Speech by Simon Fraser, Permanent Under Secretary at the Foreign and Commonwealth Office, at the Aberdeen and Grampian Chamber of Commerce, 24 June:
Economics is at the heart of foreign policy. You cannot understand the world if you do not understand the economic forces at play.
Promoting the commercial, business, trade and investment interests of the UK is also part of our core business.
The Chancellor’s challenge to double exports to £1trillion by 2020 is a central strand of the Government’s drive to rebalance the economy and deliver sustainable growth. The FCO in partnership with UKTI and BIS, has a critical role to play in support of this ambitious target.
Over the past three years we have put commercial and economic diplomacy at the heart of the FCO. We created a new Prosperity Directorate which was directly accountable for commercial and economic issues, establishing a new Economics unit to ensure economic thinking was central to all policy decisions and creating an Emerging Powers unit to help catalyse cross-Whitehall efforts to elevate our relationships with the vital trade engines and rising political players of the future.
The FCO’s work is framed around our central strategy - building the four conditions for growth: openness, sustainability, reputation and opportunity.
In practice this means:
pushing for transparency and a rules-based international economic system that is fair and evenly applied so that our companies can compete in foreign markets on an equal basis.
working to open markets, promote free trade, support pro-growth policies and counter risks to economic stability including reducing threats to growth from energy and resource insecurity.
promoting the UK as a creative, innovative and trustworthy partner; a world-class destination for business, tourism and study.
lobbying on behalf of UK business against corruption, bureaucracy and protectionism and to support their efforts to secure new business around the world.
In support of this work, we have adjusted our overseas representation to allow us to reinforce and open new missions in many of the fastest-growing markets. By 2015 we will have opened up to 20 new Embassies, consulates and trade offices, and deployed 300 extra staff in more than 20 countries, particularly in Asia, Latin America and Africa.
We have taken steps to strengthen commercial skills at all levels. We have trained 800 staff with the skills to deliver our commercial priorities. We are partnering with the private sector to allow HoMs to spend time in business before they take up their jobs overseas.
Clear that many, if not all, of you are working internationally in some form or another. Hope that you have worked with some of our Embassies and High Commissions around the world already.
I also noticed a survey about how northeast Scottish businesses felt about the independence referendum. I was struck by the fact that three out of four businesses in this region said they thought no commercial opportunities would come out of independence, and one in five said that their business decisions had already been affected.
Not for me to tell you how to vote. It is a decision for the people of Scotland. I believe we are better together and that is the UK government position. What I think I need to do today is to explain how the FCO delivers for Scotland: in terms of trade support, greater influence, consular help and EU membership.
Firstly, trade. There are 169 offices worldwide. There are nine UKTI offices in the USA, Scotland largest market for investment, five in Canada and three in Germany.
Currently, UKTI works closely with Scottish Development International, which has 26 offices worldwide.
The Scottish Government plans to make these offices the core of its trade support in the event of independence. Eventually the Scottish Government would plan to offer trade services at each of the 70-90 diplomatic posts they plan for an independent Scotland.
Even in that scenario, the network would be much smaller than the network that Scottish firms are currently entitled to use.
On any given day, UKTI trade advisers may be promoting Scottish designers at Milan Fashion Week; they could be nudging Aberdeen oil and gas firms to capitalise on Brazil’s black gold rush; or they could be finding trade partners for Scottish manufacturers in China or Germany.
UKTI helped almost 2,000 firms in Scotland last year to export.
It also works closely with UK Export Finance, which can make doing business overseas safer for Scottish firms by offering trade finance and insurance in case an overseas partner defaults. This is a service that the Scottish Government has no plans to match.
Investment is the other side of UKTI’s role.
UKTI helped to land three quarters of the inward investment projects that generated 13,500 jobs in Scotland last year.
Part of the reason is our GREAT campaign, which promotes businesses, tourism and education in England, Scotland, Wales and Northern Ireland.
As a campaign, it has been hugely successful – so much so that the French are now trying to copy it.
Secondly, the UK’s influence. As part of the UK, Scotland is represented on all of the world’s major decision-making bodies: the UN Security Council, the G7 and the G20. As the UK, we have our own seat at the IMF and the World Bank.
Last week, Chinese Prime Minister Li Keqiang came to visit London.
It’s been four years now since the FCO and DEFRA won a major victory when China agreed to grant geographical indicator status to whisky, so that any Scotch sold in China has to be distilled here in Scotland. This victory has been worth many millions to Scotland’s whisky industry.
The FCO has supported the Scotch Whisky Association in other markets too. Earlier this month, the SWA signed a deal in Mexico, which is now one of the top ten markets worldwide for scotch.
And we have used our influence to win changes to the EU’s Common Fisheries Policy which were welcomed by the Scottish Fishermen’s Federation.
Thirdly, consular services, and I want to clear up any misunderstandings on this.
We have 272 consular posts in 170 countries around the world. They offer assistance to all UK citizens. Last year we helped 400,000 people.
The Scottish government is planning a network of 70-90 diplomatic posts, plus a network of honorary consuls. Where a country has any form of representation, including an honorary consul, it must look after its own citizens.
Other EU embassies only help where there is no other representation of any kind. Scottish nationals may have to pay for the cost of any assistance they receive in those circumstances and the Scottish government would be liable to reimburse whichever EU member state provided the service.
My final point today is about EU membership.
The UK’s position is that we want to be members of a reformed EU - one that is more competitive, more flexible and more democratically accountable. We think we can achieve these goals and that the changes we seek are not just for our benefit, but for the benefit of everyone in the EU.
We know that there is strong Scottish support for remaining in the EU.
There may be some uncertainty about the UK’s future membership. What is certain is that Scotland would have to leave the EU and then rejoin in the event of independence. A seamless 18 month transition as suggested by the Scottish Government is unlikely. Nor is it likely that any fast-track entry would be agreed.
In conclusion, the Commonwealth Games and the referendum this year have turned the spotlight of the world on Scotland. The referendum is an occasion for the Scottish people to make their own choice on the future status of Scotland.
I don’t doubt that the enterprising firms of Aberdeen and Grampian will take full advantage of this heightened visibility to reach out to new international markets.
As you do so, you can count on the full support of the Foreign & Commonwealth Office, UK Trade & Investment and UK Export Finance.
There are 14,000 FCO employees out there who stand ready to help, whether by assisting individual firms; lobbying on a wider industry basis; or by looking after British employees when they venture overseas.
We want to help Scotland make the most of the great opportunities it faces this year, and in many years to come.
Thank you for having me tonight and I’m happy to take any questions.
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