The UK and the European Union have agreed the terms of a transition deal that covers Gibraltar but also maintains Spain’s controversial veto.
Gibraltar is included within the territorial scope of a draft withdrawal agreement that also sets out arrangements to smooth the UK’s departure from the bloc after March 2019.
The transition period will last until the end of 2020 under the terms of a joint legal text that must still be approved by EU leaders meeting at the European Council summit on March 22 and 23.
Brexit Secretary David Davis hailed the agreement as a “significant step” following talks with EU chief negotiator Michel Barnier in Brussels, adding that the transitional period would provide stability to businesses.
“They now have certainty about the terms that will apply immediately after our withdrawal, meaning that they can continue to operate and invest with confidence as the design of our future partnership with the European Union becomes clear,” Mr Davis said.
“Now this is true across the whole United Kingdom family because the territorial scope of the withdrawal agreement makes clear it includes Gibraltar.”
He added: “We continue with our positive dialogue with the Spanish on how we improve cooperation in the future.”
The text outlining the territorial scope of the agreement was highlighted in green in the joint document, meaning there is no disagreement on this point between the UK and the EU.
But while the text explicitly states that Gibraltar is included in the scope of the agreement, it also includes a footnote – marked with an asterisk, not a number – referring to the veto granted by the EU to Spain on the issue of Gibraltar.
In practice it means that while any immediate flare-up over Gibraltar has been defused at a critical point in the wider Brexit negotiations, the underlying issue of the Spanish veto remains unresolved.
Clause 24 of the EU’s negotiating guidelines states that any transition agreement or future trade relationship between the UK and the EU can only be extended to Gibraltar after bilateral agreement between the UK and Spain.
Both Gibraltar and the UK insist that the transitional arrangements are part of the withdrawal agreement and that Gibraltar is covered. Gibraltar further adds that the veto is probably illegal under EU law, and has not ruled out a legal challenge if Spain attempts to exercise it.
The differences between the UK and EU camps on this point were evident yesterday during a press conference in Brussels as Mr Davis and Mr Barnier answered questions on the issue.
Asked by a Spanish journalist whether the transition agreement covered Gibraltar, Mr Davis replied: “Yes, it does cover Gibraltar. That is our view of it.”
“We are having ongoing, very constructive negotiations with Spain, and they will continue and I expect will be productive,” he added.
Responding to the same question, Mr Barnier acknowledged that the legal text agreed yesterday included Gibraltar in its scope. But he also highlighted a caveat.
“Gibraltar leaves the European Union at the same time as the United Kingdom [and] legally, we’ve specified the territorial scope of the agreement,” Mr Barnier said.
“But there’s a reference which remains valid [and] which member states are keen on, all member states of the European Union on behalf of whom I negotiate,” he said, referring to the Clause 24 veto included in two sets of negotiating guidelines agreed by the EU over the past year. “Twice, the 27 member states and head of state and government indicated their position on the question of Gibraltar, in total solidarity with the Spanish Government.”
Mr Barnier said the UK and Spain had engaged in discussions “to solve a certain number of pending matters” and that he hoped for a positive outcome.
“The result of those discussions will be fundamental for the application to Gibraltar of the agreement we’re talking about,” he said.
Last night the Gibraltar Government welcomed the “specific and explicit” statement from Mr Davis that Gibraltar was included in the transition deal.
It welcomed too Mr Barnier’s acknowledgment of “the logical and legal reality” that it is a legal requirement for the transition to be extended to Gibraltar so that the Rock can leave the EU alongside the UK.
But No.6 Convent Place said it “deeply regrets” the EU’s support for the Spanish position, particularly given Gibraltar’s strong backing for Remain in the 2016 referendum.
“It’s not yet half time, there is still more than a year to run in the Article 50 process, and we are making good progress,” said Chief Minister Fabian Picardo.
“There is a lot still to do and at the end of this fraught process, the only thing that will matter are the final, executed versions of the agreements.”
Mr Picardo said the text agreed yesterday were “very helpful” and demonstrated Gibraltar’s inclusion in the withdrawal and transitional periods.
He highlighted too the recent bilateral agreements between Gibraltar and the UK on continued market access.
“Gibraltar thus becomes the only territory that can boast continued access to the UK services market post Brexit, a gain which should not be underestimated particularly in respect of online gaming,” he said.
“In this context, my government will continue to be of the view that Brexit presents us with a possibility to progress cooperation with the EU in the future and with Spain, our neighbour, in particular.”
“We will not hesitate to say that there are opportunities that we can realise as a part of this unfortunate process.”
“I describe these as a rainbow of potential opportunities that can create increased wealth to lap the shores of all of the Bay of Gibraltar.”
But the Chief Minister added: “I want to be explicit again in clarifying that no one should expect that we would ever cross our well known red lines and no one should expect any concessions or even any hint of any concessions on sovereignty, jurisdiction or control.”
“If anyone holds out for those, they will be sorely disappointed.”
Mr Picardo also made a reference to Mr Barnier’s comments on the EU’s solidarity with Spain on the issue of Gibraltar’s inclusion in the transitional arrangements.
“The statements from Mr Barnier in relation to ‘solidarity’ might have been more genuinely deployed if aimed at the many people who cross the frontier every day and not to a particular government,” he said.
“Such remarks are unhelpful and don’t help to lower the temperature.”
“Gibraltar won’t rise to them and will instead continue to concentrate on wanting to cooperate and work with the EU Member States in future as the only part of the continent of Europe that will remain resolutely British forever.”
A spokesman for the UK Government also reacted to Mr Barnier’s comments and the reference to Spain’s veto in the draft agreement published yesterday.
The spokesman said the UK had been consistent in its view that the Brexit negotiations were “on behalf of the whole UK family” including Gibraltar.
“The Prime Minister has made that clear including in her statements to the UK Parliament,” the spokesman said.
“Whilst we do not agree with the reference to the EU’s negotiating guidelines, we want to take a constructive approach to our negotiations with the EU.”
“In that vein, we have had productive technical discussions with a range of Member States, including the Spanish Government, on EU exit.”
“The Government of Gibraltar has been fully involved throughout on issues that affect Gibraltar.”
“We are optimistic that together we can find a way forward that works for Gibraltar, the UK and the EU, including Spain.”