Optimistic and pessimistic scenarios for border trade following independence
There could be minimal friction or greater border disruption with some categories of freight vehicles subject to routine or random checks,
Brexit has already done much of the border management groundwork needed for Scottish independence in the European Union (EU).
That was a claim put forward by Professor Alan Mckinnon of Kuehne Logistics University in Hamburg at a recent webinar on the logistics impact of scottish independence and B rex it. he quoted a study by hayward and Mcewen as finding that "Brexit has re-energised the campaign for Scottish independence, but it has made the practicalities of independence more complex”.
A comfort noted by Alan was that in the event of a Yes vote for Scottish independence the process of detaching Scotland from the UK and then re admittance tot he EU would probably take several years, giving business more time to make adjustments than during some recent fiscal changes. Also, in that period there would surely be further progress in digitising customs procedures.
Currently lacking any significant non-food distribution centres other than Amazon, Scotland is at present dependent on movements from the logistics heartland of midland England. According to research by London School of Economics (LSE), so close is the economic integration between Scotland and the rest of the UK that the volume of trade is six times greater than what a gravity model would predict for two economies of their size and proximity.
Most of Scotland’s international trade passes through English ports and airports. The country lacks a direct Roro ferry link to mainland Europe and its airports handle only 2 per cent of UK air cargo.
If border controls significantly constrained cross-border freight traffic, a possible business response to independence might be to position more inventory in Scotland. This could imp air logistical efficiency but would promote property development and employment. There might also be a mod al shift from road to rail, offering easier border transit both to england and via the Channel Tunnel to other EU countries. Independence would promote an expansion of direct shipping services( containerised and Roro) between Scotland and the European mainland and help Grangemouth to fulfil its potential.
Evidence of how countries can change economic direction is provided by the Irish Republic, where at the time of accession in 1973 theproportion of its exports going tot he UK amounted to 55 per cent – now this is only 9 per cent, and since Brexit the proportion of Ireland-eu trade on direct ferry routes to theEuropean mainland has doubled with seven new routes, while the share which crosses the UK “land-bridge” has dropped from 84 to 66 per cent.
If Scotland rejoined the EU single market as an independent country it could have border-free access to other EU countries via Ireland but our trade on a double sea-crossing would be too circuitous.
Alan sketched out two scenarios. In the benign one, there would be minimal border friction: the Trade and Co-operation Agreement (TCA) would remain in force, providing tariff-free trade between UK and EU. Minimal divergence would prevail between UK and EU regulatory standards, and the Common Transit Convention would continue to apply to scottish international trade “land bridging” there st of the UK. In his more pessimistic scenario, border friction would arise from divergence of UK and EU regulatory standards, requiring re-negotiation of the TCA and imposition of tariffs/restrictions on some classes of product. with less progress on the digitisation of border processes including alignment of SPS controls and checking on rules of origin, we might see much greater border disruption with some categories of freight vehicles subject to routine or random checks.
There could thus be an increase in the length and variability of crossborder transit times, with occasionally significant tail-backs. Scotland’s international logistics might also be affected by inconsistencies in such areas as truck fuel economy standards, cabotage rules and emissions trading, particularly after the EU introduces a carbon border adjustment mechanism.