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Statement by the President of the Policy & Resources Committee

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Thursday 17 December 2020

Brexit Update

Mr Bailiff

Members will recall that the Policy & Resources Committee last made a statement to the States on Brexit - and the Bailiwick's preparations for the end of the transition period - as recently as 25 November.  The Committee had anticipated and hoped that, by now, there would be a Policy Letter for the States to consider: to note the implications of the end of the transition period for Guernsey and the Bailiwick and to make any necessary decisions.

However, whilst that Policy Letter has been drafted, it has not yet been finalised because the negotiations between the UK and the EU have still not concluded.   Given the status of the negotiations, the Committee thought that it was appropriate to provide another update to the States.

Various deadlines for the end of the negotiations have come and gone.  The latest were associated with a meeting between the UK Prime Minister and the President of the European Commission last week - and a review of the status of the negotiations on 13th December.   On that day, the UK and EU issued joint statements[1] to say that "We think it is responsible at this point to go the extra mile.  We have accordingly mandated our negotiators to continue the talks and to see whether an agreement can even at this late stage be reached".  No specific date for the next review has been made public yet, albeit I and my colleagues have just received a note from our civil servants to say perhaps this weekend might be the deadline - but who knows. 

One date is certain at the moment: at 11pm on 31 December 2020, the Brexit transition period will end.  This will impact businesses who trade with the EU and individuals that wish to travel and work within the EU. 

Many of the issues relating to the rights of British and EU citizens were settled with the Withdrawal Agreement, which was ratified in January, and that agreement will remain in place.  The agreement being negotiated by the UK now relates to the future economic partnership with the EU: the terms of trade between the EU and the UK and the terms on fisheries.

Whilst it has not been possible during the negotiations to provide you with frequent or detailed updates, due to the sensitive nature of those discussions, the Committee has, and continues to, firmly and diligently represent the Bailiwick's interests to the UK in line with the States Resolutions from June 2016[2] and January 2020[3].

I don't intend to reiterate all the points made in the statement of 25th November, but I want to highlight the following.

While the UK and EU have stated their intentions to seek a trade deal, the time available to consider and ratify any agreement before the 31st December reduces every single day, every single minute.  The final decision about whether the islands will be included in the scope of any UK-EU trade agreement will be for each of the Bailiwick's three assemblies.  When the negotiations have concluded, the Committee intends to finalise and publish the Policy Letter for consideration by this assembly before the end of the year.  The Policy & Finance Committees of Alderney and Sark have agreed to use the same Policy Letter, with Propositions tailored for their jurisdictions. 

Given the continued uncertainty over the final outcome of the negotiations, as a responsible government we continue to plan for all potential outcomes.  With only a short time remaining, the States continues to prepare for the risks associated with what's termed a No Further Negotiated Outcome ('NFNO') where there is no UK-EU trade agreement by the end of the year, or some other situation or reason where the Bailiwick is not included.  We continue to provide information about the changes that will happen at the end of the transition period as and when it becomes available.  That includes updating the Brexit-related content on the States' website.   The governance arrangements to manage the issues caused by COVID-19 have been adapted to help manage the Bailiwick's response to the end of the transition period.

The Bailiwick is already a third country to the EU for most purposes, including in relation to financial services.  So, even if an agreement is not reached before the end of the year, there will be limited changes for many Bailiwick businesses.

However, the end of the transition period will bring changes in the rules for trade in goods with more checks at the border than there are in place today.  So it is reasonable to anticipate some manageable disruption to some supply chains whether or not a UK-EU trade agreement is reached at the end of the transition period as the UK leaves the EU Customs Union and Single Market.  Modelling has shown that if there is no trade deal there might be a temporary lack of choice or delays for some EU foodstuffs, but no shortage of food overall.  The community is resilient and tolerant as it is well used to weather-related disruption.  I want to remind the community that there is no need to stockpile or panic buy.  Any stockpiling just disrupts supply chains and denies other people access to essential goods. 

The States of Guernsey has put various measures in place to help with stability and continuity at the end of the transition period.  That includes the work that extended the Bailiwick's territorial seas in July 2019; a customs arrangement signed in 2018 with the UK that comes into effect at the end of the transition period; and the extension of the UK's membership of the World Trade Organization[4] to the Bailiwick from the end of the transition period so, at a minimum, Bailiwick businesses can trade using those international rules and tariffs.  New requirements for workers coming into the islands and for islanders wishing to travel to, or work in, the EU have also been put in place for when free movement ends at the end of the year.

One of the most controversial and sensitive parts of the negotiations is about fisheries.  Let me assure the community of this: The Bailiwick is seeking a stable and predictable relationship that works for the specific interests of the islands.   That includes retaining access to nearby ports, access to EU waters and recognising that reciprocal arrangements may be necessary.  The relationship must ensure that the islands' fisheries are sustainable through controls on any vessels that we allow to fish in our waters, with licensing and management undertaken by the Bailiwick.

The Policy & Resources Committee continues to do all that it can, together with other States Committees and the other islands, to ensure that the Bailiwick is ready for the end of the transition period and for the new relationships with the EU and the wider world - whatever those relationships might be.  As the negotiations are continuing, we still do not know yet the extent that the Bailiwick may be, or wish to be, involved in any resulting agreement.  We are as prepared as we can be to deal with whatever the end of the negotiations may bring.  I would strongly encourage businesses, if they have not already done so, to plan for the changes and for the possibility that a new trade agreement will not be in place by 1st January 2021.

With just a fortnight or so left to the end of the transition period, the timescales are challenging and there will be a need to maintain quick and flexible working by, and between, governments and businesses to ensure that the final pieces of the jigsaw are put into place in time - but I am confident as ever, with this Bailiwick and the people that live therein, that we can achieve that together. 

 

[1] A joint statement from UK Prime Minister Boris Johnson and European Commission President Ursula von der Leyen - Published on www.gov.uk on 13 December 2020

[2] 'Urgent Proposition' at the States' Meeting of 29 June 2016 (P.2016/19) and the Resolutions

[3] Billet d'État II of 2020 and Resolutions

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