Calls to avert trade war: letter to Chancellor of the Exchequer

Letter from Cabinet Secretary for Finance and the Economy, Kate Forbes to the UK Chancellor of the Exchequer, Rishi Sunak, regarding sustainable solutions to ease trade between the UK and EU.

The Rt Hon Rishi Sunak MP
Chancellor of the Exchequer
HM Treasury
1 Horse Guards Road

13 May 2022

Dear Rishi,

I am deeply concerned about ongoing threats by the UK Government to introduce legislation to breach international law.

Such an irresponsible act is causing significant concern to trade sectors in Scotland, particularly food and drink, which would be harmed the most by a damaging trade war. As you know, businesses and households are not only struggling to recover from the pandemic, but they are all still dealing with the adverse effects of Brexit and now with the escalating cost of living crisis. An unnecessary trade war would compound hugely these issues and effects.

The food and drink sector in Scotland and the UK has borne the brunt of the hard Brexit pursued by the UK Government, particularly through the loss of freedom of movement and free trade. This sector is of particular importance to Scotland: it generates turnover of £15 billion each year and our overseas exports are worth £6.2bn. Scotland has over 17,000 food and drink businesses, which employ around 119,000 people, many in remote and economically fragile rural and island communities.

A trade war could lead to further delays to exports, including in sectors like seafood where there is a premium on freshness, further bureaucracy and barriers and potentially crippling tariffs.

It is increasingly clear that the Trade and Cooperation Agreement is failing to deliver for many buinesses, and that the UK Government’s approach to the Northern Ireland Protocol talks is exacerbating matters. This has serious implications for key parts of Scotland’s food and drink sector – such as the ongoing impasse over the export of seed potatoes – while also impacting other crucial areas like the UK’s legal association to the vital Horizon Europe research programme.

The Devolved Governments have direct interests at stake in the Protocol, particularly in trade and border control, yet despite repeated requests the UK Government has shown no willingness to engage on these issues and we are excluded from discussions. Our direct trade route from Cairnryan to Belfast is a key gateway, and one of the UK’s biggest and most important commercial ferry routes. Here in Scotland, it services a wide range of goods distribution networks within and through Scotland to Northern Ireland and also Ireland – from well before Brexit. Ongoing uncertainty and threats to the Northern Ireland protocol can help threaten the long term economic security of this and, indeed, other trade routes with Northern Ireland and Ireland.

In the interests of businesses and households across Scotland, therefore, I urge you and other UK Ministers to cease the brinksmanship and escalation.

I urge you instead to focus on dialogue with our EU partners and commit to finding sustainable solutions which will help trade between and among these islands flourish.

Yours sincerely,

Kate Forbes

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