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3rd May 2017, 11:45

New study estimates that Gibraltar could lose 20% of its trade in services with the EU

A new study on the impact of Brexit estimates that the UK leaving the single market could see Gibraltar lose 20 per cent of its trade in services with the EU. The report, by the European Parliament’s policy department for citizens’ rights and constitutional affairs, identifies the border as the main concern, with 40 percent of Gibraltar’s labour force crossing every day.

The in-depth analysis was commissioned upon request by the European Parliament Committee on Constitutional Affairs, to look into the impact of Brexit on the devolved territories of Scotland and Wales, as well as Gibraltar.

It reports that that financial services and online gaming account for 40 percent of Gibraltar’s GDP: with the the UK accounts for 80 percent of the Rock’s financial services market, and online gaming also dependent on the UK market. Leaving the single market would therefore, it says, risk Gibraltar’s losing 20 percent of its service trade with the EU; it states, however, that this is “less important than the UK market”.

The report says EU free movement provisions are an “essential element in the Gibraltar economic model”, stating cross-border workers account for 40 percent of the labour force: just over half Spanish, the remainder citizens of other EU states. It identifies the border as the dominating concern, and says an agreement would have to extend to the non-Spanish EU citizens crossing the border. It adds, however, there’s “no technical obstacle to Gibraltar operating its own policy” on cross-border access for EU and UK workers, as it already has border passport controls with both Spain and the UK.

The report states Gibraltar has been very active in seeking support in London, the devolved territories and Europe, with the UK-Gibraltar Joint Ministerial Committee allowing it to present its priorities to the UK; but adds there’s no guarantee these will not be traded off in the negotiations. It says the UK-Gibraltar Joint Ministerial Committee allows Fabian Picardo’s government to present its priorities to the UK, but says there is “no guarantee” that these will not be “traded off in the negotiations”. It notes that Gibraltar voted 96 percent to remain in the EU, describing Europe as an “imaginative space” providing Gibraltar with broader horizons in the context of its relationship with Spain, with the EU also having acted as an arbiter in disputes over the working of the border. However, the report adds as Gibraltar is not part of the UK and not represented in Westminster, it is unable to join an “effective anti-Brexit political coalition” or directly influence the Article 50 process.

In wording some may find controversial, the report claims that Gibraltar’s “sovereignty is disputed with Spain”, also citing “disputes” over its territorial waters. It adds that Spain accuses Gibraltar of being a “tax haven”, but states the OECD has accepted it as largely compliant with international standards. The report adds it “makes no judgement” on the issue, but merely notes it “remains in contention between Gibraltar and Spain”. It sets out the Spanish position that any Gibraltar Brexit deal must be negotiated bilaterally, as reinforced by the EU’s negotiating guidelines: but states Spain’s joint sovereignty proposal has been rejected by both Gibraltar and the UK.