Fraser Galloway is a corporate lawyer who worked previously in the House of Commons.He was the Scottish Conservative and Unionist candidate for Paisley and Renfrewshire South in the 2015 General Election.
The silver lining of the General Election for the Conservative and Unionist Party was the historic result in Scotland, and disastrous night for the Scottish National Party.
The loss of 38 per cent of their seats flattered the SNP. They hung on by two votes in North East Fife; 21 in Perth and North Perthshire; 60 in Glasgow South West; and 75 in Glasgow East.
In Lanark and Hamilton East – an area not overfamiliar with Conservatism – Poppy Corbett doubled the Scottish Conservative vote to over 16,000, leapfrogging Labour and cutting the SNP’s majority from 10,100 to 266. Most worryingly for the SNP, there are now no safe seats in Scotland.
In light of this result, a less evangelical party might have reconsidered its mantra of another independence referendum during this Scottish Parliament. Not so the SNP.
In a much-vaunted statement, the First Minister ordained that she would not seek to introduce legislation for another referendum “immediately”, but would instead “seek to build maximum support around the proposals set out in the paper that we published in December – Scotland’s Place in Europe – to keep us in the single market”, while remaining committed to a “choice” at the end of the Brexit process.
Those of us who assumed that ‘Scotland’s Place in Europe’, a somewhat optimistic attempt to reconcile membership of the UK and EU single markets, had been junked in favour of another referendum were intrigued to see it resurrected by the First Minister.
Keen followers of Scottish Government white papers who remember Scotland’s Future, the biblical 670 page manifesto for independence – since widely discredited even by Nationalists – will want to take a second look at ‘Scotland’s Place in Europe’ now that it is also being cited by the SNP as the foundation for Scotland’s future prosperity.
The paper sets out two options for Scotland’s continuing relationship with the EU: first, for the UK as a whole to remain within the European Single Market – through the European Economic Area – and within the Customs Union; and second, for Scotland to remain a “member” of the European Single Market even if the rest of the UK decides to leave.
Leaving aside the first option, the desirability of which has been much debated since the EU referendum, is the second option even possible?
The foreword of the paper explains that this proposal “seeks to secure the benefits of the European Single Market for Scotland in addition to – not instead of – free trade across the UK” (page vii).
The paper states correctly that the “European Single Market is much more than a ‘free trade area’” (para. 27). A free trade area eliminates tariffs and quotas on goods and services traded between countries. In contrast, the European Single Market eliminates non-tariff barriers to trade by creating a common set of laws and regulations for all goods produced and services carried out anywhere within that market.
However, the paper proceeds on the mysterious, and uncited, assumption, at para. 152, that: “The laws of the European Single Market would apply only to those goods and services traded between Scotland and the rest of the European Single Market.”
As the paper itself states, the definition of a single market is a common set of laws and regulations for all goods produced and services carried out within that market. This is to ensure that there are no non-tariff barriers to trade, particularly services (para. 48).
If the above statement is correct, and Scotland were not to apply the laws of the European Single Market to all goods produced and services carried out within Scotland (regardless of whether they be exported to the rest of the European Single Market), it follows that non-tariff barriers to trade between Scotland and the European Single Market would exist.
Therefore, the paper would not be proposing membership of the European Single Market but would in fact be proposing tariff-free access to the European Single Market – which is of course the same proposal as the UK Government’s.
On the other hand, if the paper is proposing that Scotland retains membership of the European Single Market, by definition, the laws of the European Single Market would apply to all goods produced and services carried out within Scotland. But the paper also states that the Scottish Government wants to retain “free trade across the UK”.
In order for there to remain a UK single market without non-tariff barriers to trade, such market would also require all goods produced and services carried out within Scotland (regardless of whether they be exported to the rest of the UK) to apply the laws of the UK single market. The practical reality of this is that Scottish businesses would have to comply with two sets of laws and regulations for both single markets.
This cost to business would be significant as the European Single Market and the UK single market diverge following the UK’s exit from the European Union.
How to square this circle is the question this writer raised with Michael Russell MSP, the Scottish Government’s Brexit minister, in March this year. He responded that Scotland would follow a model similar to Switzerland or Lichtenstein (of which only Lichtenstein is a member of the European Economic Area), in which Scotland would produce goods compliant with UK law and EU law within Scotland, but would be allowed to export only goods compliant with EU law. (Russell did not elaborate on services.)
Of course, he could not provide any costs of dual regulation to Scottish businesses, other than to assert that, “They will face significant economic damage through the decision of the UK Government to leave the EU Single market.” On the obvious question of the regulatory burden of such a system, Russell responded that,
“The level of complexity required in any such system would be determined by the extent to which any future UK regulatory regime differed from that of the Single Market. From what the UK Government has said in relation to the so called ‘Great Repeal Bill’ there will be no divergence in the first instance as EU law will be brought onto the UK statute book.”
In other words, such a system could work only if everything in the UK stays exactly as it already is. Scotland would need the British Government to bind itself not to diverge from EU law, as any divergence would fracture the UK single market.
In practice, then, the second option in ‘Scotland’s Place in Europe’ is the same as the first: in both cases, the entire UK would remain bound by the rules of the single market. No UK government committed to the UK’s leaving the single market – a manifesto commitment of both the Conservative and Labour parties – could agree to such a demand.
So next time you hear Nicola Sturgeon refer to her “compromise” proposals to keep Scotland in the single market, remember the SNP’s form on white papers.