Chapter 1: Introduction
Overview
1.Of all the British Overseas Territories,1 only Gibraltar is part of the EU. Its 24,117 voters were therefore eligible to take part in the referendum of June 2016 but, despite delivering an overwhelming majority for ‘remain’, Gibraltar is now set to leave the EU along with the UK when Brexit negotiations are concluded.
2.This report seeks to highlight the key challenges posed by Brexit to Gibraltar, including for its service-based economy, its land border with Spain, for relations between the UK, Gibraltar and Spain, and for Gibraltar’s future relationship with the EU.
Gibraltar’s current relationship with the EU
3.Gibraltar is a British Overseas Territory, which has been under British sovereignty since it was formally ceded by Spain in the Treaty of Utrecht in 1713. Spain continues to dispute Gibraltar’s status, but the territory joined the European Economic Community in 1973 as a dependent territory of the UK.2 Gibraltar’s membership is now defined under the terms of Article 355(3) TFEU, which states: “The provisions of the Treaties shall apply to the European territories for whose external relations a Member State is responsible.”3
4.The UK’s 1973 Act of Accession provided for certain derogations in relation to Gibraltar, including exclusion from the Common Agricultural and Fisheries Policies, and from the customs union (including VAT and common commercial policies). In effect, this means that Gibraltar participates in all four of the ‘freedoms’ that underpin the EU Single Market, apart from the free movement of goods. The rest of the acquis applies to Gibraltar, apart from those areas from which the UK itself has ‘opt-outs’, such as the Schengen acquis.4
5.Under its current constitution, Gibraltar’s own elected Government and Parliament are responsible for the transposition and implementation of EU laws, which amount to about 70% of all Gibraltar’s legislation. Since 2004, Gibraltar has also participated in elections to the European Parliament as part of the South West England region, following a successful challenge against its disenfranchisement at the European Court of Human Rights.5
This report
6.On 23 June 2016, 95.9% of votes cast in Gibraltar were in favour of the UK staying in the EU, the strongest vote for ‘remain’ of any area eligible to participate in the referendum.6 As the Chief Minister, the Hon Fabian Picardo MP QC, told us, this result reflected near total unity on the issue across party, class, and generational lines, on a scale matched only by that shown in referendums on the issue of Gibraltar’s sovereignty.7 Nevertheless, the overall outcome in favour of leaving the EU now presents challenges to Gibraltar’s place in Europe, to which, as several of our witnesses pointed out, the territory is culturally, socially, economically and geographically attached.8
7.The Chief Minister stressed that the referendum result had been accepted by people in Gibraltar, but admitted that it had caused considerable uncertainty, notably over the economic impact of any restrictions in access to the Single Market in services and potential disruption at the frontier with Spain, which will now become an external EU border.9 Witnesses also told us that the referendum had challenged people’s sense of identity as Gibraltarian, British, Europeans, as well as sparking renewed calls by Spain for negotiations on Gibraltar’s sovereignty.10
8.The UK Government will be responsible for representing and promoting Gibraltar’s views and interests as part of EU withdrawal negotiations, and in any future EU and international trade agreements. We have therefore undertaken this inquiry to draw attention to the particular issues and concerns facing Gibraltar as a result of the UK’s decision to leave the EU.
9.We heard evidence from the Chief Minister of Gibraltar, Mr Picardo, the Deputy Chief Minister, the Hon Dr Joseph Garcia MP, and the Attorney-General of Gibraltar, Michal Llamas QC. We also heard from Dr Chris Grocott, Lecturer in Management and Economic History at the University of Leicester, Professor John Fletcher Pro Vice Chancellor for Research and Innovation at Bournemouth University, and Robin Walker MP, Parliamentary Under Secretary of State at the Department for Exiting the European Union (DExEU). We were also grateful to receive written evidence from the University of Gibraltar, the Gibraltar Port Authority, politicians, academics, and other interested parties.
The work of the EU Committee
10.Following the referendum on 23 June 2016, the European Union Committee and its six sub-committees launched a coordinated series of inquiries, addressing the most important cross-cutting issues that will arise in the course of negotiations on Brexit. These inquiries, though short, are an opportunity to explore and inform wider debate on the major opportunities and risks that Brexit presents to the United Kingdom.
11.We make this report to the House for debate.
1 The EU Treaties do not apply to the UK Sovereign Base Areas of Akrotiri and Dhekelia but they are treated as part of the territory of Cyprus for customs, VAT and excise purposes and they have been de facto members of the eurozone since Cyprus adopted the euro in 2008.
3 Consolidated version of the Treaty on the Functioning of the European Union (OJ C 326/1, 26 October 2012)
6 ‘EU referendum results’ Financial Times (24 June 2016): https://ig.ft.com/sites/elections/2016/uk/eu-referendum/ [accessed 20 February 2017]
8 Written evidence from Marlene D E Hassan Nahon MP (GLT0004), Peter-Ashely Mackay-Jackson (GLT0003) and Prof Andrew Canessa (GLT0002)