Businesses warn of ‘frustration, worry and anger’ as treaty deadline approaches 

Gibraltar’s business community is uneasy about the changes facing local traders once the UK/EU treaty on Gibraltar comes into force in less than two months’ time. 

The Gibraltar Government has over the past fortnight been briefing the business community on the treaty ahead of its expected implementation date on April 10.  

This included a packed town hall meeting in Grand Battery House where the key players of the Gibraltar negotiating team – Chief Minister Fabian Picardo, Deputy Chief Minister Dr Joseph Garcia and Attorney General Michael Llamas – explained the main changes and took questions from those present.  

Those briefings and technical notices issued in parallel have been eyed jealously from the Spanish side of the border, where business organisations and politicians alike complain about a lack of engagement with the central government in Madrid, adding that most of what they know about the treaty they have learnt from Gibraltar. 

And yet despite this, the sense in much of the business community here is that they are heading into the unknown without a detailed roadmap to show them the way. 

That was among the key takeaways from a forum organised by the Gibraltar Federation of Small Businesses and the Chamber of Commerce last Thursday evening. 

The meeting was held at the GFSB’s newly refurbished offices in Irish Town and it was standing room only. The Chronicle was allowed to sit in on condition that no businessperson was identified by name to ensure all could speak openly. 

The mood at the meeting was summed up by the GFSB with three words: “Frustration. Worry. Anger.” 

It was clear from the lively debate that, even if the answers to some of the broader questions have a degree of clarity, all businesses are hungry for granular, operational detail. 

The challenge is that much of this information will be not just sector specific, but business specific. More than that, even different product lines provided by the same business may be subject to different requirements going forward. 

It is that detail that businesses need to prepare and adapt. Right now, they feel they do not have it. 

With the treaty in place, Gibraltar will be subject to EU requirements and not every supplier currently selling goods to Gibraltar businesses is set up to trade, in effect, into the EU. 

That means big changes for many traders and while some businesses have answers to some of the questions that affect them directly, most feel they do not. 

How will everything work in practice for those who import and export specific goods? What, exactly, does a business have to do to get ready for new systems and processes? What shape will those systems and processes take? 

“We’re talking about the 10th of April and we know nothing,” one said, echoing a common refrain. “It’s unbelievable.” 

While the Government has provided ample information, it is so far hindered in answering the highly detailed questions because the treaty has not yet been published by either the UK or the EU, the two signatories. Once the text is available, more information will likely follow. 

But this offers little solace to business owners who fear the real-world impact of the agreement and the short window of time they have in which to prepare. 

At the meeting last Thursday there were representatives present from across all business sectors, from logistics operators and restaurateurs to jewellers, clothes retailers and everything in between. 

The more questions were asked, the more many of those present realised what they did not know. 

In the exchanges though, some prominent themes emerged. 

One dominant subject was how the new arrangements would be monitored in practice, for example to stop Spanish companies not registered in Gibraltar from simply driving across a check-less land border to provide services in Gibraltar. 

In theory at least, the provision of services will not be permitted under the treaty arrangements. 

“But who is going to police this?” one retailer asked. 

The fundamental concern was about the need to ensure a level playing field. 

This is a refrain more often heard from Spanish companies fearful of losing business to Gibraltar competitors who they see as having fiscal advantages, but it is equally loud on this side of the border too. 

“Unfortunately, we don’t have a good track record on this even now,” another businessperson said. 

“A van can just drive through now filled with workers and tools who are clearly not coming to visit.” 

“Imagine without a frontier.” 

The consensus was on the need for tight controls and enforcement of rules that require any business delivering services in Gibraltar to be fully licensed here. 

“This problem predates the treaty, but it’s going to get worse without that enforcement,” the speaker said. 

“There has to be something in place to control that because this will affect all types of business.” 

“If we can spot them, I don’t understand how government agencies can’t spot them.” 

“Once that border opens, every man and his dog is going to come here.” 

There were concerns too about security once immigration checks at the border are lifted, with business organisations already engaged with the Royal Gibraltar Police to seek reassurance for their members. 

One of the ways the treaty has been sold to the business community is with the concept that the agreement will open up an EU-wide market of 450m potential customers. 

But while that sounds immediately attractive in theory, the practical requirements to tap that market are less evident. 

The EU’s rules for cross-border trade were far from clear for most gathered in the GFSB premises on Thursday. 

“How do we tap into that?” one asked, summing up the general mood. 

“I don’t know how to get to them.” 

And even if a business does attract EU customers, there are practical barriers to profitable trading, not least the high cost of posting goods which are routed via the UK. 

“That has to be sorted out if we are going to access that bigger market,” the businessperson added. 

The questions flowed during the lively session, the answers less so. 

What happens, for example, to existing government tender contracts? Will businesses be able to increase their prices to cover the additional costs they will face, not least the impact of the transaction tax, which will start at 15% and rise to 17% within three years? 

How, in a new system that will allow for refunds on certain purchases in defined circumstances, will businesses be able to protect sensitive price information about the products they sell? 

How will businesses be able to homogenise with EU rules products that have hitherto not required that label? Will suppliers outside the EU be set up to deliver this and ensure Gibraltar buyers can comply? 

There were fears too of a knock-on effect if some businesses go bust. 

“How many companies here work on credit?” one person asked, describing how their business offers customers up to 90 days to settle bills. 

“If they go bust and I don’t get paid, I’m going to go bust.” 

“The information we have is scant, confusing or simply unavailable, and it’s causing panic and confusion,” another said. 

There are concerns in the catering trade too. While foodstuffs will be exempt from transaction taxes, Gibraltar’s bars and restaurants face higher costs than counterparts in La Linea and the wider Campo. 

From rents to utilities, they feel they are on the back foot and have already seen how trade is lost to nearby Spanish competitors. 

“Where are you going to have your Christmas parties this year?” one restaurateur asked the room. 

There is a more fundamental concern too, perhaps easily pinpointed in the food trade but also evident in other sectors. 

If importers switch to EU suppliers, most likely in Spain, to source their products because it will be easier, cheaper and involve less logistical bureaucracy, what happens to the British products that form part of Gibraltar’s identity? 

“We are going to lose our uniqueness,” one person offered from the floor. 

“We risk becoming another city in Andalucia.” 

The GFSB and the Chamber will be writing to the Government setting out what businesses expect from the Government as the April 10 deadline. 

Despite the concerns voiced last Thursday and in previous meetings, the business community understands that a treaty is necessary for Gibraltar and that the alternative, no deal and a hard border, would likely be worse. 

But businesses are demanding detailed information above all, and a commitment from the Government to help them navigate a change that all hope will be beneficial in the long term. 

At a basic level, they will ask the Government to explore, within the parameters allowed by the treaty, what type of assistance it can offer businesses to cushion the impact of higher costs including the new transaction tax that will be applied on many commodities. 

They will also ask for detailed guidance on the treaty’s operational requirements once the text is published by the UK and the EU.  

Everyone wants to see the fine print of the agreement, but the reality is that the document will be lengthy and complex, and thus hard to digest.  

The expectation is that the Government will provide a simplified guidebook to the main changes once it is able to, and be ready to promptly answer detailed questions as and when they arise, especially on changes to operational procedures. 

Alongside this will be a call for enforcement of the rules to ensure there is no unfair competition from across the border. 

Businesses want too a clear commitment from the Government to protect Gibraltar’s British identity from any unforeseen impact arising from the changes that the treaty will bring to local businesses and the products they are able to sell. 

Protecting Gibraltar’s unique British offering should be a top priority, they believe. 

They also want to see and understand Gibraltar’s strategy to tap the new opportunities that should emerge from guaranteed frontier fluidity and the higher footfall that everyone hopes will follow. 

How will more people be attracted to Gibraltar once the treaty is in place and how will Gibraltar change its offering to make the most of this? 

This last issue was raised several times during Thursday’s meeting, and one businessperson at the event summed it up. 

If this is going to work, he told the Chronicle, “Gibraltar must up its game”.