Scotland’s Vision for Trade

– in the Scottish Parliament on 26th January 2021.

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Photo of Lewis Macdonald Lewis Macdonald Labour

The next item of business is a statement by Ivan McKee on Scotland’s vision for trade. The minister will take questions at the end of his statement, so there should be no interventions or interruptions.

Photo of Ivan McKee Ivan McKee Scottish National Party

The Irish philosopher Edmund Burke once said:

“Free trade is not based on utility but on justice.”

That concept and belief sit at the heart of “Scotland’s vision for Trade”, which I am pleased to publish today. It is a vision that shows how trade can advance Scotland’s economic, social and environmental aims and sets out our principles for the type of trading relationships that we want Scotland to have both now and in the future. Its publication today is timely, because it comes during an unprecedented period of disruption and uncertainty. The pandemic continues to impact on our health and wellbeing, our businesses and the economy. At the same time, the decision to take Scotland out of the world’s largest single market and customs union will be hugely damaging for our country and our economy.

In such a challenging context, trade is all the more important as a means of delivering sustainable, inclusive growth and contributing to a wellbeing economy, because it drives improvements in living standards and generates higher incomes for workers. Scotland will continue to support free and fair trade that works for all, while standing against protectionism. Doing so is absolutely compatible with and fundamental to balancing our economic, social and environmental aims and ambitions. Decisions on trade might create tensions but, guided by our principles, we will always aim to strike that balance.

“Scotland’s Vision for Trade” sets out a principled approach to navigating the complexity of the trading environment both now and in the future. That includes not only the challenges of today—the significant shocks of Brexit and Covid—but likely and foreseeable trends and developments. The trade-related decisions that we take will have important and far-reaching implications for current and future generations, so it is only right that we take a considered approach to them—one that is founded on the principles and values that reflect the country that we want to be and the trading relationships that we want to have.

At the heart of our approach sits a set of five principles that will be our constant guide in our future decisions on international trade: inclusive growth; wellbeing; sustainability; net zero; and good governance. Of course, it is businesses that trade, but to avoid their doing so in a damaging vacuum the Scottish Government believes that it is important to set the tone so as to encourage values-based economic development both at home and elsewhere. In addition, actions speak louder than words, which is why our vision applies those five principles to the biggest trade issues that our economy, our people and the planet face today.

In identifying those issues, we also set out the levers that the Scottish Government can use to direct, manage and shape international trade flows and their impacts. However, other levers are currently reserved to the United Kingdom Government. Although the Citizens Assembly of Scotland has strongly called for the Scottish Government and the Scottish Parliament to seek greater powers to negotiate our own trade relations, currently we must press for Scotland’s interests to be properly identified, protected and enhanced in the UK’s trade negotiations.

Members will know that the Scottish Government has consistently made a powerful case for a formal and comprehensive role for devolved Governments in all stages of the development of future UK trade arrangements. Despite the obvious strength of our case, we have been frustrated by the UK Government’s failure to engage meaningfully with us or, indeed, with any of the devolved Governments. So far, the UK Government has chosen to focus on a series of ad hoc free trade agreements in order to reach its trade goals. However, if we are to conduct a consistent, coherent and successful trade policy, a broader range of tools will be needed. “Scotland’s Vision for Trade” therefore also sets out the Scottish Government’s asks of the UK Government, using that vision to influence the approach that it will take in developing trade agreements with other countries and blocs.

We will seek to apply the five trade principles in our vision to today’s biggest trade challenges for Scotland’s economy, our people and the planet. We want our economy to grow and to be globally competitive, entrepreneurial, inclusive and sustainable. To achieve that, we will work to influence the trading environment so as to maximise our competitive advantages and improve market access for our businesses in goods and services. We will do so in a coherent and strategic way, by supporting? traders in navigating preferential trade terms in free trade agreements, thereby driving up the utilisation of such agreements. More important, we will seek to improve the trading environment for Scottish businesses and sectors that share our values, by targeting market access barriers beyond free trade agreements.

We will also support business in engaging with the World Trade Organization architecture to reduce unnecessary technical barriers to trade for goods and to seek mutual recognition agreements for key sectors. For services, barriers on mobility, establishment and qualifications need to be addressed.

However, in taking advantage of the trade opportunities for our economy, we must constantly seek the right balance between competing priorities in our trade decisions. Some examples include: drawing advantages for Scotland from the growth of digital trade, while balancing that with the importance of data protection and establishing Scotland as an ethical digital nation; being part of global value chains, while balancing that with supporting our local businesses; and seeking opportunities for regulatory co-operation with others, while regulating—where we have the power to do so—in the public interest.

The European Union is our closest and largest international export market and EU trade continues to be our priority; we will not lose sight of that in the months and years ahead. The UK’s trade and co-operation agreement with the EU is a bad deal for Scotland, so we ask the UK Government to prioritise building on it in a way that upholds high standards—for example, through mutual recognition agreements for key sectors.

For Scotland’s people, we will use our trade principles to increase wellbeing and opportunity through trade, while reducing inequality. International trade has contributed to a rapid increase in growth and living standards globally. However, the benefits of trade have not reached everyone—there are clear winners and losers. Although we are committed to taking advantage of the benefits that trade liberalisation can bring for people, we recognise that globalisation and trade bring challenges that must be managed and addressed.

We need to understand better the differential impacts of trade across our society, particularly in order to advance our fair work agenda. Championing Scotland’s trade interests does not prevent us from considering how the impacts of trade are experienced by different people in different sectors and across different geographies. That means identifying and engaging with all sectors, communities and individuals impacted by economic shifts that result from global developments or from trade decisions and, where necessary, working to ensure just transitions to the sectors and technologies of the future.

We can do that by ensuring that our labour market, education, skills and regional development policies consider the impacts of trade. It also means applying our principles to trade decisions in a way that supports fair work and wellbeing. My recent announcement of a new model of Scottish green ports, focused on inclusive growth, fair work practices and delivering a net zero economy, is an example of that.

The voices of consumers are often excluded from trade policy, so we will protect, serve and empower them. We will also ensure that our policies on trade always support and seek to protect our public services.

The Government remains absolutely committed to protecting our national health service from predatory and harmful trade agreements and we will continue to insist that the UK Government makes that a red line in any trade negotiations.

Our trade principles aim to have a wider global impact that will benefit our planet. We are determined that Scotland will be a good global citizen, so our approach to trade must contribute to addressing global challenges such as the climate emergency and global inequality.

We will use trade as a lever to drive progress towards our climate change targets and improve our international environmental impact. An example of that is our commitment to ending all overseas trade support and promotion activities that are solely focused on fossil-fuel goods and services by the time of COP26—the 26th conference of the parties. Scotland’s trade support will be provided to businesses that align with our climate priorities.

We will also use the vision for trade to set out the sort of trading partner we want to be as a Government—collaborative, inclusive and innovative. To do so, we will promote our trade principles internationally and play an active and visible role on the global stage on issues that matter to Scotland.

We support strong global governance to provide collective solutions to transnational challenges, with the rules-based system of the WTO as a core part of that, driving up standards through international co-operation.

We want to build global trade relationships with like-minded countries, organisations and businesses, finding common cause based on our trade principles—for example, through encouraging UK participation in the agreement on climate change, trade and sustainability group at the WTO.

We will respect international law, support human rights and seek to build international relationships on trade that support developing nations and address global inequality. We will expect the same of the UK Government. We will call on Westminster to make compliance with fundamental human rights and with the Paris agreement absolute red lines for the initiation of free trade agreement negotiations.

By publishing “Scotland’s Vision for Trade”, we are setting out our stall for the future—we are openly, transparently and unapologetically setting high standards for ourselves and for others. We intend to use our trade vision as a working document, to test future trade-related policies, to monitor its effectiveness through a set of indicators, and to publish an annual trade policy review setting out how we have tackled trade-related challenges in line with the principles and approach set out in the vision.

We are clear about the kind of country that we want to be, with strong principles to guide how we do business around the world so that people, businesses and other Governments know who we are and what we represent as a nation. We want Scotland to be a successful trading nation, but we want to be known as much for how we trade as for what we trade—our economy, our people and the planet require it.

The Deputy Presiding Officer:

The minister will now take questions on the issues raised in his statement. I intend to allow around 20 minutes for questions, after which we will move on to the next item of business.

Photo of Maurice Golden Maurice Golden Conservative

I thank the minister for advance sight of his statement.

I very much welcome the minister’s commitment to inclusive growth, wellbeing and reaching net zero. The Scottish Conservatives believe that we can achieve all those things while protecting jobs and ensuring that no community is left behind. However, from reading between the lines in the minister’s statement, it seems that he does not agree. He states that, before the end of the year, the Scottish National Party Government will end

“all overseas trade support and promotion activities” for industries that are based on fossil fuels. Those words alone will cause uncertainty for those who are looking to invest in Scotland’s oil and gas sector and for companies that are based in Scotland that export oil and gas—[Inaudible.]—all over the world. The SNP is delivering a hammer blow to the north-east and to wider Scotland with that approach. Will the minister clarify his comments and explain exactly what the impact of the commitment will be for North Sea oil and gas?

Photo of Ivan McKee Ivan McKee Scottish National Party

That is a very strange question from Maurice Golden. If we are serious about net zero, we need to be serious about the transition but, based on that question, it is clear that the Conservatives are not.

In our programme for government two years ago, I think, we made a commitment to end support for trade missions that focus solely on fossil fuels, and we have now clarified the position on that and have said that it will happen by the time of COP26 in Glasgow later this year. That means that businesses that are focused solely on exports of fossil-fuel goods and services will not be supported by our overseas development agencies. We are working with the sector to clarify any areas that might need to be clarified around the edges of that statement, but it is clear.

Before Covid, I was in Boston with a trade mission involving successful Scottish businesses, mostly from the north-east of Scotland, all of which started life in the oil and gas sector and all of which are transitioning extremely successfully into the renewables sector. We were there to sell that Scottish technology and expertise to businesses in the US that want to establish offshore renewables industries. Scotland has great strengths in that area. The transition is real, and we are moving forward with it. The oil companies understand that, as does the supply chain in the sector. It is a shame that the Scottish Conservatives clearly do not understand it and that their commitment to low carbon and net zero is a bit of a charade.

Photo of Alex Rowley Alex Rowley Labour

The most recent target to grow international exports by 50 per cent between 2010 and 2017 was missed. Then, two years ago, the Scottish Government published another strategy, “A Trading Nation—a plan for growing Scotland’s exports”, which included £20 million of funding over three years. How much of that funding has been spent, to date? Does the Government intend to increase the funding in the light of the pandemic? I note that there was no mention of funding in the minister’s statement. Will this latest strategy be funded, or is it just wishful thinking?

Photo of Ivan McKee Ivan McKee Scottish National Party

To be clear, the document that I am talking about today is a vision statement that will allow us to assess trade-related decisions that we need to make in the real world to navigate the complexities of the global trade environment. It will allow us to take policy positions on what requires to be done. The member can read through the 90-odd pages of the document at his leisure. It sets out in great detail the 11 global challenges and how we will use the levers that are at our control to make policy decisions on how we address and tackle those challenges.

The document is not a policy statement about how we will increase exports, although that is an important issue that is tackled by “A Trading Nation”, as the member rightly identified. The document that I am talking about today is our vision statement. It is about how we address what are often complicated balances in the global trading environment and how we work with others to deliver on that.

The member asked about the money that has been spent. We have a commitment to grow our exports, and the very substantial and well-received document “A Trading Nation” delivers on that for us.

It is clear that Covid and the very hard Brexit that the UK Government has championed have had a detrimental impact on that, but we remain committed to driving forward the more than 100 actions in “A Trading Nation”, and I meet officials on a monthly basis to that end. We are committed to delivering on that and to ensuring that Scotland’s exports continue to grow despite the challenges that we face.

Photo of Annabelle Ewing Annabelle Ewing Scottish National Party

It is, of course, vital that Scotland’s vision for trade has fair work at its heart, so can the minister provide any further detail on how specifically the Scottish Government will promote key fair work principles as far as trade is concerned?

Photo of Ivan McKee Ivan McKee Scottish National Party

Fair work is absolutely central to our economic policies and, rightly, to our approach to trade. Promoting fair work and high labour standards at home and abroad is central to our work in those areas. We oppose trading partners undercutting production costs to gain unfair advantages by failing to enforce labour standards and worker protection.

I can give some examples of that. Last week, I unveiled our Scottish model of green ports to create an exemplar for the use of fair work practices. It sets a high bar for businesses that want to work with the Scottish Government to promote trade and regional development across Scotland. Our approach to skills is designed to equip individuals to make the transition to sectors that are growing as a consequence of shifts in global trade. There are many other examples.

As Annabelle Ewing rightly identified, fair work is central to our approach to economic development and to our international trading relationships.

Photo of Graham Simpson Graham Simpson Conservative

I welcome the statement on page 35 of the accompanying document, “Scotland’s Vision for Trade”, in which the Scottish Government accepts that the UK Government has a “global influence”, which could

“create an open trading landscape for Scottish businesses”.

I want to ask the minister about free ports, which are also mentioned in the document. I had a go at getting an answer on this one last week, but failed. How many free ports does the minister anticipate opening in Scotland? How far behind the opening of free ports in England will we be in time terms?

Photo of Ivan McKee Ivan McKee Scottish National Party

Our position on that has been very clear. The UK Government has identified a model that calls for 10 free ports to be established across the UK. The Scottish green port model will ensure that anything that happens in Scotland complies with our very high standards of fair work practices and our transition to net zero.

We are in discussions with the UK Government at the moment. I would be happy for there to be more than one green port in Scotland, but we need to discuss that with the UK Government, and we are continuing to do so. Depending on the success of that model, there would be scope to roll it out further to support regional economic development across Scotland to those high standards.

Photo of Ivan McKee Ivan McKee Scottish National Party

I am sorry, Presiding Officer; I would like to comment on the timing issue. I am very conscious of that issue, which I discussed again on Monday with more than 60 representatives of ports and businesses from across Scotland.

We found out about the UK Government’s proposals only in the middle of November, and we have moved extremely quickly to where we are today. In March, we will release our bid prospectus, which will provide businesses with a three-month opportunity to apply for green port status. We will follow up on that as quickly as we can, so that we can move forward with the agenda in that timeframe.

Photo of Willie Coffey Willie Coffey Scottish National Party

We have increasingly focused on building our reputation and relationships globally around key products that represent our strengths and our values, not least the products of our food and drink industry. However, we have also seen how fragile global trade can be.

How does the minister see the Scottish Government’s vision for trade helping to further promote Scotland the brand and create more resilience in our relationships internationally and within Scotland?

Photo of Ivan McKee Ivan McKee Scottish National Party

We see great coherence between promoting a values-based approach to trade and promoting the provenance of Scottish products in our food and drink sector, in particular. Those premium goods and services chime well with that approach.

We think that the trade vision sends a clear signal to international trading partners that Scotland is serious about this and that we are very focused on Scotland the brand and on strengthening that brand. There is recognition that it represents high-value products and services, and the values very much align with that. We see the vision not only as an opportunity to make a statement about values, but as an opportunity to support Scottish businesses to trade more internationally.

Photo of Sarah Boyack Sarah Boyack Labour

Small businesses are facing extraordinary times. The continued restrictions are risking some businesses going to the wall and, with the added pressure of the transition out of the EU, it is critical that the Scottish Government provides support to small and medium-sized enterprises in order to enhance exports and help our economy recover. How will the minister provide practical help to small businesses in order to boost exports?

Photo of Ivan McKee Ivan McKee Scottish National Party

The trade vision sets out our vision for how we trade. It does not specifically address support for businesses. That is done through “A Trading Nation” and the on-going work of our enterprise agencies and the Scottish Government.

However, the member will be clear about the positions that we have taken to pressure the UK Government to deal with the disgraceful mess that it has made with Brexit. That has caused huge difficulties for our seafood exporters, for example, and the pressure that my colleague Fergus Ewing has applied to the UK Government has led to support from the UK Government for that sector.

We continue to work through Scottish Development International and Scottish Enterprise to support export businesses in these difficult times, and particularly SMEs, which are a core focus of the work that we are taking forward through “A Trading Nation”. As I said, I meet officials very regularly to push forward the more than 100 actions that we have outlined to deliver that. Despite the restrictions that have been put in place by Brexit and the difficulties of the current pandemic, that work remains an absolute focus in order to increase Scotland’s exports, particularly from our very successful SMEs.

I regularly take part in trade missions—at present, they are virtual—and I engage with Scottish SMEs and international partners. In fact, I took part in one this morning to support Scottish trade with France.

Photo of Willie Rennie Willie Rennie Liberal Democrat

In the past, the Scottish Government has sought to promote trade deals with places such as Qatar, as well as the infamous fake deal with the Chinese railway company. Both had suspect connections with human rights abuses. Would the principles of human rights and inclusive growth that the minister has just set out have halted those initiatives by the Scottish ministers just a few years ago?

Photo of Ivan McKee Ivan McKee Scottish National Party

I think that the vision is very clear and that we have addressed those important issues. We have put on paper—in what I hope the member will agree is a substantial document—what those issues are, and we have identified and outlined the levers that we have to influence and control things where we can. I think that any deal that came forward now would be assessed on the basis of the values that are addressed in the document.

I make no secret of the fact that some of the challenges can be difficult to assess, but we are clear now and going forward that that is what the vision is there for. It is there to address in particular those specific examples where there may be issues that need to be considered.

As I have said clearly both in my statement and in the document, we will produce openly and transparently an annual assessment of how we have addressed those trade challenges with regard to the principles in the document. I hope that the member will welcome that.

Photo of Patrick Harvie Patrick Harvie Green

I am grateful for advance sight of the statement. It includes some fairly predictable capitalist assumptions, such as that trade drives improvements in living standards and generates higher incomes for workers. It can do that, or it can do the opposite. However, the statement at least begins to put some principles into the debate on trade, such as the first indication that the Government might be willing to withdraw political support from the lethal fossil-fuel industry.

Will the Scottish Government act in accordance with the principles of those at Westminster who voted against trade agreements with countries that perpetrate genocide? Will we ensure that we are not seeking advantage through such trade deals that are signed in defiance of those principles? Can the minister identify areas where he would like to see less trade, such as through the eradication of the arms trade, as well as those areas where he wants to see more?

Photo of Ivan McKee Ivan McKee Scottish National Party

There were a few points in there. On genocide and the UK Government’s Trade Bill. Scottish National Party members were clear in our position that the UK Government should not be taking forward trade deals with regimes that are guilty of genocide.

On arms, it is also quite clear that Scottish Enterprise and enterprise agencies do not support businesses that manufacture munitions in Scotland. Any support is very clearly for diversification away from the arms industry and to other—[Laughter.]—Patrick Harvie is laughing, but it is true, and he should look at the reality of that. I do not know why he has a problem with our creating jobs in sectors that are not related to the arms industry, because that is exactly what we are doing.

My final point is that I always find it bizarre when Patrick Harvie and others champion protectionism and speak against free trade in what is a Trump-like approach to international relations. Free trade is good. It opens windows and thus increases the ability of people and societies to generate wealth. That is the reality. A narrow-minded and protectionist approach such as Patrick Harvie’s does nobody any good. We have articulated that very clearly as one of the key principles.

There are of course winners and losers. We understand that very clearly. Central to our vision is how the Government tackles that, through just transition processes in the energy sector and elsewhere, and how it handles transition in a way that drives up overall living standards and makes sure that the societies and individuals in those parts of Scotland that are at risk of suffering as a consequence of trade are supported to manage through those transitions, so that we can minimise the impact on them and support them to take advantage of the opportunities that trade opens up.

The Deputy Presiding Officer:

I ask for succinct questions and answers, please, so that we can get other questioners in.

Photo of Rona Mackay Rona Mackay Scottish National Party

The UK Government’s Brexit deal has thrown up considerable barriers to trade with the EU, and all against the will of Scottish voters. Will the minister confirm that Scotland’s trading strategy will continue to develop and grow Scotland’s strong trading relationship with the EU?

Photo of Ivan McKee Ivan McKee Scottish National Party

The member is absolutely correct. The UK’s deal with the EU is a bad deal for Scotland. That will become more apparent over time. The Scottish Government remains committed to strengthening, where we can, our relationship with our partners in Europe and with the EU, and to working with those like-minded countries, through whatever channels are available, to strengthen good governance across the global trading environment.

Photo of Jamie Halcro Johnston Jamie Halcro Johnston Conservative

Although the minister claims that the EU is our closest and largest international export market, the rest of the UK is Scotland’s largest market for trade—it is the destination for more than 60 per cent of our exports. Why do he and the SNP continue to push for breaking up the UK, which would put up barriers with our largest market, thus risking jobs and livelihoods? Does he accept that leaving the UK single market would be hugely damaging to our country and economy?

Photo of Ivan McKee Ivan McKee Scottish National Party

As we have seen and continue to see, the people of Scotland are recognising, in ever greater numbers, that Scotland’s position would best be served by being outside the UK. Internationally, countries of Scotland’s size that have far less natural resource than we do have been much more successful in building fairer and wealthier societies, as a consequence of having a full range of levers at their disposal for maximising the benefits of their economy and resources for their people and societies. People recognise that Scotland’s future lies in that direction.

Our trade vision identifies the levers that Scotland and the UK each have for influencing trade agreements, and what we seek to do to influence the UK. However, we all look forward to the day when all those levers will be controlled by a Scottish Government that sits in Edinburgh and is elected by the people of Scotland as an independent country.

Photo of Ivan McKee Ivan McKee Scottish National Party

They have key roles, because a lot of what we are talking about is to do with understanding what is happening in reality. SDI’s global network is extremely useful in that it feeds back data and what is happening on the ground, and that helps us to understand opportunities as well as barriers to market access and how to tackle them. Gathering that information helps to inform a more rounded picture of the global trade environment and how we can seek to influence it and support businesses to export. It enables us to understand what information will help us to make clearer judgments on trade-related decisions, in line with the principles that we articulate in the vision document.

Photo of Stuart McMillan Stuart McMillan Scottish National Party

We need to ensure that there is a green recovery from the coronavirus crisis. Can the minister provide further information on how Scotland’s trade strategy will contribute to that?

Photo of Ivan McKee Ivan McKee Scottish National Party

We absolutely do. The challenges that we face are significant. We have written the vision for trade document to be for now and for the future, as I said. It establishes principles on which we will reflect year after year as we navigate our way through complex international trade issues, in the current constitutional situation and in the future. As we come out of the pandemic, we hope that the vision will provide a springboard from which to develop and take advantage of our policies, with the principles that it espouses very much at its heart.

The Deputy Presiding Officer:

I am grateful to the minister and to members.

I suspend the meeting briefly to allow all the participants in the next debate to take their places. Please do not go away or log off.

15:26 Meeting suspended.

15:38 On resuming—