UK trade strategy: Scottish Government priorities - January 2025

We welcome the UK Government’s commitment to publish a UK trade strategy, and offer our support and input into its development. We are committed to working constructively with the UK Government in furthering our shared trade interests. We submitted this to the UK Government in January 2025.

This paper covers both process issues – namely, the definition of a formal and comprehensive role for devolved administrations in all stages of trade policy – and substance, much of which is drawn from our own strategic documents, Scotland’s Vision for Trade and Scotland: A Trading Nation.  

In our view this should be a UK-wide strategy,  jointly owned by the four Governments, so that it delivers for the whole of the UK. Devolved administrations must be meaningfully involved in its development, in recognition of the devolved elements of its content and of the direct effect any reserved trade levers have on devolved policy, people and businesses in Scotland.  

In summary, we believe that the strategy should:  

• contribute to UK-wide domestic policy objectives, such as economic growth, and sectoral priorities 

• use an evidence based approach to identify priority markets and include a focus on the EU and emerging economies   

• go beyond the negotiation of Free Trade Agreements (FTAs), and consider a range of levers to improve the trading environment within the context of a clear economic strategy 

• set out delivery arrangements for business support on trade where UK Government activity is complementary to support provided by the Scottish Government  

• adopt a values-based approach, along the lines of Scotland’s Vision for Trade 

1. Process and governance

Key points: 

• the UK trade strategy should include a formal and comprehensive role for devolved administrations in all stages of the process of agreeing trade policy, so this delivers for the whole of the UK 

• the trade strategy should be jointly owned by the four administrations, in recognition of the devolved elements of its content 

Our August 2018 discussion paper Scotland’s Role in the Development of Future UK Trade Arrangements made a strong case for a formal and comprehensive role for devolved administrations in the process of agreeing trade policy, including trade deals. 

While responsibility for foreign affairs, including international relations and the regulation of international trade, is reserved to the UK Parliament and Government, there are important exceptions to this. In particular, the Scottish Parliament and Scottish Ministers are responsible for observing and implementing international obligations relating to devolved matters.  

The broad and increasing scope of modern trade agreements means that their content cuts across a range of reserved and devolved policy areas. 

Scottish Ministers should have full, early and formal involvement in policy formulation and opportunities to influence the development and agreement of international negotiations, including in formulating negotiating mandates.  

This will ensure greater legitimacy and transparency, as decisions about trade are made closer to the people affected by those decisions, and their views are incorporated from an early stage. 

2. Market and sectoral priorities

Key points: 

• the UK trade strategy should directly contribute to UK-wide domestic policy objectives, including on growth, inclusion and sustainability and be integrated with domestic strategies, such as the UK Industrial Strategy  

• the UK trade strategy should reflect the sectoral priorities of the whole of the UK. For example, Scotland has particular strengths in offshore wind, technology and life sciences 

• services should be a strong focus, given their sustained growth, significance to the UK and Scottish economies and to employment 

• the strategy should use an evidence-based approach to identify UK priority markets, which considers our priorities, as set out in A Trading Nation, including a focus on the EU, and targets emerging markets

The UK trade strategy should primarily be about the role of trade within a wider economic strategy. It should directly support and contribute to UK-wide domestic policy objectives, including on growth, inclusion and sustainability. It should be closely integrated with the domestic objectives set out in the UK Industrial Strategy and with UK-wide investment policy objectives.

It should reflect the whole of the UK’s sectoral priorities, including our top sectors as outlined in A Trading Nation: Engineering and Advanced Manufacturing; Food and Drink; Energy; Financial & Business Services; Technology, Digital & Media; Life & Chemical Sciences; Education; Tourism.

It should also focus on emerging sectors, including an emphasis on green and sustainable goods and services such as hydrogen, green finance and renewables – in line with our Green Industrial Strategy.

Services should be a strong focus, given their sustained growth, significance to the UK and Scottish economies and to employment. This plays to UK-wide strengths and requires an approach that goes beyond Free Trade Agreements, which are less effective for services than goods.

The strategy should use an evidence-based approach to identify the UK’s priority markets and consider priorities across the UK. Our top 15 priority markets are set out in A Trading Nation: the US, 10 EU countries, Norway, Switzerland, China and Canada. The strategy should also consider future market priorities, by targeting emerging markets.  

The strategy should focus on the relationship with the EU, our closest and largest international export market, and address barriers and opportunities for both imports and exports. It should also build on the shared values with the EU to address common policy challenges, considering opportunities to maintain EU alignment. 

3. Levers

Key points: 

• the UK trade strategy should consider a wide range of levers to support free and fair trade that works for the whole of the UK 

• this should go beyond FTAs, including addressing market access barriers through commercial diplomacy and strategically using non-binding agreements, such as Memoranda of Understanding and enhanced trade partnerships 

• trade liberalisation, including signing free trade and other trade-related agreements, needs to be done selectively, coherently and consistently across agreements  

• delivery arrangements for business support on trade should be based on principles of collaboration, complementarity, and non-duplication with support by the Scottish Government

The UK trade strategy should consider a wide range of levers to improve the trading environment within the context of a clear economic strategy.

Governments have a range of levers available to direct, manage, and shape international trade flows and their impacts. These include free trade and other trade-related agreements; World Trade Organization (WTO) negotiations; International Regulatory Cooperation; commercial diplomacy; trade promotion and support; and domestic policy and regulation, with an interaction with the trading environment.

We would support a trade strategy that uses a range of these levers to support free and fair trade that works for the whole of the UK. However, trade liberalisation must depend on equivalent high standards and be compatible with our need to regulate in the public interest, balancing economic, social and environmental aims.

Free Trade Agreements and non-binding agreements

The UK trade strategy should include the negotiation and implementation of Free Trade Agreements, where these are in line with UK wide interests. These should be used to create opportunities and remove barriers for businesses across the UK, including Scottish sectoral priorities in spirits, offshore wind, hydrogen, agri-foods and services.

However, market access gains should not outweigh wider domestic objectives and our values. Trade liberalisation, including signing Free Trade Agreements, needs to be done selectively, coherently and consistently across agreements. 

The UK trade strategy should also consider the strategic role of non-binding agreements, such as Memoranda of Understanding and enhanced trade partnerships, to meet economic and wider objectives. Used strategically, these can play an important part in developing stronger trade and investment relations and unlocking opportunities with partners around the world. Devolved administrations should be fully involved in these strategic decisions and in shaping these agreements, particularly where there is direct relevance to devolved policy.    

World Trade Organization 

The UK trade strategy should emphasise that it will continue to invest in the rules-based international system, including active engagement in the WTO committee system and the defence of UK (and Scottish) interests.  

The UK Government should represent Scottish interests at priority committees and working groups, which for us includes those on Technical Barriers to Trade, Sanitary and Phytosanitary, Trade and Environment and Trade and Gender.  

The strategy should also be clear that it will push for multilateral agreements, such as on industrial subsidies, but also press ahead at a plurilateral level. It should also set out a clear position on dispute settlement reform.  

Commercial diplomacy 

The UK trade strategy should put a strong focus on using commercial diplomacy to remove market access barriers. Removing these barriers has been shown to have more significant benefits than any FTA. This should prioritise barriers based on interests across the UK and not just the highest by value. It should also focus on collaborative efforts with devolved administrations and partners to address these barriers.  

Trade support  

The UK trade strategy should commit to the principles of collaboration, complementarity, and non-duplication in relation to business support, with an agreed operating framework between the Scottish Government, its agencies and the UK Government.  

Delivery arrangements should be evidence-based and aligned with our priorities. Our priority sectors, markets and companies for trade support are based on the evidence-led A Trading Nation.  

Support provided by the UK Government should add value to existing Scottish Government support by focusing on trade finance and supporting exporters in sectors or geographies which are beyond our reach. It should also aim to make it easy for businesses to transition between Scottish Government and UK Government support, such as through data sharing and transparency.  

International Regulatory Cooperation 

The UK trade strategy should set out the role of International Regulatory Cooperation in removing regulatory barriers to trade and should commit to Good Regulatory Practices. This should include recognition that there are varying approaches to regulation across the UK and detail how devolved administrations will be included in developing and implementing the UK’s approach to International Regulatory Cooperation. 

It should also support recognition of professional qualifications where there is sector and regulator interest, ensuring that devolved bodies and levers are recognised at each stage of negotiation and implementation.  

Domestic policy and regulation 

Domestic and trade strategies should be coordinated, so, for example, decisions on regulatory and skills policies complement trade objectives. Trade policy must also be accompanied by wider policies to maximise the benefits of trade liberalisation, while identifying and addressing any adverse or undesired effects of trade shocks and trends. 

4. Values and cross-cutting issues

Key points: 

• the UK trade strategy should adopt a values-based approach to navigate competing priorities, along the lines of Scotland’s Vision for Trade, such as balancing short-term market access gains against longer term economic, social and environmental goals 

• the strategy should support coherence between climate and trade policy, the promotion of human rights and recognise that there can be winners and losers from trade within the UK 

• the strategy should be open and transparent with stakeholders, particularly business, reporting regularly on progress 

Values 

The UK trade strategy should use a values-based approach to navigate competing priorities, including:  

Sustainability: the strategy should balance short-term market access gains against longer term economic, social and environmental goals. For example, reducing tariffs on UK food imports, reducing food safety and animal welfare standards, or diluting digital rights may have a detrimental effect in the longer term. 

Inclusive Growth: the strategy should recognise that the benefits of international trade are not always equally distributed throughout society in the UK.   

The UK Government should work collaboratively with devolved administrations to understand and address those distributional impacts, such as sex-based or regional inequalities, including by improving and sharing data.  

The strategy should specifically recognise the existence of a gender export gap and the need to address this through various support measures. This should be done in collaboration with devolved administrations and in alignment with wider initiatives to support women’s economic empowerment.  

The UK Government should also use its strategy to demonstrate that growth and inclusion can go hand in hand, for example addressing the gender export gap would support both inclusion and economic growth.   

Net Zero: the strategy should actively support coherence between climate and trade policy, including at a multilateral level. This could include making compliance with the Paris Agreement a ‘red line’ in FTA negotiations and putting net zero and environmental commitments at the forefront of ex-ante impact assessment. 

The strategy should also drive forward the liberalisation of the trade of environmental goods and services, e.g. hydrogen, using UK Tariff structures, bilateral and multilateral negotiations and commercial diplomacy.  

The strategy should address both carbon markets and carbon leakage and aim to meet climate objectives while avoiding additional costs and burdens for UK, including Scottish, exporters and importers.  

Good governance: the strategy should make human rights a central aspect of UK trade policy, aiming to operate in a way that supports and promotes human rights. This could include making compliance with fundamental human rights a ‘red line’ for the initiation of FTA negotiations, and carrying out human rights impact assessments for FTA negotiations. 

The strategy should support high labour standards at home and abroad, for example, by including labour standards in FTAs. Trading preferences should only be granted to partners implementing the core UN and International Labour Organisation international conventions on human rights and labour rights.  

Cross-cutting  

Business and stakeholder engagement: the UK trade strategy should be open and transparent with stakeholders, reporting regularly on progress. It should aim to encourage dialogue on economic policy and the role of trade. It should create opportunities to engage businesses across all sectors and regions of Scotland in its delivery. The strategy should also aim to better communicate the terms of trade, such as opportunities from FTAs, to businesses. 

Better trade data: a UK trade strategy relies on a strong trade data infrastructure. The UK Government should use this opportunity to address existing gaps and build a better infrastructure in collaboration with devolved administrations. This includes developing an evidence base for UK services export data and improving the collection and availability of data on the differential impacts of trade.