UK-EU BREXIT DEAL - WHAT IT MEANS FOR THE OTs

Sighs of relief are certain to be at least wafting across the British Overseas Territories on the news that the ‘mother country’ and the European Union have reached agreement on Brexit.

Especially for the OTs with land or sea borders with the EU, the news, coming as it did on Christmas Eve, makes for a welcome Christmas amidst the uncertainty of what no-deal would have meant; the certainty and complexities of full-tariff World Trade Organisation terms.

Anxiety is also eased for those doing business with the EU through trade in intangibles and the export of goods such as OT’s invested heavily in the financial services sector and those such as Falklands for whom the EU is a huge export market for fish.

One of the contentious issues in the Brexit talks revolved around standards and regulations.

It resulted in considerable acrimony with the UK talking up sovereignty as a core reason for wanting to leave the EU, divisive though as Brexit has come to characterise politics in the country.

How those regulations affect the financial services, especially on matters of compliance, is one of the myriad elements of the details buried in the 2,000-page Brexit agreement.

For Gibraltar, the only OT with a land border with the EU, via Spain which has a historical claim to the British territory, the outcome is particularly relevant.

Within hours after the UK/EU Christmas Eve Brexit deal was announced the UK Foreign, Commonwealth and Development Office has issued a statement about the future of Gibraltar’s unique situation.

“The UK, side by side with the Government of Gibraltar, has held constructive discussions with Spain regarding future relationship issues relating to Gibraltar,” it said.

Crucially the FCDC added: “All sides acknowledged the challenging nature of this process at the outset of talks. Although an agreement has not yet been reached on Gibraltar’s future relationship with the EU, we will continue our discussions with Spain to safeguard Gibraltar’s interests, and those of the surrounding region.”

“In addition, we are also working closely with the Government of Gibraltar, in discussion with Spain and the EU, to mitigate the effects of the end of the Transition Period on Gibraltar. We are totally committed to protecting Gibraltar’s interests. That includes ensuring border fluidity, which is clearly in the best interests of the communities that live on both sides.”

Around 15,000 people cross into Gibraltar every day from Spain to work, accounting for half of the territory's workforce.

Most of the tourists who visit Gibraltar are day-trippers from Spain.

For the Falkland Islands with its lucrative fish export market to the EU, continued tariff and quota-free trade will be a major relief.

Oftentimes overlooked has been the situation of Anguilla with its close family and business ties just 10 miles across the water with EU Caribbean outposts Dutch and French St Martin/Sint Maarten which share one island.

The shared Dutch and French island is a vital supply line for Anguillian consumers and business.

Less so is the situation of Montserrat whose territorial waters also abut with another EU Caribbean territory, the French Overseas Departmente, Guadeloupe.

Although there’s no significant movement of goods and people between Montserrat and its French neighbour, there is some tourism and cultural exchange for which a no-deal Brexit would have reams of paperwork.

On a wonder scale, the UK has already reassured the OT’s which have been beneficiaries of EU aid that it will step in to fill the void, a commitment it reiterated as recently as at this year’s Joint Ministerial Council (JMC) meeting.

The UK Government acknowledges that the UK’s withdrawal from the European Union (EU) will impact on the Overseas Territories, particularly in the areas of eligibility for and access to funding, and trade.

It assured the OTs that “in consultation with Territory Governments, (it will) take their interests and needs into account when designing future funding streams, programmes and policies to promote the sustainable economic development of the Territories.

The EU/UK Brexit negotiations have been going on for the past four and a half years, since the UK narrowly voted to leave the trading bloc in a divisive referendum on June 23rd 2016.

The full details of the deal are being scrutinised.

Announcing the agreement on Thursday, Christmas Eve, British Prime Minister, Boris Johnson, was clearly relieved, projecting what might even be regarded as an initial air of triumphalism into his announcement.

“We've taken back control of our laws and our destiny. We've taken back control of every jot and tittle of our regulation in a way that is complete, and from January 1 we are outside the customs union and outside the single market.

"British laws will be made solely by the British parliament, interpreted by UK judges sitting in UK courts, and the jurisdiction of the European Court of Justice will come to an end," the Prime Minister stated.

Directly addressing the EU, Mr Johnson stated: "And so I say again directly to our EU friends and partners, I think this deal means a new stability and a new certainty in what has sometimes been a fractious and difficult relationship.

We will be your friend, your ally, your supporter and indeed – never let it be forgotten – your number one market."

When the President of the European Commission, Ursula von der Leyen, pronounced at 3pm UK time (4pm EU/10 am Cayman Islands) that an agreement had been reached, she phrased it as “a long and winding road”, invoking the pop classic of the same name by the British rock legends, the Beatles.

Expressing “relief” that it was “finally over”, she went on to say: "I know this is a difficult day for some, and to our friends in the UK, I want to say: parting is such sweet sorrow.

"To all Europeans, I say it is time to leave Brexit behind. Our future is made in Europe."

The 2,000-page agreement will see the UK and EU continuing to collaborate on a vast range of areas.

In the end the issue of fisheries, less than 1 per cent of UK GDP, which turned out to be a make-or-break point of the talks.

It overshadowed critical issues of cross-border trade, standards, retaining existing zero-tariff zero-quota arrangements on imports and exports, financial services, and posed the no-deal risk of the UK crashing out of the EU and trading on World Trade Organisation(WTO) terms.

The trade agreement, the largest ever signed by both the EU and the UK is valued at £668 billion a year.

Thursday’s announcement still has to be ratified by both the UK and EU parliaments.

There was no immediate indication of any significant objections by the EU’s now remaining 27 members nor by the British Parliament (House of Commons and House of Lords), although the deal reached is expected to be subjected to intense scrutiny.

However, it has been pointed out that the agreement will also result in a massive adjustment for UK businesses trading with Europe through the huge volume of new paperwork and administration along with border checks, especially from January 1st.

The new agreement also ends free movement between the UK and the EU.

The UK Parliament, which has been on its Christmas recess, was recalled to debate and ratify the agreement on Wednesday December 30th.

That’s only one day before the Brexit transition period expires and two days before the new status between the UK and EU takes effect on January 1st.

The UK Foreign Minister Dominic Raab, who carries cabinet responsibility for the OTS, tweeted: “PM secured a deal with EU that takes back control over our laws, borders, money, fish & trade. We have a zero-tariff, zero-quota deal with EU & friendly cooperation will continue. Time to unite, put Brexit divisions behind us & look to 2021 as a springboard for Global Britain.”