Transition deal covers Gibraltar, but Spanish veto remains

The UK and the European Union have agreed the terms of a transition period 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 made public on Monday, but which 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.”

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 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 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.