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Warning on negotiations

Scots EU deal would ‘fracture’ UK market

Iain McMillanA Scottish deal that gives the country access to the EU or EEA would result in the “fracturing of the UK domestic market,” according to a new report.

The paper – entitled Scotland’s Trading Future – concludes that the Scottish Government attempt to seek a separate deal from the rest of the UK is neither deliverable nor in Scotland’s self-interest.

Aside from the legal, political and technical obstacles to such a plan, such a deal would disrupt the internal UK market, said the report, produced by a group of Conservative party sympathisers including the former director of CBI Scotland Sir Iain McMillan.

The report was published as First Minister Nicola Sturgeon gave one of her clearest indications yet that Scotland is heading towards a second independence referendum.

She warned that the powers of the Scottish Parliament are at risk from a hard Brexit.

The First Minister told an audience in Edinburgh that a second vote on leaving the UK will “almost be a necessary way” to safeguard ­Scotland’s values and priorities.

Scotland’s Trading Future concludes that:

–   Unless the Scottish Government agreed to adopt the same immigration policy as the rest of the UK, it is “inevitable” that internal UK border controls would be introduced under their plan.

–   Even in the absence of tariffs between Scotland and the rest of the UK, the flow of goods and services across the border which are four times more important to Scotland than EU exports would “inevitably be affected” by more restrictive controls.

–  There would be a gradual “divergence” between Scotland and the rest of the UK as Scotland through EU or EEA membership was forced to adopt more EU regulations and laws, while the rest of the UK did not.

The report also examines the prospects for a UK-EU trade deal and for the UK’s global trading opportunities once the UK leaves the European Union in 2019.

It supports efforts to continue co-operation across Europe in law enforcement, intelligence gathering, high-quality university research and student exchange programmes.

It says a UK/EU free trade deal “need not be difficult” to agree as all tariffs, regulations, laws and standards would be identical on the day the UK leaves the EU. 

The report goes on to say that “it is pivotal that all parts of the UK come together and present a united front, so that efforts are focused on getting the best possible deal”.

And on future opportunities for Scotland, it concludes that if trends over the last 10 years are continued, rest of the world exports from Scotland will be two-thirds more valuable to Scotland than EU exports by 2025.

It calls on both the UK and Scottish Governments to do more to support Scottish exports, and says the experience of successful exporters – such as Scotch Whisky – should be used as “best practice” for other sectors which are less successful.

The group declares: “Our challenge has been to reach across the divide between those who voted to remain and those who voted to leave and to set out a way forward which, we believe, is in the best interest of Scotland and the whole United Kingdom.

“We believe it is in Scotland’s self-interest to do nothing to fracture our own Union. And we believe it is in Scotland’s self-interest to support the United Kingdom’s efforts to increase global trade.

“We cannot see the self-interest in a so-called ‘differentiated solution’ for Scotland. It would have the effect of damaging the economy and reducing growth in Scotland.”

Scottish Conservative MEP Ian Duncan, who chaired the group, said: “While Brexit undoubtedly presents challenges as well as opportunities for our future trading relationships, it is clear that cooperation and presenting a united front will allow us to focus efforts on securing the best possible deal.”

Scottish Conservative leader Ruth Davidson said: “The report makes it very clear: none of the challenges posed by Brexit are answered by weakening or breaking up our own Union of nations.

“This report makes a compelling argument that, as we embark on our departure from the EU, the protection of our own Union is vital to Scotland’s self-interest.”

Other members of the group were former Scotch Whisky Association CEO Gavin Hewitt; ex-CBI head of policy Allan Hogarth who is now director of AH Strategies; Rhona Irving, a retired partner from PwC; Alexander Stewart,  the Scottish Conservative Party’s Shadow Minister for International Development and External Affairs; Prof Adam Tomkins MSP, who was one of the Scottish Conservatives’ two nominees on the Smith Commission.

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