Effect of Brexit on Gibraltar


The effect of Brexit on Gibraltar concerns the status of Gibraltar after withdrawal of the United Kingdom from the European Union. The UK left the EU on 31 January 2020 after having voted to leave in the 2016 referendum and formally notified the EU of its intention to withdraw in March 2017. Gibraltar is not part of the UK, but contrary to all other British Overseas Territories was a part of the European Union like the UK. It participated in the Brexit referendum and it ceased, by default, to be a part of the EU upon the UK's withdrawal.

Gibraltar's position during the process of UK withdrawal from the European Union presents specific issues during the negotiations. Gibraltar voted strongly to remain in the European Union during the referendum, and its unique situation could lead to difficulties in Brexit negotiations due to the Spanish claim on Gibraltar, the large contribution of on-line gambling, offshore banking and duty-free shopping to the Gibraltar economy, and the strong likelihood that Gibraltar will cease to be a part of the single market.

History


Gibraltar was part of the European Union, having joined the European Community (the forerunner to the European Union) through European Communities Act 1972 (UK), which gave effect to the Treaty of Accession 1972, as a dependent territory of the United Kingdom. It status in the European Union was under what was then article 227(4) of the Treaty Establishing the European Community covering special member state territories, with exemption from some areas such as the European Union Customs Union, Common Agricultural Policy and the Schengen Area. It was the only British Overseas Territory included in the European Union.

Gibraltar's status in EU elections

Gibraltar did not participate in the 1975 UK European Communities membership referendum the result of which had a direct impact on the colony. Neither did it participate in any European Parliamentary Elections between 1979 and 1999, but in 2002 legislation was passed by the British Parliament which allowed Gibraltar to formally take part in the 2004 European Parliament election as part of the South West England constituency in all subsequent European elections. Following the surprise election victory by the Conservatives in May 2015 it was announced that Gibraltar would fully participate in the proposed referendum on continuing EU membership, and this was legislated for in the European Union Referendum Act 2015. This meant that Gibraltar was the only British Overseas Territory in the European Union (EU)[clarification needed] and uniquely it had the right to vote in EU elections and in referenda.

Before the 2016 referendum

In 2015, Chief Minister of Gibraltar Fabian Picardo suggested that Gibraltar would attempt to remain part of the EU in the event the UK voted to leave,[1] but reaffirmed that, regardless of the result, the territory would remain a British overseas territory.[2] In a letter to the UK Foreign Affairs Select Committee, he requested that Gibraltar be considered in negotiations post-Brexit.[3]

Before the referendum, José García-Margallo, the Spanish minister of foreign affairs at the time, stated that in the event of Brexit, Gibraltar would not have access to the single market unless a formula giving Spain co-sovereignty were agreed for a transitional period; after the referendum, he saw the result as increasing the chance of a Spanish flag on Gibraltar.[4] He also said Spain would seek talks on Gibraltar, whose status is disputed, the "very next day" after a British exit from the EU.[5]

Referendum


United Kingdom European Union membership referendum, 2016
Gibraltar
Choice Votes  %
Remain a member of the European Union 19,32295.91%
Leave the European Union 8234.09%
Registered voters and turnout 24,11983.64%
Source: Electoral Commission

The European Union (Referendum) Act 2016 (Gibraltar),[6] was passed by the Gibraltar Parliament and implemented in Gibraltar after the European Union Referendum Act 2015 was passed by the UK Parliament.

During the campaign leading up to the United Kingdom's national referendum on whether to leave the European Union (known as "Brexit") the Spanish government warned that if the UK chose to leave, Spain would push to reclaim control over Gibraltar.[7] The Chief Minister of Gibraltar Fabian Picardo warned the UK of the threat to Gibraltar's safety posed by Brexit. All three parties represented in the legislature supported remaining in the EU during the referendum[8][9] and the Remain campaign was known as Gibraltar Stronger in Europe.

The referendum result within Gibraltar was declared early on Friday 24 June 2016 by the counting officer and Clerk to the Gibraltar Parliament Paul Martinez at the University of Gibraltar at 0040 CEST making it the first of the 382 voting areas to declare and its result was fed into the South West England regional count and then the overall national count. The result saw 95.9% of Gibraltarian voters opting to remain, on a turnout of 84%. Overall the United Kingdom voted by 51.9% to 48.1% to leave the European Union.

Gibraltar in the Brexit negotiations


Gibraltar has no direct say in the negotiations between the UK and the 27 remaining countries of the European Union (EU27), since the duty and responsibility of dealing with foreign affairs rest with the UK, as do the duties of defence and internal security in Gibraltar.[10]:11

Robin Walker MP Parliamentary Under-Secretary of State for Department for Exiting the European Union visited Gibraltar in March 2017 to discuss Brexit with Fabian Picardo Chief Minister of Gibraltar and Joseph Garcia Deputy Chief Minister of Gibraltar.[11]

With the impending Brexit negotiations, the House of Lords produced a report entitled "Brexit: Gibraltar".[12]

The European Council released a series of guidelines for the EU27 on negotiations for withdrawal. Within these guidelines, core principle number 22 stated that "After the United Kingdom leaves the Union, no agreement between the EU and the United Kingdom may apply to the territory of Gibraltar without the agreement between the Kingdom of Spain and the United Kingdom".[13] Pro-Brexit conservative M.P. Jack Lopresti thought it shameful that the EU would attempt to allow Spain an effective veto over the future of British sovereign territory, ignoring the will of the people of Gibraltar.[14] Foreign secretary Boris Johnson re-iterated the United Kingdom's commitment to Gibraltar.[15]

Esteban González Pons, a Spanish MEP and chairman of the Brexit working group of the European People's Party, met with Ireland's Minister for European affairs Dara Murphy in May, when he (Pons) called Gibraltar a "colony" and pushed for support for the Spanish position that the status of Gibraltar is a bilateral issue solely for the UK and Spain to resolve. Ireland recognises that the issue is a bilateral one but wishes to avoid parallels being drawn with the status of Northern Ireland. Murphy stated that “Ireland will address issues regarding the nature of the relationship of Gibraltar with the European Union post-Brexit as and when they arise in the course of negotiations on the future relationship of the UK with the European Union.”[16]

In April 2017, the former director of operational capability at the UK Ministry of Defence, Rear Admiral Chris Parry, said, “We could cripple Spain in the medium term and I think the Americans would probably support us too.[17]

Key issues


Sovereignty

The day after the result, Spain's acting Foreign Minister, José Manuel García-Margallo, renewed calls for joint Spanish–British control of the peninsula.[18] These calls were strongly rebuffed by Gibraltar's Chief Minister.[19] After the result Spain reiterated its position that it wanted to jointly govern Gibraltar with the United Kingdom and said it would seek to block Gibraltar from participating in talks over future deals between the UK and EU.[20]

In April 2017, British Prime Minister Theresa May reiterated that "the UK would seek the best possible deal for Gibraltar as the UK exits the EU, and there would be no negotiation on the sovereignty of Gibraltar without the consent of its people.” [21]

In April 2018, Spanish Foreign Minister Alfonso Dastis announced that Spain hoped to sign off a bilateral agreement with Britain over Gibraltar before October so as not to hinder a Brexit transition deal. Talks between London and Madrid had progressed well. While reiterating the Spanish long-term aim of "recovering" Gibraltar, he said that Spain would not hold Gibraltar as a "hostage" to the EU negotiations.[22]

Movement over the border

Questions were raised over the future of free-flowing traffic at the Gibraltar–Spain border.[23]

People

Gibraltar, like the UK, had been outside the Schengen Area. All people crossing the border to/from Spain have therefore always been required to go through British and Spanish border controls. There are estimates that upwards of 15,000 people live in La Línea, in Spain but work in Gibraltar. (La Línea has an unemployment rate of 35% whereas Gibraltar has a 1% unemployment rate.) [24]

Goods

Gibraltar was never part of the EU's customs union, so there are already more detailed checks on goods moving over the Spanish-Gibraltar border.[25]

Air travel

A Spanish diplomat has indicated that any agreement on airline landing rights for flights between the EU and the UK agreed during Brexit negotiations would not apply to the Gibraltar International Airport.[26] However, as of 2018-2019 all flights at the airport are to and from the UK or Morocco (not affected by Brexit), and none to the EU. As an alternative, Málaga Airport (distance 125 kilometres (78 mi)) has many EU flights.

Finance industry

Anticipating a loss of access to EU market as a result of Brexit, the Government of Gibraltar received "a firm commitment from the United Kingdom government to maintain and broaden access to their financial markets," including "automatic access to the United Kingdom in banking, insurance, investment services and any other similar area where cross-border directives currently apply".[27]

Fintech companies like Payoneer moved their offices from Gibraltar to Ireland, the main English-speaking country left in the EU, as a result of the Brexit.[28]

On 4 March 2019, the UK and Spain signed an agreement of taxation pertaining to Gibraltar. This was the first treaty in 300 years that explicitly referred to Gibraltar. This agreement came into force on 4 March 2021. This agreement establishes enhanced cooperation between Spain and the British Overseas Territory, which will provide information on workers and assets of Spanish fiscal residents. A direct effect of this agreement is Spain taking Gibraltar off its list of Tax Havens.[29][30]

Brexit Agreement


On 18 October 2018, the Spanish Prime Minister, Pedro Sánchez, announced that he had reached an agreement with Britain, declaring the Gibraltar protocol "resolved" and further stating that the Spanish government would hold no objection to the United Kingdom leaving the EU with specific regards to Gibraltar as being one of the British Overseas territories and currently within the EU.[31][32] Any dispute which Spain has or may have over the sovereignty of Gibraltar will also no longer affect a future trade agreement between Britain and the EU.[32]

On 22 November 2018, Pedro Sánchez threatened that Spain would veto Brexit if Spanish concerns over Gibraltar were not addressed.[33][34] Two days later, on Saturday 24 November, British EU Ambassador Sir Tim Barrow, assured the Spanish leadership that no future trade deals around Brexit would relate to Gibraltar's market, which would likely clear the way for the Brexit deal to pass.[35]

A special committee will be created, which will handle Gibraltar–EU matters, such as free movement for people and border controls. It will contain only representatives from Spain and the UK.

After Brexit, some agreements will apply during the transition period. However, post transition-period agreements remains to be negotiated between the stakeholders.[36]

Post-Brexit


On 31 December 2020, Spain and the United Kingdom reached an agreement in principle under which Gibraltar would join the European Union's Schengen Area.[37] This clears the way for the European Union and the UK to start formal negotiations on the matter.[38] Elements of the proposed agreement are:[38][39]

  • Gibraltar (air)ports become entry points of the Schengen area, under responsibility of Spain [40]
  • The border controls will be performed by Frontex-personnel [40]
  • unrestricted movement of goods
  • arrangements in the field of "environment, the level playing field, social security coordination, citizens’ rights, data and matters related to continued document recognition" [40]
  • the relationship between Gibraltar and the European Union in areas of EU competence
  • Gibraltar can offer residence permit on its own decision
  • Visa for visiting Gibraltar will be Schengen visas, mainly issued by Spain
  • The arrangements are implemented for "an initial period of four years"[40]

Both Spain and the UK Government has written to the President of the European Union asking them to seek a mandate to create a treaty concerning movement of labour and goods, the environment, citizens rights, continued recognition of documents etc.[40]

References


  1. Swinford, Steven (14 April 2015). "Gibraltar suggests it wants to stay in EU in the event of Brexit". The Daily Telegraph. Retrieved 25 February 2016.
  2. "Happy Birthday, Your Majesty". Retrieved 27 April 2016.[permanent dead link]
  3. "Britain must include Gibraltar in post-Brexit negotiations, report says". Archived from the original on 20 April 2016. Retrieved 27 April 2016.
  4. Bernard, Philippe; More, Sandrine (3 April 2017). "Brexit: l'Espagne inflige deux camouflets à Londres" [Brexit: Spain hits London with double whammy]. Le Monde (in French). Retrieved 8 April 2017. ... peu avant le vote britannique, le ministre des affaires étrangères espagnol d’alors, José Manuel Garcia-Margallo, avait affirmé qu’' en cas de Brexit Gibraltar n’aurait pas accès au marché intérieur, à moins que [ne soit] accept[é] une formule qui suppose la cosouveraineté de l’Espagne durant une période transitoire'. M. Garcia-Margallo s’était ensuite félicité du vote pro-Brexit en soulignant que 'le drapeau espagnol sur le Rocher n’a jamais été aussi proche'. [... shortly before the British vote, the then Spanish Minister of Foreign Affairs, José Manuel Garcia-Margallo, stated that 'in the event of Brexit, Gibraltar would not have access to the internal market, unless a formula were agreed that provided for Spanish co-sovereignty for a transitional period'. Mr Garcia-Margallo later welcomed the pro-Brexit vote, emphasizing that 'the Spanish flag on the Rock has never been so close'.]
  5. "Spanish PM's anger at David Cameron over Gibraltar". BBC News. 16 June 2016.
  6. Act No. 2016-01 (Legislation Number (L.N.) 2016/034, as amended by L.N. 2016/035, L.N. 2016/082 and L.N. 2016/120.
  7. Williams, Jennifer (2016-06-24). "The Brexit vote result has reignited a 300-year-old fight between Britain and Spain". Vox. Retrieved 2016-06-26.
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  19. (Reporter), Joe Duggan (12 September 2016). "Chief Minister Fabian Picardo says 'British Means British' at National Day political rally".
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  21. "UK won't negotiate away Gibraltar sovereignty, May tells Tusk". The Guardian. 6 April 2017.
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  23. "Govt's stark analysis highlights Brexit border challenge – Gibraltar Chronicle". chronicle.gi. Archived from the original on 2019-03-23. Retrieved 2017-04-08.
  24. "Don't prejudice thousands of Gibraltar jobs by using border as 'choke point'". The Olive Press. 23 January 2017.
  25. "What could Brexit mean for Gibraltar?". BBC. 3 April 2017.
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  27. "Gibraltar 'planning for a hard Brexit', Tipping tells Brussels". Gibraltar Chronicle. 10 May 2017. Archived from the original on 10 May 2017. Retrieved 10 May 2017.
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  29. "UK, Gibraltar/Spain international agreement of Taxation has entered into force". MercoPress. Retrieved 2021-03-16.
  30. González, Miguel (2021-03-16). "Spain to take Gibraltar off tax haven list after treaty enters into force". EL PAÍS. Retrieved 2021-03-16.
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  32. "UK, Spain reach Brexit deal over Gibraltar: Spanish PM", Digital Journal, 18 October 2018
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  34. @sanchezcastejon (22 November 2018). "After my conversation with Theresa May, our positions remain far away. My Government will always defend the interests of Spain. If there are no changes, we will veto Brexit" (Tweet) via Twitter.
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  39. Deal between Spain and UK plans to eliminate Gibraltar border checkpoint
  40. "Chief Minister's Statement to Parliament On The New Year's Eve Framework Agreement - 61/2021". HM Government of Gibraltar. 15 January 2021.