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A Trading Nation

Part of the debate – in the Scottish Parliament on 30th May 2019.

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Photo of Jamie Halcro Johnston Jamie Halcro Johnston Conservative

Trade is a vital component of any globalised economy. Our future economic success will depend in some considerable measure on our ability to export; it will also depend on our ability to import and attract foreign direct investment to Scotland.

Scotland’s volume of trade has unfortunately lagged behind as a proportion of our GDP. Although there has been growth in recent years, the picture has not been uniformly positive—our export figures fell backwards in 2014 and 2016. When looked at in real terms, even our positive export growth begins to look a little anaemic. It is important that growth not only continues consistently but accelerates.

We have many success stories. Many Scottish exports are well known in every corner of the world. In my region, we have some of the finest food and drink producers in the world: Baxters, Walkers Shortbread and enough distilleries to keep the world in drams in Moray. We also have meat from Orkney and seafood from Shetland.

Although trade in goods is perhaps the most obvious form of exporting, in recent decades, we have seen a huge shift in the types of exports that we trade in, with growth in the services sector racing ahead of goods and manufacturing. A successful strategy must look towards emerging markets for both. Getting the basics right is essential.

In our island communities, such as Orkney, Shetland and the Western Isles in my region, there is a clear need for comprehensive future planning for freight. Overseas trade will seem a distant hope if fish that is landed on islands, or other produce, is left waiting on the quayside at local ports because of a lack of capacity to get it even to the Scottish mainland.

Our road connections are, in many places, poor. After far too many years of campaigning, the A9 dualling is taking place, but at a slow pace, while the dualling of the A96 remains in its planning phase. Problems remain with our air links both to other parts of the UK and to the wider world. Even from a passenger perspective, they are expensive and can be unreliable, whether that is because of weather, technical issues or industrial disputes.

In addition to the necessary infrastructure, the foundations must be in place to operate in a global market for services. Despite the future economy being powered by digital connectivity, the Highlands and Islands continue to be left behind on broadband roll-out, with some of the worst services in Scotland.

Unless exporting becomes a reality for all Scotland’s regions, we will be held back. It is not for want of promises or ambitious targets that we find ourselves in that position. In 2011, “The Government Economic Strategy” was published. Its headline target was missed by a wide margin. “A Trading Nation” reasonably identifies a number of sectors where we can make gains and prioritise target markets. It would be useful to understand from the minister whether the Government’s trade resources are being focused appropriately on those areas.

Particular priority should be given to high-value exports and productivity gains should be considered. Government, working with business, can and should make a real difference. One measure that we can take is to ensure close alignment on trade policy with the UK Government, which has unrivalled international networks and reach.

I welcome some of the intergovernmental activity that has taken place, but it must bring results. In March this year, the House of Commons Scottish Affairs Committee published its report “Scotland, Trade and Brexit”, which welcomed the moves towards a truly UK-wide trade policy, recognised the need for formalised trade discussion through the joint ministerial committee and outlined how future trade agreements could involve the devolved Administrations. A team UK approach, with the devolved Governments working with the UK Government rather than separately, would be a significant positive for Scottish business. However, as the Scottish Affairs Committee said, that will require good will and trust from both sides. Complementing rather than duplicating must be the way forward in the international arena.

Those points are extremely important, but none of them should blind us to the fact that, as Jackie Baillie highlighted, Scotland’s biggest trading partner, with which it trades more than with the rest of the world put together, is the rest of the United Kingdom. That is unsurprising. The closeness of our internal domestic market makes the sale of goods and services straightforward. Our common legal structures and political institutions drive frictionless trade across these islands.

The end result is an arrangement that supports hundreds of thousands of jobs here in Scotland. Although bodies such as Scottish Development International focus their efforts internationally, we can do much more to build up markets for Scottish goods and services in the rest of the UK, as Dean Lockhart highlighted. However, the SNP’s position on another independence referendum, which we heard about yesterday, puts those vital links at risks.

We should recognise that only a small minority of businesses export, with the CBI identifying the figure at around 8 per cent. That has been acknowledged for some time. The Economy, Jobs and Fair Work Committee’s report on internationalisation of Scotland’s businesses was released several years ago, yet little progress has been made to expand that base. Given our increased reliance on small and medium-sized businesses, where appropriate, we should actively support even our smallest firms to export and to find and harness opportunities across the globe.

I do not have time to talk about all the positive contributions that have been made across the chamber. My colleague Dean Lockhart started by noting some stark facts, among them that half of Scotland’s exports come from a small number of businesses. He pointed out that, given the major growth potential of economies outside Europe, we need to seize trading opportunities in fast-growing markets. He outlined a number of sensible proposals that are aimed at boosting trade and building on the partnerships and links that we have as part of the UK to give Scotland a modern global reach. He also talked about the SNP’s recent push to break up the United Kingdom and how the uncertainty that that creates over currency would have a devastating impact on Scotland’s position globally, which Willie Rennie and others also highlighted.

Gordon Lindhurst noted—