Scotland's Place in Europe

Scotland’s Place in Europe sets out the Scottish Government’s position following the result of the EU Referendum.


This glossary explains some of the key terms we have used in this paper and includes links to further information.

Membership of the European Single Market - We have defined membership of the European Single Market as the ability to participate fully in that market without any regulatory or tariff barriers to the export or import of goods and services. This would also include full participation in the four freedoms, the free movement of people, goods, services and capital and the rights of establishment for businesses.

Access to the European Single Market - Access to the European Single Market is very different to membership (as defined above). Any one of the hundreds of nations with a trade schedule at the World Trade Organisation has access to the European Single Market, but may face tariffs on goods and will also need to demonstrate that goods meet the standards of the European Single Market. There is also no access for services, or rights under any of the four freedoms.

Some nations have negotiated preferential terms, in the form of a free trade agreement with the EU, such as the recently agreed deal with Canada, to reduce some of these tariffs and increase common standards to help further reduce barriers to trade and market access. However, these deals still fall far short of membership as defined above.

The European Union - The European Union ( EU) is currently a group of 28 (which will be 27 following the exit of the UK) countries that operate as a cohesive economic and political block. Nineteen of the countries use the euro as their official currency. The EU grew out of a desire to form a single European political entity to end the centuries of warfare among European countries that culminated with World War II, which devastated much of the continent.

The European Single Market - Has its basis in article 26 of the Treaty on the Functioning of the European Union which provides in article 26(2) that "[t]he internal market shall comprise an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured in accordance with the provisions of the Treaties". The European Commission describes the European Single Market as "the EU as one territory without any internal borders or other regulatory obstacles to the free movement of goods and services". The European Single Market is in effect extended to include the EFTA State parties to the EEA Agreement (Norway, Iceland and Liechtenstein) by the EEA Agreement: the EFTA State parties participate in the European Single Market under and in terms of that Agreement.

EU Customs Union - The effect of a customs union is to ensure that no customs tariffs are levied on goods travelling within the area of the customs union with a common external tariff imposed on all goods entering the customs union - effectively prohibiting members of a customs union negotiating independently of other members bilateral trade deals with other countries. The members of the EU Customs Union are all the EU member states, Monaco, Isle of Man, Jersey and Guernsey, Akrotiri and Dhekelia. (The EU also has partial Customs Unions with Turkey, Andorra and San Marino where some goods are excluded.) The EFTA States - including the EFTA State parties to the EEA Agreement (Norway Iceland and Liechtenstein) - are not members of the EU Customs Union. They do not participate in the EU's free trade agreements with other markets in the world and trade in goods between the EFTA State parties to the EEA Agreement and the EU member States are subject to customs procedures, including "rules of origin" checks on the source of components to ascertain whether tariffs require to be paid as products cross the border.

European Free Trade Association ( EFTA) - EFTA is an intergovernmental organisation set up for the promotion of free trade and economic integration to the benefit of its member States - currently Switzerland, Norway, Iceland and Liechtenstein. It manages the EFTA Convention which governs free trade between the EFTA states, a network of trade deals between EFTA and 38 other countries worldwide and the EEA Agreement, through which three of the EFTA States - Norway, Iceland and Liechtenstein - are members of the European Single Market.

European Economic Area ( EEA) Agreement - The EEA Agreement is an agreement between the EU, the EU member States and three EFTA States (Norway, Iceland and Liechtenstein). It provides for the inclusion of EU legislation covering the four freedoms - the free movement of goods, services, persons and money - in the three EFTA States as well as the EU member States. It is the basis of which the three EFTA States participate in the European Single Market. In addition, the EEA Agreement provides for co-operation in other areas including research and development, education, social policy, the environment, consumer protection, tourism and culture ("flanking and horizontal" policies).

Council of Europe - The Council of Europe is an international organisation which promotes human rights and democracy in Europe. It was founded in 1949 and with 47 member states covers 820 million people. It should not be confused with the EU.

Flanking and Horizontal Policies - The EEA Agreement provides for the inclusion of EU legislation in all policy areas of the European Single Market. The EEA Agreement includes provisions on the free movement of goods, persons, services and capital, as well as competition and state aid rules. It also contains provision relevant to the four freedoms on consumer protection, company law, environment, social policy and statistics. These are referred to as horizontal provisions.

In addition to these horizontal areas there are other provisions within the EEA Agreement that provide for co-operation in several flanking policies such as research and innovation, education, training and youth, employment, tourism, culture, civil protection, enterprise, entrepreneurship and small and medium-sized enterprises.

This is not an exhaustive list and it is possible for contracting parties to the EEA Agreement to agree new flanking areas to be added to the list.

Schengen Area - The Schengen area covers 26 EU states and the member states of EFTA (Switzerland, Norway, Iceland and Liechtenstein) where passport and border control has been abolished for travel between participating states. The Schengen states operate a strengthened external border. The UK and Republic of Ireland have opted out of Schengen, and in response to recent terror attacks and the migration crisis some Schengen states have re-introduced temporary border controls.

Common Travel Area - The Common Travel Area maintains an open border for travel between Ireland, the UK, Isle of Man and the Channel Islands. People crossing internal borders within the CTA are subject to no or minimal border checks and require minimal identity documents to travel. In order to maintain the CTA there is significant co-operation between UK and Irish border officials.

EU Acquis - The EU Acquis Communautaire, often shortened to the EU Acquis, is the legislation, acts and court decisions which in sum form the body of European Union law.

Rules of Origin - Rules of origin are used to determine the country or origin of a product for purposes of international trade. Countries may not apply the same trade policy measures towards all other countries in international trade of goods, with the consequence that there must be various legal or administrative requirements to be fulfilled for implementing the different trade policy measures according to the different origin of goods. This may be for example different levying of import duties, allocating quotas, imposing anti-dumping duties or applying safeguard measures.


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