The Draft Withdrawal Agreement and Protocol on Gibraltar

On Tuesday this week, news broke that a deal on an agreement for the United Kingdom's orderly withdrawal from the European Union was agreed and it was confirmed that the draft agreement would be considered by Cabinet. Yesterday evening, the British Prime Minister announced on the door of Number 10 that the collective view of her Cabinet was that the United Kingdom should accept the deal, thereby setting in motion the process of getting the deal through the British Parliament.

The Withdrawal Agreement and draft political declaration can be accessed here:

https://www.gov.uk/government/publications/progress-on-the-uks-exit-from-and-future-relationship-with-the-european-union

The explainer issued by the British Government on the Withdrawal Agreement can be accessed here:

https://www.gov.uk/government/publications/withdrawal-agreement-explainer-and-technical-explanatory-note-on-articles-6-8-on-the-northern-ireland-protocol

The draft agreement included, as anticipated, a Protocol on Gibraltar (in addition to Protocols for Northern Ireland and the bases in Cyprus) as agreed between the parties. The draft agreement and accompanying documentation, including the draft political statement and statement on the future relationship, can be found by clicking the links above.

The key points to be borne in mind at this time are as follows:

This is a draft deal which has been approved by Cabinet and now needs approval by means of 'a meaningful vote' in the British Parliament. In effect, any amendments suggested to the deal in the British Parliament during any debate on it, will essentially kill the deal as it stands today, as any changes would necessarily require acceptance by the EU, something that is unlikely in the context of the very long, detailed and strained negotiations which have been held to get to this point.

In effect, the 'meaningful vote' is likely to be distilled to a 'yes' or 'no' vote.

At this time, and though it is impossible to predict, it is understood that the deal is unlikely to enjoy the support it requires to get through Parliament. This is subject, as ever, to change.

The rest of this note deals with the Protocol on Gibraltar and deals with it on the assumption of the main Withdrawal Agreement being approved by both sides and entered into. Without the framework of the main deal, there is no Protocol on Gibraltar.

The single, most relevant point to note in respect of this draft agreement is that Gibraltar is included within the territorial scope of the agreement as set out in Article 3 of the main body of the draft text.

In effect, Gibraltar is included in the implementation period and all the many other aspects of the deal relating to transition in terms of access, freedoms, etc. Essentially, whatever deal applies to the UK, if there is one, will apply to Gibraltar.

Gibraltar's inclusion in the territorial scope of the draft agreement is a direct consequence of agreement being reached between the Governments of the United Kingdom, the Kingdom of Spain and the Government of Gibraltar, owing to which the Spanish Government has not exercised its veto over Gibraltar granted to it in Clause 22 of the European Commission's negotiating guidelines.

The Protocol on Gibraltar is, as set out above, part of the wider Withdrawal Agreement. The parties to the wider Withdrawal Agreement are the United Kingdom and the European Union. The parties to the Protocol on Gibraltar therefore, are also the United Kingdom and the European Union. The significance of this in the context of the treatment of Gibraltar in the Protocol is that this is not an agreement entered into bilaterally between the UK and Spain.

The Protocol sets out, by way of context and background, the nature of Gibraltar's relationship to the EU, highlighting that the United Kingdom is responsible for Gibraltar's external relations, and that Union law is applicable to Gibraltar to the extent provided in the 1972 Act of Accession by virtue of Article 355(3) TFEU.

Gibraltar is not a member state in its own right and it is therefore the UK that enters into this agreement, not Gibraltar.

Critical to a correct interpretation of the Protocol is a detailed look at the final recital to the Protocol which reads as follows:

"TAKING NOTE of the Memoranda of Understanding concluded between the Kingdom of Spain and the United Kingdom on [xx] November 2018 in relation to citizens' rights, tobacco and other products, cooperation on environmental matters and cooperation in police and customs matters, as well as the agreement reached on [xx] November 2018 to conclude a treaty on taxation and the protection of financial interests."

These Memoranda are arrangements between the UK, Spain, and the Government of Gibraltar which set out the parties' commitment to cooperation. These will be implemented in line with the constitutional arrangements in place between the UK and Gibraltar. These arrangements will include Memoranda of Understanding (MoUs) covering citizens' rights, tobacco, the environment, and police and customs cooperation, and will be concluded in the coming weeks. An agreement to conclude a treaty on taxation and the protection of financial interests is also expected to form part of the wider package. With the exception of provisions on citizens' rights, the Protocol is limited to the duration of the implementation period. The MoUs will be similarly time limited.

Further, the Memoranda of agreement concluded, in the context of the draft agreement, between the Kingdom of Spain and the United Kingdom deal with matters relating to the various 'perennial irritants' for Gibraltar and Spain, which Memoranda set out the detail of the matters already agreed between Gibraltar and Spain directly, as explained in the Gibraltar Parliament by the Chief Minister, and equally by the Spanish Foreign Minister, Josep Borrell in recent weeks.

The detail of the Memoranda are not yet public and are therefore not yet known.

Some insight as to the content of these Memoranda can be gleaned from the Chief Minister's statement to the Gibraltar Parliament on Thursday 18th October where, in relation to the Protocol and the Memoranda he said the following:

"Beyond the Protocol, there are also to be a number of sets of practical arrangements reflected in various Memoranda of understanding. These will reflect the co-operation in areas where both sides have identified irritants, as I highlighted in my Ministerial Statement in March and in my last update to this House. At this stage, we have reached a large measure of agreement on the substance of four such Memoranda.

The first of these sets of practical arrangements will deal with the implementation of the rights of citizens which are protected under the main Withdrawal Agreement.

The second will deal with matters related to the environment. As all hon. Members know, 85 this has been an area on which Gibraltar has long wanted to co-operate with our neighbours. We have only one environment. There is no Planet B, as President Macron has rightly said. The environment knows no frontiers and we have long been keen to see co-operation in this area on a basis which is clearly without prejudice to the sovereignty, jurisdiction and control position on which we would never compromise, expressly or impliedly, in any respect, in particular in respect of Gibraltar's British Gibraltar Territorial Waters.

The third memorandum addresses matters of police and customs co-operation. In this area there has long been an excellent regional co-operation between our respective law enforcement agencies in many respects. Unfortunately, there have also been some very high-profile instances of a lack of co-operation occurring between law enforcement agencies. We sincerely hope that we can leave disagreements behind and move toward more fluid co-operation. Mr Speaker, the only ones who should tremble at the thought of this new approach to co-operation should be criminals.

The fourth memorandum will deal with matters relating to the trade in tobacco in order to progress the shared agenda of wishing to control illicit tobacco activity and to protect our respective legitimate markets. This has been a key area of concern for me since my election, as hon. Members will know. In fact, in my time in Government I have already increased the price of tobacco in Gibraltar by 148% since my election. I have said, as recently as at the last Budget, that I consider this commodity to be on a permanent price escalator and that the health consequences of tobacco consumption concern me and the Government greatly. In this particular respect, I sincerely hope we will be able to move forward in the co-operation we enjoy with relevant agencies and competent authorities across the Frontier. The work on this memorandum is not yet finalised, however, and we do want to continue discussions to seek agreement.

Finally, Mr Speaker, we are also seeking to try to agree a tax treaty to settle the perennial misunderstanding by some in Spain of our internationally accepted tax system. This memorandum is also not yet agreed. I do not know if it will be possible to reach final agreement in respect of this matter at this stage, but we continue our discussions to seek agreement. The technical work on this memorandum is being ably undertaken for Gibraltar by the Financial Secretary and the Commissioner of Income Tax and their Senior Crown Counsel."

Returning to the Protocol as published yesterday, and in relation to the airport, a careful reading of Article 2 reveals that it preserves the status quo in relation to the application of EU measures to the Gibraltar airport, as they apply today, adding only that in the event that further agreements are reached in relation to the use of the Gibraltar airport between Gibraltar and Spain, other measures may be extended to cover the Gibraltar Airport if relevant.

This is consistent with what the Chief Minister explained to Parliament in October this year, as set out below:

"On the Airport, as Sr Borrell told the Spanish Foreign Affairs Select Committee yesterday, the position to be reflected will be the position of status quo. We have not found the PSOE government of Spain prepared to move to implement the arrangements agreed in Cordoba by the former PSOE government of Spain in this respect. Hon. Members know that those of us on this side of the House had our reservations about the Cordoba Agreement. There were aspects of it that we did not like at all. Be that as it may, the Cordoba Airport Agreement was defended by them in the 2007 general election and they won that election. As a result, they went on to spend in excess of £84 million of taxpayers' money implementing the Gibraltar obligations under the Cordoba Agreement. The Government of Gibraltar takes the view that the Gibraltar side has complied with its obligations under the Cordoba Agreement and we are ready to see it come into effect. There will be no change or progress in respect of enhanced use in relation of Gibraltar Airport, however."

It is important to consider that in these tense and difficult times, the language used in the Protocol may grate or give rise to concern about the balance struck in the agreement. It is important to bear in mind that there are a number of audiences to which these documents will be presented, the support of which audiences needs to be engendered domestically by all parties concerned.

The detail of the Memoranda, expected to be published next week, if the draft Withdrawal Agreement prospers on its journey through the British Parliament, will provide a clearer picture in respect of Gibraltar's position. Fundamentally at this stage however, and if the agreement prospers, we will be included in the implementation period and avoid a cliff edge on 29 March 2019.

The Government of Gibraltar issued a statement at 11.45 on Thursday making the following further key points:

"The proposed Withdrawal Agreement published yesterday by the United Kingdom and European Union makes it clear that its terms, including the transitional period, will apply to Gibraltar.

This was the number one priority of the Cabinet and of the Government and it has been achieved."

The statement emphasizes that "Article 3(b) of the Withdrawal Agreement makes it clear that any reference to the term 'United Kingdom' shall be understood as referring to Gibraltar to the extent that Union law was applicable to it before the entry into force of the Agreement. This means the the use of the term 'United Kingdom' means Gibraltar. It is the same formula that has been used for the Channel Islands, the Isle of Man, the Sovereign Base Areas in Cyprus and the other UK Overseas Territories."

The Chief Minister, Fabian Picardo QC MP said: "This Protocol contains absolutely no concessions on sovereignty, jurisdiction, or control. We would not have accepted it if it had. There are no issues of bilateralism that can cause any concern. Gibraltar, for EU purposes, has always been included in the definition of the Member State United Kingdom. This is an important part of our inclusion in the proposed Implementation Period and the definition of the United Kingdom in the Withdrawal Agreement. There are no matters which in any way challenge our fundamental positions on any keys issues. I expect to make a Ministerial Statement explaining the details of the Protocol and the Memoranda of Understanding next week. I am satisfied that the aspects of the proposed Withdrawal Agreement which relate to Gibraltar work for Gibraltar. There are many more documents to be published so that every part of the Protocol and its effect on Gibraltar can be properly analysed and understood."

Further updates will be provided as and when substantive developments emerge.