A guide to key areas of the Scottish Government's Europe strategy

The Scottish Government says its aim is to influence the overall UK position so that the UK as a whole remains in the European single market through the European Economic Area (EEA) agreement and the EU customs union, a position Scottish ministers believe is "both feasible and desirable". The paper states: "Given the many years, perhaps decades, of uncertainty involved in the pursuit of bespoke deals with the EU and other world trade partners, we believe Scotland's interests would be best-served if the UK retained its membership of the EEA."

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It argues this could be achieved by the UK joining the European Free Trade Association (EFTA) before "retaining or renewing its membership of the EEA agreement or by direct association to the EEA". The paper also states that remaining within the EU customs union would "reduce to a degree the disruption of years of negotiating new FTAs (free trade agreements), with no evidence that the eventual outcome will be better".

The Scottish Government says of its option for keeping the UK in the single market: "We believe this is consistent with the referendum result, that it is strongly in the interests of all parts of the UK and that it provides a strong basis for negotiation."

Differentiated solutions for Scotland

In the event that the UK Government chooses to leave the EU customs union and single market, the paper explores how Scotland could remain within the EEA and the European single market. It notes the existing "range of differentiated arrangements within the EU and single market framework" highlighting the Faroe Islands, Liechtenstein and Switzerland as examples.

Under the option put forward, Scotland would remain part of the EEA, continuing to participate in the single market and upholding the "four freedoms" as part of its law. This could be achieved through a Norway-style arrangement, with Scotland becoming a full or associate member of EFTA and thereafter party to the EFTA EEA agreement.

The paper goes on to argue that, alternatively, Scotland could, through the UK, enter a direct association with the EEA or seek associate membership of EFTA, and subsequently become party to the EEA agreement. Under such an arrangement, the government says Scotland would continue to trade in both goods and services within a European single market of 500 million people and Scottish people would retain the right to travel, live, work and study in other EU and EEA countries.

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Ministers argue there would also be economic advantages for the UK as a whole in having at least part of its territory still within the single market and insist that an open border would be maintained between the two, pointing to the "invisible border" between Northern Ireland and the Republic of Ireland.

The document acknowledges that under such a differential arrangement Scotland would enjoy less influence over EU policy-making than is currently exercised by the UK Government and would remain outside the customs union with downsides for businesses that trade within the EU. However, the Scottish Government argues "the fact that both Scotland and the rest of the UK would be outside the EU customs union (or both within it if the UK Government chooses that option), would mean that the border between Scotland and England would NOT be an external EU customs border, retaining unimpeded customs-free trade within the UK". The Scottish Government would also have to make financial contributions to the administrative and operational expenditure of the EU, just as other EFTA EEA countries do.

The paper acknowledges that a differentiated relationship to the single market for Scotland would "require compromise on all sides" and "raises technical, legal and political complexities". It acknowledges that "as long as Scotland remains part of the UK there will need to be some form of sponsorship for any Scottish membership of EFTA", as membership of the EFTA treaty and the EEA agreement is formally open only to "states".

The paper points to the potential of Denmark "sponsoring" the Faroe Islands' membership of EFTA. It argues: "This shows that a sub-state may enter into international agreements. In similar circumstances, and with its own legal system and strong administrative capabilities, Scotland would be well-placed to meet those requirements."

One proposal put forward suggests the UK Government could seek to maintain its current EEA membership, through an application for EFTA membership, and then seek a territorial exemption so that this membership would only apply to Scotland. Alternatively, Scotland, directly or through the UK, could seek full or associate membership of EFTA and subsequently the EEA agreement.

Further devolution to the Scottish Parliament

The paper calls for "a fundamental review of the UK's constitutional arrangements and the powers of the Scottish Parliament to avoid excessive concentration of power at Westminster". It argues that further transfer of powers to Holyrood will be necessary for Scotland to pursue a differentiated relationship with the EU.

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The Scottish Government says there should be no attempt by Westminster to reserve issues such as agriculture, fisheries, education, health, justice and environmental protection which would no longer be subject to EU law post-Brexit. Ministers argue that matters which would no longer be subject to EU law such as employment law and health and safety legislation should also be devolved to the Scottish Parliament.

The paper argues that Scotland will need a range of additional powers to pursue a differentiated relationship with the EU. These would include powers over of import and export control, immigration, competition, product standards and intellectual property and company law and insolvency.

In addition, the Scottish Government said a new arrangement would be necessary to allow it to take part in trade negotiations and international engagement.