The Referendum on Separation for Scotland: Scotland's Membership of the EU - Scottish Affairs Committee Contents


Conclusions and recommendations


Becoming an EU Member State

1.  In the event of separation, Scotland's future membership of the European Union, on appropriate terms, would be in the national interests of the UK. Furthermore, we have heard no evidence that any other Member State would regard it as contrary to their national interest, subject to acceptable terms. (Paragraph 25)

2.  The Scottish Government's preferred route to becoming a member of the EU is through Treaty amendment under Article 48. Under this process the Scottish Government would depend on the UK Government instigating negotiations on Scotland's behalf. Not only has the UK Government described the prospect of using Article 48 as "utterly implausible" but, in the unlikely event that it is used, the UK Government could not be expected to raise issues that would be to the detriment of the citizens of England, Wales and Northern Ireland. Key objectives identified made by the Scottish Government in its White Paper would not, therefore, be realised. (Paragraph 26)

3.  Under the Article 49 process Scotland would have to be outside the EU to apply for membership. For this reason, the Scottish Government favours Treaty amendment under Article 48 but it is unclear whether this is permissible under EU law or acceptable to Member States. There is therefore every likelihood that, in event of a Yes vote, if the Scottish Government continues to insist on an independence date of 24 March 2016 Scotland will temporarily be outside of the European Union - with significant implications for the Scottish people. However, we can find no evidence that the Scottish Government has communicated this risk to the people of Scotland. The Scottish Government should publish the legal advice it has received on a separate Scotland's membership of the European Union as a matter of urgency. (Paragraph 27)

4.  It is misleading for the Scottish Government to claim that on 24 March 2016 Scotland could be both a separate state and a Member State of the European Union. There are a number of clear risks to the Scottish Government's strategy to gain membership of the EU, all of which are overlooked in the White Paper, and which make the 18-month timetable unbelievable. The Scottish Government's attitude to becoming a member of the EU appears based on the sentiment, as articulated by Fiona Hyslop MSP, that "where there's a political will, there will be a way". The Scottish Government has provided no proof that the will exists across Europe for Scotland's membership of the EU to be fast-tracked with a timetable of Scotland's choosing, nor can it be certain that its chosen way of achieving such a goal is legitimate or would be accepted by all Member States. To date, not a single Member State has indicated its support for the Article 48 route. (Paragraph 39)

5.  We do not believe that negotiation and subsequent ratification of Scotland's membership of the EU could be concluded by 24 March 2016. The Scottish Government have to tell the Scottish people which of the alternative options available they favour. The alternative scenarios of Scotland leaving the EU and entering into complex provisional arrangements or joining the European Economic Area are neither guaranteed nor satisfactory; they offer little benefit, but could cause significant harm to Scotland's interests. (Paragraph 45)

6.  An obsession with securing membership of the European Union by a specific date has significantly weakened the Scottish Government's negotiating position. It was a mistake to have made such a commitment. The Scottish Government must clarify for the people of Scotland whether, in the event of a yes vote, its focus in any negotiations would be on getting the best outcome for Scotland or meeting an arbitrary and self-imposed timetable. (Paragraph 46)

Conditions of membership

7.  A separate Scotland cannot be forced to adopt the Euro, but Member States might well insist on a commitment to do so in the future. (Paragraph 52)

8.  On joining the EU, the government of a separate Scotland would have to commit to meeting the EU target of getting national debt down to 60% of GDP within 10 years. To achieve this the Scottish Government would have to impose additional spending cuts to those planned by the UK Government or raise taxes higher, or both. We will give further consideration to fiscal limitations imposed by the EU in our future work. (Paragraph 54)

9.  The need to complete negotiations with the UK on key issues before Scotland can negotiate with the EU is not mentioned by the Scottish Government in the White Paper, but it is further reason to doubt the plausibility of the Scottish Government's 18-month timetable for negotiation and ratification of a separate Scotland's membership of the EU. (Paragraph 57)

10.  The Scottish Government seems to believe that opting out of joining the Eurozone and Schengen would be a formality, but Member States have no reason to give in to Scotland's demands, and they each enjoy a right of veto over a separate Scotland's potential membership. The case made by the Scottish Government in the White Paper that, in the event of separation, it could and should continue to receive the opt-outs and derogations negotiated by the UK appears to us based on wishful thinking rather than legal and historical precedent. (Paragraph 58)

11.  No new Member State has negotiated an opt-out from JHA measures and it is questionable that Member States would grant Scotland a greater flexibility than they themselves are able to exercise. The UK Government claims that a failure to negotiate an opt-out from EU Justice and Home Affairs measures would have major implications for a separate Scotland's legal system. This is an important matter which requires further clarification. (Paragraph 61)

12.  A Scottish EU Member State would be bound by EU legislation on VAT. There is no guarantee that the Scottish Government would negotiate the opt-outs that would be required to continue zero-rates of VAT on items such as children's clothes, food and books. Failure to secure an opt-out would see costs of these basic items increase by a minimum of 5%. Like other risks surrounding separation, this threat to the pockets of Scottish families is overlooked by the Scottish Government. The uncertainty over zero-rates of VAT does not exist if Scotland remains part of the UK. (Paragraph 64)

13.  If an Article 48 route to membership were pursued, it seems highly unlikely the UK Government would seek to negotiate a position on behalf of Scotland that would see thousands of its own students disadvantaged. Under an Article 49 accession, while Scotland would be arguing its own case, it would still have to persuade the other Member States, including the UK. On this basis, it is surely time for the Scottish Government to admit that its hopes of discriminating against students from the rest of the UK on the charging of tuition fees are dead; alternative plans must now be made. (Paragraph 68)

14.  If a separate Scotland's universities were unable to charge tuition fees to students from the continuing UK there would be a £150 million funding black hole in the higher education budget. The Scottish Government has failed to say how, or even if, that gap in funding would be filled. (Paragraph 69)

Contributions to and receipts from the EU budget

15.  The Scottish Government appears to misunderstand how the UK's rebate is calculated. In the event of separation, the UK's rebate would be automatically adjusted to reflect the change in the UK's circumstances. There would be no Scottish share to be negotiated as the Scottish Government erroneously suggests. Instead, Scottish households would have to make an additional contribution to the EU budget, some of which would go towards paying the UK's rebate. (Paragraph 73)

16.  Separation poses clear risks to Scotland's farmers. The level of funding they would receive under Pillar I of the Common Agricultural Policy is uncertain. In the event that Scotland has to accede under the Article 49 process then CAP receipts would cease for any period that Scotland is outside the EU. The Scottish Government has made no commitment to maintain levels of funding should this scenario occur. Whatever the route to membership, there are no guarantees that a separate Scotland would continue to receive the same level of payments that it does now. For this to happen Scotland would need to successfully negotiate that it should receive a higher allocation of receipts than some existing Member States, notably those that have recently acceded and had to accept the ten-year phase-in of payments that Scotland would be seeking to avoid. (Paragraph 78)

17.  The Scottish Government should make clear the potential risks as well as the alleged benefits of separation. In terms of the CAP, separation would bring no improvement in funding for Scottish farmers before the end of this budgetary period in 2020 (anything beyond that is unknown) and could result in existing levels of funding being cut or even interrupted. (Paragraph 79)

18.  Scotland currently benefits from a favourable allocation of Structural Funds by the UK Government that sees it receive an additional £186 million between 2014-2020. On separation, this uplift would be lost and, should Scotland's presence within the EU be interrupted, even temporarily, while negotiations on membership take place, the payment of any Structural Funds would cease as there would be no treaty authority to pay them. (Paragraph 80)

19.  In the context of the EU budget, the Scottish Government's plans for separation, even under the best-case scenario, would leave Scottish households at least £843 worse off. Under the worst-case scenario, that of a separate Scotland seeing its CAP receipts phased in over ten years (as has been the case with the 13 most recent Member States), then Scottish households would be £1,343 worse off than if they remained part of the UK. (Paragraph 83)

Conclusion

20.  We agree with the conclusion of the House of Commons Foreign Affairs Committee that the Scottish Government "underestimates the unease which exists within EU Member States and EU institutions about Scottish independence". Not only does this mean that the period required for negotiations is longer than anticipated by the Scottish Government but, ultimately, all 28 Member States have the right to veto if they are unhappy with the terms of a separate Scotland's membership of the EU. That the Scottish Government does not take this threat seriously demonstrates a lack of understanding of the realities of international politics. (Paragraph 86)


 
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Prepared 27 May 2014