Risky trade deals with US and India no substitute for EU membership

Two trade deals this week with India and the US carry risks for Scotland - but the Scottish government has had no say and was not even informed or consulted on the US deal. It had some involvement in the India deal but ultimately no say over the agreement. That picture would be very different for an independent Scotland in the EU where it would have a seat at the top table, the Council of Ministers.

As part of the UK, Scotland has to suck it up. Many Scots will regard these risky deals as a poor substitute for being in the EU. Free trade with 27 other countries, freedom of movement and support for high environmental and welfare standards now look further away.

“Kissing my ass”

The UK has been the first country to legitimise Trump’s attempt to reorder global trade to suit the US. President Donald Trump said whacking 10% tariffs would bring other countries dashing to the negotiating table, and as he put it, “kissing my ass”. 

First in line was UK Prime Minister Keir Starmer. The US is now boasting that the deal brings average British tariffs down from 5.1 per cent to 1.8 per cent, while US levies on UK imports have risen from 3.4 percent to 10 percent. The trade deal preserves Trump’s 10% tariffs on most goods. It does not include whisky, which is currently covered by the 10% tariff with a possibility of it rising to 25%. 

Tariff-free access for cheap feedlot beef 

Tariff-free access for beef from cattle reared in vast feedlots will be one more cross to bear for Scottish farmers. American beef is cheap - because of low environmental and welfare standards. 

US beef will have to comply with UK food standards so it can’t be produced with controversial growth hormones. But US cattle are not typically fed on grass - there are cases of them being fed skittles and other inappropriate food and they are intensively farmed in crowded conditions with many health problems.

National Insurance arrangement with India is causing concern

The Indian deal carries a sweetener for the Scotch Whisky Association of lower tariffs on whisky. So that sector, which delivers huge tax revenue to the UK treasury, will welcome it.  

But many small and medium-sized business leaders will be concerned about the effect of exempting Indian workers from NI contributions for three years. They will fear that some businesses could be in a position to exploit this loophole and reduce their employment costs, undercutting other businesses who can’t do this. 

We don’t yet know the details but the National Insurance exemption will only apply to businesses which operate in both India and the UK. It is similar to reciprocal arrangements in place for other countries like Japan and the USA. The difference with India is that there are many more Indian workers in the UK than there are UK workers in India - that is not the case with the other countries that have NI arrangements. India also has a population of 1.5 billion and the average wage is $422 per month.

So the concern might be for some businesses that they could be undercut by operations which can exploit this situation to their advantage, and bring in Indian workers on short-term contracts for three years. This would cut their wage bill significantly - and get around the painful rise in employers' NI which is affecting many Scottish businesses. 

Fears over the potential impact of doing a deal with India to allow access to more workers will come as no surprise to Remainers who predicted this. 

Freedom of Movement lets workers come and go seasonally

The advantage for many Scottish businesses of EU membership was that free movement means that workers can come and go on a seasonal basis. Hospitality and agriculture benefited from access to a pool of workers who could live in temporary accommodation in the summer but return to their home countries in the winter months, reducing pressure on permanent housing and other infrastructure. 

No impact assessment

MP Daisy Cooper said the National Insurance plans risk damaging UK businesses' competitiveness, particularly in light of the global trade turmoil sparked by US President Donald Trump:

"This deal risks undercutting British workers at a time when they're already being hammered by Trump's trade war and Labour's misguided jobs tax. The government's failure to even publish an impact assessment of these changes gives the impression of something that is completely half-baked.”

Desperate post-Brexit deals with Australia and NZ set to harm Scottish food and farming

Under Boris Johnson, the UK made desperate post-Brexit trade deals with Australia and New Zealand that will eventually harm Scotland’s food and farming sector. After a few years of lead in time, enough for Johnson’s administration to have left office, they allow New Zealand and Australian farmers tariff-free access to UK markets, despite their very different welfare standards. This is reminiscent of the ‘Great Betrayal’ when the UK government overnight stopped support for Scotland's farmers in the 1920s because freezer ships made imports from the colonies cheaper. Farms were abandoned and rural Scots were thrown into desperate poverty. 

Conclusion

Scotland has a Parliament and a devolved government with limited powers. The great offices of state and the levers of power remain at Westminster. Unlike some other devolved administrations such as Quebec, which has a say over trade deals, Scotland’s representatives don't even have the right to be consulted. 

An independent Scotland back in the EU would be represented at the highest levels as one of the members of the Council of Ministers, which is the body that holds the ultimate decision-making power in the EU. It would be in the loop about what was being planned and could make impact assessments of how they would affect Scotland’s businesses, economy, and people.

Instead, within the UK, Scotland has no voice. Scotland’s government is not given even the bare minimum of being informed about what is coming down the line. Like it, lump it - or leave the UK.