Scotland’s European Choices as UK Exits the EU

by Dr Kirsty Hughes
Director of the Scottish Centre on European Relations

14th January 2020

This article was first published by Scottish Centre on European Relations

In just two weeks, the UK will leave the EU – a huge damaging folly, irreversible in the next few years. And, as Boris Johnson predictably rejects the Scottish government’s request for a second independence referendum, the independence debate is set to intensify.

But how will the UK’s hard Brexit path impact on Scotland’s future European choices, if Scotland does sooner or later choose independence?

Scotland is a broadly pro-EU country. In last month’s general election, almost three-quarters of votes went to pro-EU or pro- a second EU referendum parties. In 2016, 62% voted remain, while the 38% leave vote was split between those wanting Brexit with the rest of the UK and those wanting independence outside the EU.

And Scotland, like the rest of the UK (even Northern Ireland with its special deal) is set to be badly hit by the hard, Canada-style Brexit (or less) that Johnson’s government appears set upon. There is, and will continue to be, lower investment (including foreign direct investment) and lower growth due to Brexit. A hard border between Britain and the EU will reduce, probably sharply, the UK’s trade in both goods and services with the EU, and will be especially damaging for services. Scotland’s economy and society will be damaged too by the ending of free movement of people.

But, in the face of Brexit, is re-joining the EU the right goal for an independent Scotland or does the option of being like Norway, in the European Economic Area (EEA) or even outside that too, have any attraction? And how much more difficult will independence in the EU or in the EEA be, given the UK’s on the way to a hard Brexit quite likely by end 2020?

European Options

An independent Scotland can certainly apply to join the EU as a European state meeting the EU’s democratic and market economy criteria. Sixteen states have joined the EU since the mid-1990s, so the idea that Scotland would, uniquely, be rejected is untenable. But Brexit raises issues around an independent Scotland’s borders with the rest of the UK and around timing for EU accession.

Much ink will be spilt in the coming year on the details and nature of the future UK-EU trade and security relationship. If a deal is done by December, it will be a fairly basic one leaving much still to be negotiated in the years to come. But it seems clear that it will involve putting up borders to trade; leaving the EU’s customs union and single market make that inevitable.

Borders for an Independent Scotland

So an independent Scotland in the EU will face more friction in its border with the rest of the UK than it would have done if Brexit hadn’t happened. If the UK had stayed in the EU’s customs union that would have reduced some of these frictions substantially. But that is not the Tory government’s path.

Yet uncertainty will roll on into the future. What if Labour did somehow, remarkably, reinvent itself, and took power in five years’ time: would it revert to its partial Brexit policy of backing staying in the customs union or even back re-join? Would this even be possible once UK-US and other trade deals were signed? This is some time off even as a scenario. But the future UK-EU relationship is not writ in stone for all time, and that would impact on to a future independent Scotland-rUK relationship too.

The EEA: There could be a case made for an independent Scotland joining the European Economic Area and then forming a customs union with the rest of the UK. This would certainly reduce border frictions. But it would mean Scotland would be part of UK trade deals, with perhaps some but a minority say in those deals (chlorinated chicken and all). And if Scotland was in the EU’s single market – as a full member of the EEA – it would still have a major regulatory border with England and Wales. So Scotland would face customs borders with the EU and regulatory borders with the UK (principally England and Wales) – perhaps not the most desirable outcome, border frictions in all directions.

Northern Ireland: Then, in any scenario, there is the added complexity of Northern Ireland’s special deal whereby it will effectively be in the EU’s single market for goods but not for services, and apply the EU’s customs code while notionally being part of the UK’s customs territory. The current discussion of how to operationalize the Northern Ireland protocol, and the extent of customs and regulatory barriers there will be in the Irish Sea, at least for goods going from Britain to Northern Ireland, is another topic that will occupy much of the year ahead (or even make it impossible to conclude a deal by December).

An independent Scotland in the EEA would face regulatory barriers in services but not in goods between itself and Northern Ireland (as Northern Ireland will not be in the single market for services). And if it was in a customs union with the UK, it would face customs barriers across the Irish Sea to Northern Ireland just as England and Wales will. If, alternatively, an independent Scotland was in the EU, it would face no customs barriers to Northern Ireland or the EU, only to England and Wales.

Free Movement: In either the EU or EEA scenarios, Scotland would benefit from being part, once again, of free movement of people. And, like the Republic of Ireland, it would doubtless still be part of the UK-Ireland common travel area, so benefiting from inward and outward flows of people with the rest of the EU and the rest of the UK.

An Independent Scotland in the EU

Independence in the EU, compared to in the EEA, offers the democratic advantages of having a seat at the table and voice and votes in the EU institutions. It would also, amongst other advantages of cooperation, mean frictionless trade with the EU.

It’s certainly notable, that while 16 countries joined the EU since the mid-1990s, none chose instead to join Norway, Iceland and Liechtenstein in the EEA. And it’s notable too that there are a range of political, policy and strategic approaches adopted by different EU member states within the EU’s overall framework. If independence in the EU is the goal, Scotland also needs to start debating what sort of member state it wants to be.

There will, rightly, continue to be much debate and analysis of the economic impacts of being independent in the EU. There will be positive, dynamic gains to be had from free movement, from the likely attraction of more foreign direct investment with knock-on positive productivity impacts, and from open access to the EU single market. This will be set against frictions in goods and services trade with the UK. But simplistic assertions that the larger volume of Scotland-rUK trade compared to Scotland-EU trade shows the economic case is negative do not take account of the dynamic migration and investment effects – nor of the overall negative impacts of Brexit on growth. Comparisons too of the EU versus EEA routes are also needed.

The negative impacts of Brexit also suggest an independent Scotland going down the route of being neither in the EU or EEA nor in a customs union with the rest of the UK would be particularly damaging economically.

Joining the EU: In terms of EU accession, Scotland is part of the EU for just two more weeks and then will still be in its single market and customs union for the 11 month transition to the end of the year. So Scotland currently meets almost all the EU’s regulations and legal requirements but this may soon change. As an accession candidate, it would also have to opt-in fully to EU justice and home affairs laws, commit in principle to joining the euro, and meet deficit and monetary policy requirements. But it would, today, already meet most of the EU’s rules, dealt with in the 35 negotiating chapters that all candidates face.

Timing: Timing impacts crucially here. The further away Scotland and the rest of the UK move from EU regulations after the end of this year, the more time it would take for an independent Scotland to then re-introduce EU regulations and laws and show that it could meet the conditions of membership. Negotiating to re-join the EU in 2023 might look rather different, and be rather speedier, than doing it in 2030. How far Scotland can, in devolved areas, stay in line with EU laws, even while the rest of the UK does not, is also going to be one more continuing bone of contention in the months and years ahead.

The European politics of timing could impact here too. Currently, France is blocking the opening of accession negotiations with North Macedonia and Albania. We will see if France concedes on this in the coming months. There is no enlargement queue, but if the accession process is slowed by such political debates it can, certainly, impact on other candidates too.

But in the absence of such political blocks, accession talks could be expected to proceed fairly rapidly – hence predictions in my recent research that Scotland could re-join the EU within 4-5 years (including the likely two year ratification process).

Transition: There are different challenges around the transition phase from leaving the UK to re-joining the EU than there were in 2014, given the UK including Scotland will already have left the EU. And there will be knock-on effects too onto the evolving UK-EU relationship. If the UK does do a deal on access to fishing waters this year (the political declaration says it should be by June), then that will need to change once Scotland is independent and aiming to re-join the EU (different implications again if it aimed for the EEA).

Some suggest Scotland could join the EEA as a transition to the EU but the normal route for accession countries is, in fact, to agree a tailored association agreement with the EU, while membership negotiations take place. There is, even then, a question of the short period (perhaps 6-12 months) – a ‘short pre-transition’ – before an independent Scotland could agree an association agreement (or join the EEA).

Would there automatically be hard borders and barriers in all directions (in this short transition) to the EU, the rest of the UK, the rest of the world? This is unlikely and would need to be resolved during the UK-Scotland divorce talks – perhaps also involving the EU at least informally. One option might be for Scotland to stay briefly within the framework of whatever UK-EU deal was in place at that time. But the best choices here will also depend on timing: how long will the UK have been out of the EU’s single market and customs union, where have the complex web of future UK-EU talks and treaties got to.

Choices for Scotland

Scotland faces its own European choices now that the UK is leaving the EU. Pro-EU voices in England and Wales have started to debate whether to campaign to re-join the EU, or for a soft Brexit (fairly hopeless in the face of a 5 year Tory government), or for wider progressive policies and values. But in Scotland, the independence debate, and Scotland’s pro-remain majority, means that the EU discussion will stay central here.

Most European countries have chosen to be in the EU. But there are other choices. There are a range of relationships, and borders, with the EU – as seen in Norway/the EEA, Switzerland, Turkey, Ukraine, and soon/eventually as seen for the UK.

An independent Scotland’s most likely choice is to re-join the EU. But the implications and timing of that, in the face of Brexit and in the face of the continuing evolution and politics of the EU, needs careful analysis as well as continuing political debate.