 Fฉrwyrd mewn cyfrifyt leaders ond y ôl yn fwyllygol. Felly, trafodaeth mawr i gyflosio'r cyffredinol fel mewni, am y cyfrifytleddol, am spincaf presiden y bwrs. Felly, perroeddiwch yn ddefnyddio'r cyfrifytledd a chyfrifytledd. Mae Fyllygol yn gwneud ei nodi gwneud ar ôl y cyfrifytledd yn hynny o'r bwrs. Felly, rydyn ni'n hefyd ar ôl yn bryder i ac yn bryder i'r bwrs am gyfrifytledd i'r cyfrifytledd. of correspondence from the finance and constitution committee. My next item of business is an evidence session on article 15 negotiations international trade. This morning, we will take evidence from the Scottish Government Minister for Trade, Investment and Innovation, Ivan McKee MSP and Ruben Aitkin, the deputy director for trade policy with the Scottish Government. Good morning and thank you for coming today. Can I invite the minister to give an opening statement? Yes, delighted to and good morning everyone and thanks for inviting me along this morning. The committee's inquiry into the negotiation of international trade agreements and the implications for Scotland is well timed. You have taken evidence from a number of experts in the field and one message is clear. If the UK is to create an independent trade policy, there is a huge amount to do. It is essential that the devolved administrations and legislatures should play a full part in the work and the voice of Scotland's commercial and trade interests must be heard. The Scottish Government understands the importance of trade to the success of our economy and that is why we are so serious about enhancing and securing Scotland's role in future trade arrangements. We published a discussion paper last year that makes the case for a guaranteed role for the Scottish Government and Parliament in all stages of the formulation, negotiation, agreement and implementation of future trade arrangements. We are continuing to press this case to ensure that Scotland's economic and social needs are protected and promoted. We are working across Government and beyond to identify what matters to the Scottish economy and, in particular, the key differences between Scotland and the UK that must be taken into account in developing and negotiating trade deals that work to the benefit of the whole of the UK. The scope of modern trade deals is increasingly increasing and now they typically deal with and merge a range of reserved and devolved policy areas. That is important implications for Scotland and it is right that the voices of our consumers, businesses and others are heard both in terms of what we want to trade and also how we want to trade. Alongside work to ensure a better way of developing future trade arrangements, we are also supporting our businesses to increase the value of Scotland's international exports. A trading nation, our plan for growing Scotland's exports, was published at the national economic forum last week and focuses on the actions that will have the greatest impact on Scotland's export performance and our economy. Thank you very much, Mr McKee. As you indicated at the beginning of your remarks, the committee has taken a considerable amount of evidence from international trade experts and experts who have experienced negotiating trade deals. What came through very strongly was the need for early preparation, gathering information and setting the red lines at a very early stage at every level of government, across government and wider sectors. Before you go into the negotiating room, you know exactly what your red lines are and what you are hoping to achieve. You mentioned your discussion paper and I think that the indication in your discussion paper was that you very much believed that the Scottish Government has to be in there early, but the UK's paper does not seem to indicate that it says that the role for the devolved administrations but it does not specify that the role should be at that early stage. I wonder if you could give us more of an indication of where you are with the UK Government on that, whether you have been told that no, you cannot be in there early stage, which is what the experts suggest needs to happen. You are right, convener. The discussion paper that we produced in August 2018 covered our view on that in quite a bit of depth. I really argued that international best practice, some examples, was that devolved administrations and parliaments should be involved, not just at the beginning of the negotiation but even at the stage where you are deciding who you are going to negotiate with. Right from that point, right through pulling together the drawing up the negotiating red lines of your life and the offensive and defensive positions, and then right through the negotiation itself, through the agreement and the ratification of the agreement at every stage. If you look, for example, at the way that the Canadian provinces have been involved in negotiations, that sets some good examples to follow. We think that that is the best way forward and it was quite a substantial piece of work. The UK Government, as you say, came back with a few paragraphs commenting on it and recognised that there is a role but they do not formalise that role or indicate how they would want to take that forward. We are continuing to talk with the UK Government and I meet my counterpart, George Hollenbury, from time to time. Behind the scenes, there is work going on on a concordat as to how that process could and should work, but progress on that is stalled at the moment. There is limited discussion and we are quite away from reaching an agreement on how that should be handled. We see it as hugely important for the future trade negotiations that will take place with third-party countries, with the EU clearly as well, but also with the roll-over deals, the continuity deals that are on-going at the moment as well, where those will perhaps have some changes in them and again we feel that we should be, as and all the other devolved administrations should be involved in that process from an early stage. On roll-over deals, we are calling them roll-over deals but, as you know, quite often they differ considerably from the deals that we already enjoy. What should be your input there? Fairly limited, other than that, we periodically get an update on where they are in terms of the process. That is not great in that sense because, as you say, I was actually in Norway at the point where they announced that they had done the roll-over deal with Norway, and it was fairly obvious straight away that the deal was not the same as the current deal that we enjoy as EU members, in that it did not include services, for example in regulation and a number of other aspects. It was flagged as our presenter has been a roll-over, but there were significant gaps, changes and omissions to what was previously or currently in place. In that sense, it is important that the devolved administration is involved, but also in terms of the prioritisation of those deals, the UK Government has gone through a prioritisation process as to which roll-over of the 40-plus roll-over deals it wants to do first. I think that nine are now in place, although some of those are different to what was in place before. However, there are others that are not UK priorities, but that are Scottish priorities because we have specific sectoral interests. Some of the North African markets, for example, where items such as seed potatoes that are important to our agriculture sector are very critical, but those are fairly low down the UK's list of priorities. In the sense of prioritisation and intent into the content, it is important that Scotland is involved and we are disappointed at the level of engagement so far. Have the UK Government point-blank refused to consider Scotland's early engagement? You say that you have not been able to reach agreement, but have they said, no, we are not going to include you at the early stage, we are not going to have you help set priorities? There will be discussions at official level, so Ruben might want to comment as well, but I think that when you talk to my counterpart, George Hollenbury, he understands that it makes sense for us to be involved and certainly makes the right noises in that regard at a very top level, but when it gets down to the detail of it, it is very stop-start. We go through periods where we get information and then it dries up and we have to push again to get more information. You get the feeling that it is more of a box-ticking exercise rather than the IT being fully engaged in understanding that it is important that we are involved, and not just from our point of view but because it allows the UK to go into those negotiations with a much stronger position because the negotiating party understands that they have got buy-in right across the piece and it is not something that is going to fall apart through the negotiations as fault lines start to appear. I do not know if there is anything you want to add to that in terms of the communications at official level. I agree wholeheartedly with that. The issues that we face is that, whilst the narrative is often quite good about wanting to involve us in practice, the engagement and the involvement, for instance, on the recent tariff announcements, which will have material impacts where it has come to pass, is next to nothing. What is the noises, as the minister said, a positive practice that we are experiencing at the moment is less than we would like. Those recent tariff announcements are taking what you are referring to, the decision to liberalise drop tariffs in certain areas in the event of a no deal. The committee was quite surprised that some of the areas that had been chosen as areas to drop tariffs were in various dairy products, which certainly affects the part of Scotland that I represent in the south. Were there any other areas where those tariffs were dropped? If you had been consulted, you would have said, no, that is bad for Scotland. I think that there are two points on that. First, I will touch on our input to that. I remember that night fairly well because I was out to dinner with a group of technology businesses and to leave the dinner to take a call at 8 o'clock at night. The call was to let me know that, in the morning, they would be publishing those tariffs, but also to let me know that the Prime Minister had just announced that in the House of Commons anyway, so it was public knowledge anyway and that they could not tell me what the tariffs were because it was market sensitive and I would find out when it was announced in the morning. That was the level of engagement in terms of the process. On the specifics, I think that we have asked for the numbers on the impact assessment, how they have arrived at those tariffs, clearly balancing the consumer interest with the producer interest and maintaining positions for future negotiations. If you give away too much at this stage, you have less in the bag for negotiation later, which puts you in a weaker place. It is a multifaceted situation, but we have been disappointed with the level of impact assessment that we have seen effectively, and the understanding of the process that they went through to arrive at the tariffs that they have. You have highlighted on the agricultural side that there are concerns there because Scotland has clearly got a different profile from the rest of the UK in terms of what is important to us. I say that we are still waiting to understand what the number crunch has done to assess the impact of that on the UK and the Scottish economy. I do not know if you want to add anything to that. Just lastly, in an ideal world, if things changed and you did get the early engagement that experts say is needed and you say is needed, what is the Scottish Government's readiness to provide the UK Government with the pertinent information on the aggregate and sectoral interests of Scotland? Do you feel that you have the information and the capacity to make a big difference at an early stage? We have set up a new directorate within the Scottish Government, which I believe is up to 70 people. That is looking at international trade and investment, so how we drive exports, but we are also very much focused on trade policy as well. It gives us capacity to do work to engage with businesses in Scotland and to do analysis on where we see the priorities. If you look at our response to the UK Government's call for consultation on the four trade deals that have started work on, which are New Zealand, Australia, the US and the Pacific Partnership, we responded with a fairly substantial document on that back in November of last year, which identified for each of those markets what the UK priorities were, what the Scottish priorities were, what the differences were and the different approaches that we would like to see with respect to those negotiations. I think that we have the capacity in place. We have shown with our response already on those first four trade deals how we would approach that, and the specifics will clearly depend on where the UK goes next with trade deal negotiations and the environment that we are working on with regard to the situation with the EU, whether we are in or out of a customs union and what the priorities are in terms of which markets we are going to look at first. We had evidence from trade negotiators a couple of weeks ago who demonstrated huge experience and expertise in that area and laid out to the committee how complicated trade negotiations are. It is not just about the preparations for gathering information on Scotland and feeding it in. It is the hard-edged business of trade negotiations. Do you feel that—I do not know whether you want to pass any views on the UK Government's capacity to deal with that? You have referred to issues around tick-boxing and lack of engagement. I am not sure if that is going to be tied to some capacity issues. That might have been too fair to the Government, but given what is going on around Brexitlers, the Scottish Government is understanding and capacity building around how trade negotiations work and what the real political story to trade negotiations is. No, you are absolutely right that there is huge complexity around them. It is about lining up your defensive position and understanding the wider context and how it will impact your economy and what cards to play at any particular point in time through that process. Clearly, the EU has been at that for a long time and it is fair to say that it has developed significant capacity to do that, as you have seen demonstrated with the negotiations with the 40 deals that are in place at the moment. The UK, by contrast, has not done any of that for 40 years. The best on the world, the lack of experience would be a challenge. That is clearly an area of concern in terms of, as part of the UK, benefiting or otherwise from deals that the UK manages to negotiate. I think that that is a concern. Within the UK environment, it is clear that the focus has been very much on preparing for the no-deal scenario. Although the UK Government has been sucked into the Brexit environment and prepared for Brexit, within the trade part of that, it has been sucked into preparing for no-deal to the exclusion of much else. The focus on the rollover deals has been on the priority rather than focusing on new trade deals. That also talks to a capacity challenge at that level. From a Scottish perspective, it is clearly the UK that would be leading the negotiations. Our part would be to flag up issues that would have concerned Scotland in advance and to ensure that those that were included in the UK is negotiating mandate. It is a different ask of what we are putting on the table. We would not lead those negotiations, although what we have argued for is for Scotland's concerns to be taken on board, as part of the putting together of the UK's initial negotiation position and for Scotland to be involved in that process as the negotiations developed. We can be one step back from the front line on that, if you like. It is a different ask, as I say. We have put the capacity in place and we will see how that moves forward. A large part of that is going to be clearly our engagement with sectoral bodies and businesses throughout Scotland to understand what is important to them as we approach each negotiation and with the Parliament as well. You mentioned a concordat being developed. You said that it was around how the process would operate and how the two Governments would co-operate on. I understand the proposal that you have put forward from the Scottish Government about early stage involvement and knowing and being involved in the process as it goes on. What we have heard from trade negotiators is that you go in with offensive and defensive, and you have red lines, but when it comes down to having to make a deal, there are trade-offs involved in that. You have indicated that the UK Government would be the negotiating team. I suppose that it is how far you think the Scottish Government should be involved in those final stages and how that process might operate. Will the concordat address those issues? Do you think that there is a role for devolved administrations at that level, or is there a recognition? The other thing that he talks about with the trade negotiators was the importance of trust between the key negotiators and how that operates within the UK's political context. It is important to recognise that it is not just Scotland, it is all the devolved administration's involvement in that process. You are right that the detail around that, as you get to the business end of the negotiation, if you like, when the trade-offs have to be made, is a crucial part. The position of Scottish Interest needs to be protected at that point. That is why we argue for involvement from the very early stages of the process right through to the final stages of the negotiation and the ratification of any agreements. When it gets to that hard-nosed part at the end or at the end of the process, it is important that our interests are represented in the herd. As I said earlier, the discussion paper identifies international practice in there. It is instructive to learn from Canada, Belgium and others, where the sub-national administrations are involved in the process. There are models out there that we can look at and learn from that work well. You are right about the trust aspect, because it is important that everybody is lined up behind the single negotiating position and understands the trade-offs and is able to have those discussions in parallel if you like. In the back room, the process is on-going. That is how you build the trust. If you are doing it in isolation and not involving the wider interests and devolved administrations, you end up in a weaker position whereby you do not have buy-in across the piece for what you are negotiating. That is more problematic. The EU, for example, was keen that the Canadian provinces were in the room and were part of the process of negotiating the trade deal with Canada. I recognise that that is the mature, grown-up way to do it. It is the way that gets the best results and builds the most trust in the process. I take on board what you are saying of great interest. That makes some very valid points that, if all the negotiators in the room are singing from the same hymn sheet that makes the negotiation much more powerful, that is a commendable approach. It is interesting that you mentioned the Canada deal. The reality of that deal is that you could argue the obverse. It took so long and suffered so many problems because of the vested interests of each constituent part of the bloc that was negotiating. It was very famously that Bolognair refused to give Belgium's authorisation to ratify the deal. I am sure that I am very pleased that the Canadian provinces did not have that issue. My question is therefore what happens in that scenario when you have a single negotiating body that is made up of constituent parts with their own rightfully so vested interests, or indeed different political views on the world. T-Tip and CETA were very controversial politically for many. What happens if you get to that stage where the members—in our case of the devolved ministrations—cannot agree a single unified position to go into that negotiating room, that puts us in a very sticky position? As you say, I think that it is how you approach that and the intent that is there. Certainly the intent is if we are in that position, we are outside the EU and hopefully we won't be, but if we do end up in that position, where we are having to negotiate those trade deals, then the intent would be that you have to get the best deal for the whole of the UK, and Scottish interests need to be protected in that. There are clearly going to be areas of disagreement and areas of different priorities, and those just need to be worked through, and that is part of the negotiating process. The EU does it. They have 27 countries that they bring to the table, but they have a very well-developed process, and the range of different objectives there could be very wide clearly, given the range of different countries that are involved in that. However, they have a very mature process where they go through and identify what the negotiating stances are, and that is all published so that everybody can see what it is, and then they move forward from there. The fact that you have lots of parties involved can actually give you strength. It would probably be true to say that if you look at the EU negotiations on Brexit, it is the EU that has had the most stable and clear positions, despite the fact that they have brought 27 parties together at the table. It is the UK that has been the party, despite the fact that it has only been Westminster that has not had clarity on what they are looking for. Just because you have lots of parties, that does not mean that you are going to have a more confused position. It has been demonstrated that it can often be quite the opposite. Thank you for that. It is very helpful. I think that in an ideal world that is the case, and I think that you are right that you have hit the nail in the head, is that if there is an established protocol by which a dispute resolution within a negotiating bloc can be achieved, that is very helpful. However, this comes up time after time. Italy is another great example of sticking its boot in when it feels appropriate. However, again, these are things that are altered by the political shifts in their own domestic landscapes. The five-star movement, for example, has a strategy in that respect. They have tried to put their bloc on the Australia trade deal, for example. Even within the EU, those things still can and do happen. Can I ask a separate question? That is around the nature of, for your own views, on the nature of these types of bilateral deals. A year after CETA was introduced, we have had the opportunity to analyse the success or otherwise of it. What we are actually saying is that imports from the EU into Canada are massively on the increase, but exports from Canada into the EU are not. Many Canadian businesses, for example, are suffering with the flooding of their country with zero tar of goods, and that is a concern to their domestic markets. How do you think that would affect us here as we start to do these bilateral deals? How do we protect Scottish interests thereof? I am not aware of that evidence that you are talking about, but that is interesting. If that is the case, that would, on the surface point, to the EU having negotiated a better deal. It talks to the importance of having a clear and well-understood negotiating position and the strength of that in the buy-in across all parties for what you are trying to achieve. It talks to the difficulty going back to the issue before the fact that the UK has not done this for 40 years. It is not as easy as some would make you believe that you use rock-up and do a bit of negotiation and sign a deal and everything is great. You need to really understand very clearly the implications of what is happening and understand what the risks and opportunities are and how best to leverage those through the negotiation. It is a process that takes a long time because of the complexity of it, and it is a process where, as I said, you really need to understand very well what the implications are on your consumers and on your businesses. My question, however, to be just to zoom in a little bit into Scotland, is that clearly different parts of the UK will have different markets and strengths. There will be a seafood industry that is stronger in one region than in another, but indeed there may be a shared interest, so if you look at Whitby, Cornwall and Aberdeenshire, you may have a shared and common goal to negotiate certain positions. The day-air industry is stronger in some areas, but not in others, for example. How would you approach that if you were in that room around that table, balancing the needs of protecting what you think are Scotland's trading interests with being cognisant and respectful of the interests of other devolved parts of the UK? At that level, it is understanding clearly what our interests are, and you have highlighted some of them there. As I said, we have put the capacity in place in the Scottish Government so that we understand that better and are able to articulate that better, and then it is having those discussions around about where the upsides and downsides are and putting forward the arguments and the evidence that highlights why certain parts of the UK suffer or benefit based on what we are going to do. Clearly, it depends on who you are negotiating with on the other side and what their asks are likely to be because, depending on who it is, they are going to have different priorities themselves and understand how best to play that. However, I think that taking on board the expertise and understanding that the Scottish Government would have an engagement with sectors in Scotland has to bring value and strength to a UK negotiating position. Stuart McMillan Thank you, convener. Good morning, minister. Just a couple of questions. Towards the end of the process, when treaties are going to be concluded, what type of activity would the Scottish Government actually be looking for to monitor the impact of any trade deals that would be undertaken? First, I want to say that this is new to us all. It is the specifics of how that looks. The process is new, and the discussions with the UK Government as to how exactly that is going to work, as we have discussed, are new. However, at that stage, as you are moving through the whole process, from the very beginning, you need to understand the strengths of your own sector and where the risks and opportunities are and do some analysis on that. That is something that we are putting in capacity to do, so that as you get through that process, you are able to present the data and say that this is how that impact is going to affect Scottish producers and the risks that are there in any given scenario. As I said, it is about having that information, having that data, that analysis, that impact assessment to hand, so that you can do that, compare notes with what the data that the UK Government might have on various sectors, so that we reach something that allows us to have the strongest negotiating position. I mean, on that, have you had any discussions with the UK Government on that type of activity thus far, or is that something that you would approach closer to that time? I think that the more we are keen to talk on all of this, as much as we can, and the discussion paper talks to all stages of the process, so the issue, as I have said, is, if you like, bringing the UK Government to the table to talk to us about pulling together the Concordat and understanding at each stage of that process what that engagement looks like and the mechanism by ourselves and the Parliament, because the UK Parliament has a role in that as well, which is in our view needing to be enhanced, and the Scottish Parliament and other devolved administrations, how that engagement takes place. In terms of that aspect of the engagement with the Scottish Parliament, we will have some of the discussions around the secondary legislation in the Delegated Personal Law Reform Committee. We had a session about that on Tuesday, but in terms of trade negotiations, what is the process going to be between the Scottish Government and the Scottish Parliament in terms of informing the Parliament and keeping the Parliament fully up to date in terms of how the trade negotiations are developing? Well, our approach to that is very much that we would want to engage, involve, consult as much as possible because we think that that brings strength to the process. The Government is very happy to provide information to committees and to the Parliament and appear in front of committees and talk through and give regular updates. I think that the only caveat on that would be that there may be scenarios at various stages where there is confidential information that the UK Government might not want to be shared more widely and publicly, but outside of that, we are very keen to engage with the Parliament and with wider sexual interests across Scotland. It is very keen then to attend committees and relevant committees where possible, and notwithstanding the fact that there may be occasions where it may have to be a private meeting that is going to be up to a public session. With those good strengths, I am always delighted to appear in front of your committee. That is a quick supplementary. I asked the First Minister about this when she came before the Parliament's convener's group yesterday. She said that she envisaged a very formal role for the Scottish Parliament in scrutiny of trade negotiations. You will know that the Trade Committee of the European Parliament has a very formal role. Are you able to expand on what that formal role would look like? I do not have any more specifics on that. Sorry, I do not know if you are concerned. Beyond what we set out in the discussion paper for saying that we want to make this as transparent a process as possible, because we believe that that is a better way to get more societal engagement and better outcomes for Scottish consumers and producers, but we would be keen to hear any recommendations for the sort of engagement that would be most effective from parliamentarians and committees. I am sure that the committee would be very happy to do that at the end of our inquiry. Sorry, Mr McMillan, but I did not realise that you were not finished. I have a brief question. You mentioned earlier that the Minister used the words trust issues, intent and the EU having a mature process, among other comments. You also highlighted that the Concordat is currently being developed. Do you see that the trust, intent and mature process being undertaken from the UK Government towards the Scottish Government and the other devolved administrations? I think that it would be fair to say that we certainly think that it could be much better in those regards than it has been to date. I think that that is probably a combination of the capacities that we talked about before at the UK Government's end, the lack of experience of having trade negotiations, but also, frankly, the fact that the Westminster system is set up to, by and large, be focused on what the UK Government's priorities are without taking into account necessarily why there are concerns, be that from devolved administrations or indeed from the UK Parliament. We have already touched this morning about the need to enhance and protect the trade that we have. We are well aware, and you are too, that Scotland has world-leading goods and services, and that our status in that requires to be secured. When the Scottish Government is looking at ways of selecting trade partners for future negotiations, what stage are you at and which countries are you considering or looking at to enhance that ability to ensure that we can protect and enhance those goods and services? If only it was up to us to make those decisions, but I am afraid that it is not yet. Clearly, there is a number of different scenarios playing there. I have mentioned the rollover agreements and the prioritisation within that, and we have clearly articulated to the UK Government where we have specific sexual interests. I mentioned some of the North African countries, where we have agriculture requirements, etc. So, there are specifics and, with regard to the potential new trade deals that the UK Government has identified, New Zealand, Australia, the US and the trans-specific. We have commented on those at length because we see what we are not sure that New Zealand is very small. The trans-specific has not yet been established, so you are coming in at a very early and embryonic stage. With the US, while it is our largest market, the opportunities and the challenges around a trade deal with the US are many for various reasons. We have commented on the prioritisation with regard to those. Clearly, the European Union is our biggest trade partner by far. As I have indicated already, the Scottish Government's position is that we should stay in the EU, or, as a minimum, we should stay in the customs union and the single market, whereby we would not be needing to go through this whole trade negotiation process anyway. If neither of those come to pass, we would be negotiating a trade deal with the EU. To our mind, that is the priority. We have done our export plan analysis of the top 15 countries, and almost all of them are in the EU. We see that as the clear priority for Scotland's interests and the UK's interests for securing a trade deal going forward. You have identified that there are a number of countries across the EU that you would prioritise and ensure that that negotiation and trade was going back and forward. We are with the negotiations at present. None of us wants to be in this stage because we want to ensure that business and commerce is given that stability, that they know what is happening for their continuity, and that many have gone into ensuring that they have some kind of contingency plans in place. However, as we continue the process, what do the Scottish Government see as their role in ensuring that continuity, that continuation and that stability, is still there? If you are talking about stability through the Brexit process, I think that the UK Government's way of handling that is usually problematic. I hear from businesses almost on a daily basis across a whole range of sectors about the challenges that that causes for them. The position that we are in is hard to imagine. It could get worse, but it probably has, because we are now in a position where we do not even know what we do not know, because nobody knows what is going to happen when or not. If you are trying to run a business in that environment, it is hugely complex, very costly and very problematic. Given the chaos of the Brexit situation, from our point of view, it is about supporting businesses to be able to deal with those challenges and trying as best that they can anticipate what may or may not happen. In terms of the trade deals that we are talking about to move forward on the rollover, which has got quite a long ways to go yet, there are only nine of those agreements that have been put in place, and many of those are only partially out of the four yards that exist, so that process needs to be moved forward with pace. The negotiations that we are having at present about the tariffs and the supplies that are taking place, has the Scottish Government itself considered dropping any tariffs that would have an impact on or the process for the businesses that we are looking forward to support? Again, it is not up to us to drop tariffs, but what role has the Scottish Government got in that process? As I said, none. The UK Government has decided what it is going to do in consultants or informers, and they just pushed ahead with what they did. Perspective on that is that the amount of analysis and impact assessment that they have done on that has been minimal at best, so it is a concern for us. There are risks that it could, in certain sectors, open up our producers to some challenges. In terms of new trade negotiations going forward, we have put us in a position where we have got less negotiating capital to deploy through those processes. I do not know if you want to comment any more on that. I wonder whether the minister would be prepared to concede that we talk up trade deals, but they have the limitations. Bombardier has just announced the closure of the operation in Northern Ireland, no matter the Canada-U trade deal. Would you accept that, for business, those are trade deals that are important? Yes, but they are not the B on end of the bottom line of any business. No, absolutely. Businesses will trade with businesses in the most difficult and complex of environments, because that is what they do. It is an important point at the end of the day that businesses that trade and export and they will continue to do so. The job of Government, in our view, is to make that process as easy and supportive as possible. The export plan that we released last week talks about the Brexit scenario and the trade deal scenario, but only briefly in the context, because it recognises that first-legs business is the export. There is a huge amount of work that the Government can do, notwithstanding any trade deals that are in place to support businesses, to export by providing information, advice, support connections, networks and focus across a range of opportunities. It is very clear that what you are saying is exactly right. The trade deals can help to create an environment where trading can be made easier or more difficult if you get it wrong. There is only one kind of layer in that whole process. Do you think that it is important as to whether a business operating out of Scotland is foreign-owned or domestically-owned? The two obvious examples of food and drink are both the whisky industry and the salmon farm industry, which are predominantly foreign-owned, but they are very much part of our Scotland's food export business. Does it matter? I think that it very much depends on a case-by-case basis. We have all seen examples of both. I worked and lived through Silicon Glen, which was problematic because so much of that was satellite plants of foreign-owned corporations that, for various reasons, moved those elsewhere. I also regularly meet businesses that were Scottish-owned and, for various reasons, are now part of larger groups. I met one only earlier this week in Glasgow, and the fact that they are now plugged into international businesses that have a wider perspective, access to more markets, technology and investment, has allowed those businesses to go from strength to strength. A business that I saw in Glasgow is trebled in size since it was taken over by a foreign group. It really depends on the intent of who the owners are and what they bring to the party, if you like. Foreign direct investment is something that we push within the Scottish Government and our agencies because we see that it brings great value to the Scottish economy. A big part of what we can do is to ensure that we have deep roots so that the businesses that are there for incorporation may want to acquire the technology that links to academic institutions. The skills and talents of the people or, perhaps, the natural resources that are inherent to that product or process. Having those deep roots means that businesses that, regardless of their ownership, are going to stay in Scotland. Just related to your point about your agencies, do I gather from your published documents that you have plans for or are thinking of plans for Scottish Development International in the context of what you have discussed this morning? Could you lay those out for the committee? As we have talked about, the role of SDI is not largely going to be on the trade policy side. It is going to continue on supporting businesses in all the ways that are outlined and the ways that are in the plan. We have obviously doubled the SDI resource in Europe over the past three years, and we have plans to continue to add, particularly in-market specialists in key-target markets in our key-target sectors, to give us more depth and connections. At the end of the day, what businesses want to see is that they want to have opportunities highlighted to them and that they want to understand the market so that they are going to get a bit better and have connections in networks that they can rely on. Those are, I think, areas that the SDI has focused on. The trade policy aspect of that is much more within Ruben's team and the Scottish Government directorate. Okay, thank you for that. Last question, if I may, convener, is actually something that Tony Mackay's briefing paper that I know was sent to your office, which I thought was a courtesy thing to do, to give you a fair chance of that one too. I thought the point that you made that was interesting was the import substitution point. Do you want to just comment on that? It was an observation that I had not thought about in the context of FACTS figures data that would support either his contention with not doing enough or disprove that contention. What is your take? I am surprised that he did not find that. If he had done a fine and looked for imports, he would have found that, in section 7, import substitution is mentioned. We mentioned import substitution in the context of identifying that as outside the scope because clearly you have to draw a bolcher on what you are going to focus on. To get the depth of analysis that we have done, we focus very much on driving exports, but we do recognise that import substitution is an issue. It is highlighted in section 8 as something that we would look to follow up on, both in the context of the wider aspects of import substitution but also in terms of what you might call the quality of exports. What I mean by that is that there are exports where a large part of the value added is within Scotland, and those clearly add more to the economy than exports where a large part of what they are doing is adding something small to it than exporting it again. We understand that and we have flagged up that through the next phase of the export plan we are going to be doing some more deep dives in sub-sectors where we are going to understand the value proposition there. One of the other points that was raised in Mr Mackay's commentary was round about the trade deficit. That is covered also in the export plan and, contrary to what he asserted, the data is clear to Scotland and does and consistently run a trade surplus in contrast to the rest of the UK that has not done so for quite some considerable time now. In that sense, Scotland is better placed than the rest of the UK. Surplus with who? International trade. Scotland's international exports are higher than our international exports. That would be fundamentally whisky and salmon farming? It is a whole range of things. The clear oil and gas services, the oil and gas itself are part of that. Different technologies are quite a range. Advanced manufacturing is quite a range of things. Thank you very much. Thank you very much. Hannah Bill Ewing. Thank you, convener. Good morning, minister. Thank you for coming to see us. We have had a very interesting discussion, just picking up on a few points at this stage. Tabish Scott mentioned the importance of the salmon industry. In my constituency of Cowton Beath, Rhesythe has mowy with some 600 jobs in salmon processing, so it is something that I am very well aware of. In that regard, the point that you made, minister, about the role of government that, in terms of business, will trade with business, but what they look to for governments to do is not to facilitate the imposition of additional burdens, surely. I am sure that everybody is watching very carefully in Rhesythe and elsewhere about that, but picking up on some threads earlier, we got a copy of the excellent Scotland's role in the development of future UK trade arrangements report in our committee papers this morning. I see that it is dated August 2018. I have been hearing what you have been saying about discussions sort of on going on a stop-start basis, but I am very surprised. Is there any formal response to this paper from the UK Government? That is some eight months ago. No, there is nothing formal response to the paper, but there were some, as I said, paragraphs in the UK Government's paper that came out in the last few weeks that mentions devolved administrations and how they see their role. I do not know if you want to comment any more on that, Ruben. As a formal response to the discussion paper, minister is absolutely right that that has not been in the February 2019 command paper process for making free trade agreements after the UK has left the EU. There are, I think, about six paragraphs relating to devolved administrations involvement, with a lot pointing to future work that still needs to happen. That relates to, as the minister was pointing out, the Concordat and, hopefully, formalising a role for devolved administrations, legislatures and others, the wider industry interests to be involved in the nitty gritty of developing good trade mandates and being involved in the negotiation pathway as well. That is helpful. Thank you for that further clarification. Obviously, in the relevant sections on process issues in the Scottish Government's paper, there are very detailed proposals put forward about a workable arrangement, and it is very disappointing. It seems that the UK's response to that has been six paragraphs, not really probably addressing the detail because it is the detail that we need to sort out. In terms of the timing of the Concordat, it is still the case, sadly, that we could see a no-deal scenario at the drop of a hat because we have no idea what has gone on at Westminster. What is the timing of the Concordat? It could be that we, and it is not something that I want to see and I know that the minister does not, but we could see this having to kick off quite soon. What is the UK Government's intention timing-wise? It is very disappointing that the UK Government has not seen fit to move forward with getting the Concordat in place and discussing that with us. We are disappointed in that. We have clearly been through, I have lost count, two cliff edges, narrowly averted so far. Who knows, as you say, what is round the corner. That could be a significant issue, depending on how things play out or not over the coming period. We are disappointed, but we would like to have seen further progress, and we urge the UK Government to move forward and engage more seriously with us on those matters. Turning to another issue that has been raised, an important issue of respect, and I was very appalled really to hear, although perhaps not surprised to hear the minister say at the outset of remarks in terms of the tariffs, the sort of free-for-all tariffs that were set for many sectors, that the First Minister knew of. It was after the Prime Minister had announced it. I do not think that shows very much respect, no notification, no prior discussion, I do not see any respect in that. At the end of the day, there are great proposals for the Scottish Government, practical proposals, say that some concordat is bashed out along some of the lines of that, but I suspect that it will not take on board much of what has been suggested. How can we seek to ensure, in the current constitutional setup, that Scotland's interests can be protected in subsequent trade negotiations? How can we ensure that they are not simply traded away or indeed ignored by the UK Government, given the situation that we are currently operating? Does the minister have any thoughts on that? I think that you are absolutely right round about the risk of the Scottish sexual interests being potentially traded away when you get into the heat of battle, if you like, towards the end of an international trade negotiation. Fisheries is an obvious one that springs to mind, where you could see that scenario evolving and many other sectors potentially as well. It goes back to what we talked about earlier, building up that trust, so that the different parties on the UK side are comfortable and familiar with where things are going and how they are developing is hugely important. That process clearly takes time, and the sooner we start on that, the better, and getting in place the building blocks, for example. The concordat is therefore doubly important, not just because it lays down the process, but also because it builds the communication channels and the trust to a deeper level that is important for the whole of the UK, including Scotland's interests in any future trade negotiation. I argue that a simple way to ensure that our interests are always protected first and foremost in trade negotiations is to negotiate ourselves. Thank you very much, Kenneth Gibson. You will not be surprised to know that I support what my colleague Annabelle Ewing has just said, but it seems that, from what we have heard today, it is a question of whether Westminster knows best, although we know that it does not, and Scotland is looking outside. Is that a fair assessment of where we are with those negotiations? I think that that would be a fair assessment. From my mind, I have spoken to a number of businesses in my constituency over the years who are doing okay but could do better. One of the ways that they could do better is if they entered the export market. I am talking about not particularly small companies here, I am talking about fairly large companies with a significant number of employees who are doing well within the UK, but they are fairly deterred from exporting. There have been in recent years, perhaps for a number of reasons, but how likely is it that the discussions that we are having now are going to encourage people to export or will have the opposite effect and prevent companies from growing and exporting? That backdrop and that messaging is important. If businesses see barriers going up and they see uncertainty and lack of clarity and trade negotiation processes that could go on for years, then clearly—I mean, notwithstanding the conversation with Tavish Scott earlier about that isn't trade deals aren't they being able to end all, but clearly it does send a message and a backdrop and an environment that makes it less likely rather than more likely that those businesses would export. On another point, it is interesting that you talk about those kinds of businesses. If you look at the export plan, those businesses are what I would call our kind of tier three. They are businesses that are big enough to export but haven't done so yet, and we see that layer as being hugely important in our efforts to drive up Scottish exports. I would be interested if, as any potential businesses, they would like me to come and meet these constituents to understand better from them how they see the challenges and what government can do to help them. I certainly would be more than happy to do that, something that you want in mind. Touching on a sector that has already been mentioned, which is salmon in paragraph 36 of your discussion document, you say that in 2017, 92,000 tonnes of fresh or lantic salmon worth £600 million were exported from the UK, which 99 per cent of Scottish represent a 35 per cent interest in value and 26 per cent increase in volume over the year. Clearly, we will get some vibrant sectors arguing quite significantly. I should say that I have a constituency interest. W and J Knox in Colburni, which was found in 1778 and employs 130 people who are actually backs on to my house. Despite it being in Colburni, it cleans all the salmon nets for all the fish farms across Scotland. There are a number of areas where people do not automatically think of employment being in some of these sectors. How will our international competitiveness be affected in such areas, such as salmon, for example, if sectors such as those are not prioritised the way they should be? If it is 99 per cent Scottish and 1 per cent rest of the UK, it may not be given the same priority. I think that that is absolutely true, and I think that that sector, that whole aquaculture sector, is interesting. We talked earlier, Annabelle Ewing talked about Maui and the constituency, and clearly they do the farming on the west coast and further north, but they do have the large facility in Recith, and I met them when I was in Oslo a couple of months ago, along with other investors in aquaculture in Scotland. When you look at where Norway is in this sector and what they have done with it and where Scotland is, it is an area that we have identified as having the potential to add significant numbers on to our export statistics and something that we focus very much on. However, the risk that there is is correctly identified of the uncertain times that are in where trade negotiations may go puts a lot of that growth potential at risk, which is very unfortunate because, as you rightly identify it, it is something that is not just in the areas that you would expect it. Scotland does have, I am told by the Norwegians, the best waters in the world for salmon farms because of the temperature that we have, and Shetland in particular is identifying as the best of the best. We do have huge potential there, but we do not just know those areas as you identify that there are businesses in the supply chain right across Scotland. In convenience, one of the areas that I can touch on is export markets. You talked about the importance of the EU and we know that it is 43 per cent of exports, but the USA is 16.1 per cent, so as a country it is the largest export market. I am interested in what the Scottish Government is looking to do to see whether we can continue to grow that. Again, we know that there are issues that I will not touch on, the kind of cliches that we hear in the media all the time, specific types of poultry. What is the Scottish Government doing to preserve its links with that specific market, given the scale of it? It is number one in our current exports and we see huge growth potential there. It is an interesting one because a lot of that comes back to the point that I mentioned earlier. Businesses will trade in the current trading environment and the trade deal may add some value in some aspects, but it is not to be able to end all in terms of businesses continuing to trade and grow. It is very much a focus for SDI. It is very much a focus for myself. I will be visiting the US market later this year to see first hand what we are doing there and what we can do to continue to focus and grow in that market. SDI has a presence across a number of states in the US that are focused on different sectors, such as oil and gas in Houston, technology in Boston or Silicon Valley. Across a whole range of other states in the US, but we see great opportunity there and we are keen on continuing to build those links to increase exports. What is interesting is that the United States and our second biggest export market in the Netherlands are traditionally the two biggest inward investment partners that we have. How is this scenario affecting inward investment? Over the recent years, Ernest and Young have produced annual figures that show that outside London and the southeast Scotland has attracted the third biggest of the 12 UK regions and nations in terms of inward investment jobs, new companies, etc. How is the current scenario affecting that? It is not helpful, because businesses look at that and they have to make some decisions on where to make their investments internationally and the uncertainty around about breaks. It is at the whole of the UK, which I think it is, if I am not mistaken, the data showing that there has been an impact there and that impact Scotland. The impact on the whole UK environment and Scotland's position within that is that we work very hard as you rightly identify to be at the top of that tree. We have done well there and we continue to push that on R&D investment. We are right at the top of that tree, ahead of any other part of the UK in the past year. That is a great success, but the Brexit environment is making that difficult, because that uncertainty is hard for businesses to factor in to their investment decisions. Just very briefly, it is falling on from Kenneth Gibson's line of questioning. Given that the First Minister has stated in recent days and weeks that every Government minister and director will be reviewing their policies in light of the declared emergency and climate change, in terms of your portfolio, do you think that that will alter the amount of resource or, indeed, work that goes into your department's work in the energy sector, specifically in carbon energy? You mentioned your office in Houston supporting the oil and gas sector. Is there any potential that you may reduce, indeed, any of this activity in light of recent movements? The key issue is about the transition. The renewable sector is aware of the technology that Scotland is world-leading. That is recognised. I see that when I visit international markets, the high esteem that the Scottish renewables sector has held in and the technology that we have in place and are rapidly developing. I think that it is about how rapidly we manage that transition and we have tremendous scope there. Clearly, the stats in terms of how much renewable energy will generate in Scotland continue to outpace all the estimates in the forecasts. However, when I was, again, met with Equinor in Oslo recently and they have chosen Scotland to invest in the world's first commercial offshore floating wind farm, which is a real step change in the technology, and right across all the renewable opportunities Scotland has well placed. In the innovation space that I am responsible for and in the trade space that I am responsible for, the more that we can do to generate innovation in the renewable sector to accelerate that transition is the biggest single contribution that my department can make. If a traditional carbon energy company approached you or any of your agencies for assistance, you would say no thanks. We are focusing on the environmentally friendly energy at the moment. There are processes in place at the moment in long-standing arrangement with businesses in and across all sectors that we continue to support. The point that I made is about the transition. It is not a cliff-edge, but it is accelerating that transition so that the renewable technologies are moved even further ahead than they already are. I mentioned Equinor, but the businesses that are in that sector understand very well that that transition is hugely important. I was at the oil and gas technology centre a few weeks back in Aberdeen, and despite its name, a huge amount of what it does is also renewables-focused, and that has continued to increase. The sector understands that and we understand that. As I said, it is all about driving the innovation, wind, hydrogen and adoption of electric vehicles and so on, heat solutions and so on, to accelerate that trend. It might be too early to say or it might be decisions that will be kept behind closed doors, but I think that we have an understanding of where Scotland might see opportunities, whether that's in specific market access or access to services or procurement, so we can see where the positives are. Alongside that, there would be an expectation of compromises and what we are prepared to trade off in exchange for those benefits. Mr Mac Gibson mentioned American Chicken, so listening to regulatory standards as one area could be about tariff spikes on certain products. Are you able to say where you think Scotland might be looking to what we would offer in exchange for some of the things that we are looking for? I think that it's a very valid point, and I'm glad you raised it, because it's something that we haven't really touched on. We've tended to focus on the impact on producers and consumers, but the regulatory aspects, be it that environment, be it workers' rights, be it food standards, animal welfare, et cetera, there's a whole range of other aspects that are hugely important in the Scottish context. Many of them are devolved and really talk to the points that we make that trade deals these days are complex and not just about selling widgets back and forward. They're much wider impacts than that and many of those impact on devolved aspects, which is why it's so important that the Scottish Government and all the devolved Administrations are involved in that process right through the trade negotiations. Access to our health service is something that's been talked about as well. All those are the Scottish Government's position that we would want to maintain the standards that we have. We would be very clearly opposed to anything that, for example, opened up or NHS or any other aspect of our public sector to unwanted inputs from businesses that might want to seek to privatise or otherwise challenge some of those services. That's something that we're very strong on and that's something that we would be putting on the table as part of trade negotiations, depending on how the unfolder is going forward. It could be suggested that that's quite a protectionist approach. If we're looking at trade deals with the US, who are seen as quite an aggressive negotiator, do you think it is possible for Scotland and the UK to get deals? It might not be the morning to talk about where we would make concessions, but there is a trade-off involved in making those deals. Do you think that the UK is in a position that they understand the rules of the game when it comes to international trade? Talking back to the fact that there's a lack of experience in those trade negotiations, clearly that's potentially a challenge. Referring back to the comments that were made about the Canada EU deal, not all trade deals necessarily are good trade deals. If you negotiate a bad trade deal, you end up in a worse place than where you started. It's very important to understand what it is that you're going to gain and what it is that you're potentially going to lose as part of that process and go into that with your eyes open. The deal on end isn't to negotiate trade deals if they're trade deals that don't help you to deliver what you're trying to achieve, be that for your economy or for your wider societal interests. I think that it's all about what happens in negotiation. Therefore, it's very important for Scottish interests where we perhaps have a different perspective on some of those aspects and the rest of the UK might have that they are to the fore in terms of our input to any UK negotiating position in any of those deals. Thank you very much. You mentioned the NHS, which is interesting because when we were taking evidence from international trade experts a few weeks back, and we were talking about the importance of, as we talked about earlier, setting your red lines, your negotiating position at a very early stage, I pointed out to them that the Scottish NHS was independent of the UK NHS and there had been concerns publicly aired that the Scottish NHS could be opened up to more marketisation as a result of international trade agreements. Those international experts said that it was actually possible to specify at the very beginning before the negotiations began that the Scottish NHS should be treated separately because it wasn't marketised in the same way as the English NHS. Is that something that the Scottish Government is aware of and are you looking into the possibility of doing that? I'm thinking particularly in the context of American trade deal. Yes, and absolutely. Okay. Are you able to give us any more detail? Of course, we're aware of it. It's something that I'm glad we got the opportunity to raise here this morning. It's something that is very much to the fore of our thinking if and when we get to the stage of making our inputs to any UK trade negotiations. Okay, thank you very much. The committee is also aware that the issues of state aid and geographical indicators are on-going areas of disagreement between the Scottish and the UK Governments. The UK Government believes that they are reserved, although it's not specified as reserved in the Scotland act. What do you consider to be the implications of that position for the devolution settlement? I'll let Ruben talk to this in a minute as well because it gets a bit more technical, but on state aid initially, the issue there isn't necessarily that state aid would become freed up when you could do what you like, because if you're going to trade negotiation with partners in the EU—the obvious one but others as well—then the level playing field concept applies. If we were having a trade deal with somebody and our intent was that we would subsidise business to then go and export to them, they would feel that that would be unfair and would be part of the trade deal negotiation. I think that it's fair to say, and Ruben will correct me if I'm wrong, but I think that the UK Government has stated that state aid rules would broadly stay the same as that at the moment. It's one of those areas where there is a disagreement about the wording of the devolution act and exactly where the responsibility lies, but I don't think that the immediate term would necessarily lead to any different approaches. Geographic indications are a bit more complex, but I'll let Ruben talk to both of us. I agree with what the minister said out there. The important thing here for us is that it shows the close alignment perhaps between Scotland and the EU. The state aid principles and the geographical indicators are very important to the EU and its way of doing business, its trade and its internal market. The Scottish Government position is aligned with seeing the importance of both of those. Without wanting to perhaps segue into a long debate around the devolved aspects of the devolution act and whether geographical indicators and state aid are devolved or reserved, the important bit is that they are very important to Scotland in terms of our trading relationship with the world and that our alignment with the EU's position on seeing the state aid principles as a sensible approach. Seeing geographical indicators as an important part of preserving and protecting Scottish brands and Europe, the EU sees its important part of protecting EU brands. There's a strong sense of alignment there. Okay, thank you very much. We've had a very wide-ranging discussion today, so thank you very much for that. We're slightly ahead of time, but we're able to move into private session. Thank you very much for coming to give evidence to us today.