Scotland's Vision for Trade: annual report - March 2022

Executive Summary

Part 1: Assessment of policy development and outputs, using Scottish Government levers

Scottish Government levers

Governments have a range of levers available to direct, manage, and shape international trade flows and their impacts. These can be levers that are trade-related, trade-impacting or that address the impacts of trade. The Vision identifies those levers that are available to the Scottish Government, particularly those with an interaction with domestic policy.

The list of Scottish Government levers that we set out in the Vision are the tools that we can draw on as we navigate the complex trading environment. In this first year of implementation, we identified an initial set of priorities.

Progress in using Scottish Government levers

Using Scottish Government levers, we were able to build on previous work to make tangible progress in two key areas in particular.

Using trade as a lever to increase progress towards net zero, including:

• Meeting our commitment to end overseas trade support and promotion solely focused on fossil fuel goods and services by COP26;
• Engaging internationally on climate, trade and investment at COP26;
• Enhancing our understanding of Scotland's strengths and opportunities in relation to environmental goods and services.

Taking steps to improve the trading environment for businesses, while prioritising public interests, including by:

• Developing a methodology to prioritise identified market access barriers;
• Aligning the Scottish Government's Business and Regulatory Impact Assessment process with trade requirements;
• Notifying the regulation on Single Use Plastics to the World Trade Organization (WTO).

In other areas, our work in this first year has focussed on building our evidence base and laying the ground-work for future development.

Future plans for using these levers

This report also covers our future plans to meet our aims for Scotland's economy, people and the planet, focussing on the following issues:

Economy. We will take action to improve the trading environment for Scottish businesses, while applying our principles to ensure that we find the right balance between competing priorities, including by:

• Refining and applying our market access prioritisation methodology.
• Building our evidence base on Trade in Value Added.
• Building on our relationship with the British Standards Institution (BSI).
• Developing an approach to regulation that links adoption of international standards, regulatory cooperation and EU alignment.
• Building coherence between digital trade and domestic digital policy.
• Identifying opportunities to position Scotland as an ethical digital nation.

People. We will take action to advance more equal access to the gains and opportunities from international trade for people in Scotland, including by:

• Building our evidence base and engaging with stakeholders on the differential impacts of trade.
• Identifying domestic policy ambitions that interact with the international trade agenda on improving gender equality.
• Identifying further opportunities to embed fair work in our trade policy.
• Examining the impacts of trade on health and nutrition and identifying levers to address or mitigate any negative impacts.
• Continuing to build our evidence base on consumers, in collaboration with key stakeholders.

Planet. We will take action to use trade to contribute to addressing global challenges, such as tackling the climate and nature crises, reducing global inequalities and building international cooperation, including by:

• Continuing to support coherence between our climate, environment and trade ambitions and building our evidence base on the impacts of trade on climate change and on Scotland's international footprint.
• Engaging with the UK Government and international partners on fossil fuel subsidy reform.
• Continuing to develop our understanding of the strengths and opportunities of Scotland's environmental sectors and to embed trade into related Scottish Government policy.
• Taking opportunities to engage on the global stage with like-minded countries, organisations and businesses on a principled approach to trade, including building on the momentum of COP26.
• Strengthening the role of Scotland at the WTO and building capacity across the Scottish Government on WTO compliance.
• Developing and monitoring the connections between human rights and trade.
• Supporting Policy Coherence for Sustainable Development.

Part 2: Engagement with the UK Government on trade policy

Where particular trade-related levers are currently reserved to the UK Government, the Vision sets out how we think it should use those levers to act in a way that is supportive of Scotland's economy, people and the planet.

This report highlights our work so far to promote Scottish trade priorities and defend trade issues of importance for Scottish people and businesses, through engagement with the UK Government on Free Trade Agreement (FTA) negotiations, the implementation of the UK-EU Trade and Cooperation Agreement (TCA), and on WTO business.

In our engagement with the UK Government on live and anticipated FTAs, we have applied our principles, pressing for:

• Consideration of the wider socio-economic impacts of trade agreements.
• The assessment of impact and desirability of short-term market access gains against longer term economic, social and environmental goals.
• All FTAs to link trade and climate change and to help unlock the economic opportunities from the transition to net zero.
• Ambitious human rights provisions.

We have identified and argued for Scotland's interests in a wide range of areas, including goods market access, technical barriers to trade, food standards, animal welfare and regulation. We have worked to ensure that Scotland's services sector can benefit from FTAs and that they help to promote opportunities for digital trade, balancing economic and social considerations.

In doing so, we have also made it clear that the protection of the NHS, its services and the price paid for medicines continue to be red lines for the Scottish Government.

Part 3: Engaging stakeholders, developing data and monitoring our progress

The report outlines our continued engagement with stakeholders, a core aspect of developing our evidence base, testing our policy development, and implementing and monitoring the Vision.

It is crucial that the implementation of the Vision is based on relevant data in support of our trade policy. This lays the groundwork for decisions we make on trade and the levers we prioritise. This report details progress we have made in two areas in particular: Trade In Value Added; and the impact of international disputes.

The report also sets out our initial progress in monitoring the implementation of the Vision, to ensure we are making good progress against our priorities in relation to the Economy, People and the Planet. This annual report, documenting how we have put into practice the principles in the Vision and met the needs of people and businesses in our policy development and decisions on trade, is the first product of this monitoring process and a core part of how we will document our ongoing work on trade policy.