Professor Steve Peers

Scottish First Minister Nicola Sturgeon recently revealed the Scottish Government’s desire to pursue a second independence referendum. This announcement follows the UK government’s dismissal of Scotland’s proposed Brexit alternatives. The timing of this potential referendum, contingent on the UK’s final Brexit arrangements, brings Scotland’s EU membership into focus. While a second referendum would encompass issues beyond EU relations, this analysis will primarily address the legal complexities surrounding Scotland’s potential EU membership, particularly the misconception of budget deficits as a barrier to entry.

Scotland as an independent non-EU country

An independent Scotland might not immediately become an EU Member State. Instead, it could initially establish an association agreement, potentially leading to full membership later or serving as a long-term arrangement if political obstacles arise. This association could be stronger than the remaining UK’s post-Brexit relationship with the EU, particularly given the UK’s intention to leave the single market and customs union.

Joining the European Economic Area (EEA) presents a viable option for Scotland. Similar to Norway, Iceland, and Liechtenstein, EEA membership grants access to the EU single market, relevant legislation, and most EU employment and environmental laws. However, it excludes agriculture, fisheries, taxation, justice, and home affairs, although separate agreements with the EU on these matters are possible. Notably, while current EEA countries participate in the Schengen Area, this is separate from EEA membership and not legally binding.

EEA membership offers distinct advantages. It avoids obligations related to the EU single currency and deficit criteria, Schengen, and EU trade policies with non-EU countries, allowing Scotland to retain a closer relationship with the remaining UK than the UK might have with the EU. Scotland could also independently pursue global trade agreements, similar to other European Free Trade Area (EFTA) members.

Concerns regarding single market participation, ECJ jurisdiction, financial contributions, Scotland’s size relative to other EEA members, and limited influence over applicable EU laws are less relevant in the Scottish context. These are non-issues considering Scotland’s vote to remain in the EU. Regarding size, Scotland is comparable to Norway. Furthermore, EEA states have more influence over EU laws than Scotland would have as part of a post-Brexit UK.

The EEA option aligns with Scotland’s desire for single market access while circumventing potential obstacles. Moreover, it offers a potentially faster path than full EU membership. Notably, the EU can provisionally apply treaties with non-EU countries pending national ratification. The recent EU association agreement with Kosovo, despite some Member States not recognizing its independence, suggests that a “Spanish veto” over Scotland’s EEA membership is unlikely.

Alternatively, Scotland could pursue closer relations with the EU than the remaining UK through EFTA membership, similar to Switzerland. This approach would still grant freedom in maintaining close economic ties with the remaining UK, unless Scotland follows Turkey’s model and joins the EU customs union.

Scotland as an EU Member State

Achieving EU membership would require either an accession treaty or a treaty amendment to include Scotland. While a treaty amendment directly replacing “United Kingdom” with “Scotland” throughout the treaties is legally viable, the EU currently favors an accession process under Article 49. This entails negotiations potentially expedited due to Scotland’s existing de facto EU membership. The EU’s approach to Iceland’s application in 2010, where EEA membership expedited the process, offers a relevant example.

Concerns about a potential Spanish veto due to fears of encouraging separatism appear overstated. The EU’s existing relationship with Kosovo, despite not all Member States recognizing its independence, suggests otherwise. While the EU might defer discussions until Scotland achieves full independence, this is not guaranteed.

If the EU is unwilling to extend the UK’s current opt-outs to Scotland, full participation in the single currency and justice and home affairs policies would be expected, along with the loss of the UK’s budget rebate share.

The budget rebate, determined through secondary EU legislation, is subject to periodic review and requires unanimous agreement. Scotland could leverage its position in future negotiations to secure a favorable arrangement.

Regarding justice and home affairs, a distinction between general EU policies and those related to Schengen is crucial. The existing protocol guaranteeing the ‘Common Travel Area’ between the UK and Ireland post-Brexit could potentially apply to Scotland’s border with England. This suggests a legal basis for protecting the common travel area, relevant to both Ireland’s concerns regarding the Northern Ireland border and Scotland’s potential accession talks.

Scotland’s participation in most civil and criminal law EU measures would not change significantly. Moreover, Scotland would not be obligated to participate in the planned European Public Prosecutor, as this falls under ’enhanced cooperation,’ allowing individual Member States to opt out.

Finally, the single currency and deficit criteria require clarification. Although new members are typically obligated to adopt the euro, the EU does not actively enforce this. Several countries, like Sweden and those joining in 2004, have remained outside the eurozone.

The 3% deficit-to-GDP ratio is a requirement for joining the single currency, not the EU itself. This is evident from the accession of countries with higher deficits. While managing a large deficit is crucial, claiming that Scotland needs a sub-3% deficit to join the EU is inaccurate.

Photo credit: Daily Record

Barnard & Peers: chapter 27

*amended to correct “debts” to “deficits”, 10 May 2021