Scotland's Vision for Trade: annual report - June 2023

Executive Summary

Part 1: Assessment of policy development outputs, using Scottish Government levers

Progress made in using Scottish Government levers

Using those levers which are available to the Scottish Government, we were able to build on work in the previous year to make tangible progress in areas that support the delivery of NSET, meeting net zero targets and aligning economic growth with the ambition to build a wellbeing economy by:

• Taking steps to improve trading conditions and increase market access for Scottish goods and services sectors, including by completing a market access barrier pilot and establishing a Scottish Services Trade Forum.
• Building our evidence base to inform policy development on the differential impacts of trade. This work seeks to understand the “winners” and “losers” that trade can create within countries.
• Making human rights a central consideration in trade policy, through establishing a Human Rights Assessment process to evaluate prospective FTA partners and producing concrete recommendations to the UK Government.
• Showcasing leadership on environmental regulation at a multilateral level, by representing the UK Government at the World Trade Organization (WTO) Technical Barriers to Trade (TBT) Committee’s thematic session on regulatory cooperation.
• Actively drawing on stakeholder expertise, through a series of stakeholder roundtables and through a collaborative relationship with the recently established Centre for Inclusive Trade Policy.

Future plans for using these levers

This report also covers our future plans to meet our aims for Scotland’s economy, people and the planet, focussing on the following issues:

Economy: We will take action to improve the trading environment for Scottish businesses, while applying our principles to ensure that we find the right balance between competing priorities, including by:

• Implementing action plans to address top market access barriers.
• Further building our relationship with UK standards and certification bodies.
• Continuing to develop our policy on International Regulatory Cooperation.
• Using the Scottish Services Trade Forum to inform our approach to trade in services.
• Identifying opportunities to improve access to information on terms of trade for businesses.
• Building our evidence base on digital trade and monitoring developments on digital trade and data within the EU.
• Increasing targeted business engagement on trade policy.
• Using trade policy levers to support delivery of the Life Sciences and Technology Sector Export plans.

People: We will take action to advance more equal access to the gains and opportunities from international trade for people in Scotland, including by:

• Improving our evidence base on the differential impacts of trade in Scotland.
• Identifying and reviewing levers to mitigate or address these impacts.
• Engaging internationally to draw on good practice on differential impacts.
• Identifying practical actions the Scottish Government could take to increase the benefits of trade for women.
• Engaging with the Centre for Inclusive Trade Policy’s research agenda.
• Supporting work to embed the Vision’s principles into the evaluation of priority export markets.

Planet: We will take action to use trade to contribute to addressing global challenges, such as tackling the climate and nature crises, reducing global inequalities and building international cooperation, including by:

• Reviewing the policy on trade promotion and support for the overseas fossil fuel energy sector.
• Supporting the delivery of Scotland’s Renewables Export Framework and including available trade policy levers in the Hydrogen Sector Export Plan.
• Developing a trade policy response to the UK Climate Change Risk Assessment.
• Refining our position on Trade and Sustainable Development in trade deals.
• Assessing the impact on trade of different countries’ and regions’ approaches to tackling climate change.
• Supporting development and delivery of Scottish Government Just Transition Plans.
• Continuing to strengthen the role of Scotland at the WTO and building capacity across the Scottish Government on WTO compliance.
• Reviewing and consolidating current Scottish Government policy on human rights and trade and investment.
• Supporting Scotland’s enterprise agencies to carry out due diligence on trade support.

Part 2: Steps taken by the Scottish Government to engage with the UK Government on trade issues of importance for businesses and people in Scotland

Over the past year we continued to engage with the UK Government as part of its negotiation of Free Trade Agreements (FTAs) with a number of countries around the world and its programme of Memoranda of Understanding (MoUs) with US states.We continued to raise Scotland’s interests, priorities and concerns, and stressed the need for our full involvement at all stages to ensure that any new FTA reflects Scotland’s economic and other interests, and provides opportunities for businesses in Scotland.

In our engagement with the UK Government on live and anticipated FTAs, we have applied our principles, pressing for:

• Improved assessments of the likely economic, social and environmental impacts of a new FTA.
• The assessment of short-term market access gains against longer-term economic, social and environmental goals.
• Greater ambition in commitments linking trade and climate change.
• The use of trade negotiations to promote and improve human rights.

We continued to build on positions set out in the Vision to input into the wide range of policy areas covered by FTAs, including: food, drink and agriculture; goods; regulation and technical barriers to trade; services and investment; digital trade; Intellectual Property and the NHS; Investor-State Dispute Settlement; and gender.

Since March 2022, we have contributed to the following negotiations:

• UK accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) (Agreement in Principle on accession announced March 2023)
• UK-Canada FTA (negotiations ongoing)
• UK-Mexico FTA (negotiations ongoing)
• UK-Greenland continuity-agreement (negotiations ongoing)
• UK-Gulf Cooperation Council (GCC) FTA (negotiations ongoing)
• UK-India FTA (negotiations ongoing)
• UK-Switzerland FTA (negotiations ongoing)
• UK-Israel FTA (negotiations ongoing)
• Series of UK-US State MoUs

We also developed a set of clear priorities and sought to influence the UK Government to develop an agreed approach to the WTO’s 12^th Ministerial Conference, which was held in June 2022.

Part 3: Steps taken to build our evidence base on trade and monitor Scotland’s Vision for Trade

To help further develop our priorities and understand the trade-offs across economic, social and environmental aims, we convened a series of roundtables with stakeholders over this period on:

• Improving the trading environment for Scottish businesses while addressing trade’s differential impacts on sectors, regions and groups.
• Scotland’s role in supporting the rules-based system, while encouraging reform in line with economic, social and environmental aims.
• Trade as a dual lever for economic development and climate goals.
• What trade based on high regulatory standards means for Scotland’s businesses, workers and consumers.

Developing data and evidence to inform trade policy

Improving access to, and developing, relevant data and evidence in support of our trade policy is key to the successful implementation of the Vision, laying the groundwork for decisions we make on trade and the levers we prioritise.

This year, we developed our evidence base in a number of key areas, including in strengthening the basis of our role as a devolved administration in engaging with the development of FTAs; and on our opportunities to maximise Scotland’s role and influence on WTO policies and processes.

Monitoring Scotland’s Vision for Trade

This annual report, in documenting how we have put into practice the principles in the Vision and met the needs of people and businesses in our policy development and trade decisions, is a core part of documenting our continuing work on trade policy.

We will continue to track our progress using a combination of: documenting evidence of policy implementation, gathering stakeholder perspectives on our progress, compiling evidence from other data sources and establishing links with other monitoring frameworks.