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CBI warning

Losing EU free trade deals ‘will cost Scotland £3.9bn’

Tracy Black

Tracy Black: risks are an ‘overlooked danger’ (pic: Terry Murden)


Business group CBI Scotland has added to warnings of the devastating impact a No Deal Brexit would have on Scotland’s exports.

Just a day after the Scottish government’s chief economist said exports could suffer a 20% fall, the CBI has said that as an EU member Scotland risks losing access to free trade agreements with 70 countries.

These deals are worth £3.9 billion a year, accounting for 14% of international sales. This figure equates to the annual salaries of 114,000 teachers.

Scotland exports £790m of goods to Norway and £690m to South Korea, with the machinery, fuel and food and drink sectors among the most exposed.

If the UK leaves with no deal, these exports could be subject to immediate tariffs, adding millions to Scots firms doing overseas business.

CBI Scotland director Tracy Black said: “If the UK leaves the EU without a deal, overnight businesses in Scotland could cease to enjoy the benefits of tariff-free trade and easy access to markets for products and services, from Canada to South Korea.

“Many firms are unaware that it’s not just their relationships with EU customers at risk from no-deal, but relationships across the globe.

“Individual businesses trading with markets outside the EU would face tariffs worth millions of pounds being slapped on them instantaneously. These trade deals span five continents and are vital for the smooth export of our goods and services.

“Exports to countries with EU free trade agreements are worth almost £3.9bn to Scotland every year.

“The risk to these deals is an overlooked danger to our economy and yet another reason why no deal is not an option for the UK and jeopardises jobs in our communities.

“It is vital compromise is shown on both sides of the Channel and politicians work quickly to come to a deal.”

The report from Scotland’s chief economist this week warned no-deal could push Scotland into recession by the end of the year by causing a 7% fall in GDP, a doubling of unemployment and a potential drop in Scottish exports by 10%-20%.

Continuity of trade

The Department for International Trade is continuing to work with countries to transition the existing EU trade agreements which the UK participates in as a member of the EU, in the event of a no deal to avoid disruption for businesses.

The department has secured agreements with countries that account for more than a quarter of UK trade covered by these agreements, including Switzerland, which is worth over 20% in terms of value, as well as Chile, the Faroe Islands, Eastern and Southern Africa, Israel and the Palestinian Authority.

Mutual Recognition Agreements have been signed with the US, Australia and New Zealand, which the department says will ensures that businesses do not face additional bureaucracy and allows them to continue trading as freely as they do today after Britain leave the European Union.

Many of the other trade agreements are at an advanced stage, and the UK Government will be signing more in the coming days and weeks.

Adam MarshallHowever, there is concern that progress is too slow. Dr Adam Marshall, Director General at the British Chambers of Commerce (BCC), pictured, said: “The lack of progress revealed today is an incredibly disappointing, though not an unexpected admission. This is unfortunately yet another example where politicians have over-promised and under-delivered – and it is businesses and consumers both at home and abroad that will pay the price.

“The British Chambers of Commerce has warned government for over two years that the replication of EU trade agreements would not be easy. We have also warned politicians that some trading businesses don’t even know they are benefiting from the provisions of these agreements, and will be surprised to see their costs going up or their products treated differently overseas in the unwanted event of ‘no deal’ on 29 March.

“There are firms now who have shipped their products to important overseas markets like South Korea whose customers may now face higher costs and new administrative burdens and purchases languishing at the dock after 29 March. UK firms and their partners have spent time building strong business relationships and will not appreciate sudden and expensive changes in trading arrangements.”

Scottish Trade Minister, Ivan McKee said: “It is extremely concerning, but not surprising, that the full range of trade agreements will not be rolled over in time for the end of March. Worryingly, only six of around 40 have been agreed so far. We were assured by the UK Government that these deals would be in place – this is simply not good enough.

“While it is welcome to see that a deal with Switzerland has been agreed, the European Economic Area – particularly Norway – remains a top priority for Scotland.

“We also cannot afford to lose sight of the importance of smaller trade agreements, many of which are vital for some of our key industries in Scotland including whisky exports.”

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