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Guernsey's contingency plan should the UK referendum result in a decision to leave the E.U.

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Wednesday 08 June 2016

The following statement was delivered by the lead member for External Affairs, Deputy Jonathan Le Tocq, Member of the Policy & Resources Committee, to the States of Deliberation on 8 June 2016

**note to editors - check against delivery**

Sir, the UK is currently debating whether it should remain a member of the European Union, and will be holding Referendum on this question on 23 June 2016.  As members will be well aware, our relationship with the EU is governed by Protocol 3 to the UK Treaty of Accession.  This allows for the Islands to be part of the customs territory of the EU, and effectively underpins the free movement of goods between Guernsey and the UK and the rest of the EU. 

For the majority of the trading relationships that Guernsey has with the EU, such as in financial services, we are treated as a third country. This means, in broad terms, that we, like other third counties, need to meet agreed criteria in order to be able to access those markets.

The States of Guernsey has maintained its long standing position, it is not seeking to change its relationship with the EU.  It is not advocating that the UK remain or leave the EU; that is a matter for the UK to decide.

However, a UK exit from the EU will impact the Bailiwick of Guernsey.  We stand to lose our Protocol 3 relationship, which may be replicated.  In terms of our main trading relationships as a third country, for example in financial services, these relationships will remain intact as they are not part of Protocol 3.  Again, in broad terms, Guernsey is a third country now and will be a third country no matter what the UK decides to do in respect of its own EU relationship.   

The potential change for Guernsey will be less substantial than in the potential change for the UK. The Crown Dependencies are relatively stable in respect of their EU relationship compared to the UK. Much work has already been undertaken by Office of the Policy & Resources Committee, and its predecessor the Policy Council, to understand the impact on Guernsey should the UK decide to leave the EU, and how to mitigate that impact.  

The outcome of this work suggests that there will be a need for the States of Guernsey to work with the other Crown Dependencies to negotiate with the UK to ensure its best interests are served in four main ways:

First, in the UK-EU exit agreement itself.

Second, in the new UK-EU trading agreement, including the replicated or revised Protocol 3.

Third, by ensuring we safeguard the constitutional and trading relationship with the UK.

And fourth, by looking for opportunities in any new UK trading relationships with the rest of the world, including for example extension of the UK's membership of the World Trade Organisation.

It is anticipated that if the UK decides to leave the EU then the process under the EU treaties provides for a two years window of time by which the UK should negotiate an exit agreement.  Whilst that gives some time for the negotiations set out above, it is not a lot of time.

In order to ensure that the Policy & Resources Committee has the necessary mandate, and that the Island and external stakeholders know our position, it is recommended that a Policy Letter be prepared in the event that the UK decides to leave the EU.  The Policy Letter can then be lodged as soon as it is possible after such a decision is taken by the UK Government This approach will be aligned to the approach taken in Jersey and the Isle of Man, and will be done in full consultation with the States of Alderney and the Chief Pleas of Sark.

In order to ensure a timely debate it may be necessary to convene a special States Meeting before the meeting to be held on 7 September.  If a meeting before September is desirable then will be recommended that this meeting should be held on 20 July 2016, before the States' school terms ends on 21 July.  If this is necessary then I will bring this matter before the Assembly again when it meets on 29 June in order to convene such a meeting.

Sir, I hope the Assembly take this statement and early notice as a sign that we are well placed to face the challenges that a UK exit decision might bring, and  that any impact will be minimised as much as is possible.

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