Wednesday 21 March 2018
Update on Brexit
Sir, I am pleased to give this third update statement from the Policy & Resources Committee on the States' work with the UK as it progresses its negotiations to leave the EU.
Our collective response to the UK's withdrawal from the European Union is one of the priority work streams in the Policy & Resources Plan as agreed by the States last November. We are approaching the mid-way point of the two year exit period laid out in Article 50, so matters are at critical stage.
Since the previous update statement in September 2017, the UK has progressed with the negotiations on the free movement of people, the financial settlement and the Irish Border.
Negotiations have moved to cover the withdrawal and separation issues and the terms of the implementation period, and will lead to discussion on the framework for the future UK/EU partnership.
Throughout this time the cross-Committee Brexit Group established by the Policy & Resources Committee has met on a fortnightly basis. The group brings together representation from the committees whose mandates cover areas highlighted as Brexit priorities - the Committee for Home Affairs, who will be instrumental in the delivery of the priorities; and the Committeefor Economic Development who play a strategic role in protecting our economic interests.
Withdrawal Agreement and Implementation period
The EU published its proposed legal text for the withdrawal agreement on 28 February. On Monday the negotiators agreed the text and terms relating to the implementation period, the rest of the text of the withdrawal agreement is yet to be agreed. The European Council will be considering the terms of the transitional arrangements in the next two days.
The UK and the EU are, in effect, proposing to maintain the status quo by re-creating something akin to the current relationship.
While this will keep the UK within the EU customs area and single market for this period, and provide similar rights for the free movement of persons, it will mean that the UK will no longer play a formal role in EU institutions from March next year.
The draft withdrawal agreement, which includes provision for an implementation period, contains a territorial extent clause which includes explicit reference to the Crown Dependencies. This is a significant and positive step; it is the first clear sign of the EU's intention to include the Channel Islands in any exit agreement.
The proposed text suggests that the implementation period should apply to the Crown Dependencies to the same extent that Protocol 3 does. Therefore during this period we would benefit from the free movement of goods to the same degree as we currently do. This provides security and assurance to Bailiwick businesses trading in goods throughout the implementation period.
In addition, our position on the free movement of people should not change during this period.
Sir, the withdrawal agreement in its final form will need to be laid before the States of Deliberation as well as the States of Alderney and the Chief Pleas of Sark, to ensure that there is appropriate parliamentary process in all of our islands before the terms of that agreement would apply. We expect that this will be sometime around or after the autumn and we will try to ensure that States Members are given as much notice as possible.
Engagement - political
Our engagement strategy has been aligned with those of Jersey and the Isle of Man.
On 5 March, Deputy St Pier met with Robin Walker, Minister at the UK Department for Exiting the EU. They discussed the negotiating strategy, and where it may impact the island's interests; and they also discussed how the UK and the Crown Dependencies will look to develop an economic partnership with each other and with the EU.
We have continued our cross-party engagement in Westminster, in particular through the Channel Islands All Party Parliamentary Group, the House of Lords EU Committee and House of Commons Justice Committee.
On 23 January the House of Lords debated the EU Committee report on Brexit and the Crown Dependencies. The Policy & Resources Committee briefed members of the House of Lords to ensure that they were cognisant of the island's objectives, and as a result many members referred directly to the island's priorities during the debate. In response, the UK government recognised that it has a constitutional responsibility to represent the island's interests during Brexit negotiations.
The Policy & Resources Committee has engaged with the EU committee since then and will keep it informed as our engagement with the UK progresses.
In June, Guernsey will host the British Irish Council Summit. This will be the 30th summit and the fourth held in Guernsey in the 20 years since the Council's inception. The BIC has assumed greater importance since the Brexit vote and plays a dynamic role in managing relationships within the UK and with Ireland.
Engagement - Officials
The engagement by officials on Brexit matters has widened as the impact of Brexit across a range of sectors becomes more clearly understood. A contact group of senior officials in Guernsey, the Cabinet Office and the Department for Exiting the EU has been established, and meets in London on a regular basis. It is envisaged that this group will facilitate the sharing of information in a timely fashion as negotiations enter the final stages.
Work streams - Movement of People
There has been one common thread in discussions to date between the UK and the EU and that is common recognition of the status and value of the Common Travel Area.
This assembly has made it very clear that it wishes to recognise the rights of EU nationals in Guernsey when it supported the amendment led by Deputy Roffey in the Brexit debate a year ago, and this statement of intent sends a strong and positive message to the EU.
We continue to ensure that the UK acknowledges our need to be able to welcome EU citizens post-exit, in recognition of their valuable role in our community and our economy. The UK has laid out plans to recognise the rights of EU nationals already living in the UK through a settled status scheme, and we want to ensure that any time spent in the Bailiwick will count towards an EU national's settled status.
The rights of Guernsey nationals resident in the EU are not in our gift to guarantee, but we would like to see all British nationals, be they from the UK or from the Crown Dependencies, treated without discrimination within the EU after exit.
Work streams - Movement of Goods
The Committee is working closely with the Committee for Home Affairs to prepare for the range of scenarios that could result from the negotiations.
Critical to this work is the potential to form a customs union with the UK, alongside Jersey, to ensure that both islands can trade with the UK on the same terms as we have done for centuries.
The formation of a customs union is vital for securing an arrangement for continuing flow of goods between the islands and the UK, the other Crown Dependencies, the EU and the rest of the world. Participation in a UK and Crown Dependencies customs union could give us greater influence on trade policy and greater benefit from its policy objectives. The Committee for Home Affairs will need to present this matter to this assembly in due course.
Work streams - Financial Services
In respect of the UK's partnership with the EU, the Chancellor of the Exchequer laid out the UK's vision for a special partnership on financial services in his speech on 7th March.
Much remains to be understood in terms of the future partnership and how the EU will deal with market access and regulatory matters such as recognition and divergence. We will be working closely with the UK as they develop the framework for this partnership.
This will provide us with an opportunity to reaffirm the positive contribution we make to the UK economy - a fact acknowledged by Miles Celic, Chief Executive of City UK, when he visited Guernsey in January.
Work streams - Fisheries and Agriculture
Trade in fisheries and agricultural products goes to the heart of Protocol 3, and it is also one of the most complex aspects of the Brexit negotiations.
In order to provide certainty on the status of Bailiwick waters we hope to bring a Policy Letter to this assembly later this year concerning the extension of the Bailiwick's territorial seas from 3nm to 12nm. This would bring greater power to this assembly to control our marine environment and bring us in line with most other jurisdictions.
We will continue to work with the UK on the development of its new fisheries management regime. At the same time we are discussing with our neighbours in France how we might maintain our trade flows to ensure that the current access to markets for fisheries products, on which our fisheries industry depends, can continue. The UK will be taking a Fisheries Bill to the UK Parliament at some stage in 2018 and we may need to bring fisheries matters before this assembly later in the year in response to these moves.
Work streams - Transport
We continue to engage with the UK government on transport matters, taking accounting for fact that we are surrounded by French airspace and waters. Our transport links do not just relate to the ferry, sea freight services and air links. We must also ensure that we can continue to use to the EU's road network. This is both in terms of vehicles registered in the island on EU roads and in the recognition and exchange of driving licences issued Guernsey. Our ability to drive on the continent is something we take for granted but it is a right that must be secured and we are working closely with the UK on a range of options to safeguard this. We are seeking to understand what, if any, changes may be required to our own rules and regulations to enable that to happen.
Work streams - WTO and Trade Agreements.
This assembly recognised the importance that the World Trade Organisation - the WTO - could play in the future.
We have a choice to make: to take part in the UK's trade policy and benefit from the WTO trading rules which will open up global trading opportunities; or to operate in isolation, making Guernsey businesses with limited defence to any discrimination against goods and services supplied by our islands.
Officials across the States are working hard to analyse our compliance with WTO membership criteria, and we are discussing with the UK whether extending the UK membership of the WTO is a viable opportunity in time for the UK's exit. This is extremely complex and is not without its challenges. We expect we will be in a position to report to this assembly in more detail later this year.
We are also considering to what extent we can participate in the UK's intended network of Free Trade Agreements, and much of this work is identical to the WTO analysis we are undertaking. These agreements will be based on WTO rules, so in short, if we want to enjoy the benefits of a trade policy independent of the EU, then we must be willing to take on the same WTO commitments as the UK.
Alderney and Sark
Sir, managing the impact of Brexit is equally important for Alderney and Sark and it is equally important to those islands that their interests are not forgotten. We are working closely with these islands, including through the Bailiwick Council, the Alderney Liaison Group and the Sark Liaison Group.
We have highlighted to the UK Government the need for the assemblies in those islands to have their own meaningful votes on the terms of the Withdrawal Agreement and any new partnership. Our door is always open to meet with the States of Alderney and Chief Pleas of Sark to ensure that any concerns can be raised collectively.
States of Deliberation
Sir, this Assembly has played an important role to date in setting and updating our Brexit objectives, managing the constitutional processes, and legislating where required. As I have outlined, we expect that further Brexit matters will be laid before this assembly, on the withdrawal agreement, fisheries, customs, immigration and the future partnership. Many of these matters are in the hands of the UK and EU negotiations and we will need to respond to events.
There may be a need for this assembly to react quickly, which may require additional States meetings before March 2019. We have so far shown that we can be nimble and provide proper parliamentary input and scrutiny, so I am confident that we are well placed to respond to the challenges ahead.
Sir, I hope the Assembly join me in commending the efforts that have gone into our engagement and representing the island's interests to date.