by Brian Reyes in London
Gibraltar will step up its contingency planning as from January 1, 2019, if there is no certainty of a Withdrawal Agreement and implementation period by that date, Chief Minister Fabian Picardo told an influential House of Lords select committee yesterday.
Addressing the EU Select Committee, he also signalled his hope that Gibraltar, the UK and Spain could salvage elements of the Gibraltar negotiations even in the event of a ‘no deal’ Brexit between the Uk and the EU.
Mr Picardo briefed peers on the latest developments in respect of Gibraltar and praised the work of Prime Minister Theresa May and her team in the wider Brexit negotiations, expressing confidence that a Brexit deal would be reached.
But while he was optimistic about the progress to date on Gibraltar, he left no doubt that his government was continuing to prepare for a scenario where the UK – and be extension, the Rock – crashed out of the EU without a deal to soften the landing.
Mr Picardo said the Rock’s status outside the EU customs union meant that goods entering Gibraltar already had to cross a hard border. As such, many of the UK’s own concerns about the impact of a hard Brexit were not relevant to Gibraltar.
But the nature of supply chains also meant that customs delays at Dover or Calais could have a knock-on effect on goods shipped to the Rock.
“Gibraltar is not a place where we are needing to stockpile food or anything like that,” Mr Picardo said.
“But if you do need, for example, a particular type of pharmaceutical, we will ensure that you are able to have it and there will be a seamless provision of it.”
He said the key date before his government stepped up to the next phase of planning was January 1, adding: “Our civil service and our providers are all geared up to go into the next gear of contingency planning after that date if there isn’t yet a deal that we can all rely on to be in place by the 29th of March.”
In evidence during an hour-long session in the UK Parliament yesterday evening, Mr Picardo was positive about the Gibraltar Brexit protocol that will ensure the Rock’s inclusion in any wider Withdrawal Agreement and transition period reached between the UK and the EU.
Without going into detail given that negotiations are still ongoing, he explained too the different memorandums being agreed with Spain on practical issues such as the environment, law enforcement cooperation, tobacco and tax.
There was a “status quo” on the airport, he told peers, which would remain as it is.
Mr Picardo said the memorandums were “dependent” on the wider UK/EU withdrawal agreement, but expressed hope that even in the event of a ‘no deal’ scenario, something could be salvaged from the progress to date.
While the protocol is an annex to the withdrawal agreement, the memorandums on practical matters are not, meaning they could – in theory at least – exist in the absence of a wider deal, something that was “in everyone’s interest”.
“I would hope that we might be able to ensure that they are our ‘no deal’ deal contingency,” Mr Picardo said.
“I would also hope that we do not reach the stage where we are scrambling to do a ‘no deal’ deal and that everybody is protected by a UK/EU deal.”
“Those might sound like fanciful concepts…but it would be a pity to throw away the work that has been done.”
“It is not easy for Gibraltar and Spain to say that they have come to terms on things and I think it really does represent a change in the relationship and a positive step in the right direction.”
Mr Picardo recalled a Spanish diplomat who, in a private conversation with him, had described how the separation of the memorandums from the protocol “could save both Spain and Gibraltar from the train wreck of a no deal scenario”.
That, Mr Picardo told the committee, “was an astute observation”.
The Chief Minister also explained that any agreement on taxation would come not as a memorandum but as “a tax treaty” between Gibraltar and Spain.
Mr Picardo would not be drawn on detail of what was being negotiated, but was happy to explain what was not up for discussion.
“Something that is certainly not under discussion is the rate of tax applicable in Gibraltar in respect of corporate taxation,” he said.
He said Gibraltar’s 10% corporate taxation rate was above what the OECD regarded as harmful.
“We are not negotiating that rate of tax with Spain or indeed with any other third party…” he said.
“But that’s not to say that we haven’t had positive engagement with our Spanish counterparts in respect of the things where we think we can work together as neighbouring tax authorities, where we can resolve issues relating to domicile and where we can work together in a way that would be unprecedented and I think mutually beneficial.”