What is the future of Scotland’s relationship with the European Union?

On 23 June 2016, voters across the country will be asked to decide whether the UK should remain in or leave the EU.  SPICe has previously published a briefing examining the Impact of EU Membership in Scotland (SPICe 2015).

The outcome of the referendum will have important consequences for Scotland’s economy and demography.  For example, the European Union accounts for around 42% of Scotland’s international exports in 2014, with an estimated value of around £11.6 billion (Scottish Government 2016).   Six of Scotland’s top ten international export destinations are EU Member States (Netherlands, France, Germany, Ireland, Spain and Denmark).  Any decision to leave the EU would result in a need to agree a new form of trading partnership with former EU partners.

Value of Scotland’s exports to the EU, 2014

Exports

In its inquiry on the ‘EU Referendum and EU reform: implications for Scotland,’ the Scottish Parliament’s European and External Relations Committee concluded that “access to the single market is not just beneficial, but is crucial to the Scottish economy” (Scottish Parliament 2016).

An aspect of EU membership is the entitlement to freedom of movement for European workers.  The latest estimates suggest that, in 2014, there were around 173,000 people in Scotland who had the nationality of another EU member state, equating to 3.3% of the overall population.  The arrival of non-UK EU nationals in Scotland has helped grow the Scottish population and address Scotland’s demographic challenge of an ageing population.  The European and External Relations Committee concluded that:

“The Committee believes that freedom of movement has been culturally enriching. It has allowed Scots to study, work and live abroad, and it has brought EU citizens to Scotland to study, work and live. Moreover, freedom of movement has helped reverse the decline in Scotland’s population and respond to labour shortages in the Scottish economy.” (Scottish Parliament 2016)

It has been suggested that a decision to leave the EU would result in more powers for the Scottish Parliament (BBC 2016).  Professor Drew Scott, Professor of European Union Studies at the University of Edinburgh, has said that powers over areas such as fishing and farming that are currently EU competences would automatically revert to the Scottish Parliament.  Given that European programmes such as the Common Agricultural Policy provide significant funding to Scottish farmers (over €4 billion for the period 2014-2020), it would also be necessary to address how future programmes are funded in the event the UK leaves the EU.

What happens if the UK votes to leave the EU?

The procedure for leaving the EU is set out in Article 50 of the Treaty on European Union (TEU).  The procedure can take up to two years, at which point, if no agreement on the terms of departure has been reached, the Treaties may cease to apply to the State wishing to leave, unless the European Council, by unanimous decision, along with the Member State decide to extend the period.

As Article 50 TEU has never been used, there is no clear framework or previous example of how the process would work. However, it is likely that if the UK votes to leave the EU, much of the next two years (at least) is likely to be taken up negotiating the terms of withdrawal and the UK’s consequent future relationship with the EU.

In addition to the negotiations at European level, the UK would need to examine its domestic law in relation to EU law.  For example, in Scotland this would require an assessment to be made of the ways in which EU law is incorporated into domestic law and whether some of these measures need to be retained if the underpinning legislation the European Communities Act 1972 is repealed.  There would also be the question of whether the Scotland Act 1998 should be amended to remove the requirement that Scottish Parliament legislation comply with EU law and whether this would require the prior agreement of the Scottish Parliament to a Legislative Consent Memorandum to allow the UK Parliament to enact such an amendment.

At this stage it is not clear what the alternatives to EU membership might be for the UK.  However, it seems likely that an agreement incorporating a free trade arrangement would be sought with the EU. This would require the agreement of all the remaining Member States and could include requirements to adopt relevant EU legislation and observe the four fundamental freedoms of the EU, including freedom of movement.

What happens if the UK votes to remain in the EU?

If the UK votes to remain in the EU, the Scottish Parliament will continue its role in scrutinising the Scottish Government’s engagement with the EU.  This will include scrutinising Scottish Government engagement with the UK Government through the intergovernmental Joint Ministerial Committee (Europe) and the Scottish Government’s engagement with the European Union institutions.  This scrutiny will focus on the activities and actions set out in the Scottish Government’s Action Plan on European Engagement (Scottish Government 2015).

What are the key issues facing the EU?

Two key issues facing the EU over the coming years are finding a solution to the Eurozone crisis and addressing the migration crisis – on both these issues the UK has in effect legal opt-outs.

Another priority for the Member State Governments will be trying to reinvigorate the European economy to boost economic growth and create new jobs, consequently reducing unemployment rates across the EU.  Amongst the ways the EU will seek to boost growth is by strengthening efforts to complete the Single Market in goods and services and developing the Digital and Energy Single Markets.  The European Commission will also seek to conclude international trade agreements such as the Transatlantic Trade and Investment Partnership with the United States.  These priorities were identified by the European Commission President Jean Claude Juncker when he assumed the role in 2015 and they will continue to be priorities of an EU with or without the UK.

Iain McIver

Sources:

BBC (2016) EU referendum: Brexit ‘would give Holyrood new powers’, 18 February 2016. Available at – http://www.bbc.co.uk/news/uk-scotland-scotland-politics-35601764 [Accessed 4 May 2016]

Scottish Government (2015) Scotland’s Action Plan for EU Engagement. Available at – http://www.gov.scot/Publications/2015/03/8113 [Accessed 27 April 2016]

Scottish Government (2016) Export Statistics Scotland. Available at – http://www.gov.scot/Topics/Statistics/Browse/Economy/Exports/ESSPublication/ESSExcel [Accessed 27 April 2016]

Scottish Parliament (2016) 2nd Report, 2016 (Session 4): EU reform and the EU referendum: implications for Scotland, SP Paper 978, European and External Relations Committee. Available at – http://www.scottish.parliament.uk/S4_EuropeanandExternalRelationsCommittee/Reports/EUS042016R02.pdf [Accessed 27 April 2016]

SPICe (2015) The impact of EU membership in Scotland. SPICe Briefing 15/71. Available at – http://www.scottish.parliament.uk/ResearchBriefingsAndFactsheets/S4/SB_15-71_The_impact_of_EU_membership_in_Scotland.pdf [Accessed 27 April 2016]