieve a “massive step change” while ensuring that any trade arrangements are transparent, inclusive and meet the needs of the nations and regions of the UK.
Brexit is testing political conventions and orthodoxies in this country to destruction. It is time for new ways of thinking and working to emerge. We need a new mindset around how the Governments of these islands work together. It requires goodwill and co-operation. It challenges us to learn from good practice elsewhere, as well as introducing new and innovative practices of our own.
In evidence to the Finance and Constitution Committee in April, Kathleen Walker Shaw of the GMB—I declare an interest as I am a member of the GMB—outlined concerns about existing global and EU-level trade agreements:
“predominantly because of their lack of democracy, transparency and inclusiveness of stakeholders.”—[Official Report, Finance and Constitution Committee, 25 April 2018; c 3.]
We can better engage with stakeholders by giving our devolved Parliament a meaningful say, and by the UK Government accepting that the devolved Administrations are not its competitors or opponents but partners in an endeavour the like of which none of us have ever had to engage with before. To do that, we need a formal structure, clear and binding agreements, mutual respect and understanding, and parity of esteem. As Kathleen Walker Shaw also said,
“the Scottish Parliament and other devolved Administrations must have a formal and substantial say on why we are having any trade agreement, what its aims, objectives and scope are and what its mandate is.”—[Official Report, Finance and Constitution Committee, 25 April 2018; c 6.]
As Bruce Crawford said earlier, the Finance and Constitution Committee has been taking evidence on trade, and I agree with him that it has been useful for us to hear about the experience of officials and representatives of different countries. I am struck by the fact that other countries, especially those with federal or devolved structures, deliver complex trade deals that are acceptable to their nations and regions when they have a robust agreed process that is underpinned by a genuine spirit of co-operation. That could mean central Government and devolved Government agreeing a common negotiating position before entering formal trade talks. It could mean observer status for the devolved Administrations. It could even mean proper recognition for local government as a sphere of government—not just a tier—with a significant interest in our future trading relationships.
There are no easy answers. What works well in one agreement with one country will not necessarily work well in others, but surely a new framework of co-operation and understanding is a sound and legitimate basis on which to proceed. Governments and devolved Administrations will not always get everything they want. Kathleen Walker Shaw again pointed out, in relation to the Canadian provinces:
“I know that whether the provinces were able to get where they wanted to be on CETA is an open question. A lot of compromises were made ... There is no perfect model.”—[Official Report, Finance and Constitution Committee, 25 April 2018; c 10.]
Even if we do not always get what we want, let us put in place the framework that allows us to try. Let us make a complex process more transparent and inclusive, and let us make sure that it reflects the needs of our economy.
We are entering uncharted and turbulent waters. I hope that the UK Government responds positively to the motion lodged by the Scottish Government.16:23
I have become increasingly pessimistic as I prepared for today’s speech and looked through the discussion paper, which goes through various scenarios. Given the mood music from Westminster, it is not a hopeful picture.
To start with some general comments, I certainly feel as though I can trust the European Union more than I can trust the UK. The EU has ideals but it can also be pragmatic. Westminster does not seem to have very much in the way of ideals, nor does it seem to be living in the real, practical world. The EU has negotiating power, scrutiny, expertise, and the fear is that the UK has none of those. The UK has been behaving like a spoiled brat. The Chequers agreement was meant to be an opening offer for negotiations not a “take it or leave it” final offer. It should also have come much earlier in the process.
There is probably a majority in the House of Commons for a soft Brexit that keeps us in the single market and the customs union. However, it seems that Theresa May and Jeremy Corbyn are putting their parties before the country, rather than standing up to the ardent Brexiteers in both parties.
Labour seems to be saying that we need a federal system. I seem to remember that Gordon Brown said that quite a while ago. However, that would require a written constitution for the whole of the UK. Can we really expect that any time soon, even if Labour were to win a Westminster election? A federal system could be an improvement, as it would make it much clearer who had the power to do what, whereas devolution always leaves the real power at the centre.
I have to say, also, that part of me feels sorry for Theresa May, because she cannot possibly square all the circles that she finds herself in.
There is a lot of good material in the discussion paper. Paragraphs 10 and 11 in the introduction make a useful point about the amount by which we would need to increase trade with other countries to compensate for lost trade with the European Union. For example, tripling services trade with China would still not equal one fifth of the UK’s current services exports to the single market.
Chapter 1 talks about some of the key differences between Scotland and the UK with regard to trade. Chart 3 on page 17 makes the point that the food and drink sector is much more important to Scotland than it is to England and Wales, and the fear is that UK negotiators will be less concerned about sectors that are relatively important to Scotland but relatively unimportant to the rest of the UK—that is the point that I was trying to make earlier to Murdo Fraser.
On page 18, paragraph 36 talks about the fact that, of the 92,000 tonnes of salmon, worth £600 million, that are exported from the UK each year, 99 per cent are from Scotland. How seriously will the UK negotiators take that sector, which is extremely important to Scotland?
Similarly, chart 4 on page 19 talks about the differences between the service sectors, and notes that professional, scientific and technical and real estate services are much more important, relatively, to Scotland, where they make up 45 per cent of the service sector, than they are to the rest of the UK, where they make up only 30 per cent.
The fear is that, when negotiations take place with the EU or other countries, if there are no checks on the UK negotiators they will inevitably do what they think best for the biggest part—that is, England, and potentially, the south-east of England—whereas the other parts, such as Northern Ireland, Wales, Cornwall, Cumbria and so on, not to mention Scotland, will scarcely be on the radar.
That chapter concludes by looking at imports and argues that global production chains can mean that products and their components cross multiple borders, which means that tariffs can become burdensome for producers and consumers.
I accept that there are challenges in relation to getting the balance right in this area. It seems that, under EU regulation, we have been largely unable to favour local suppliers over cheaper imports, and many of us have not always been comfortable with that. We have been allowed to have arrangements in relation to fair trade products, which has effectively enabled Scottish, UK and EU consumers to choose to pay a premium to ensure that farmers and others in the developing world get paid a decent wage. On that point, I disagree with Adam Tomkins, because, sometimes, free trade drives down wages in the developing world.
I would like the Fairtrade model to be developed so that not only individuals, but local authorities, or a whole country, could choose to allow only imports that meet certain human rights or, perhaps, animal welfare standards. The hope would be that such possibilities could be built into future trade agreements in an even better way than the EU has managed, and that is what the Conservatives seem to be arguing. However, the fear has to be that the UK will be smaller and weaker than the EU and will fail to achieve even the present standards.
I thank the trade justice Scotland coalition for its briefing. I agree with a number of the principles that are laid out there, such as the suggestion that trade should be based on ethical principles. However, I caution against being too idealistic and cutting off our noses to spite our faces. I fear that, if we dealt only with countries and companies that are above reproach, we would not be doing very much trade at all. Again, a reasonable balance must be struck.
Paragraph 56 in the report talks about the length of time for trade deals. It says that the quickest deal that the EU has managed took three years to arrange, so the question is, how long will one with the UK take?
The ball is very much in the UK Government’s court. It has taken far too long to get to where we are. It must be willing to negotiate, not just make demands of the EU, in the way that we might expect a colonial power to do.
I appeal to the London leadership of the Tories to please consider what is best for the country, not just who will win the next election.
I call Rachael Hamilton, who will be followed by Willie Coffey. You have both had your speeches cut to five minutes to allow the debate to continue properly—I thank you for that.16:30
For more than 40 years, the negotiation of trade agreements has been the exclusive competence of the EU. We know that, when we exit the EU, we will have far more involvement in our future UK trade agreements than we currently have in trade deals. As my colleagues have mentioned, our amendment seeks to amend the motion to highlight the significance of co-operation and collaboration between all parts of the UK as we move forward with Brexit. The UK Government has repeatedly committed to work closely with Scotland to deliver a future trade policy that works for the whole of the United Kingdom, yet the SNP continues to sound aggrieved about that and will not work collaboratively with the UK Government to help forge those future trade deals so that we can reach the best outcome for Scotland and the rest of the UK.
Our amendment is unequivocal. We are calling on
“all parliaments, assemblies and governments in the UK to ensure that the UK’s withdrawal from the EU is delivered compatibly with the UK’s devolution arrangements, respecting both that which is devolved and that which is reserved”.
If, as the member says, the UK Government is so focused on securing trade deals, why has it not set a date for agreeing the rollover of current preferential trade agreements that the EU has negotiated on the UK’s behalf?
We need to focus on the engagement and consultation process that will take us forward with free-trade agreements in a way that involves Scotland and the other devolved Administrations.
Any future trade deal will have massive potential for Scotland. The Fraser of Allander institute has stated that Brexit will
“encourage companies to consider trade on a much more international scale and over a longer time frame.”
The opportunity to take Scotland global and really showcase our products abroad could be positive for our economy. At the moment, Scotland exports £370 million to Luxembourg but just £235 million to India, and we trade 80 per cent more with Ireland than we do with China. Only three of the top 10 countries in the world by size of population appear in the top 20 for Scotland’s exports. I see Mike Russell putting his hands on his head. I think that there is huge potential, but clearly he cannot see that. With Brexit, we have the chance to change the current situation, and I just wish that Mike Russell was slightly more optimistic for Scotland.
Scotland punches well above its weight in producing many fine quality products for export. For example, take food and drink, which many members have mentioned. The IMF predicts that 90 per cent of growth in the coming years will be outside the EU, and James Withers of Scotland Food & Drink has said today that he sees that as a major opportunity. Martin Bell, the deputy director for trade at the Scotch Whisky Association has welcomed Scotland’s future trade possibilities and has said:
“the Scotch Whisky industry welcomes the opportunity to share our priorities for future UK trade negotiations with these key trading partners.”
Many Scottish companies do not export internationally, perhaps because of a lack of finance, awareness of opportunities or international savvy. That is despite the fact that many companies trade with England and other parts of the UK, which already requires packaging and logistics.
Shanker Singham, director of the international trade and competition unit at free-trade think tank the Institute of Economic Affairs, has said that the UK’s
“narrower range of offensive interests”
makes it more likely to succeed where the EU had failed to negotiate access for Scotch in growth markets.
Will the member take an intervention?
I am sorry, but I have limited time, as my time has been cut.
I believe that the Scottish and UK Governments have a vital role in ensuring that companies have the necessary tools to promote their products for exports. The role of Government is not only to provide financial support but to increase awareness of the support that is already available and provide easily accessible advice on internationalisation.
The UK Government has made it clear that, as we leave the EU, our high standards for consumers, employees, the environment and, in particular, animal welfare will be maintained. Healthcare and food standards will not be compromised in future trade deals. George Hollingbery, who has already been quoted today, has said:
“The UK is absolutely clear that we will not be dropping our phytosanitary or food standards and that these are things that we will not be negotiating away in any free-trade deal.”—[Official Report, Finance and Constitution Committee, 5 September 2018; c 16.]
Let me make it clear that Mr Hollingbery went on to say that the UK will not sign agreements that allow the national health service to be challenged by foreign investors.
Food issues can also be dealt with in agreements. We have made clear commitments about how we will deal with such issues.
We must never forget that Scotland exports nearly four times as much to the UK as it exports to the EU. That is a fact that SNP members completely disregard, and—
Sorry, but you must conclude. Thank you.16:35
When I visited Brussels last week with colleagues from the Finance and Constitution Committee, I learned that, whether we are talking about the German Länder or the Swiss cantons, colleagues in Europe embrace a process whereby federal Governments fully involve their devolved Administrations and proceed on matters only when agreement is reached. The Länder have full responsibility for education and culture policy, and the federal Government must get consent from the Länder on certain matters or it cannot proceed.
We met representatives from three Länder: Bavaria, which is the biggest Land, Thuringia, which is one of the smallest, and Brandenburg, which is in the former East Germany. Despite the differences in size and scale and the challenges that Germany faced when the east came into the EU overnight in 1990, the common threads that hold everything together are the basic law and the Lindau agreement, which provides that if an international treaty contains any provision that affects state competencies, the federal Government must obtain the consent of the Länder; in return, the Länder can conclude treaties with foreign states, with the consent of the federal Government. That system has been in place for many years now and has served Germany well.
I remember the surprise on the face of the Swiss ambassador to the EU, Mr Bucher, when we asked him how disputes are resolved. He and his colleagues looked at one another and said, “We do not have disputes.” That is because they engage in detailed discussions with colleagues and all interested parties—they also hold public referenda from time to time.
The Swiss cantons all retain a high degree of autonomy. They enjoy fiscal autonomy, have their own constitutions and control everything that is not specifically reserved to the federation, including healthcare, education and domestic security. The division of responsibility between the cantons and the federal state is respected and cannot be overturned by central Government interference.
The point is that those countries work hard at getting agreement in advance and benefit from doing so, because they avoid disputes and all talk of veto.
Let us contrast such an approach with the position here in Scotland. Our Government, Parliament and citizens are not to be part of the process. There is to be no engagement, participation or scrutiny, and we are to have no right to reject any proposal that might cut across our responsibilities.
We asked Mr Hollingbery, the UK trade policy minister, whether his Government is planning to include anyone from the devolved Administrations in the new trade remedies authority, which will try to resolve issues that arise. The answer, basically, was no. Therefore, we could have a situation in which the authority is dealing with an issue that clearly cuts across the devolved powers of all the Parliaments and Assemblies despite there being no one serving on the authority who has any knowledge of devolved powers. Surely trade agreements must be supported by all the devolved Administrations; they must not simply be foisted on us.
Members described possible scenarios in relation to our prized Scottish produce such as Scotch beef and salmon, not to mention whisky and one of my local Ayrshire products, the wonderful Dunlop cheese, which enjoys protected geographical indication status. The strength of the European Union in protecting our PGI products—and even our NHS—should not be underestimated. The UK must never diminish or trade away the protected status of our brands simply to get a trade deal that it is seeking.
Scotland must have a clear role to play in the process and the UK Government, rather than oppose such a role at every step of the way, should rethink its position and embrace an approach that fully involves the devolved Administrations. The UK Government has to trust us and we have to trust it if we are to get the best deal all round—I think that that is the point that Bruce Crawford made. That will come about only if the UK agrees to the same level of involvement for Scotland, Wales and Northern Ireland that we see elsewhere in Europe and that was explained to us so graphically last week in Brussels.
The UK Government seems to want to be the boss here—we have to take whatever it wants to dish out, because trade is reserved and that is that. That arrogance flies in the face of the approach taken in Europe that I have just described and is a recipe for disaster—as if we needed another one on top of the current Brexit chaos. Those in charge of the UK really need to move into the 21st-century and stop behaving like the colonial governors whom they once were. Surely we can move forward, embrace the modern thinking that we heard about in Europe last week and ensure that trade agreements are in the best interests of all of our nations.16:40
There have been three important themes in the debate: trade, the role of devolved institutions and dispute resolution. Our trading relationship with the EU is critical and will remain so, even post-Brexit. Our trade with the rest of the EU is worth £12 billion, and Brexit will have drastic consequences for the country. I do not know how Adam Tomkins can talk about the importance of supporting economic growth when a no-deal Brexit would mean that we would not have rules, regulations and policies that were consistent with those of the rest of the EU. That would undermine some of that £12 billion trading block and reduce economic growth. Under the new budget arrangements, that would affect the tax coming into the country and ultimately result in public spending cuts.
Jackie Baillie was right to point out that the Tories are in tatters over this. They seem to have spent most of the time since June 2016 putting together an agreement that will bring together the Tory party, without considering what the other 27 EU countries think, and were then surprised when the EU did not agree with their first stab at it.
Pauline McNeill was right to point out that the drafting of the Trade Bill restricts the powers of the devolved Administrations, which means that we could end up with a lack of scrutiny of trade deals and deals being done behind closed doors. Any lack of involvement of the devolved Administrations would not be good for the overall prospects of trade deals. As Neil Bibby pointed out, if we are going to get proper and robust trade deals that contribute to Scotland’s economy and that of the UK as a whole, transparent and inclusive arrangements are required.
On the role of the devolved Administrations, Patrick Harvie was right to emphasise the importance of a proper process that sets out clear rules and mechanisms. Within that, it is important that, where appropriate, the devolved Administrations are able to negotiate variations from UK trade deals.
For example, more than 400,000 people in Scotland are not paid the living wage. In a previous session of Parliament, I tried to mandate that public bodies must pay the living wage. That proposal was voted down by the SNP on the basis—wrongly, I felt—that it was against EU law. If, under new trade arrangements post-Brexit, the devolved Administrations are able to derogate on issues such as the living wage when a trade agreement affects public bodies, it will be possible to fix that problem. That is an important aspect.
The other important point that has emerged is about how disputes can be resolved. Tavish Scott made some vital points on that, and I regret the fact that the Liberal Democrats’ amendment was not selected for debate. The way forward is not for the House of Commons or the Scottish Parliament to have the power of veto. In that regard, Bruce Crawford made a substantive contribution, in which he reflected on the Finance and Constitution Committee’s trip to Brussels last week.
I am sure that Mr Kelly will agree that intergovernmental relations is a long-standing issue that has not just arisen because of Brexit.
Intergovernmental relations are vital. On last week’s trip to Brussels, we learned about the importance of co-operation, clear rules and a mechanism for discussions at an early stage. Ultimately, all parties need to try to reach an agreement, even if they start out from a position of disagreement. From that point of view, there is a lesson for all of us to learn. We cannot have a situation in which the UK Government simply shouts down the Scottish Government and tries to put it in its place. Equally, the Scottish Government needs to move to a footing on which it is prepared to work and come to an arrangement with the UK Government, if that is feasible. People ought to reflect on that.
The way forward is to have clear rules, to try to reach agreement and to seek consensus.
I call Dean Lockhart to close for the Conservatives.16:46
As we have heard, a number of concerns have been expressed by members from across the chamber about the future prospects for Scotland’s trade. I rarely find myself on the optimistic side of a debate, but I would like to address some of those concerns by taking a look at Scotland’s current trading position.
Of our trade, 61 per cent is with the rest of the UK and 17 per cent is with the EU single market. In fact, the value of our exports to the EU has declined since 2010. Meanwhile, our exports to the rest of the world have been increasing in recent years and now represent 23 per cent of our trade. Given that 90 per cent of the world’s economic growth in the next 10 years will take place outside Europe, it is vital that we help Scottish business to gain more access to those fast-growing markets.
To explore how we can take advantage of those trading opportunities, I want to deal briefly with continuity of trading arrangements, before I move on to future trading agreements. At the moment, more than 5 per cent of our total trade is governed by existing EU free-trade agreements with third countries. One of the key objectives of the UK Trade Bill is to roll over those existing EU deals as smoothly and quickly as possible. To address some of the concerns that James Kelly raised, I point out that the UK Government’s Minister of State for Trade Policy, George Hollingbery, made it clear in his evidence to the Finance and Constitution Committee that there is a need to ensure that those trade agreements continue to be in place on the day on which we leave the EU. He said that it is the UK Government’s
“intention to alter the arrangements as little as possible.”—[Official Report, Finance and Constitution Committee, 5 September 2018; c 4.]
He went on to say that continuity was all about giving certainty to business, consumers and our trading partners, and that speed would be “of the essence”.
My colleagues have made it clear that the proposals that are contained in the SNP’s trade paper would undermine those objectives. Requiring the agreement of the Scottish Government and the Scottish Parliament to roll over existing EU trade deals is incompatible with the devolution settlement and would delay the process. It would defeat the commercial necessity for continuity, certainty and speed in rolling over the existing trade deals.
How does Dean Lockhart expect the UK Government to roll over those deals when we are heading towards a no-deal Brexit?
The UK will replace the EU with third countries using the trade agreements that are in place. That is how it would work. [Interruption.] Yes, it would.
I want to turn to how future trading agreements will be negotiated, agreed and implemented. A number of members, including Gordon Lindhurst and Rachael Hamilton, highlighted that withdrawing from the EU will give us the opportunity to shape our own trade and expand it with some of the fastest-growing economies in the world, including China and India. Our current exports to those markets are marginal: for example, less than 2 per cent of our exports go to China and less than 1 per cent go to India.
When it comes to the question of how Scotland should approach free-trade agreements, the countless policy papers that the SNP has issued have painted a confusing picture. On the one hand, in the trade paper that we are debating today the SNP argues that the needs of Scotland’s economy must be fully reflected in future deals that are negotiated by the UK Government. For that reason, it proposes a veto at every stage of the preparation, negotiation and ratification of any UK free-trade agreement.
On the other hand, the SNP’s policy of a differentiated approach to Europe and remaining in the single market would hand significant powers over trade agreements back to Brussels, which would mean that all trade agreements for Scotland would have to reflect the widely conflicting interests of the 27 other EU member states, with the needs of Scotland’s economy being marginalised and diluted and there being no veto rights for the Scottish Government or this Parliament.
The SNP’s position on Scotland’s future trading arrangements is contradictory, confusing and lacks credibility. Our approach is to get the best trade deals for Scotland, as an integral part of the UK economy.
Will the member give way?
I need to make progress.
As Murdo Fraser made clear, the needs of Scotland’s key economic sectors are closely aligned with those of the rest of the UK, whether that is the financial services in Edinburgh and London, manufacturing in Glasgow and the Midlands or fisheries in the north-east and Cornwall. The best way to secure those needs is for the Scottish Government to work closely with the UK Government to ensure that Scotland’s interests are reflected in future deals.
There is work to be done in that area, but the Finance and Constitution Committee has heard many examples of how Scotland’s trading interests can be fully reflected in future UK-wide deals. Those include the Scotland Office’s involvement in developing trade policy, Scotland’s 59 MPs representing the interests of our trade policy in the UK Parliament and the monthly policy round tables that are held at senior official level to discuss trade policy.
There is scope for consultation, there is scope for scrutiny and there is scope for amendments to trade policy, but there should be no veto.
Scotland’s trading future can be positive, if the Scottish Government works together with the UK Government to enter new trade deals with fast-growing economies globally, and does so only in a manner that is compatible with the existing United Kingdom’s devolution arrangements.
I support Adam Tomkins’s amendment.16:52
I would have accepted the Green and Lib Dem amendments had they been selected for debate, because they are compatible with the consensual debate that we have had this afternoon. I am grateful to all members—apart from Tory members—for understanding that “Scotland’s Role in the Development of Future UK Trade Arrangements” is a consultative paper that was designed to start the process of discussion. I am very glad that the consultation has been successful. In that regard, the debate has been positive.
Bruce Crawford made a significant contribution, and a number of members mentioned his speech. He said that the normal approach—which is clearly what the Finance and Constitution Committee members heard about when they were in Brussels—would be to seek consensus and to have robust formal structures on which to rely. I think that every party in the chamber has raised the issue of formal structures—the subject was mentioned by Jackie Baillie, Tavish Scott, Neil Bibby and a range of others. Of course, at the British-Irish Council, the Taoiseach very successfully addressed how formal structures underpin trust; I have cited the Taoiseach before in the chamber. When talking about trust in the EU, he said that it works because there are formal structures that can be relied on.
All that the Scottish Government’s paper seeks to achieve is a normal approach to modern trade arrangements. A number of members have made that point. Trade arrangements have changed over the past 40 or 50 years. It is important that citizens are consulted. They expect high environmental and welfare standards to be reflected in trade agreements, which is a point that Patrick Harvie made well.
The only people who have stood against normality in the debate are the Conservatives. They see it as unacceptable that we should have any involvement of the type that is suggested in our trade paper; indeed, they consider it to be unacceptable even to discuss it. It is what might be called the “Eat your cereal” approach. They have given up debating what needs to change.
What we heard from the Tories this afternoon was fascinating and showed what is now happening in the Brexit debate. For example, the position that the Tories have taken with regard to the single market is abnormal, even in terms of Tory history. I will quote a Lancaster House speech—not the Lancaster house speech—from 18 April 1988.
“Just think for a moment what a prospect that is. A single market without barriers—visible or invisible—giving you direct and unhindered access to the purchasing power of over 300 million of the world’s wealthiest and most prosperous people. Bigger than Japan. Bigger than the United States. On your doorstep. And with the Channel Tunnel to give you direct access to it. It’s not a dream. It’s not a vision. It’s not some bureaucrat’s plan. It’s for real.”
That was Margaret Thatcher, and it is the first and only time that I shall ever quote her with approval in the chamber. It shows that the Tories have turned their backs not just on the modern world but on their own recent history—they have turned their backs on the Iron Lady.
The Tories have even turned their backs on the positions that they held a matter of weeks or months ago. Groupthink has taken over in the Tory party. On 28 June 2016, Adam Tomkins told the chamber:
“leave should mean that we”
“the EU’s single market.”—[Official Report, 28 June 2016; c 26.]
That was Adam Tomkins’s view several days after the referendum. However, as Brexit sinks into the swamp, along with the Prime Minister, Tory members are the last defenders of Brexit—they are the born-again Brexiteers. Adam Tomkins said today, trying to curry favour with the Brexiteers, that he “did think about” voting for Brexit. If members read the Official Report, they will see that that is what he said. He wants to
“take back control ... of our international trading links”.
When the obvious questions were asked—Who would they be with? On what terms?—Gordon Lindhurst, who would not take an intervention on that point, argued that the country in question is India. Let us look for a second at the reality of the Indian trade agreement with the EU, which has not been finalised for two reasons that are widely admitted. They are: because India wants to continue tariffs on Scotch whisky, and because the UK would not accept the demand for access and migration—a point that was made by the Indian ambassador to the UK when he said that they are “in no rush” to do the deal.
That is the reality; it is a chimera to say that all those countries are waiting to do a deal. Some time ago, Dean Lockhart was David Cameron’s favourite Tory candidate, but he now argues that we are about to hand back control to Brussels. That comes from a man who voted and campaigned to remain. We are debating collaborative work by sovereign states, but we have knee-jerk Brexiteers on the Tory benches.
What is taking place is shocking because it is damaging to Scotland and to Scottish interests. The people of Scotland know that they cannot look to the Conservatives to defend them because they have sold the Brexit pass completely by misrepresenting the issues. There is no veto mentioned in our paper; there is consultation. There is no ban on consensus; there is a requirement for consensus.
Brexit preparations for business are going ahead apace and, as Jackie Baillie pointed out with regard to the UK Trade Bill, legislative consent that will be refused because of the Sewell issue should also be refused because of the unbending approach on not listening to the Welsh and Scottish Governments on such issues as membership of the trade remedies authority.
We have a serious paper for serious discussion. I am grateful to members of all the parties—except the Conservatives—who have taken that point and who wish to support the debate. We now see what Brexit has done to the Scottish Conservatives: it has removed the word “Scottish”. They are simply “Conservatives”, defending the Conservative status quo and the most incompetent, ruinous and disastrous Government that any of us can remember—a Government that is now in its final days, one hopes. Let us hope that it does not drag the rest of us down with it.
The Tories sneer, but I remind them of the words of Margaret Thatcher that I quoted. There was a time when trading was seen as important. Now, nothing is important except the survival of the Conservative Party.