Chapter 2: The Crown Dependencies, the UK and the EU
Introduction
7.This chapter outlines the current nature of the Crown Dependencies’ relationship with the EU. In order to place this relationship in context, it is important first to summarise the Crown Dependencies’ constitutional relationship with the UK.2
The Crown Dependencies and the UK
8.The Crown Dependencies are the Bailiwick of Jersey (population 100,000), the Bailiwick of Guernsey (population 66,0003) and the Isle of Man (population 85,000). There are three separate jurisdictions within the Bailiwick of Guernsey: Guernsey (population 63,000, and including the islands of Herm and Jethou); Alderney (population 1,900); and Sark (population 600, and including the island of Brecqhou). Each of the three jurisdictions within the Bailiwick of Guernsey is a self-governing Dependency of the Crown, with its own directly elected legislature and fiscal and legal systems. The Government of Guernsey act on their behalf in dealings with the UK Government.4 These islands, together with Jersey, are collectively referred to as the Channel Islands.
9.Each of the Crown Dependencies has a complex history in relation to the United Kingdom and its predecessor Kingdoms. The Channel Islands, situated between 10 and 30 miles off the Normandy coast, were historically part of the Duchy of Normandy, and their connection to the English Crown began with the Norman Conquest in 1066. In 1204, when King John lost continental Normandy to France, the people of the Channel Islands stayed loyal to the English Crown. The Islands were granted various rights and privileges in return, which have been confirmed in numerous Royal Charters since, and which are reflected in the autonomy that the Islands continue to enjoy today.5
10.The Isle of Man, situated in the Irish Sea almost equidistant from England, Scotland, Wales and Northern Ireland, was during the medieval period variously ruled by the Kingdoms of Norway, Scotland and England, until it finally came under the feudal lordship of the English Crown in the 14th century. The Island’s legislature, Tynwald, is claimed to be the oldest continuous legislature in the world.
11.Today, the Bailiwicks of Guernsey and Jersey, and the Isle of Man, are collectively referred to as the Crown Dependencies. They are not part of the UK but are self-governing Dependencies of the Crown, with their own directly elected legislative assemblies, administrative, fiscal and legal systems and their own courts of law. They are not represented in the UK Parliament.
12.The constitutional relationship of the Islands with the UK is maintained through the Crown and is not enshrined in a formal constitutional document. The Crown, acting through the Privy Council, is ultimately responsible for ensuring their good government. The Queen is the Head of State, with a Lieutenant-Governor acting as her personal representative in each Crown Dependency.
13.The UK Government is responsible for the defence and international relations of the Islands. The Lord Chancellor and Secretary of State for Justice is the Privy Counsellor with special responsibility for Island Affairs, supported by a Ministry of Justice Minister (currently Sir Oliver Heald QC MP) with responsibility for the conduct of the Islands’ business within Whitehall. While the Ministry of Justice is responsible for managing the constitutional relationship with the Crown Dependencies, all UK Government Departments have a responsibility to engage directly with the Crown Dependencies on their policy areas.
14.The British Nationality Act 1981 confers British Citizenship on “all those with close connections with the UK, the Channel Islands and the Isle of Man.”6 The Crown Dependencies, together with the UK and Ireland, comprise the Common Travel Area. There is no immigration control within the CTA. The Bailiwicks of Guernsey, Jersey and the Isle of Man are also members of the British-Irish Council.
15.The Islands’ legislatures make their own domestic legislation, which requires Royal Assent or sanction. The Ministry of Justice examines such legislation to ensure that there is no conflict with international obligations (including compliance with the European Convention on Human Rights) or any fundamental constitutional principles. UK legislation rarely extends to the Crown Dependencies, and when it does so is normally extended by an Order in Council with the agreement of the Crown Dependencies.
16.The Crown Dependencies are not recognised internationally as sovereign States in their own right, but as territories for which the United Kingdom is responsible. As such, they cannot sign up to international agreements in their own right, but can have the UK’s ratification of such instruments extended to them, or can sign specific international agreements if they have been entrusted to do so by the UK. However, as we explore in Chapter 4, the Crown Dependencies are developing their international identities.
17.The long-standing practice of the UK when it ratifies, accedes to, or accepts a treaty, convention or agreement is to do so on behalf of the United Kingdom and any of the Crown Dependencies that wish the treaty to apply to them.
The Crown Dependencies and the EU
18.The Crown Dependencies’ relationship with the EU is unique. Article 355(5)(c) TFEU states that “this Treaty shall apply to the Channel Islands and the Isle of Man only to the extent necessary to ensure the implementation of the arrangements of those islands set out in the Treaty concerning the accession of new Member States to the European Economic Community and to the European Atomic Energy Community signed on 22 January 1972.”7
Protocol 3 to the UK Treaty of Accession
19.Protocol 3 to the UK’s 1972 Treaty of Accession to the European Community is set out in Box 1.
Box 1: Protocol 3 of the UK’s Act of Accession to the EU
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Article 1 1. The Community rules on customs matters and quantitative restrictions, in particular those of the Act of Accession, shall apply to the Channel Islands and the Isle of Man under the same conditions as they apply to the United Kingdom. In particular, customs duties and charges having equivalent effect between those territories and the Community, as originally constituted and between those territories and the new Member States, shall be progressively reduced in accordance with the timetable laid down in Articles 32 and 36 of the Act of Accession. The Common Customs Tariff and the ECSC unified tariff shall be progressively applied in accordance with the timetable laid down in Articles 39 and 59 of the Act of Accession, and account being taken of Articles 109, 110 and 119 of that Act. 2.In respect of agricultural products and products processed therefrom which are the subject of a special trade regime, the levies and other import measures laid down in Community rules and applicable by the United Kingdom shall be applied to third countries. Such provisions of Community rules, in particular those of the Act of Accession, as are necessary to allow free movement and observance of normal conditions of competition in trade in these products shall also be applicable. The Council, acting by a qualified majority on a proposal from the Commission, shall determine the conditions under which the provisions referred to in the preceding sub-paragraphs shall be applicable to these territories. Article 2 The rights enjoyed by Channel Islanders or Manxmen in the United Kingdom shall not be affected by the Act of Accession. However, such persons shall not benefit from the Community provisions relating to the free movement of persons and services. Article 3 The provision of the Euratom Treaty applicable to persons or undertakings within the meaning of Article 196 of that Treaty shall apply to those persons or undertakings when they are established in the aforementioned territories. Article 4 The authorities of these territories shall apply the same treatment to all natural and legal persons of the Community. Article 5 If, during the application of the arrangements defined in this Protocol, difficulties appear on either side in relations between the Community and these territories, the Commission shall without delay propose to the Council such safeguard measures as it believes necessary, specifying their terms and conditions of application. The Council shall act by qualified majority within one month. Article 6 In this protocol, Channel Islander or Manxman shall mean any citizen of the United Kingdom and Colonies who holds that citizenship by virtue of the fact that he, a parent or grandparent was born, adopted, naturalised or registered in th e Island in question; but such a person shall not for this purpose be regarded as a Channel Islander or Manxman if he, a parent or grandparent was born, adopted, or naturalised or registered in the United Kingdom. Nor shall he be so regarded if he has at any time been ordinarily resident in the United Kingdom for five years. The administrative arrangements necessary to identify those persons will be notified to the Commission. |
Source: Isle of Man Government, Isle of Man Relationship with the European Union: https://www.gov.im/media/624101/protocol3relationshipwiththeeu.pdf [accessed 15 March 2017]
20.Under Protocol 3, the Crown Dependencies are part of the customs territory of the Union and therefore Union customs matters, the common customs tariff, levies, the prohibition against quantitative restrictions and any measures having equivalent effect apply. There is free movement of agricultural goods and derived products between the Islands and the EU. Measures relating to trade in agricultural goods and derived products with third countries are also included.
21.However, other EU Rules do not apply to the Crown Dependencies. Implementation of the provisions on the free movement of persons, services and capital is therefore not required, and the Crown Dependencies are not eligible for assistance from EU structural funds or under the Common Agricultural Policy. EU tax instruments do not apply, nor do justice and home affairs measures or the Schengen acquis, although the Crown Dependencies support improved judicial cooperation within the EU and have voluntarily applied for recognised equivalent status in a number of legal and policy areas.
22.Thus, in summary, the Crown Dependencies are part of the Customs Union and are essentially within the Single Market for the purposes of trade in goods, but are third countries in all other respects, although they voluntarily implement appropriate EU legislation or apply the international standards on which they are based. They do not contribute to, or receive, EU funds.8
Protocol 3 in context
23.Our witnesses reflected on the background to the drafting of Protocol 3. Senator Gorst noted that when the UK decided it was going to join the European Community, the three Crown Dependencies decided that they did not wish to be members, but because of the structure of their economies at the time, they wished to be able to trade in goods, in particular agricultural produce.9
24.Mr Quayle said that, while the Isle of Man did not wish to join, there had been concerns that trade and freedom of movement with the UK might not have been able to continue once the UK joined. Therefore, “Protocol 3 was put in place to allow this relationship to continue without bringing us fully into the European Union.” He noted that, while “the drafting of Protocol 3 was done almost as an afterthought … it is an association that has served us well for over 40 years.”10
25.Professor Andrew Le Sueur, Professor of Constitutional Justice, University of Essex, noted that each of the Channel Islands initially had a different view as to what it wanted its constitutional relationship with the EU to be.11 Professor St John Bates, of St John Bates Consultancy, and formerly Clerk of Tynwald and Counsel to the Speaker of the House of Keys, told us:
“Protocol 3 can be described as short, limited in scope and somewhat telegrammatic. One reason for that was that until quite a late stage of the accession negotiations the UK Government’s position to the Dependencies was effectively, ‘We are in the middle of difficult and complex discussions. Because of that, either you are going to have to be treated as part of the UK or you are going to have to stay out entirely.’ It was only at a late stage that Protocol 3 was drafted and Lord Rippon eventually relented.”12
Differences between the Crown Dependencies
26.Notwithstanding the Protocol 3 framework, there are some differences between the Crown Dependencies in terms of their relationship both with the UK and the EU, notably regarding the rights of EU citizens (including British citizens) to work. Another principal difference is that the Isle of Man has a customs and excise agreement with the UK (signed in 1979), which provides for the sharing of VAT and other revenues between the Island and the UK. Thus the Isle of Man is part of the EU customs territory and fiscal territory.13 Guernsey and Jersey do not apply VAT. They apply their own customs regimes set up in 1973 and the EU Common External Tariff by virtue of being part of the customs union for goods through Protocol 3. They are also part of the Common Commercial Policy for goods. While the Isle of Man is part of the UK’s membership of the World Trade Organization (WTO), Guernsey and Jersey are not. We discuss these issues further in Chapter 3.
27.While all of the Crown Dependencies cooperate where appropriate, given their geographical proximity, the relationship between the Channel Islands is in practice closer. For instance, they have a joint Channel Islands office in Brussels, whereas the Isle of Man operates a separate office.14 While we were told that the Crown Dependencies’ interests were in alignment most of the time, this is not always so. The Chief Ministers of Jersey and Guernsey cited fishing rights as an area of disagreement between them (see Chapter 3).15
28.There is also some difference in the intensity of the Crown Dependencies’ relationship with other EU Member States. The Channel Islands operate an office in Caen, reflecting the geographical and historical links with Normandy, and Senator Ian Gorst told us that the bilateral relationship with France was “a very close second” to that with the UK. As well as cultural and language links, some French financial institutions are based in the Channel Islands, and there are also significant transport and energy supply links.16 Given its geographical location, such bilateral links with other Member States are less significant for the Isle of Man, although it has good relationships with its next-nearest neighbour, Ireland.17
29.As we shall see in Chapter 3, although the three Crown Dependencies have many policy interests in common in connection to the Brexit negotiations, they also have their own individual priorities, reflecting the relative economic importance of various sectors and issues.
30.It is also notable that the Crown Dependencies’ constitutional relationship, both with the UK and the EU, is distinct from that of the UK Overseas Territories, including Gibraltar, the only Overseas Territory within the EU. Indeed, the Chief Minister of Jersey told us that “our relationship with the EU is virtually the mirror image of Gibraltar’s relationship with the EU.”18
2 Much of the below is drawn from Ministry of Justice, Fact sheet on the UK’s relationship with the Crown Dependencies (12 April 2013): https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/564373/factsheet-on-the-uks-relationship-with-the-crown-dependencies.pdf [accessed 8 March 2017]
3 This figure is rounded up to the nearest thousand.
5 Government of Jersey, ‘Jersey and the UK’: www.londonoffice.gov.je/jersey/uk [accessed 8 March 2017]
6 Ministry of Justice, Fact sheet on the UK’s relationship with the Crown Dependencies (12 April 2013): https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/564373/factsheet-on-the-uks-relationship-with-the-crown-dependencies.pdf [accessed 8 March 2017]
7 Article 355(5)(c), Treaty on the Functioning of the European Union, OJ C 326/1 (consolidated version of 26 October 2012)
8 Channel Islands Brussels Office, The Channel Islands and the European Union (21 March 2016): http://www.channelislands.eu/wp-content/uploads/2011/12/CI-EU-background-note-21-March-2016.pdf [accessed 9 March 2017] and Isle of Man Government, Isle of Man Relationship with the European Union: https://www.gov.im/media/624101/protocol3relationshipwiththeeu.pdf [accessed 15 March 2017]
10 Ibid.
12 Q 13; Lord Rippon (then Geoffrey Rippon MP) was the Minister responsible for negotiating the terms of UK entry to the European Community.
18 Q 8; Our recent report European Union Committee, Brexit: Gibraltar (13th Report, Session 2016–17, HL Paper 116) sets out our analysis of the implications of Brexit for Gibraltar.