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

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

It is crucial that our work developing and implementing the Vision is built on stakeholder input, informed by relevant and robust data and evidence, and is monitored to ensure we are making good progress against our priorities in relation to the Economy, People and the Planet.

3.1 Stakeholder Engagement

In the Vision, we issued an open invitation, to individuals, businesses, academics and other organisations in Scotland and globally, to discuss trade policy with us, reflecting the priority we place on ensuring that our approach to trade is informed by the experience and expertise of consumers, businesses, workers, civil society and others.

To allow further consideration of our priorities and the trade-offs across economic, social and environmental aims, we convened a series of roundtables with stakeholders over this period to consult on a range of technical issues.

Improving the trading environment for Scottish businesses while addressing trade’s differential impacts on sectors, regions and groups.

Following commitments in the Vision to ensure our trade policy is informed by stakeholder experience and expertise, in June 2022 we held a stakeholder roundtable on ‘Improving the trading environment for Scottish businesses while addressing trade’s differential impacts on sectors, regions and groups’.

This roundtable aimed to identify ways to improve our evidence base on differential impacts and to explore approaches to preventing or mitigating those impacts in Scotland. Our stakeholders included business representatives (from Scottish Chambers of Commerce and Highlands and Islands Enterprise), Trades Union Congress, as well as academia (e.g. Fraser of Allander). Input from this roundtable has guided our policy on differential impacts of trade.

Insights gained included:

• Information on existing relevant data and challenges in accessing that data.
• A better understanding of where gaps lie in information and steps the Scottish Government can take to address those.
• Good practices in other countries, demonstrating what can be done, even with an imperfect evidence base.
• Input on approaches which could be used to prevent or mitigate adverse or undesired effects of trade shocks and trends in Scotland.
• The relevance of non-trade related policies in addressing the differential impacts of trade.
• Views on integrating a feminist approach into trade policy, including: designing trade policy to advance domestic objectives on gender equality; mainstreaming gendered economic modelling; and considering the impact on and interests of all women, not just those who are entrepreneurs.

Outputs from this roundtable have contributed to our evidence base on differential impacts of trade and have provided insights into possible measures that could be taken to mitigate these impacts. These outputs will be used to help prioritise our work.

Scotland’s role in supporting the rules-based system, while encouraging reform in line with economic, social and environmental aims.

We convened a roundtable to explore how best to use our engagement with the WTO to promote the Scottish Government’s policy objectives, discussing Scotland’s role in supporting the multilateral trading system.

We invited trade academics and policy experts from institutions including the World Bank, the International Institute for Sustainable Development and the University of Glasgow, building relationships with these global trade experts to assist the development of Scottish Government policy.

The session considered the prospects for success in promoting Scotland’s three priority issues (fisheries subsidies; trade, environment and sustainability; and trade and gender) at MC12 in June 2022. Additionally participants discussed how Scotland can support the WTO, how we can look to project our principles internationally, and what opportunities there are for a strengthened and enhanced role at the WTO.

Following the session, we continued to build on our relationships with external experts, and with two panellists in particular. Both are academics interested in engaging further on questions relating to the role that the Scottish Government can play, as a devolved administration, in multilateral trade reform, as well as on the role of trade in climate change policy. Research produced by these panellists will feed into the delivery of our priority to see a stronger, reformed and enhanced WTO.

Building on this roundtable, and reflecting shared Scottish and UK interests in a well-functioning multilateral trade environment, we also engaged over this period with like-minded governments and UK and international stakeholders to explore how best to reform and strengthen the WTO regime, including in respect of dispute settlement. As part of these activities, we held discussions with US and EU-based practitioners, academics and policy community members, as well as with UK counterparts.

Illustrating the value of our convening role and Scotland’s positive international reputation, as well as positive relationships fostered in this field with UK and international stakeholders, we supported the organisation of a June 2023 roundtable at the University of Glasgow which explored the prospects for progressive reform and the strengthening of global trade institutions.

The Scottish Government EU Office also hosted a trade roundtable that included trade counsellors from the EU and third countries, for a Chatham house rule discussion on key issues and developments related to the challenges to the WTO order impacting on trade and investment. Scottish Government officials also held several bilateral meetings with trade officials and key stakeholders from manufacturing and food and drink industries.

Trade as a dual lever for economic development and climate goals

A roundtable on ‘Trade as a dual lever for sustainable economic development and climate goals: identifying, influencing and accessing new net-zero export markets’ was held in June 2022.

This roundtable brought together stakeholders from the Norwegian Institute for External Affairs, the International Institute for Sustainable Development, Ernst & Young, Off-shore Energy UK, Scottish Enterprise and the Overseas Development Institute (ODI). Three topics were considered: shifting demand in the context of a global net-zero transition; Scotland’s capability to meet demand; and the actions we can take to develop, influence and access new net-zero markets.

Points raised included:

• Scotland should take a holistic approach to our export, import and investment plans, to ensure our economic levers work together to support Scotland’s net-zero and development plans. Conducting granular sectoral analysis of Scotland’s net-zero production chains would support this approach.
• SMEs, as innovators on environmental goods and services, could benefit from export support.
• The importance of high-level political collaboration at a national and sub-national level was underlined as critical to strengthening Scotland’s commercial position within international net-zero markets and meaningfully supporting our international development partners.

These recommendations are informing the direction of our work on environmental goods and services, net-zero export opportunities and trade and international development. We have also linked ODI with developments within the Scottish Government on loss and damage and the Global Renewables Centre.

What trade based on high regulatory standards means for Scotland’s businesses, workers and consumers

A roundtable was held on 13 May 2022 on ‘What trade based on high regulatory standards means for Scotland’s businesses, workers and consumers.’ The session aimed to identify mechanisms and sectoral priorities to improve Scottish regulation that impacts on trade, in the context of International Regulatory Cooperation (IRC). Participants included the BSI, Which? Consumer Group, SCDI and UKAS.

Areas identified by the session included:

• Priorities for high regulatory standards including consumer priorities.
• Opportunities to use the Better Regulation framework to embed international considerations into policy development to reduce trade barriers.
• Opportunities and risks in relation to international standards.
• Opportunities in relation to IRC. This will feed into a Scottish Government work plan on IRC, building on elements from the IRC strategy and framework published by the UK Government.

3.2 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, in addition to the areas covered above, we have developed our evidence base in two key areas:

• Our role as a devolved administration in contributing to the development of FTAs, through the secondment of Lindsey Garner-Knapp, a PhD candidate in Politics and International Relations at the University of Edinburgh. Her research focuses on the role of sub-national civil servants from the Canadian provinces and UK’s devolved governments in FTAs.
• Opportunities to maximise Scotland’s role and influence on WTO policies and processes, through the secondment from the University of Glasgow during 2022-23 of Dr Henry Lovat as Senior Research Fellow for Trade Strategy, sponsored by UK Research and Innovation and the Economic and Social Research Council.

Our role as a devolved administration in inputting into the negotiation of Free Trade Agreements

Over the course of a four-month secondment from the University of Edinburgh, Lindsey Garner-Knapp conducted research focused on the Scottish Government’s trade policy-making processes. The purpose of this research was to advise the Scottish Government on strategies to improve engagement on the development and implementation of FTAs. This aimed to support improved efficiency and effectiveness in resource allocation to better meet the needs of citizens, businesses, and other stakeholders in Scotland.

The research included an assessment of the team’s outreach and trade policy network, using social network analysis and interviews. The Scottish Government’s approach to trade policy-making was also compared with similarly positioned sub-central governments, including Australian States and Canadian Provinces.

The research noted that there are a number of reasons for including sub-central Governments in FTA negotiations. Their involvement can assist in identifying strategies to mitigate the negative consequences of trade liberalisation, uphold the values of democratic governance and the multilevel government apparatus, and reduce risks by providing a platform for continual consultation throughout a negotiation rather than after terms have been agreed.

The research also found five key areas of opportunity with the highest likelihood of a beneficial impact on the Scottish economy while supporting the goals in the Vision and A Trading Nation. They include playing an active role in ongoing inter-governmental reviews; developing staff expertise in trade policy; building trusting relationships with key networks; networking with stakeholders in the international arena; and providing support to businesses in the form of outreach and learning and development opportunities to inform trade policy preferences.

Opportunities to maximise Scotland’s role and influence on WTO policies and processes

A set of potential levers to maximise Scotland’s role and influence on WTO policies and processes has been identified in the course of Dr Henry Lovat’s secondment. Some of there are currently being used, while we will look to explore others over the coming year in order to seek to influence outcomes at the WTO and strengthen global trade governance.

• Contributing to the UK Government position at MC13 and exploring Ministerial attendance as part of the UK delegation.
• Utilising our international networks to build partnerships and inform our and others’ positions at the WTO and on related trade issues and initiatives.
• Contributing to UK Government positions at key WTO committees where there is a devolved policy interest, including: the Committee on Agriculture, the Trade and Environment Committee, the Committee on Sanitary and Phytosanitary Measures; and the Committee on Technical Barriers to Trade.
• Working with business groups and sectors to inform positions at key WTO committees where there is a devolved policy interest.
• Abiding by our compliance obligations, including the WTO notification system, which places a duty to notify members of new regulations that might have an effect on international trade.
• Participating in WTO Trade Policy Reviews of key import/export markets.
• Developing our domestic positions on WTO-related issues where Scotland has a distinct perspective and expertise.
• Leveraging our soft power to convene stakeholders and develop international partnerships to explore and promote solutions to global trade challenges.
• Supporting Scottish civil society, business, industry and academic engagement on global trade policy issues, identifying shared interests and opportunities to promote these within the UK and internationally.
• Undertaking risk management to map devolved policies that could result in international trade disputes.

3.3 Monitoring Scotland’s Vision for Trade

This annual report, which details 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 are identifying additional ways to track the views of businesses and individuals in relation to the effectiveness of Scotland’s trade policy, and on their top priorities for the Scottish Government for using our own levers and influencing the UK Government to use theirs. There are a range of approaches that other trade players use to measure their progress. These approaches generally use macro quantitative performance indicators. However, given that all levers to direct, manage, and shape international trade flows and their impacts are currently not within the control of the Scottish Government, and others fall within the remit of A Trading Nation, a similar macro quantitative approach would not be suitable for measuring progress in implementing the Vision.

As a result, our proposed approach is largely qualitative, to allow us to isolate the potential ways in which implementing the Vision is contributing to positive or negative changes for sectors/businesses, individuals, and the planet. We plan to continue tracking our progress using a combination of the following methods:

• Documenting evidence of policy implementation: through documenting our policy deliverables. This is the type of evidence that we have set out in this year’s annual report.
• Gathering stakeholder perspectives on our progress: engaging with stakeholders and existing networks. This would allow us to gather stakeholder input on changes for individuals, businesses/sectors and the planet as a result of actions within the scope of the Vision. The stakeholder roundtables we held in 2021-22 are an example of how we have gathered these perspectives to date. Additionally we are exploring options for a benchmarking exercise with trade experts and other stakeholders to compare our work with best practice exemplars.
• Compiling evidence from other data sources: using data from other sources to provide wider context for actions we have taken, for example, business survey data from Scottish Government surveys and enterprise agencies; data on attitudes to trade from the UK Government Trade Attitudes tracker; research by the Centre for Inclusive Trade Policy (e.g. jobs in trade database).
• Establishing links with other monitoring frameworks: using other monitoring frameworks within the Scottish Government, for example the Global Footprint indicator within the Environment Strategy for Scotland, the International Networks indicator within the National Performance Framework and, at a macro level, Scotland’s Wellbeing Monitor.