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Gibraltar Covered By Proposed Brexit Transition Period

by Ulrika Lomas, Lowtax.net, Brussels
03 December, 2018

The UK's recently negotiated Withdrawal Agreement with the EU sets out the arrangements that will apply with regards to Gibraltar.

Gibraltar is a British Overseas Territory. It has strong ties to Europe, sharing a land border with Spain, and 96 percent of voters supported remaining in the European Union. Talks on future arrangements after Brexit have been ongoing concurrently with the talks between the UK and the EU.

The most significant announcement following recent negotiations is that Gibraltar will be covered by the Brexit transition period during which the UK will be treated as though it were a member state, until December 31, 2020, providing UK lawmakers agree the deal struck with EU negotiators.

In announcing the agreement on the Withdrawal Agreement, the UK Government has said the following has been agreed in respect of Gibraltar:

"The European Council guidelines of April 29, 2017, set out that '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.' Bilateral negotiations between Spain and the UK have now concluded. A Protocol referring to these bilateral arrangements is annexed to the Withdrawal Agreement."

"The Protocol forms a package with bilateral memoranda of understanding between Spain and UK in respect of Gibraltar. This concerns bilateral cooperation on citizens' rights, tobacco and other products, environment, police and customs matters, as well as a bilateral agreement in relation to taxation and the protection of financial interests."

"On citizens' rights, the Protocol establishes the basis for administrative cooperation between the competent authorities for the implementation of the Withdrawal in relation to people living in the Gibraltar area, and in particular frontier workers."

"On air transport law, it establishes the possibility, in case of an agreement between Spain and UK on the use of the Gibraltar airport, to make applicable to Gibraltar during the transition the EU legislation previously not applicable there."

"On fiscal matters and protection of financial interests, the Protocol establishes the basis for administrative cooperation between the competent authorities for achieving full transparency in tax matters, fighting against fraud, smuggling, and money laundering. The UK also commits that international standards in this area are complied with in Gibraltar. In relation to tobacco, the UK commits to ratify certain conventions in respect of Gibraltar and to put in place before June 31, 2020, a system of traceability and security measures on cigarettes. In respect of alcohol and petrol, the UK commits to ensure that a tax system which aims at preventing fraud is in force in Gibraltar."

Finally, "on environment protection and fishing and cooperation in police and customs matters, the Protocol establishes the basis for administrative cooperation between the competent authorities." A specialized committee is to be established to oversee the application of the Protocol.

In a statement, the Gibraltar Government noted that the agreement between the UK and the EU, including on the affairs of Gibraltar, does not yet cover in depth the future relationship between the UK and the EU. It underscored that it is a framework on how the UK will leave the EU in an orderly way.

Negotiations on the future relationship between the UK and the EU, and Gibraltar and the EU, will take place, providing the Withdrawal Agreement is approved and ratified in the UK, during the transition period, the Government said.

It said: "The first phase for Gibraltar was the conclusion of a series of UK-Gibraltar agreements to safeguard market access and other matters. This was achieved earlier this year as a result of work done in the Joint Ministerial Council (Gibraltar Exit from the European Union)."

"This second phase, which is about to come to a close, was Gibraltar's inclusion in the Withdrawal Agreement, including the transition period, which currently runs until the end of 2020. This has required engagement with EU and Spanish negotiating teams."

"The third phase [is] the negotiations on the future relationship between the UK and the EU, including that of Gibraltar. This is expected to open when and if the agreement on Withdrawal is formally approved and ratified."

On the technical content of the Protocol, the Government continued:

"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 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."

"Moreover, the Government of Gibraltar has been fully and directly involved in the negotiations as they affected Gibraltar."

Commenting, Chief Minister Fabian Picardo stated: "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 analyzed and understood."

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