Gibraltar in the European Union: In and Out

This is the text of a lecture delivered by Gibraltar's Deputy Chief Minister, Dr Joseph Garcia, at the University of Gibraltar on June 29

by Dr Joseph Garcia, Deputy Chief Minister

I will be looking at a very topical issue today.
I say that because the title of my talk is “Gibraltar and the European Union: In and Out”.
Curiously, 96% of us have already emphatically answered the IN or OUT question!
I think that now, just over two years on from the Brexit Referendum, is a good moment in which to reflect on two points.
First what being IN the European Union has meant for Gibraltar and;
secondly what it could mean for us to be OUT.
However, as is often the case with our homeland, questions concerning Gibraltar are never binary.
Nothing is black and white.
There are always grey areas.
We could call them “in-betweens” and “out-betweens”.
But it all makes for a particularly confusing scenario.
Although I should add that the legal position itself is absolutely clear.
The nuances of our unique EU status have meant that not all aspects of the EU Treaties applied to us.
At times, we have been shunned or ignored by the EU.
We have felt as if we were out.
Some have also pushed for us to be left out.
They have also pushed for us to be in when at times we preferred to be out.
And others have simply failed to recognise that we are in.
It has suited them to regard us as if we were out.
Our history in the EU is tormented with these convoluted and complicated questions.
As we prepare to make the transition from IN the EU to OUT of the EU, I intend to discuss some of these issues with you today.

In the EU and Gibraltar’s EU Status

So let us start at the beginning.
Our history in the EU opens when the United Kingdom, together with Denmark and Ireland, joined what were then the European Communities on 1 January 1973.
This was 15 years after the European Economic Community was established with the signing of the Treaty of Rome in 1957.
It did not take the United Kingdom 15 years to decide to join.
It was a case of third time lucky.
Many forget that two United Kingdom applications to join the EC were vetoed in 1963 and again in 1967 by the then President of France, Charles de Gaulle.
When doing so, being the forward thinker that he was, he rather ominously stated that Britain was “incompatible” with Europe and that Britain harboured a “deep-seated hostility” to any pan-European project.
Perhaps time has shown that he was not wrong.
If only he had been paid attention to back then!
How much time, trouble and energy we would all have saved!
Importantly for us though, at the time of the United Kingdom’s accession to the EC, Article 227(4) of the Treaty of Rome stated that its provisions “...shall apply to the European territories for whose external relations a Member State is responsible”.
At the time, Article 227(4) applied to a number of British territories.
These were the Crown Dependencies, the Sovereign Bases in Cyprus and, of course, Gibraltar.
Of these, only Gibraltar opted for a very substantial membership of the EC.
Not being European territories, none of the other British Overseas Territories were covered.
They have enjoyed an associated status with the EU which is also shared with the non-European territories of Denmark, France and the Netherlands.
As a result, Gibraltar is the only one of the British Overseas Territories that is a part of European Union and to which the Treaties apply.
Article 227(4) of the Treaty of Rome is today Article 355(3) of the Treaty on the Functioning of the European Union.
It is by virtue of this Article 355(3), that EU law continues to apply to Gibraltar.
In fact, uniquely, Gibraltar is the only territory in the whole of the EU to which this provision applies.
The application of the Treaties to Gibraltar is subject to certain exemptions.
These are set out in Articles 28 – 30 of the 1972 UK Act of Accession.
These exemptions are the following:
we are outside the Common Agricultural Policy;
we are outside the Common Fisheries Policy;
Gibraltar applies no VAT;
Gibraltar is also excluded from the Customs Union.
Gibraltar is treated as a third country for the purposes of trade in all goods.
It is on this basis, that customs checks are conducted on the importation and exportation of goods by authorities on either side of the border.
It is also because of this that we are able to set our own import duty rates on goods imported to Gibraltar.
In Brussels we are often asked the question, how did we achieve this unique status and why did we want it?
In keeping with the theme of this In and OUT discussion, why did we want to be IN certain things but OUT of others?
The reasons for this are two-fold.
First of all it is important to recall that the United Kingdom and Gibraltar joined the EC in 1973.
Spain was still ruled by General Franco.
It was not part of the club.
Many of you will remember that the border between Gibraltar and Spain was physically closed.
Indeed, next year we will mark 50 years of that closure.
There were no overland trade routes between Gibraltar and Europe.
Not being in the Customs Union therefore allowed Gibraltar to maintain its historic status as a Free Port.
Secondly, Gibraltar was at liberty to negotiate a tailor-made status specifically because Spain was not in the European political club.
Madrid could not weigh in on matters related to Gibraltar.
Spain was quite simply not there.
Contemporary documents demonstrate that, at the time of negotiations over Gibraltar’s exclusion from the Single Market in Goods the discussions were not considered controversial.
Like I said Spain was not in it and was not part of those discussions.
The maintenance of Gibraltar's status as a Free Port was treated as a technical question rather than a divisive political issue.
There was a willingness to find solutions.
What this demonstrates to me is that, with good faith, political will and in the absence of diplomatic contamination from Madrid, technical solutions can, very effectively, be applied to cater for Gibraltar’s unique and specific circumstances.
If only Spain were not in the club now!
Aside from the exemptions I have already mentioned, Gibraltar, as you know, does not form part of the Schengen Area given that the United Kingdom opted out of the Schengen Agreement.
Thus, Spain's border with Gibraltar is considered an external border of the Schengen Area.
It is on this basis that Spanish border guards conduct border controls on entry to Spain from Gibraltar and exit to Gibraltar from Spain.
Moreover, because of the terms of the United Kingdom’s opt-out from the third stage of the EU’s Economic and Monetary Union, Gibraltar has not adopted the single currency.
In a nutshell, that explains our legal status in the EU.
And it is true that as part of the European Union our economy has flourished into the modern, service-based economy that it is today.
Being in the European Union, Gibraltar has certainly benefitted from EU fundamental principles;
on the free movement of people;
the freedom of establishment;
the free movement of capital;
and the freedom to provide services.
Generally speaking, throughout the time of our membership of the European Union, we have been a pro-European community.
We have been proud of our European citizenship.
We have been enthusiastic Europeans.
We have made every effort to ensure that Gibraltar remains fully compliant with all of our EU obligations.
It is precisely because of this that some decisions on Gibraltar taken by the EU have left a sour taste in the mouth.
We have felt hard done by.
We have not felt understood or welcome.
We have felt betrayed.
But this was not always the case.
For 13 years, from 1973 to 1986, being in the European Union meant relatively little for us.
Our economy floated on the fact that Gibraltar was an MOD outpost.
During that period, as Napoleon once said, Europe ended at the Pyrenees.
It was only until Spain joined in 1986 that Europe came to our doorstep.
For a brief moment in time, there was a genuine glimmer of hope that the Spanish claim to the sovereignty of Gibraltar might dissolve in a developing European family with common interests.
Political commentators believed that the UK could use the EC and NATO to obstruct Spanish diplomacy.
They believed that a Spain admitted with UK blessing would be grateful.
They argued that Madrid would be more constrained in the pressures it could bear to bring on Gibraltar.
They predicted an era of positive relations going forward.
How wrong they were!
Instead of cooperation, we got confrontation.
And the opening salvo was fired almost immediately -
less than 24 hours after signing the Accession Treaty,
with the ink having not yet dried on Spain’s signature.
Spain promptly sent a despatch to the UK Foreign Office.
This confirmed that accession to the EC did not imply any changes with regard to Spain’s position on Gibraltar.
The UK simply took note.

Spain in the EU

Spain's accession to the club changed the dynamic of Gibraltar’s relationship with Europe.
It brought about important consequences.
I want to emphasise that this is where it all started.
We were fine before Spain joined.
Nobody else cared about Gibraltar.
Nobody else was as obsessed.
First of all, if Spain was going to comply with EC rules on the freedom of movement of people, it would need to open up the frontier.
The gates had been slammed shut by General Franco in 1969.
They remained closed for nearly ten years after Franco's death.
They opened in February 1985.
Therefore they were closed for longer by a democratic Spain than they had been under the dictatorship.
This did little to inspire confidence here.
Gibraltar, at the time, advanced EC rights to Spaniards even before Spain joined the EC in 1986.
We asked for nothing in return then.
For a similar arrangement, not that long ago, Sr. Margallo was already asking for half our sovereignty!
Historians always have the advantage of hindsight.
It is easy to look back.
And in retrospect, the United Kingdom committed a catastrophic error.
The UK was in a position of strength.
Margaret Thatcher had threatened to veto Spanish entry.
London should have insisted that all restrictions against Gibraltar were lifted unconditionally as the price of Spanish entry.
Spain should have been made to drop the sovereignty claim.
Decolonisation could have been progressed.
The bogus claim to our territorial waters could have been put to rest.
But Mrs Thatcher and Sir Geoffrey Howe opted not to use their veto against Spain.
This was a card that the UK should have played in the same manner that Mr de Gaulle played it against Britain in 1963 and 1967.
The result of this failure of UK policy soon became apparent.
Spain was not grateful to the UK.
Those who saw the future through rose-tinted spectacles were wrong.
We could have told them that.
Instead of allowing Europe to dissolve these issues, successive Spanish Governments have adopted a policy of seeking to exclude Gibraltar from Europe.
They have not wanted the issue dissolved.
They have shamelessly used the European Union as a conduit through which to advance their sovereignty claim.
They were heartened by the EU’s fear to act.
And the political onslaught was to come by way of a three pronged action: by air, by land and by sea.

The Airport

I will start with the air.
In 1987, the EC provisionally agreed a package of air liberalisation measures.
This concerned market access in aviation which extended the scope of a previous arrangement in which Gibraltar had been included.
Barely 18 months after having joined the EC, Spain vetoed the package making its support conditional on it not being applied to Gibraltar.
They wanted Gibraltar Airport to be excluded.
Understandably, the Gibraltar House of Assembly condemned the Spanish action.
The United Kingdom did too.
Except that six months and one u-turn later, the UK agreed to the exclusion.
In December 1987, Spain and the UK agreed a joint declaration on what they described as co-operation over the joint use of the airport.
This was agreed between the UK and Spain.
It was realpolitik at its worst.
Outright blackmail.
Our rights as a European territory to which the Treaties applied were sacrificed on the altar of political expediency.
When Gibraltar challenged its exclusion in the European Court, the Court refused to listen to the substance of the case.
Instead, it ruled the case inadmissible on technical grounds.
The offshoot was that the Gibraltar Government never passed the necessary legislation to give effect to the Anglo-Spanish agreement.
The consequence was that Gibraltar Airport was suspended from all aviation measures from 1987 until 2006.
With the establishment of the Trilateral Forum for Dialogue in 2006, the then Spanish Socialist Government formally agreed with the then United Kingdom and Gibraltar Governments that it would no longer seek the suspension of Gibraltar Airport from EU civil aviation measures.
It was also agreed that all measures that Gibraltar had been excluded from would be extended to it.
And Gibraltar would construct a new air terminal parallel to the frontier fence with direct access to another building on the Spanish side.
Gibraltar kept to its part of the bargain.
A new air terminal was built next to the border at a cost of over £ 80 million to the Gibraltar taxpayer.
There was no EU funding for this project as had been hinted at one point.
The terminal opened at the end of 2011.
Unfortunately, the Government in Spain changed as the terminal opened.
The new Partido Popular Government reversed the policy of their Socialist predecessors and moved from cooperation with Gibraltar to outright confrontation.
The result remains evident for all of us to see.
Spain withdrew from the Trilateral Forum for Dialogue.
There is still no access to the new terminal from the Spanish side.
Madrid abandoned the Cordoba Agreement.
This action raised the fundamental question in international relations of a country blatantly dishonouring what they had previously signed up to.
Both the Gibraltar Government and the UK Government have stuck to the agreement.
This included UK taxpayers paying millions of pounds to Spanish pensioners.
Gibraltar implemented the aviation aspects of Cordoba and direct flights to Madrid commenced.
The Spanish veto did not only affect Gibraltar.
It has had consequences for Europe as a whole.
A number of aviation measures are held up for the whole of the EU:
proposals to recast the Single European Sky;
to advance air passenger rights;
to streamline common rules for the allocation of slots; and
for the establishment of a common aviation area with the Ukraine.
The EU has done nothing.
They think doing nothing is being neutral.
This is not so.
I will never tire of explaining it to them.
Their obligation is to uphold European Union law.
And European Union law on civil aviation applies to Gibraltar.
At any rate, it applies while we are still in the club.
It is not for the EU to assert that there is a dispute over the land.
The dispute is a Spanish invention.
In the 1960’s Spain refused British invitations to refer her claim to the International Court of Justice.
More than that, the international Court of Arbitration for Sport in Lausanne determined, in the context of the GFA’s application to join FIFA, that “the allegation that Gibraltar is a ‘disputed’ and/or ‘sensitive’ territory... is legally and factually misplaced”.
It unequivocally concluded that “under public international law the sovereignty of Gibraltar is clearly British”.
But Brussels need not even go that far.
We have always maintained that the solution is to apply EU law.
This is in accordance with our terms of membership under the Treaties.
The EU, including the Council and the Commission, as guardian of the Treaties, therefore had a role to play instead of acting mere bystanders.
These arguments have been put to both the Commission and other Member States but neither have been willing to grab the bull by the horns.
The pun is fully intended.
Their cunning plan is that Brexit will make the problem go away.
Time will tell.

The Border

I said earlier that the Spanish attack has come by air, by land and by sea.
When I said, by land, I was of course referring to the border.
The Border has seen EU intervention in a way that the Airport has not.
Some of you might recall that the former Prime Minister, David Cameron, urged the then President of the Commission, Jose Manuel Barroso, to put an end to the border crisis of 2013.
As a result, the European Commission sent three inspection visits to the border in 2013, 2014 and 2015.
Those delays were politically motivated.
They followed intensive controls by the Spanish authorities.
Thousands of people were made to queue up for hours every day.
Many of them were Spanish nationals.
Others were EU nationals.
It took a while, but the Commission eventually agreed with us that the checks which created the lengthiest delays were "disproportionate".
The situation at the border improved as a result of their intervention.
It is still far from perfect.
Transit through the Border has always been used by Spain as a political weapon.
Indeed, there were suggestions that one of Mr Margallo’s first acts on taking office was to ask if he could shut the border.
The second was to explore a frontier toll.
None of these were possible.
I will later cover the importance of the border in the context of Brexit.

British Gibraltar Territorial Waters

As I mentioned earlier, Spain has used the EU to advance its sovereignty claim over Gibraltar.
That has also included British Gibraltar Territorial Waters.
This came in the context of EU environmental protection measures and the designation of Special Areas of Conservation.
In 2006, the UK on behalf of Gibraltar designated an area of BGTW, known as the “Southern Waters of Gibraltar”, as a Special Area of Conservation under the Habitats Directive.
The following year Spain applied to the Commission for the designation of a site known as the “Estrecho Oriental”.
This overlapped almost all of BGTW, including our own site.
The UK complained that it was not informed of the Spanish proposal.
The Commission, presumably, conducted no legal analysis on the question of the sovereignty of BGTW when approving the designation.
For the waters are indisputably British under the United Nations Convention on the Law of the Sea.
The Gibraltar Government, supported by the United Kingdom, challenged the designation in the European Court.
Gibraltar went to Court two times.
We went at first instance and then on appeal.
Again, both actions failed on technical grounds.
The appeal, was kicked out by a panel of three judges which included a Spanish judge.
This made matters worse.
Spain immediately published management plans banning marine activities in our waters.
Spanish environmental research vessels began to illegally enter our waters to undertake purported survey work to comply with obligations resulting from their designation.
Instead of putting an end to the conflict the EU, once again, chose to remain “neutral” as it did with Gibraltar Airport.
But, as Desmond Tutu once said, “If an elephant has its foot on the tail of a mouse and you say that you are neutral, the mouse will not appreciate your neutrality”.
We certainly have not appreciated that neutrality whilst being in the EU.
But we are also no mouse.
We fight back.
And we punch above our weight.
However, there is no doubt that this behaviour on the part of the EU institutions has done nothing for their standing here in Gibraltar.
Spain in the EU: More complications
The attack has not only come by air, by land and by sea.
Spain has also abused their position in the EU.
They have sought to belittle our rights as European citizens.
They have put in doubt our credentials as good Europeans.
They have spread false rumours against Gibraltar.
They have sought to undermine our economy at every turn.
We have had to resort to Court in defence of our rights.
We had to fight even for our right to vote in European Parliamentary elections.
Nothing has come easy for us.
Nothing has been handed down on a plate.
Ever since Spain joined the EU it has been one battle after another.
Spain has also objected to the role of Gibraltar’s competent authorities under relevant EU legislation.
Only Spain raises issues.
None of the other Member States do.
As a result, when liaising with Spanish counterparts, Gibraltar competent authorities have to channel formal, written communications via the FCO in London.
Finally, no account of the history of Gibraltar in the EU would be complete if I do not mention one more area.
This is Spain’s constant use of EU structures to unfairly assault Gibraltar’s tax regime.
The other Member States were so fed up with Spain that 27 of the 28 endorsed the Income Tax Act 2010 as compliant with the Code of Conduct for Business Taxation.
They voted 28 to 1 in our favour.
You can guess which country that 1 was.
The OECD ranks Gibraltar in the same category for tax transparency as Member States such as Germany and the United Kingdom.
For years Gibraltar has had to defend itself from baseless accusations and claims driven by Spain’s tireless political agenda.
They have had no other objective than to destabilise Gibraltar.
What I have accounted for is by no means an exhaustive list.
The list goes on and on.
Nonetheless it provides a flavour of what EU membership has been like for us since Spain joined.

Gibraltar out of the EU

So that covers the period that we have been in the European Union.
What should we expect when we are out?
On Monday the debate on the Budget opens in the Gibraltar Parliament.
As I will say in my budget speech next week, we are now at a crucial stage of the Article 50 process.
There are a little over 3 months to go until the critical October European Council.
There the UK-EU Withdrawal Agreement is expected to be finalised.
We are around 8 months away from our anticipated departure from the EU.
We did not want Brexit.
Despite the decision to leave, the government has taken decisive action.
We have led with ambition, persistence and determination with a defined message and a clear set of objectives.
A set of objectives which would allow Gibraltar’s economy to continue to flourish.
Downing Street itself has repeated over the last 24 months that it will work for a Brexit deal which fully recognises the Rock’s priorities.
A deal that works for all parts of the UK family including Gibraltar.
We know what our priorities are.
We therefore know what we need to achieve to make Brexit work.
An important objective was to maintain and enhance our trading relationship with the UK.
The UK Government has already made it absolutely clear that Gibraltar’s access to the UK market will remain unchanged post-Brexit.
They have also made it clear that such access will not only be maintained but it will be broadened where possible.
Access to the UK market is essential to Gibraltar’s economic sustainability.
We now have that access.
We will keep it in the future.
Such assurances have not only been provided in respect of future trading arrangements.
We have also extracted from the UK Government commitments which will ensure the same treatment post-Brexit for our students and our patients.
We have agreed with the UK Department for International Trade to put in place a mechanism for ensuring that Gibraltar is consulted on the Free Trade Agreements the UK plans to negotiate outside the EU.
This is a new opening for us.
It will spur our renewed engagement with the Commonwealth.
That leaves us with the border.
The debate here is different to that in Northern Ireland.
Their concern is more about the movement of goods than of people.
Gibraltar is not in the Customs Union so our focus is different.
They do not want what is termed a hard Brexit with controls and check-points.
We have controls and checkpoints already.
The debate here is about the intensity of those controls once we have left the European Union.
This is important to residents on both sides.
It is also important to frontier workers.
We should bear in mind that approximately 50% of Gibraltar’s workforce are cross-frontier workers.
These figures are published.
The fact is not a secret.
The vast majority are British expatriates and Spanish nationals but every EU nationality is represented.
You might not be surprised to hear that there are over 8,000 Spanish frontier workers and that there are over 2,500 Brits who live in Spain and work in Gibraltar.
But you may be surprised to hear that there are also:
113 Germans,
113 Irish citizens;
230 Italians;
164 Hungarian,
767 Portuguese,
403 Romanians;
204 Polish;
and even 2 Luxembourgers.
We have the European Union of Frontier Workers right here in our 6.8 square kilometres!
The border is not only important to cross frontier workers but also to Gibraltarians and to the 10 million tourists who visit us each year.
Fortunately, the Spanish rhetoric with regard to the border has changed dramatically over the last 24 months.
We have gone from Sr. Margallo’s threat that post-Brexit it would be “perfectly possible” to close the border;
to Sr. Dastis’ indications that the border “won’t suffer too many changes”; and to Sr. Sanchez’s comments in March when he stated that fluidity at the border was “fundamental”.
The political will therefore seems to be there.
There are legal solutions which exist which could secure the smooth passage of persons across the border even in a post-Brexit world.
We have worked hard on different options.
And we will continue to do so.

Conclusion

So, there you have it.
My aim was to cover 45 years of EU membership in less than 45 minutes.
The final chapter, and possibly the most important piece, is of course yet to be written.
Literally.
It also plays out against the wider background of relations between the United Kingdom and the European Union.
But as we approach that final hurdle I am convinced we do so from a position of strength, stability and solidarity.
We are entirely confident that we have left no stone unturned.