Scotland & the EU

Scotland’s constitutional future may well be decided by Brexit and borders

Probably one of the most confusing issues surrounding Brexit is what’s going to happen to the national borders. During the 2014 referendum, much was made of how borders were disastrous for trade and would result in huge traffic queues to show your passport at Gretna, and loads of paperwork for anything being exported from Scotland.

Now many of the same people are saying that borders are good and tariffs can protect businesses that don’t export, and that Brexit will bring opportunities to trade with the rest of the world or even to win more business in your home market. Never mind that the UK has a massive trade deficit and needs to export more to improve its balance of payments. Such benefits, if they actually exist, require hard borders and this week the UK Government stated that there would be no hard border with Ireland.

One of the people I debated in 2014 was the founder of the “No Borders” anti-independence campaign, because he thought borders were bad. He then debated me again during the EU referendum as a Leave Campaigner and was arguing for, you know, borders to keep out immigrants and cheap exports.

The idea that independence in 2014 would have created hard borders was hokum of course, because post-independence Scotland would have been in EFTA or the EU, as would the rest of the UK and so there would be no borders.

Oh wait a minute – weren’t we told Scotland single market access couldn’t be guaranteed? Now last week, the same people who told us an independent Scotland would have a hard border and be at the back of the queue are now telling Ireland that there will be no real border with the UK, or at least that it won’t be policed.

They are also promising a staged withdrawal from the single market and the customs union so that businesses have time to adjust – but that doesn’t add up. If you agree a deal on trade and borders with the EU that allows goods to keep being imported without hindrance and for immigration to continue, it will also need to mean that EU regulations will still have to be adhered to, and don’t think for a second there won’t be a fee for that which isn’t higher than actual membership.

Imagine if you were a Scottish beef farmer thinking, “well at least the massive inflows of Irish beef will stop after Brexit” and “it’s time to borrow to invest a million in expanding your beef herd”. You would need to invest and then wait at least 18 months before the beef cattle could be taken to market but now you are being told there will be a transition period, and after that the border will not be policed.

No one will lend you the money and farmers won’t know whether to invest until the trade deal is done. It is a fantasy anyway – without EU CAP payments 78 per cent of Scottish farm business are unprofitable and won’t be investing in anything. Many wont even survive.

So why is the UK Government telling Ireland that they can have the impossible borderless border and freedom of movement post-Brexit, when they told Scotland that the entirely possible post-independence soft border would be a nightmare? The answer seems to be that Ireland gets a vote on the Brexit deal as an EU member and it could potentially block any transition deal that didn’t work for them.

So the UK Government has power over Scotland as part of the Union, but small independent Ireland with its booming economy has power over the UK.

Post-Brexit borders represent a Gordian knot of a problem, and the fact remains that a hard border follows on inevitably from the UK leaving the customs union, and no amount of wishful thinking will keep it open. Only a hugely expensive deal to stay in the single market can do that. There are two possibilities – the UK Government was lying to the people of Scotland in 2014 and its lying to the people of both Irish nations now. Or they just don’t understand how borders work. I am not sure which possibility I prefer.

The good news is that if the UK can be persuaded to remain in the customs union, retain access to the single market and keep the Irish border open, then no Unionist campaigner can ever claim there will be a hard border after independence.

However, if there is a hard border with the EU after Brexit, tariffs and no customs union, then the UK economy will sink so fast that Scotland’s trade with the rest of the UK will be doomed anyway as the UK will be in a deep recession.

Scotland’s constitutional future may well hinge on the issue of borders and trade, as exporting is crucial to our economic success.

Scotland was the only part of the UK which exported more than it imported in the last reported year (Scotland has had a trade surplus since records began). The balance of trade for the rest of the UK however is dire. Scotland’s trade balance was positive (£2 billion) while Wales, Northern Ireland and England all ran trade deficits with England ran a trade deficit of £121.9 billion, and it’s getting worse.

Scotland’s exports are also intrinsically linked to being able to trade freely with the EU. For example Scottish food and drinks exports grew by eight per cent in 2016 to a record high of £5.5bn.

Some 41 per cent of Scottish food and drink exports were to the EU. There is more Scotch whisky sold in France every month, than Cognac in a year. Scottish waters produce 20 per cent of the EU’s seafood catch and that amounts to 62 per cent of all seafood landed in the UK – 66 per cent of which is exported straight to the EU. It’s not a new trend either, Scotland’s international food & drink exports increased by 71 per cent between 2002 and 2015.

In the end, although I write about economics, I have to admit it really boils down to a choice of what sort of nation do people want to belong to? One that is driven by inward looking, somewhat xenophobic, white middle-class British nationalism, or one driven by the civic, inclusive and environmentally and internationally focused independence movement? Soft borders are really just a bonus.

 

About the author

Gordon MacIntyre-Kemp

Gordon MacIntyre-Kemp is the Founder and Chief Executive of Business for Scotland. Before becoming CEO of Business for Scotland he ran a small social media and sales & marketing consultancy.

With a degree in business, marketing and economics, Gordon has worked as an economic development planning professional, and in marketing roles specialising in pricing modelling and promotional evaluation for global companies (including P&G).

Gordon benefits (not suffers) from dyslexia, and is a proponent of the emerging New Economics School. Gordon contributes articles to Business for Scotland, The National and The Huffington Post.

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