Wednesday 25 November 2020
UK-EU future relationship - negotiations and the participation of the Bailiwick
Thank you for allowing me to provide updates on live issues. Unusually, the Policy & Resources Committee is making two statements today to keep the content and questions separate and distinct as far as possible.
Brexit - background
The Committee last made a statement to the States on Brexit work in September 2019. Then, in January, the States considered a Policy Letter about the UK-EU Withdrawal Agreement and directed the Committee, "to maintain efforts to ensure that the Bailiwick's interests continue to be represented to the UK during ... negotiations on the UK-EU future relationship"[1].
Since the start of this year, a lot has changed. The UK officially left the EU on 31st January and entered a Transition Period. The COVID-19 pandemic has caused widespread disruption and led to re-prioritisation of government work, not just in Guernsey but around the world. However, work on the UK-EU future relationship, and Guernsey's place within it, has had to continue at pace.
Current state of UK-EU negotiations
The UK and EU started negotiations in March. This new relationship - if agreed - would take effect when the Transition Period ends on 31st December. Negotiations have proceeded at an incredibly fast pace - and are continuing now.
Discussions to include the Bailiwick in the future UK-EU relationship have focussed on a goods-based relationship that mitigates, as far as possible, impacts caused by the end of the Protocol 3 relationship with the EU, in line with the objectives agreed by the States in June 2016. Our future trading relationships will need to recognise the size and scale of our economy, and should be underpinned by the principles of relevance, proportionality and practicality, set by States Resolutions in January 2020,. Any new UK-EU trading relationship must not damage the trading relationship between the Bailiwick and the UK, the centuries-old constitutional relationship between the Bailiwick and the Crown nor the Bailiwick's domestic autonomy.
Fishing continues to feature prominently in the negotiations. The EU has made it clear that an agreement will not be possible without resolving the fisheries relationship. For the Bailiwick, it is significant given our geographic location and the importance of this issue for our regional relationships with Normandy and Brittany. Consequently, our interests in fisheries matters do not always align completely with the UK's. We are seeking a stable and predictable relationship for access to waters, ports and markets to maintain trade in fisheries products, and to support local communities and regional relationships. Any fisheries arrangement for the Bailiwick must be relevant, proportionate and practical. It must be reasonable, provide economic stability, respect the sovereignty the islands have over our territorial waters and protect them from displaced effort. We have been clear and robust in presenting this position and must continue to be resolute in defending the islands' interests.
Two groups set up in January have met fortnightly this year to assist the Committee to consider the Bailiwick's participation in a future UK-EU agreement - the Future Partnership Delivery Group - for political input - and the Trade Policy Advisory Panel - for industry and external stakeholders. We continue to work closely with Alderney and Sark and the final executive decision about whether the islands will be included in the scope of any UK-EU agreement will be for each of the Bailiwick's three assemblies.
NFNO planning
Whilst we continue to focus on the Bailiwick's possible part in a UK-EU agreement, the fast pace and unpredictable nature of the negotiations mean that we're still planning for the risk of No Further Negotiated Outcome ('NFNO') where there is no UK-EU agreement by the end of the year, or some other situation where the Bailiwick is not included. We have always been clear that a 'no deal' outcome is not in Guernsey's interests, but are preparing in case it happens.
Should an NFNO situation or another disruptive outcome occur, we are ready to act as needed. 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.
Many parts of our relationship with the EU will not, on the face of it, directly change. Guernsey is not, and never has been, a member of the EU. Protocol 3 allowed for us to be in the EU Customs Territory and benefit from free movement of goods. However, the Bailiwick has always been treated as a third country by the EU for all other purposes, such as financial services. This will continue after the Transition Period ends, underpinned by WTO rules where they apply. The concept of the single market and free movement of goods has widened since Protocol 3 took effect decades ago and this will inevitably be reflected in our new relationships.
Some manageable disruption can be expected whether or not a UK-EU agreement is reached, due to the end of the UK's participation in the EU Customs Union and Single Market. Islanders are used to occasional weather-related disruptions to supplies, but all the 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. I know the community is resilient and tolerant if there were to be any short-term disruption to the movement of any goods. There is no need to stockpile or panic buy. Just as in the spring lockdown, any stockpiling just disrupts supply chains and denies other people access to essential goods. Another change is the ending of free movement of people between the UK and EU. There will be new requirements for workers coming into the islands and for islanders wishing to travel to, or work, in the EU.
Communicating with businesses and the community of the Bailiwick
Due to the sensitive nature of the negotiations, it has not been possible to provide frequent or detailed public updates. However, the Committee and officials from across the States have been relentless, and fearless, in defending the islands' interests during this phase. The Committee and FPDG have each ensured that the objectives agreed by the States in 2016, and the principles it agreed in January this year, have been central to our work and all our representations to the UK Government.
We are updating all our Brexit-related content on the States' website to outline changes for the end of the Transition Period or to indicate where something might change even if the details are not yet known. We want to help individuals and businesses understand the changes that are coming during the next few weeks.
There has been a recent push to promote the EU settlement scheme for all eligible EU, EEA and Swiss nationals and their families. The States recognised early the need to protect the rights of those nationals who form an important part of the island community. So far there have been about 3,000 applications. The scheme is free of charge and will remain open until the end of June next year to provide time for all those nationals who are currently resident in the Bailiwick, or who will be by the end of 2020, to register so that their rights to healthcare, work arrangements, access to benefits and public services remain unchanged. Any EU, EEA or Swiss nationals resident in the Bailiwick who are not yet part of the settled status scheme should not delay in registering.
We have started to issue updated guidance for businesses and to talk directly to those who might be affected by changes. We will continue to provide more information as and when it becomes available. The flow of information and co-operative approach between the UK and Guernsey governments is generally good and means we are as well placed as we can be to face the potential challenges of the end of the Transition Period.
UK engagement
Throughout this year, we have continued to build on strong relationships with the UK at official and Ministerial level. Guernsey's regular engagement with the UK Government during 2020 - in particular with Task Force Europe at No10 and the Cabinet Office, MoJ, DEFRA, the Department for Business, Energy & Industrial Strategy ('BEIS') and the Department for International Trade ('DIT') - has included a number of exchanges and Ministerial meetings including with the Paymaster General at the Cabinet Office and the Lord Chancellor. We have repeatedly emphasised the UK's responsibility to represent our interests fully and robustly, even where they differ from the UK's, and have welcomed their repeated assurances that the UK does and will continue to do so.
Whilst the Bailiwick does not have its own direct representation at the UK-EU negotiations, we are represented at the highest levels by UK negotiators who have daily contact with Guernsey officials. The UK Government has publicly stated that it is negotiating with the EU "on behalf of the entire British family" and that it will continue to engage with us throughout the process[2]. The Committee continues to present the Bailiwick's interests clearly to the UK Government so that they are fully understood and the UK, "in turn, can carry out the best possible negotiations on the Bailiwick's behalf"[3].
Rest of World FTAs and the WTO
The UK's departure from the EU has also meant that it has been able to start negotiations on free trade agreements with other countries; including 'rolling over' pre-existing agreements between the EU and third countries, so that they can apply to the UK as a separate sovereign state.
The UK and Japan have agreed a Comprehensive Economic Partnership Agreement (CEPA) which is based on the existing EU-Japan agreement but with reduced tariffs. The Bailiwick has been included in the goods elements of that agreement and will benefit from the newly negotiated tariffs. Participation in other parts - including cross border supply in services, financial services and intellectual property - will be pursued during 2021.
Other 'roll over' agreements, including the recent UK-Canada one, apply to the Bailiwick insofar as Protocol 3 applies. Further free trade agreements are being negotiated by the UK with other nations and Guernsey is continuing its dialogue with the UK Government for the Bailiwick's inclusion as appropriate. The extension of the UK's membership of the WTO to the Bailiwick will also take effect in January 2021.
Next steps - parliamentary processes
When the negotiations have ended and we know if there will be a formal UK-EU agreement for the immediate future (and whether the Bailiwick is included), the Policy & Resources Committee will publish a Policy Letter to enable the States to consider and decide upon Guernsey's proposed involvement or to recognise and record formally that there is no agreement in which to participate. The negotiations remain unpredictable and various 'final deadlines' have come and gone. One thing is certain at this late stage, we will need to work quickly and flexibly if any deal is agreed to ensure our own domestic constitutional arrangements are respected. That means we don't know when the Policy Letter can be published or when it may need to be debated; but we do know that the Transition Period only lasts until the end of December. Due to this timeline, the Policy Letter might need to be considered in a scheduled States Meeting - but be published outside the usual deadlines - or it might require additional States Meetings at short notice before the end of the year. The Committee will keep States Members updated. Alderney and Sark will also follow their own constitutional processes and are aware of the same timing issues. We have stressed repeatedly to the UK that the Bailiwick needs time to follow its parliamentary processes so that each jurisdiction can consider whether to participate in any final UK-EU agreement.
What next?
The UK-EU negotiations are still ongoing and we don't know yet the extent that the Bailiwick may be, or wish to be, involved in any resulting agreement. We continue to strive for a relationship with the EU that meets the needs of Guernsey, and the wider Bailiwick; its communities and its economies. The Policy & Resources Committee is doing 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.
[1] Resolutions of the States 17 January 2020 relating to Billet d'État II, 2020
[2] Taken from letter, dated 09 September 2019, from UK Prime Minister to Guernsey's Chief Minister
