Friday, 25 January 2013

Scotland's International Relationships

Deputy First Minister Nicola Sturgeon

Scotland's International Relationships

British-Irish Chamber of Commerce


25 January 2013


It is a great pleasure to be invited to Dublin and to participate in this conference. It is particularly nice to be here on Burns Day - the annual occasion when we recognise and celebrate Scotland’s renowned and much loved national poet, Rabbie Burns.

Burns was an excise man – though given the amount of time he spent writing poetry and (allegedly) chasing women, he probably could not be described as the most dedicated of tax collectors. He was, though, a dedicated internationalist – as I believe we all are here today.

Burns’ famous song ‘A Man’s a Man - ‘that man to man the world o’er, shall brothers be for a’ that’ - is perhaps the closest the world has to an international anthem.

And it is very much in that spirit of internationalism, friendship and co-operation that I speak to you today.

Yesterday you covered a number of varied and important subjects including Food and Agribusiness, Energy, SME’s and business collaboration.

Today you are talking about innovation and competitiveness.

And it is in keeping with that theme that I will cover three closely related topics in my remarks this morning.

First, I will reflect on Scotland’s proud tradition of innovation and competitiveness.

Second, I will explain the relevance and importance of the current constitutional debate in Scotland in making sure that tradition is built upon in the future.

And, third, I will underline the importance to Scotland, to our economy, culture and society, of our international relationships - in particular, our relationships with our near neighbours like Ireland and our relationships with and within the EU.

First, our tradition as an innovator. Scotland’s reputation as a nation of inventors and entrepreneurs is well-known. Today, we are proud of our productive and diverse economy, the world-class research base in our Universities and industry, and our educated and skilled workforce.

I don’t want to sound boastful in what is a friendly gathering, but - relative to our GDP - Scotland’s research is cited by other researchers around the world more often than that of any other country - something that we are rightly proud of.

We have within our borders energy resources that are not only supporting the innovation and growth of our renewable energy sector - but also have the capacity to provide cheap and clean power to Scotland, and to other countries, for many years to come.

One of the recent successes in this area is the successful partnership working between Ireland and Scotland on the recent ISLES project, which has just been awarded further EU funding.

Scotland is also home to one of the most rapidly expanding life science research and development communities in Europe - a community that supports 630 organisations employing 32,000 people.

So, even in these tough times, there is much to be positive about in the Scottish economy. But we cannot and must not be complacent. Not just because our long term growth rate lags behind that of many other small, European countries - Ireland included - but because we know that improving our economic performance further will require us to be successful in two crucial respects.

First, we must ensure that our businesses are competitive in global markets in terms of price, quality, and performance of their products.

Second, we must pursue economic policies that are consistent with further developing Scotland’s international commercial potential – both as a producer of high quality, high value added products and as an attractive place for overseas investors to invest, live and work in.

Which brings me to the relevance and importance of the current constitutional debate in Scotland.

In the autumn of next year, the people of Scotland will choose whether to complete the powers of our devolved parliament by becoming an independent country or to leave vital economic and social powers in the hands of a Westminster system that all too often exercises them in a way that does not suit our needs and priorities.

Contrary to what many outside observers might imagine, the debate we are having is not about national identity. Scotland, like most modern European countries, is a melting pot of different identities - Scottish, British, Pakistani, Irish, Polish and many more besides. The family, cultural, historical and social ties we share with other parts of the UK - the things that often make people feel British - will endure regardless of how we are governed.

Nor is the debate any longer about whether Scotland could be independent.

These days, no one – not even our opponents – seriously questions the ability of an independent Scotland to stand on our own feet in economic terms.

Instead, it is a debate about what kind of country we want to be. What are our economic and social ambitions - and what system of governance best equips us to achieve them?

My argument is that with the full range of economic and social powers in the hands of the Scottish Parliament, we will be better able to achieve the fairer and more prosperous society that we aspire to.

As an independent country, the Scottish Government will have the range of tools that will better equip us to build on our economic strategy and produce even better results.

Let me offer some examples of how we would be better placed as an independent country to develop and grow our economic potential, particularly in the area of international commerce and trade.

Perhaps the most obvious example is the complete control over our domestic tax system – both direct and indirect taxation - that independence would give us.

This does not mean that an independent Scotland would adopt tax policies that were harmful to our neighbours. There will be no 'race to the bottom'.

But it does mean that we would use these powers to our benefit, just as every country does.

Unsurprisingly, it is the debates over the rate of corporation tax in an independent Scotland that grab the headlines - and I do believe that a responsible and competitive tax rate relative to the rest of the UK is one way of boosting jobs and investment in the Scottish economy - but I am sure I don't need to tell anyone in this audience that there is much more to a growth-based tax strategy than that.

Changes in the wider taxation system can trigger significant effects on the research and development spending of firms; on their willingness to innovate; and on the investment firms make in their workforce.

Independence will also allow the Scottish Government greater flexibility to decide on infrastructure investment priorities, not least in the area of high-speed broadband technologies and other measures that will benefit our SMEs.

Of course these are areas where we already have a considerable footprint. But they are also areas where we will be able to perform better as an independent nation within the EU.

The Scottish Government has argued repeatedly that current UK economic policy is flawed because in cutting capital spending rather than supporting investment in infrastructure, it is both extending and deepening the on-going economic crisis.

Independence would give us the ability to decide the level of capital investment that was appropriate for the Scottish economy, in the context of wider economic conditions and the need to maximise our long run economic growth rate.

Having full control of tax and welfare will also allow us to tackle the unacceptable inequalities that continue to blight our country.

Statistics show that a substantial number of social inequalities - in health, education, housing - are closely related to the degree of income inequality.

The UK is one of the most unequal societies in the developed world. And income inequalities in Britain have widened, not narrowed, in recent decades.

Tackling inequality is a priority for the Scottish Government not simply because we want to see greater social justice in our country than is the case at present – although we do want this.

But also because it is clear from international evidence that countries that achieve greater equality also perform better in economic terms as Joseph Stiglitz – a member of the First Minister’s Council of Economic Advisers - has often cited.

This is not surprising. Social justice leads to social cohesion, and social cohesion – it now seems clear – is a building block of economic success.

Important to our economic success, also, are the relationships we build with our neighbours and partners across the globe.

An independent Scotland - befitting of a country whose diaspora can be found in every corner of the world - will be outward looking and internationalist.

Of course, our closest relationships will be those with our nearest neighbours across other parts of the UK and with you, our friends in Ireland.

The Republic of Ireland is a country with which we share many common interests and long-standing bonds. These interests are reflected in our vibrant economic relations.

You are one of our key trading partners and our sixth largest international export market with yearly exports close to £800 million.

Those economic relations are constantly reinforced, renewed and reinvigorated through the close social and cultural exchanges that take place between our countries on a daily basis.

The Scottish Government firmly believes that independence will enhance Scotland’s economic and business links with Ireland; it will present new opportunities for our two countries in terms of trade and investment; and I hope will lead to ever closer cooperation to the advantage of both our peoples.

We also believe that one of the bonds we share is our commitment to Europe and our appreciation of the benefits that the EU brings to our citizens.

And, even - perhaps especially - in these times of flux for the EU, we should not lose sight of what these benefits are.

The EU is easily our biggest international trading partner accounting for nearly half of Scotland’s exports.

Membership of the EU is one of the major factors that makes us attractive for inward investment - it is estimated that inward investment has created and safeguarded around 64, 000 jobs for Scotland in the last decade.

One of the arguments we often hear from opponents of our aspiration to become an independent country is that it will leave us weaker on the international economic and political stage, including the EU.

I wonder how many in this audience, or indeed across Ireland as a whole, would agree with the view that being independent is the wrong choice in terms of European and international engagement. Very few I suspect.

Not least perhaps because in many senses Ireland effectively wrote the manual on how small nations can, and do, influence the direction of travel of Europe while advancing your own national interests at the same time.

Of course Ireland – and, as it was to transpire, the EU as a whole – was fortunate that in the late and much missed Dr. Garret Fitzgerald you had an individual who commanded the outstanding intellect and intuitive grasp of contemporary European politics that was required to be the author of that manual.

And, of course we convene today in Dublin at the outset of what is the seventh occasion on which Ireland has held the Presidency of the Council of the European Union.

Presidencies that have had to deal with past bouts of Euro-scepticism by successive British governments. And Presidencies that can credibly claim to have laid the foundations of what was to become the single EU market.

Presidencies that have - it is fair to say - more than risen to these challenges. Indeed, Ireland has an enviable reputation for leading some of the most effective Presidencies of the EU.

I rather suspect the views of the Scottish Government on where the EU’s main priorities should lie will align closely in many respects with the views of the Irish Government.

Indeed, it is very much in line with our focus on international trade and commerce as a driver of Scotland’s future prosperity, that the Scottish Government places great store on the integrity of the EU internal market.

We are in no doubt that the single EU market continues to be, as it has been in the past, the driver of economic recovery, growth and jobs going forward.

In recent days I think it has become clear that the UK Government could be on a collision course with the EU over the terms of her membership, and it is no longer fanciful to consider as real the possibility that the UK is heading out of the EU.

Let me state emphatically that this is not a journey that the Scottish Government wishes Scotland to be a part of, nor one that I believe would be supported across the Scottish business community or wider civic society.

And it is a direction of travel that I do not believe would command support in the Scottish Parliament.

It is a position that creates uncertainty; one that could damage our interests and influence, and deter foreign investors from investing in our economy. A misguided policy that threatens tens of thousands of jobs in Scotland.

One of the questions I am sure that Scotland will be asking over these next two years is whether such damage - as a result of a policy direction we haven’t chosen - is a price worth paying for leaving these decisions in the hands of Westminster.

The Scottish Government wants an independent Scotland to be a constructive member of the EU.

We want to be in Europe because it is overwhelmingly in our economic interests.

And we want to be independent in Europe, because that is the status that best allows us to protect, assert and advance our national interests.

As an independent member, we will be able to defend our national interests in a way that we cannot effectively do as a devolved part of the UK. It is true that the EU needs reform. There are issues - for example, fishing - where we believe that a different balance of competences to that which currently exists would be in Scotland's best interests. So, as an independent member state of a European Union that is changing, we will have the opportunity to build alliances and forge relationships with like-minded countries.

And we will do so, not just through the assertion of our own interests, but also by virtue of the significant contribution we can make to the furtherance of the collective European interest. Let there be no doubt that Scotland, like Ireland, wants to be a good European citizen.

So, in my final remarks let me comment on where I see Scotland contributing to the wider objectives of the European Union.

I want to focus on the substantive economic and social contributions that Scotland is making, and will continue to make as an independent member state, to tackling the range of challenges confronting all European economies and societies.

The nature of these challenges are well known – global warming; energy security; promoting healthy ageing; improving public health; and tackling unemployment and inequalities.

Each of these challenges has a strong and dynamic resonance both in the research work undertaken in Scotland’s world class universities – often in collaboration with leading research institutions (public and private) across Europe and beyond – and in the public policies pursued by the Scottish Government.

Scotland has some of the most ambitious Climate Change legislation anywhere in the world.

Many of our energy companies are devoting significant resources and working closely with research institutions to develop technologies that offer a very real prospect of producing the next generation of more reliable and cheaper renewable energy capacity.

The promotion of healthy ageing is a priority of the Scottish Government and forms a central element in the wider series of initiatives we have launched that will allow our citizens to live longer, healthier lives in their own homes.

Similarly we are pioneering a range of approaches to improving public health – again not only because it will lead to material improvements in the quality of life for our citizens, but also because it will curtail increases in the level of demand for public services.

And Scotland is fast becoming one of the major global centres for life sciences, bringing together industry, leading researchers, our NHS and the Scottish Government.

Our work on tackling youth unemployment - led by a dedicated Minister - also aligns closely with the objectives of the EU, as does our focus on tackling inequalities in a sustainable and long-lasting way.

I believe that Scotland therefore has a key role to play as we set out, together, to tackle these significant challenges facing all of our societies.

And I believe that developing the solutions to these challenges will provide considerable opportunities for commerce and trade.

So that, in short, is what Scotland has to offer.

A nation, renowned for our history and full of hope for the future.

A country that believes our destiny should lie in our own hands and that having the social and economic powers of independence will best equip us to achieve such success.

A country, small in size, yes, but big in ambition, outward looking in our instincts and positive about the contribution we can make to the world.

And a nation and a people that will always see the Republic of Ireland, not just as one of our closest neighbours and most important trading partners, but also as one of our best friends.
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