Gibraltar open to Brexit arrangements with Spain even if divorce deal fails, Picardo says

Gibraltar is ready to explore ways of adapting agreements on practical cooperation reached with Spain in the withdrawal negotiations even if the Brexit divorce deal is rejected by the House of Commons, Chief Minister Fabian Picardo said yesterday.

The Chief Minister was reacting after Spain’s state secretary for Europe, Luis Marco Aguiriano, said the Memorandums of Understanding stemming from the Gibraltar Protocol in the Brexit deal would remain valid even if the deal fell through.

Gibraltar does not agree with that analysis and Mr Picardo was adamant that the MoUs could not exist independently of the protocol and the overall agreement.

But the Chief Minister also made clear that Gibraltar, while keeping a “cynical, sceptical” eye on Spain’s intentions, would continue to seek ways of enhancing cross-border cooperation.

“Without a Withdrawal Agreement there is no Protocol on Gibraltar,” he said.

“Without a Protocol on Gibraltar, there are no effective Memoranda hanging off that.”

“But that is not to say, Mr Speaker, that in a no deal context we would not wish to consider with Spanish colleagues how to adapt arrangements to ensure we work to soften the blow of no deal for our respective citizens and continue to seek cooperation on the terms of the MoUs in those important policy areas.”

“We will start consideration of such matters in early January in meetings in London with UK and Spanish colleagues.”
“But we do not consider that it is accurate to say that the MoUs can automatically be considered to be in effect if there is no Withdrawal Agreement. The opposite is our legal view.”

OPTIONS
Mr Picardo was making a statement to Parliament following a week of Brexit-related developments including the publication by the EU of contingency measures that Brussels said would not apply to Gibraltar.

He said the EU decision to exclude Gibraltar “gives us a good taste of what may lie ahead in a no deal scenario”.

The government is now considering the EU’s measures in detail and assessing the implications of the move for Gibraltar, while ploughing ahead with the Rock’s own preparations for hard Brexit.

Mr Picardo highlighted the fact that Gibraltar had secured a commitment for continued market access into the UK for Gibraltar-based business after Brexit, irrespective of whether there was a deal or not, and had also ensured the continuity of arrangements for healthcare and education.

He said Gibraltar already operated as an island economy in key areas and was therefore well-prepared for the potential impact of a no-deal scenario.

The Gibraltar Government has championed Prime Minister Theresa May’s Withdrawal Agreement as the best available option for both the UK and Gibraltar given that legally, the only other alternative is a hard Brexit.

Yesterday the Chief Minister made clear that, while the best outcome for the Rock would be to remain in the EU, this was not currently an option that could be pursued.

“Our preferred course is for this Brexit nightmare to end [and] the best way to end it is for the Article 50 notice to be revoked, as the Court of Justice of the European Union has now agreed is possible at any time before the 29th March,” he said, adding that a new referendum could also be an alternative.

“An alternative might be a new referendum in the United Kingdom, as I set out in July 2016.”

But neither of these possibilities was on the table at the moment, Mr Picardo told Parliament.

“Slowly I think it will dawn on many that – if we are to leave, which we do not want to do – it is better to leave on the basis of the agreement and not without it,” he added.

“And what should not be allowed to fly is the ‘unicorn’ that we should be directing our energies to trying to bring about ‘remaining’ in the European Union at this stage.”

“If there is a further referendum, we will back remain.”

“If there is no deal, after the UK Parliament votes on Mrs May’s deal, we will back a recision of the Article 50 notification before an extension.”

“But we have a duty as a responsible government to be ready for eventualities, we do not have the freedom to be irresponsible and simply ignore reality.”

“We have to work on the basis of the realities that are before us and which we are dealing with in our relationship with the UK government.”

“And we have to work on the basis of the work that has already been carefully done, the heat maps and the understanding of the matters that will arise in a no deal scenario.”

Mr Picardo said Gibraltar would continue to prepare for a hard Brexit even though the UK Parliament has yet to debate and vote on the divorce deal.

SOVEREIGNTY
During a wide-ranging statement, the Chief Minister also bemoaned the renewed focus by Spanish political parties, particularly those on the right, on joint sovereignty.

Earlier this week, the Spanish Senate debated and approved a motion tabled by the Partico Popular calling on the Spanish Government to pursue joint sovereignty as part of the Brexit process, a reflection of the proposal tabled several years ago by the then Foreign Minister, Jose Manuel García-Margallo, and which Gibraltar rebutted at the time.

“I think that there is no depth of understanding in any political party in Spain of how foolish this notion is,” Mr Picardo said.

“Gibraltarians are not going to change their minds.”

“We are not going to be bribed with access to the EU market.”

“We are not going to be bribed with any sweet or reward.”

“We are not going to be cajoled by any threat or action.”

“Can they please get it into their heads in all of the political factions in Spain?”

“Can they just please forget it?”

Mr Picardo, who highlighted the UK’s double-lock commitment and steadfast position on sovereignty, received support on this point from the Opposition bench.

Elliott Phillips, the Leader of the Opposition, said Gibraltar had faced 14 different types of siege in the past and would “face this challenge together”.

Independent MP Marlene Hassan Nahon reflected on the “political pantomime” in the UK and urged the government and the GSD, who have engaged in feisty exchanges on Brexit, not to fall into the same trap as MPs in the House of Commons.

“We are all aligned in this crisis and we all have to sail in the same direction for the best outcome because none of us are immune to the potential effects of post 29th March 2019,” she said.

Ms Hassan Nahon called on MPs to pool their experience, skills and resources for a common purpose, rather than seeking to score party political points in the run-up to an election year.

“We all need to come out of this stronger rather than fractued, battered and bruised by each other,” she said.

TAX RULING
The Chief Minister also reflected on the European Commission’s recent decision on Gibraltar’s tax legislation following a six-year state aid investigation.

The EC found that two minor aspects of the legislation relating to royalties and interest breached EU state aid rules. It also found that five of 165 tax rulings investigated by its officials were in breach of EU rules.

“Although it is termed a negative decision, its effect is minor whilst at the same time it vindicates our view that there is nothing fundamentally unlawful or wrong with our Income Tax Act 2010,” Mr Picardo said.

“Indeed, considering that the entirety of the Act was under examination by the European Commission, the result of the investigation, which in total has taken over six years, is a remarkable success for Gibraltar and a massive blow for all those who seek to denigrate Gibraltar as a tax jurisdiction.”

“The net result of this investigation is that the Income Tax Act now enjoys a full clean bill of health from the Commission.”

“This is great, great news indeed [and] whether we are in the EU or out of the EU, this is an important feather in our cap as a jurisdiction.”

“Even though we may now be leaving the EU, it is with a measure of great satisfaction that we will be doing so with a corporate tax regime that has been found to be fully compliant with EU rules,” he said.

“I have no doubt that this will stand us in good stead, whatever the future may bring.”

Gibraltar publishes EU withdrawal Bill

The Gibraltar Government yesterday published a Bill to repeal the European Communities Act on the day that the United Kingdom and Gibraltar leave the European Union.
The legislation, if approved, would end the supremacy of EU law in Gibraltar law, convert EU law as it stands at the moment of exit into domestic law, and preserve laws made in Gibraltar to implement EU obligations.
It would also create powers to make subsidiary legislation to enable corrections to be made to the laws that would otherwise no longer operate appropriately once Gibraltar leaves the EU so that the domestic legal system continues to function correctly outside the EU.