EU Reform and the EU Referendum: Implications for Scotland

Published 19th March 2016 SP Paper 978 2nd Report, 2016 (Session 4) Web European and External Relations Committee EU reform and the EU referendum: implications for Scotland Published in Scotland by the Scottish Parliamentary Corporate Body. All documents are available on the Scottish For information on the Scottish Parliament Parliament website at: contact Public Information on: www.scottish.parliament.uk/documents Telephone: 0131 348 5000 Textphone: 0800 092 7100 Email: [email protected] © Parliamentary copyright. Scottish Parliamentary Corporate Body The Scottish Parliament’ copyright policy can be found on the website – www.scottish.parliament.uk European and External Relations Committee EU reform and the EU referendum: implications for Scotland, 2nd Report, 2016 (Session 4) Contents Convener‟s Foreword 1 Introduction 2 Executive Summary 4 EU Referendum and Reform - the implications for Scotland 11 The EU Referendum Act 11 What EU membership means for Scotland‘s economy and its people 17 Leaving the EU: what it would mean for Scotland? 32 Leaving the EU: the Article 50 process 33 Leaving the EU: the domestic process 39 Treaties with third parties under International law 43 Acquired rights 44 Legislative Consent and legal implications of leaving the EU for Scotland 47 Alternatives to EU Membership 53 Going it Alone 55 The Norwegian and Swiss alternatives 57 EU reform 66 Intergovernmental relations 75 Conclusions 79 Annexe A 87 Annexe B 90 Annexe C 91 Annexe D 93 European and External Relations Committee EU reform and the EU referendum: implications for Scotland, 2nd Report, 2016 (Session 4) European and External Relations Committee The remit of the European and External Relations Committee is to consider and report on- a. proposals for European Union legislation; b. the implementation of European Communities and European Union legislation; c. any European Communities or European Union issue; d. the development and implementation of the Scottish Administration’s links with countries and territories outside Scotland, the European Union (and its institutions) and other international organisations; and e. co-ordination of the international activities of the Scottish Administration. scottish.parliament.uk/european [email protected] 0131 348 5234 Follow the European and External Relations Committee @SP_European European and External Relations Committee EU reform and the EU referendum: implications for Scotland, 2nd Report, 2016 (Session 4) Committee Membership Convener Deputy Convener Christina McKelvie Hanzala Malik Scottish National Party Scottish Labour Roderick Campbell Willie Coffey Scottish National Party Scottish National Party Adam Ingram Jamie McGrigor Scottish National Party Scottish Conservative and Unionist Party Anne McTaggart Scottish Labour European and External Relations Committee EU reform and the EU referendum: implications for Scotland, 2nd Report, 2016 (Session 4) Convener‟s Foreword On 23 June 2016 voters will face one of the biggest decisions of their lifetimes when they go to the polls to vote on whether to remain in or leave the European Union (EU). While discussions of ―Brexit‖ have dominated the headlines since the Prime Minister announced the date for the referendum, there has been very little discussion of the implications for Scotland of a vote to leave the EU. I hope that this report can provide information for those going to vote in Scotland on what EU membership means for Scotland, what the process for leaving the EU would be, and what alternatives there are to EU membership. I also hope that this report can contribute to a genuine debate in Scotland about the EU and our future within it. The reform package negotiated by the Prime Minister has changed the UK‘s relationship with the EU, providing for the UK to remain a member, but in the margins of the Union. But I believe that we should not be sitting on the fringes focusing on insular debates, but instead we should be asking ourselves about the future of the EU that we belong to and discussing our visions for Europe. The EU currently faces many, and varied challenges. There is the physical migration of hundreds of thousands of refugees coming in to Europe. There are the continuing economic problems facing many countries, and the high levels of unemployment experienced by EU citizens. There are also the geopolitical challenges that surround the EU on its borders. It seems to me that this is not a time for looking inwards and disengaging, but a time to show leadership and develop solutions. I therefore hope that the debate in Scotland can extend beyond weighing up the pros and cons of EU membership to considering what we want our future to be in Europe. Christina McKelvie MSP Convener 1 European and External Relations Committee EU reform and the EU referendum: implications for Scotland, 2nd Report, 2016 (Session 4) Introduction EU reform and the EU referendum: the Committee‘s inquiry 1. The Committee decided to initiate this inquiry shortly after the intention to renegotiate the terms of the UK‘s membership of the European Union (EU) and then hold a referendum on the UK‘s continuing membership of the EU was announced in the Queen‘s speech on 27th May 2015. The inquiry has taken place over a period of seven months. Towards the end of the inquiry, ―A New Settlement for the United Kingdom within the European Union‖1 was agreed at the European Council meeting of 18-19 February 2016. Due to limited time before the dissolution of the Parliament, the Committee was only able to hold one evidence session on the implications for Scotland of the reforms agreed. 2. Following the European Council, on 20 February, the Prime Minister announced that the referendum on EU membership will be held on 23 June, seven weeks after the elections to the Scottish Parliament. Since the announcement of the date for the referendum, there has been considerable debate on the merits of remaining in, or leaving the EU. 3. In embarking on this inquiry, the Committee was aware that the renegotiation of the ―United Kingdom‘s relationship with the European Union‖ and ―reform of the European Union for the benefit of all member states‖ could take a number of months.2 In addition, the legislation to enable a referendum was being considered by the UK Parliament in the autumn of 2015. The Committee therefore decided to divide the inquiry into two strands: focusing first on the implications of a referendum on membership of the EU for Scotland, before turning to the issues of reform once detail was available on the final package. 4. In June 2015, the Committee issued a call for evidence seeking views on the proposed referendum, potential areas of EU reform and on intergovernmental relations between the UK Government and the Scottish Government in the context of EU reform. The Committee received 28 written submissions over the course of the inquiry and thanks all of those who provided written evidence. In addition, the Committee held a number of evidence sessions and wishes to thank the witnesses who gave evidence to the Committee. The Committee invited the UK Minister of State for Europe to give evidence to the Committee, but he twice declined to attend.3 A list of those that did provide oral and written evidence is attached at Annexe B. 5. The Committee also had two expert advisers for this inquiry. Professor Sionaidh Douglas-Scott of Queen Mary School of Law, University of London, advised the Committee on the process by which a Member State would leave the EU, and Professor Michael Keating of the University of Aberdeen, advised the Committee on alternatives to EU membership. The Committee would like to 2 European and External Relations Committee EU reform and the EU referendum: implications for Scotland, 2nd Report, 2016 (Session 4) thank both of its advisers for the briefings that they prepared for the Committee (attached at Annexe D) and for their advice on these areas. 3 European and External Relations Committee EU reform and the EU referendum: implications for Scotland, 2nd Report, 2016 (Session 4) Executive Summary The Committee is concluding this inquiry as it comes to the end of Session 4 of the Scottish Parliament. Over the last five years the Committee has explored the impact of EU policy in Scotland and considered the key challenges facing the EU. The Committee is convinced that there is a positive case to be made for EU membership in Scotland. EU membership has contributed to Scotland‘s economic prosperity and to the rights of those living in Scotland. It has improved Scotland‘s infrastructure and offered training programmes to Scottish people to improve their skills and prospects in the labour market. Scotland‘s agricultural sector has benefited from major economic funding for over four decades. Scotland‘s universities have flourished as international research centres and have attracted students and academics from all over the EU. Scotland‘s culture has been enriched by the interaction with other EU citizens whether at home or abroad. There are many, many areas in which the EU positively influences our lives. This inquiry has highlighted to the Committee the ways in which the benefits brought by EU membership have become integral to our society and sometimes are not even recognised as originating in EU policy. The Committee believes that the decision facing voters on 23 June will be one of the most important of their lives. However, the emerging debate has very much focused on the risks and consequences of withdrawal, rather than there being a genuine debate about the value of EU membership. There has been very little discussion to date about what the EU could achieve or the kind of EU that we want. The debate is also taking place against a backdrop of the refugee crisis in the EU, growing foreign policy issues and continuing problems in the Eurozone.

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