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Select Committee on the European Union

Uncorrected oral evidence: The UK-Spain agreement on Gibraltar

Tuesday 19 January 2021

4 pm


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Members present: The Earl of Kinnoull (The Chair); Baroness Brown of Cambridge; Baroness Couttie; Baroness Donaghy; Lord Faulkner of Worcester; Lord Goldsmith; Baroness Hamwee; Lord Kerr of Kinlochard; Lord Lamont of Lerwick; Baroness Neville-Rolfe; Lord Oates; Baroness Primarolo; Lord Ricketts; Lord Sharkey; Lord Teverson; Lord Thomas of Cwmgiedd; Baroness Verma; Lord Wood of Anfield.

Evidence Session No. 1              Virtual Proceeding              Questions 1 - 14



I: Hon Fabian Picardo QC MP, Chief Minister of Gibraltar.




  1. This is an uncorrected transcript of evidence taken in public and webcast on
  2. Any public use of, or reference to, the contents should make clear that neither Members nor witnesses have had the opportunity to correct the record. If in doubt as to the propriety of using the transcript, please contact the Clerk of the Committee.
  3. Members and witnesses are asked to send corrections to the Clerk of the Committee within 14 days of receipt.




Examination of witness

Chief Minister Fabian Picardo QC MP.

Q1                The Chair: I welcome back the honourable Fabian Picardo QC MP, the Chief Minister of Gibraltar. It is very good that you are able to spare the time to come to see us today.

This is a public evidence session of the European Union Committee in the virtual House of Lords. A transcript will be taken and forwarded to you, and we would be grateful if any corrections were sent back to us.

For the benefit of those watching, I shall explain the format of these virtual committee meetings. Each Member will have up to five minutes to ask their questions, and then I will call the next Member to ask their questions. Normal time did not allow us to have every member of our Committee ask questions, so two members of the Committee would like to come in during what we call extra time at the end of the session. I am aware that you need to leave after 90 minutes or so, but we will discuss that later.

Perhaps I could start the ball rolling. We last saw you on 24 November, and a tremendous amount has happened between then and now. Will you set out the choreography of the various developments since your last appearance, and, in particular, the events leading up to the in-principle agreement reached with Spain on New Years Eve?

Chief Minister Fabian Picardo: My Lords, thank you so much for your continued interest in Gibraltar. Thank you, too, for the opportunity to address you on the arrangements that have now been entered into, and which we now seek to pursue with the European Commission, to try to obtain a UK-EU treaty, along the lines and in the terms of the framework we now have between the United Kingdom, Gibraltar and Spain.

It is quite remarkable to think that it was 24 November last year, almost two months ago, when I last addressed you. My last opportunity to give you evidence stands in my mind. It really has been a sprint towards the finish of the year, and to the completion of the agreement. Those six weeks will live with me and the members of my teamthe Deputy Chief Minister and the Attorney-General in particularfor ever as some of the most hectic and difficult that we have lived through.

The negotiations were very tough indeed. The United Kingdom Foreign Secretary, Dominic Raab, became an integral part of that negotiating process. There had been a lot of technical negotiations until then. Matters became intensely political in late November and December. I recall that, at one stage, the Foreign Secretary was in India, but he was still very much in contact with me, as we ensured that we continued the process of negotiation.

You will recall that, in the United Kingdom, you could hear the clock ticking against the end of 2020, as the time when arrangements needed to be completed for the treaty between the United Kingdom and the European Union. In Gibraltar, we could hear two clocks ticking: that clock and the clock relevant to Gibraltar. They ticked in tandem until, on 24 December, on Christmas Eve, the United Kingdom was, I was very pleased to see, able to finalise its own arrangements in treaty with the European Union.

Our discussions were even tougher than those very tough discussions, and, for that reason, we had not been able to complete the framework and enable Spain to seek a European mandate for the negotiation of a treaty before the end of the year. We went literally to the wire. It was only in the early hours of 31 December that Foreign Secretary Raab, Foreign Secretary Laya of the Kingdom of Spain and the Gibraltar team felt confident that we could declare that we had reached in-principle agreement on a framework for a mandate to be sought by the European Commission, for it to negotiate a treaty, and a framework for the United Kingdom and Gibraltar to finalise our own mandate in that future negotiation of those treaty arrangements that we hope the European Union will agree to.

Since I last gave evidence, we have seen the United Kingdom reach its own conclusion with the EU. It is not yet ratified, as we know, with the European Parliament still required to ratify. We were able to reach our own in-principle arrangements. Thereafter, importantly, we were able to agree bridging measures so that we did not suffer the worst effects of a hard Brexit at the Gibraltar-Spain frontier.

We are in a state of almost hybrid transition. It is not exactly transition as it was until 31 December. It is what I would term, for now, a hybrid transition, as we await, with respect, the European Commissions decision on the 27 seeking to work up a mandate to start the process of treaty negotiations for, we hope, that UK-EU treaty, if we are able to finalise one. I think that is the best way of explaining where we are today.

The Chair: I have a couple of short follow-up questions. As a matter of clarification, there were, essentially, a series of three-way discussions with Gibraltar, the United Kingdom and Spain in the sameprobably virtualrooms, going through the areas. That is what has given rise to the non-paper that was so carefully leaked in a Spanish newspaper.

Chief Minister Fabian Picardo: Yes. Without agreeing or disagreeing with the characterisation that you make of the nature of the emergence of the non-paper, you are absolutely right to identify that this was, in the latter part of last year, a virtual negotiation. We have all had to learn how to do these things telematically.

The pandemic in this part of the world has got a little worse, as it has in the United Kingdom. Brussels was also suffering from the Covid pandemic, and, therefore, we could not all converge on Brussels to do the negotiation. We did this negotiation on different telematic media that enabled us to continue until the very last minute, and, in that way, with the United Kingdom on the one part, Spain on the other part and Gibraltar on the third part, were able to reach these final arrangements.

May I add this, which you might find of interest? There was what Lord Hague referred to as variable geometry in the way that the negotiations were carried out. In some instances there has been just Spain and Gibraltar talking; in some instances Spain, Gibraltar and the United Kingdom; and in some instances the United Kingdom and Spain, because of the different aspects of all the things that we were discussing, and different moments. That variable geometry availed us all the opportunity to end the negotiations in the way we did, with agreement.

The Chair: I must say that variable geometry works in an atmosphere of trust, and I am glad about that. The one player that you have not mentioned is the European Union. Will you tell us how it was involved, if at all, because everyone seems to have a high degree of certainty that the European Union will come through and allow the treaty called for in the non-paper to be drafted?

Chief Minister Fabian Picardo: We are deeply respectful of the role that the European Union needs to play in this process. The parties have agreed to aim for an agreement between the United Kingdom and the European Union that will become an instrument of public international law. The European Union has not yet sought or achieved a mandate to negotiate such an instrument.

I think that it is fair to say that, if you view this from the position of the European Unionfor one moment I put myself in its positionits view, after November 2018, was that it would not trigger a mechanism for a UK-EU arrangement in respect of Gibraltar unless it was asked to do so by its remaining member state, Spain. The minute statement that it included in the withdrawal agreement on, I think, 18 November 2018 was to that effect. It had been expecting Spain, as the member state that continues in the club, to seek such an arrangement.

Indeed, as you have seen, the European Union has not provided for any of its overseas territories, nor did it have a mandate for any of the British Overseas Territories, to form part of the initial negotiation between the UK and the EU.

We await the position of the European Union. This is a fundamental way of taking forward what the three Governments have agreed in the framework and non-paper, but we have to respect the European Union in needing to go through its processes in determining that it wishes to take the steps forward with the mandate to seek that treaty.

The Chair: I would very much agree with that. We move to another area, and I ask Lord Lamont to take up the running.

Q2                Lord Lamont of Lerwick: Will you tell us what you regard as the main principles that underlie the agreement, and how they underpin Gibraltars future relationship with Spain? Does this amount to a reset of Gibraltars relationship with Spain?

Chief Minister Fabian Picardo: That is exactly the terminology that I used when I addressed the people of Gibraltar on 31 December. I repeated that concept in Parliament late last week, when I talked about the opportunity for resetting the relationship between Gibraltar and Spainindeed, resetting the relationship between Gibraltar and the European Union.

If you look back at the nature of our relationship with the European Union until our departure, you will see that Gibraltar was not a part of Schengen, like the United Kingdom, and, additionally, Gibraltar was not a part of the common customs union of the European Union. In 1972, the advice Gibraltar received from Whitehall—and remember that Spain was not then in the European Union, and we would not have had a free-flowing border with Spainwas that it should not enter into the common customs union.

We are looking at a relationship with Spain, and with the European Union, after Brexit, where Gibraltar takes, essentially, those parts of the European acquis that we were not a part of in our 48 years of full membership of the European Union.

It is completely different. Why is that? If you look at where we have our market, you see that our market—principally of course in services, because Gibraltar produces no goodsis with the United Kingdom, so we want to continue with that market.

However, in the context of 15,000 cross-frontier workers coming into Gibraltar, and in the context of the socioeconomic and geographic reality for the people of Gibraltar, who wish to visit friends and family in the area around Gibraltar, and who wish to access Spain for shopping, for holiday and for medical purposesthe panoply of social purposes—we need fluidity at the frontier.

The two elements that we are looking at nowthe ability of people to move in a fluid and unrestricted way and the ability of goods to move in a less restricted way—involve parts of the acquis that we were never members of when we were full members of the European Union. I think it is right, therefore, to be termed a reset of the relationship with the European Union, and a reset of the relationship with our closest European partner, which is Spain.

Lord Lamont of Lerwick: How do you intend to get the assent of the people of Gibraltar to this agreement, or to the treaty when completed? Do you expect there to be substantial additions or new things that might be put into the treaty compared with the agreement?

Chief Minister Fabian Picardo: Last week, I made a statement to the Gibraltar Parliament setting out the terminology of the non-paper that had been agreed and setting out what it was that the Government had sought to achieve. I explained that this was entirely in keeping with the mandate that we had sought at the October 2019 general election: to agree terms for the fluid movement of people and an arrangement with Schengenwhich is exactly what we have agreed to seek in the non-paperan arrangement for freer movement of goods, and, potentially, an arrangement as regards the common customs union. The mandate that we obtained in the general election in October 2019 was to seek such a treaty.

Once the treaty is agreed, or the outline terms of the treaty are agreed, it is envisaged by the Government that we will put the treaty to the Gibraltar Parliament for its approval. Additionally, the treaty as envisaged would require primary legal change in Gibraltar. For example, the immigration Act and imports and exports Act in Gibraltar will require amendment, and that will require the assent of the Parliament in Gibraltar. In that way, Parliament will signify its approval for these arrangements.

Should there be any part of these arrangements that affects the constitutional status of Gibraltarand it is absolutely not envisaged that there should be any reflection on the status, or indeed on sovereignty, jurisdiction or controlit would have to be put to a referendum in Gibraltar.

I do not envisage that we will go beyond the remit of the non-paper in the treaty in respect of those potential areas. It is possible, however, that in respecting the position of the European Commission, when we sit down with the European Commission, ifand I always paraphrase this with if”—it obtains the mandate to sit down to negotiate with the United Kingdom, there may be matters in respect of any aspect of what we have agreed in the non-paper with one member state, in effect, which the Commission may wish to look at differently. We do not know whether that will lead us to a potential agreement in an area beyond that which we have already provided for in the non-paper.

Lord Lamont of Lerwick: So there is no change in the constitutional status of Gibraltar, but you memorably said on one occasion that you hope to start to see the future coming into view. What do you envisage that future to be, and what do you see as the evolving nature of the relationship between Gibraltar and Spain, and Gibraltar and the EU?

Chief Minister Fabian Picardo: In fact, I am very clear that, in Gibraltar, we have long been seeking a future that is different from the past in our relationship with Spain. In other words, we want to see the relationship between Gibraltar and Spain be one of friendship and co-operation between neighbours. Of course, the concept of neighbourliness envisages that the two entities are distinct, and remain distinct going forward, but the nature of the relationship should be a strong and positive one.

Gibraltar has never been the aggressor in the context of the relationship between us and Spain. We have always sought to have a relationship of good neighbourliness, and of positivity, which is borne out of the reality of what Gibraltar is. So many families in Gibraltar come from blood lines across the frontier. So many Spaniards have relatives in Gibraltar, and Gibraltarians have relatives in Spain. We do not seek that jingoistic nationalism that so often is on the front pages of the Spanish newspapers when it comes to Gibraltar. We seek normality and a positive relationship of co-operation going forward.

We see an opportunity in the attitude taken by the current Spanish Governmentin many respects but, unfortunately, not in allfor that to be what the future might provide for.

Additionally, with the European Union, we see that there are matters in relation to fluidity of persons and goods where it is in the common interest of both parties to reach different arrangements from the ones that we have today. I hope that is what the future represents: more co-operation, less confrontation, and an opportunity to accentuate what we have in common rather than what we have apart.

Let me say one thing, which I have said before and is fundamental to that, so that nobody gets the wrong impression. Whether it is the carrot or the stick, nothing will ever cleave the people of Gibraltar away from the United Kingdom and our Britishness.

The Chair: We are about to move on to another of our colleagues. Chief Minister, I realise you have a lot to say, but I wonder whether it would be possible to try to keep your answers a bit shorter, because I am worried that we will not get through the full and important range of questions and that we will run out of time. I say that with some trepidation, Chief Minister, but if you were able to do that, it would be a big help.

Q3                Baroness Couttie: Will you set out for us the timetable and process for giving legal effect to the agreement? What is the political and legal status of the in-principle agreement?

Chief Minister Fabian Picardo: I will try to do so as quickly as possible. I apologise, Chair, but this is a complex area, and I do not want to be accused of leaving anything out.

The envisaged timetable is approximately six months. The United Kingdom and Spain and Gibraltar have said to each other that we will seek to have this treaty done in six months, but of course, in doing so, we have to be entirely respectful of the fact that the European Commission needs to set up a task force for this negotiation. It also needs a mandate for this negotiation, and it may take a different view as to timeframe.

We seek to do this, if at all possible, and again respecting the position of the European Commission, in the first six months of the year. Until then, this non-paper is not legally binding. It is in the nature of a political agreement between the parties, but it has given us the opportunity to have a reason why we should continue some arrangements between us at the land frontier that will therefore benefit from an element of what you might call, as I said before, transition-like arrangements, so that we do not suffer the worst effects of a hard Brexit while we seek to finalise this treaty in the period of six months.

Baroness Couttie: You have alluded several times to the fact that the EU plays a crucial role in that. What engagement have you had with the EU since the agreement was reached? How confident are you that the EU and its member states will support this agreement?

Chief Minister Fabian Picardo: The British ambassador to the European Unionno longer the high representativeand the Spanish representative to the European Union have both, under cover of letter, sent in the non-binding framework agreement so that the European Commission knows that this is an agreement between the parties. That has been the beginning of the communication with the European Union.

The head of the Commissions UK bilateral task force, Clara Martínez Alberola, said in the European Parliament on, I think, Thursday last week that the European Commission is looking already at the possibility of a mandate for the purpose of negotiating the treaty. Monsieur Barnier said on, I think, Wednesday or Thursday last week, that an agreement in relation to Gibraltar is, in his viewalthough he is no longer the lead negotiatorpossible, but sensitive and difficult, which I think is a good reflection of the reality of the position. We await formal feedback from the European Commission setting out its views and, if it considers that it is possible to do these arrangements, its view of the timetable.

Q4                Lord Thomas of Cwmgiedd: Chief Minister, what is the basis, bearing in mind Lord Kinnoull’s comments, for the confidence of the United Kingdom and the Kingdom of Spain, and for your own, that this in no way impinges on the respective positions in respect of sovereignty?

Chief Minister Fabian Picardo: It is important that we set out the approach that has been taken by successive Governments, so that we understand the parameters of what we were discussing, and therefore we understand the legal certainty that we bring to the arrangements that we want to negotiate into the treaty, and the political certainty that we bring to this framework.

The Spanish Government have said consistently, even at the time that the right-wing Partido Popular was in power, and when the negotiation of the withdrawal agreement started, that they believed that this was not the time to put sovereignty on the table.

When the Socialists took power in Madrid, the then Secretary of State for the Socialist Party Marco Aguiriano said that the Spanish understood that, if they put the issue of sovereignty on the table, the Britsin particular, the Gibraltarianswould close their files and go, and the negotiation would end. Recently, the current Spanish Foreign Minister Ms González Laya has said that they are pursuing arrangements of practical effect rather than issues of sovereignty simpliciter.

The position of the British Government could not have been clearer. The United Kingdom was not prepared to discuss or negotiate any matters that impinged on sovereignty, jurisdiction or control. The position of the Government of Gibraltar bears almost no need for explanation. The Government of Gibraltar would just not enter into any discussion in respect of the sovereignty of Gibraltar, let alone jurisdiction or control over any part of the territory.

I explain that in detail because all parties came to the table seeking not to engage with sovereignty, jurisdiction or control. To start with, the first sentence of the framework sets out that the positions provided for in the non-paper are without prejudice to the positions of the parties on the issues of sovereignty. The third paragraph provides for the fact that the treaty itself may contain recitals in respect of the protection of each partys positions on sovereignty.

From the de facto approach that the negotiators have taken and the positions that we put forward when we sat down, and from the positions that we set out in the non-binding framework, and from what we have already said will be in the treaty, if there is a treaty, every one of the parties has understood that we need to do a commercial arrangement, an arrangement in relation to fluidity and immigration, and nothing that seeks to cross the red lines of any of the parties around the table on the issue of sovereignty.

Lord Thomas of Cwmgiedd: In essence, it is a pragmatic commercial agreement and sovereignty has been put completely to one side.

Chief Minister Fabian Picardo: I think that is exactly the right way to look at it. We are looking for an arrangement between the United Kingdom and the European Union, with the European Union engaged in respect of its travel area and its movement of goods area. It is not about membership of the European Union even, just an arrangement in respect of immigration and movement of goods, to give fluidity to those arrangements. None of those has to touch on sovereignty in any way, or on jurisdiction, or on control.

Lord Kerr of Kinlochard: What you have just said, Chief Minister, would presumably be reflected only in recitals, not in the substantive text or the articles of the treaty that is to be drafted. Is that right?

Chief Minister Fabian Picardo: That is what is envisaged in the non-paper. In fact the non-paper says specifically that the treaty may contain recitals in respect of the positions of the parties on sovereignty and jurisdiction. From your experience, you will know that there were a number of directives at different times that contained recitals in respect of the respective positions of Spain and the United Kingdom on the sovereignty of Gibraltar. There were never operative articles in relation to it, just preservations of positions in recitals.

Lord Kerr of Kinlochard: Do you envisage a memorandum of understanding or some legal agreement with the United Kingdom on sovereignty?

Chief Minister Fabian Picardo: I envisage that the arrangements that we enter into will require a concordat between the United Kingdom and Gibraltar on aspects of the operation of parts of the treaty, if there is one, but not on the issue of sovereignty. For us, the key issue of sovereignty is provided for in the context of the Gibraltar constitution, the preamble to the Gibraltar constitution, the despatch to the Gibraltar constitution and the repeated statements in Parliament on the double lock that the United Kingdom respects on sovereignty in relation to Gibraltar.

Lord Kerr of Kinlochard: I am sure that it will all go very well, but, supposing it does not, what termination provisions do you envisage in the agreement?

Chief Minister Fabian Picardo: Indeed, things will go well only if we prepare for what happens if they do not go well. In that respect, it is not to be taken for granted that there will be a treaty in six months. We have to prepare in six months, or a later time or earlier time, for Gibraltar to go through a hard Brexit, if we are not able to persuade the European Union that there should be a treaty, or if we are not able to agree a treaty. Indeed, once there is a treaty, there needs to be provision for the parties to undo the arrangements. I hesitate to talk about Article 50 to the architect of it, but there will be, no doubt, a clause appropriate for this treaty that would have the effect that Article 50 was intended to have in the context of the treaty establishing the European Union.

Lord Kerr of Kinlochard: I am not sure that I would recommend a carbon copy. Tell me what happens after four years. You have this implementation period concept and you have indicated that, for you, four years could be a watershed moment. You have said in public that, if FRONTEX were to be withdrawn, there could be no question of recommending the continuation of the agreement after four years. How do you think that will work?

Chief Minister Fabian Picardo: I think you need to add one element to the way in which you presage what I have said. I said that, for me, it would not be possible for the arrangements to continue, if the insistence was that, upon the withdrawal of FRONTEX, its role should be taken over by Spanish law enforcement. However, it is possible that we could find that the withdrawal of FRONTEX leads to the Gibraltar Borders and Coastguard Agency taking over those responsibilities, if we have been able to build confidence, for example, with the European Commission and our Spanish partners in these arrangements. Instead of requiring people to go through two controls juxtaposed, in the style of St Pancras or Gare de Nord, we might be able to have one control managed by the Gibraltar Borders and Coastguard Agency.

However, if, four years after the treaty is entered into, FRONTEX is withdrawnif indeed FRONTEX agrees to do it for four years—and is replaced by Spanish law enforcement, I do not think it is at all possible that even another Chief Minister would be prepared to agree to the presence of Spanish law enforcement in Gibraltar. This is because of the institutional damage that has been done to the relationship and trust that Gibraltar can have in Spanish institutions at this stage. I am very sorry to say that, but I think that is the effect of decades of the nature of the relationship, as it has been and such as it is.

There is good reason to want to reset the relationship for that reason. We expect that the treaty must therefore protect our ability to leave the application of these arrangements behind and move, if necessary, to a situation that would be akin to a hard Brexit four years after we had entered into a treaty.

It would be a great pity. I hope that we can find a different architecture that enables us to avoid that cliff edge and that all parties are able to protect their positions in respect of sovereignty, to cede nothing, and find an arrangement that enables us to progress. I think that FRONTEX is that arrangement. Alternatively, the Gibraltar Borders and Coastguard Agency might be able to create confidence among our European and Spanish partners that it can discharge these functions equally well.

Q5                Baroness Hamwee: I think you may have already covered the issues I was going to raise regarding controls on the movement of people between Gibraltar and the Schengen area without any physical barriers. I do not know whether there is more that you want to say about that part of the agreement and how it will apply. I have to say that it all sounds very pragmatic so far.

Chief Minister Fabian Picardo: The important thing to understand and to get into our heads is that, today, Gibraltarians and residents of Gibraltar—and indeed anyone who comes to Gibraltar, whether they come for work, recreation or any other purposescomes through a Schengen exit control when they come into Gibraltar at the land frontier, and leaves Gibraltar through a Schengen entry control and a customs control.

The number of movements that we see in a yearwhen we are not suffering from a pandemic—means that up to 15 million people come across that land frontier. You need to then multiply that by two because, of course, there is no room for them to stay. There are 30 million movements across that land frontier, in and out of Schengen, every year.

We have been able to agree a mechanism, if the European Commission shares our ambition, to undo 30 million moments of immigration and customs friction by moving those checks to the entry points at the airport and at the port and marinas. The numbers of movements that we see there are between a quarter of a million and half a million, maximum. With our airport working a lot more, we might see up to 1 million passengers. That is what it was built for.

If there were approximately 1 million movements that required checkinglet us not even do the difficult mathematics of wondering how many of those passengers of the 1 million would come from within Schengen where there would not be friction—you would therefore reduce the numbers of checks required so considerably that you would give real business efficacy to the crossing point at the land frontier between Gibraltar and Spain, by putting the friction at the entry points from third countries at the port and at the airport. That is what this is designed to do.

We cannot, in this context, be accused of having ceded anything in respect of the Schengen control, because, today, those 30 million checks belong to Spain, and to Schengen. They are the ones checking people out of Schengen and into Schengen. We get the opportunity to reduce those checks and put them at the airport and at the port and marinas.

Baroness Hamwee: Did I hear you say on the BBC yesterday that only Gibraltar would ever touch a grain of Gibraltar’s sand? That was very vivid. There will not be physical barriers, but will this require facilities on Gibraltar soil or sand, on behalf of Schengen?

Chief Minister Fabian Picardo: The very figurative language was, unfortunately, not mine. It was the Prime Minister who referred to not giving up the hair on one macaque, which was even more figurative than my approach. We both share exactly the same sentiment. What will happen in the context of what is proposedsubject always to the agreement of the European Commission, and of the Schengen member states, which is a different class of member states and not all the member states of the European Unionis that we will permit a FRONTEX operation to operate at Gibraltar airport and at Gibraltar port and marinas.

Adjacent to the airport, but not in the airport, we will build an office facility that will be equidistantfor example, 5 metres into Gibraltar and 5 metres into Spain. It will be a joint office to see our law enforcement agents and our Gibraltar Borders and Coastguard agents operate with FRONTEX and with Spanish law enforcement the Schengen Information System. All the checks will happen up the terminal or up the port, carried out by FRONTEX.

Some people in Gibraltar have referred to this as the Schengen shack”, in shorthand, which I thought was quite a good way of remembering what it will be. In the Schengen shack, we will carry out all the secondary checks that might be required in respect of individuals who might not clear passport control in the normal way. A very small number of individuals will require these additional checks to be carried out, with the operation by Spain of the Schengen Information System. Those will be the man bites dog category.

Lord Ricketts: It is clearly a complex area but a hugely important one. The removal of physical barriers is an enormous gain for the people of Gibraltar, if it can be made to work, as you say, in the transition period. To unpack it a little further, around the Schengen shack will you have FRONTEX/Spanish officials and Gibraltarian controls, or will it be separate controls operating on separate databases, since Gibraltar will not have access to the Schengen Information System?

Chief Minister Fabian Picardo: The details of all this are to be agreed between the European Commission and the United Kingdom in the negotiation we will enter now. What we have envisaged, and what we will be proposing jointly with our United Kingdom and Spanish colleagues to the European Union, is a common office space, where Spain and FRONTEX will be operating the Schengen Information System and Gibraltar law enforcement, including the Gibraltar Borders and Coastguard Agency, will be operating the systems we might need to operate, in a way that is joined up and enables us to ensure the best possible protection and security of Schengen and Gibraltar. That is still very much subject to detailed discussion and agreement between the UK and Gibraltarian authorities, and the Spanish and European authorities, once we have sat down to have that detailed negotiation.

Lord Ricketts: My attention was caught by the phrase in annexe 1 to the agreement that it will be necessary to align Gibraltar with EU visa policy. Will you explain a bit the implications of that?

Chief Minister Fabian Picardo: The important thing to understand is that Gibraltar visa policy today is independent of the United Kingdom and independent of the Schengen area. Gibraltar has full autonomy in relation to its visa policy. Indeed, we have used that autonomy to align our visa policy with that of the Schengen area. We found that we wanted to create almost a concentric circle of immigration in Gibraltar. We had a view as to the position of the United Kingdom on immigration, but we also wanted to have a view as to the Schengen position on immigration, and to create the possibility for people to enter Gibraltar in a way that was both safe and efficient when it came to receiving tourists in Gibraltar.

Let me give you a worked example. Any person who visits the European Union from China or Russia or India, all of them visa-requiring nationals, takes a multiple entry Schengen visa, arrives in Spain at the Costa del Sol, decides they want to take a day trip into Gibraltar, and is told initially that they cannot enter Gibraltar unless they apply for a visa. Of course they will say, “Instead of going to Gibraltar, I’ll go to Granada or somewhere else, or Ill sit on the beach.

To enable us to provide more access for people safely into Gibraltar, some time ago we took the view that our visa policy would be that, if you had a Schengen multiple entry visa, you would be able to enter Gibraltar for a maximum of 21 days on a visa waiver scheme. To an extent, we have already made up our mind about this independently, without having to have regard to the United Kingdoms immigration policybecause there is an immigration frontier between us and the United Kingdom. We have already aligned ourselves to the visa position of the Schengen states to permit those who had those visas to enter Gibraltar. We are looking at a continuation of that to give business efficacy to immigration through Gibraltar airport and Gibraltar ports, while getting rid of that barrier between us and mainland Spain and mainland Europe.

Lord Ricketts: I have a very brief question on whether you see any prospect of there being an exit/entry point at the airport for direct access to and from Spain through the airport. Could that be envisaged?

Chief Minister Fabian Picardo: That is already envisaged under the Córdoba arrangements agreed in 2006, which saw Gibraltars airport built where it is todayliterally on the frontier. The idea was that this airport would straddle the frontier because there would be an additional area for access and entry built on the Spanish side.

In those days, the arrangements were being entered into so that the airport could stay outside the Schengen zone, and people could either choose to come into Gibraltar and stay outside Schengen or go down a different corridor that took them into Schengen but out of Gibraltar.

The arrangements proposed today would put the territory of Gibraltar within a common travel area within Schengen, so the airport would be entirely within Schengen. You therefore would not need an exit directly out into Spain from Gibraltar airport. But it is not impossible, given the character of Gibraltar airport, to open up such an entry and access point, because it was designed with architectural drawings for that purpose.

Q6                Baroness Donaghy: How will the proposed bespoke customs union between the EU and Gibraltar operate in practice? What practical differences will be felt at the border with Spain?

Chief Minister Fabian Picardo: You will see the customs arrangements that we envisage in paragraph 11 and onwards of the documents. I regret that these documents were leaked by a Spanish newspaper before the European Commission had determined that it wanted to build up a mandate and before we had agreed that we should release the terms of the framework. It talks about what customs arrangements could be entered into. This is very much a live negotiation. The Gibraltar Cabinet has concerns about the opportunities for customs arrangements with the European Union. Spanish colleagues also have concerns about arbitrages. We have set out almost a starter for 10 to get the negotiation going with the guardians of the treaty, the European Commission, who need to get comfortable with what might be proposed.

The purpose is the suppression of customs controls between Gibraltar and continental Europe and mainland Spain, so that there is less friction at the crossing point between Gibraltar and Spain. There are many different ways of achieving that, but it is the purpose that we want to seek to achieve.

The easiest way, in shorthand, to achieve it is for Gibraltar to join the customs union, but that would literally be a sledgehammer crushing a nut. The customs union is designed for states that produce goods, and Gibraltar produces no goods, and the bureaucracy of that acquis would crush Gibraltar.

We are therefore not looking at the full application of the customs union in Gibraltar. We are looking at different bespoke arrangements, as the framework provides for explicitly, which might see us substantiallyand that is an important qualifying word—applying different parts of the common commercial policy, the common external tariff and other aspects of the customs union, in as light and bespoke a way as possible that delivers the objective of fluidity of goods as well as fluidity of persons.

Baroness Donaghy: There is still a lot of negotiation to take place before you reach the nitty-gritty of the detail.

Chief Minister Fabian Picardo: Yes, indeed. If I may say so, even short of negotiation, there is exploration to be done between Spain and the European Union, and the United Kingdom and Gibraltar, so that we all understand how we can achieve the common purpose that we might want to see become a reality. It has to be designed to ensure that we create an area of shared prosperity, where, therefore, Gibraltars economic prosperity and arbitrage is enhanced rather than in any way diminished.

Of course, the Government of Gibraltar will not enter into arrangements if we think they will be detrimental to our traders. We are looking to enhance what our traders can do, and, in that way, enhance what we do not just for prosperity in Gibraltar but in the region around us. Nobodyand you will excuse me for paraphrasing former Chancellor Lord Hammondwill vote or choose to be poorer. We are talking about choosing something that will make the whole region more prosperous.

Lord Wood of Anfield: I would like to probe you a little more on the nitty-gritty, as Baroness Donaghy referred to it, of how customs will work. Will you say a little more about how border control points at ports and the airport will operate? In particular, I am interested in where customs checks will be done by EU officials in the monitoring of the process and, specifically, the role of Spanish officials in those checks.

Chief Minister Fabian Picardo: It is not envisaged in the framework, and it would not be acceptable to the Government of Gibraltar, that Spanish customs officials should be present on Gibraltar carrying out customs checks on entry points from third countries. In fact, the framework sets out a different regime, where we provide information as to customs entries into Gibraltar, and statistical information in that respect. But the customs authorities of Gibraltar are the only ones empowered to check goods as they come into Gibraltar on a retail basis, in the hands of individuals arriving at the port or airport, or at marinas. Information would be provided on a wholesale basis, and those controls would be subject only to Gibraltar customs checks, with not just information provided but statistical information.

You have to understand that Gibraltar is geographically completely different from, for example, Northern Ireland, where there have been similar issues. The geography of Gibraltar is such that we have a small port capable of taking a few dozen containers, and most of what comes into Gibraltar, even by sea, comes from the European Union. There is very little trade with third countries from third countries.

In almost every instance, although Gibraltar is not in the common customs union, you would be hard-pressed to be able to buy in Gibraltar, whether it is an electronic item on the market in Main Street, or cigarettes and perfume and alcoholitems that carry special dutiesany such items originating outside the European Union on arrival to Gibraltar. Even if they are produced outside the European Union, in nearly every instance they have come through the European Union into Gibraltar and would have been produced to the standards required in the European Union.

Lord Wood of Anfield: I understand the special circumstances you eloquently set out there. Will you explain a little more what the reference to a special role for Spain is in relation to customs? What enhanced co-operation between Gibraltarian and Spanish officials will be required? I appreciate that the situation of Spanish officials taking a direct part is highly sensitive, as you say, but what exactly in that context does this special role mean?

Chief Minister Fabian Picardo: Today, we find ourselves outside the European Union. We have always been outside the common customs union, but today we are outside the European Union. Spain has responsibility, therefore, for the exit check that is required for goods that are transiting the European Union from third countries. That is manifesting itself already in the arrival of goods from the United Kingdom to our supermarkets. France is the entry point and Spain is the exit point for those goods transiting the European Union.

Geographically, Spain has the role, in the reality of the exportation of goods to Gibraltar, of a third country, or third territory, from the European Union. It is that role as the neighbouring common customs union state that is being referred to. We have been fostering enhanced co-operation for some time now. Under the withdrawal agreement, we have an MoU to seek greater co-operation between Gibraltar customs and its Spanish counterparts. That is going very well. The relationship is developing in a way that is exactly what we would wish to see: customs authorities working together to ensure that illicit traders are excluded from the market. We see the opportunities for that growing going forward.

Q7                Baroness Primarolo: May we turn to reinforced alignment? Will you explain to us what the requirement will be for reinforced alignment with Spain and the EU, including in relation to VAT on goods, excise duties for sensitive products, and level playing field measures? What does that mean in practice for future operation?

Chief Minister Fabian Picardo: The negotiation has not yet begun with the European Commission; therefore, I cannot tell you what the result of the negotiation will be. We have to respect the role of the European Commission. The position put by Spanish colleagues in the context of this part of the negotiation is that the European Commission, in the context of the discussion on the suppression of customs controls, will want to be satisfied that the arrangements that are made protect the European single market in goods in a way that will not create distortions. Therefore, there may be a need for reinforced alignment in some areas.

What those areas are will very much depend on what type of arrangement we come to in the context of goods. Remember that paragraphs 5 to 10 of the agreement talk of what will be in the agreement, if there is one, which is matters relating to immigration. That is what we have submitted to the European Commission. Paragraph 11 and onwards talk about what could be in the agreement, once the negotiation on foot between the United Kingdom and Gibraltar on the one hand and the European Union on the other hand, with Spain as the most relevant of the member states in this negotiation, leads us to an understanding of what is required in the context of the suppression of those customs controls. This issue will be very much live in the negotiation. I am very happy to come back and give you evidence if we are able to finalise that negotiation, if the European Union works up a mandate and engages with us, and once we have, I hope, finalised a treaty.

Baroness Primarolo: I am sure we would welcome that. My subsequent questions are pointless, Chief Minister, because, obviously, things such as the operation of VAT and excise duties and the interactions here are very complicated, and I think I would be wasting your time in pressing you further for information if the negotiations have yet to start.

May I ask you about a similar point? Assuming that everything proceeds, in the future how would the Government of Gibraltar be notified of new European legislation to ensure the continued application of the common external tariff? That is particularly relevant to European Union customs and excise and VAT laws. How would your Parliament ensure that legislation took effect?

Chief Minister Fabian Picardo: As you know, we have 48 years experience of membership of the European Union. We have been able to ensure that we have complied with obligations to transpose European lawEuropean directives, regulations, decisions, et cetera—into our law, in a timely fashion, during the period of our membership of the European Union. If the European Commission agrees to have this negotiation, and if we are able to reach a happy conclusion and conclude a treaty, once we know what it is that we will be continuing to do in keeping with European rulesand it may be that none of the treaty requires us to do that, or it may be that part of the treaty requires us to do thatwe have mechanisms in place to continue to monitor the Official Journal and decision-making in the European Parliament. Those decisions, regulations and directives that might be relevant would continue to be brought to our Parliament for primary legislation, where appropriate, or for Gibraltar secondary legislation to be enacted, as it has been until now under the existingnow repealedEuropean Communities Act, but, ironically, in relation to fewer areas of competence until 31 December when we were members of the European Union.

Baroness Primarolo: Could you give us any indication of when you think negotiations on these crucial areas with regard to VAT, excise duties and level playing field measures will start, and when they might conclude, or is that just an impossible question?

Chief Minister Fabian Picardo: I would not want to prejudge when the European Commission will be able to determine if and, if so, how it is prepared to engage with the United Kingdom and Gibraltar in this negotiation, and how the United Kingdom and Gibraltar, and the European Union and Spain, will structure that negotiation. Therefore, at the moment it would be crystal ball gazing to try to give you an answer in that respect that is anything beyond guessing.

I can tell you that we are doing a lot of work in assessing our market. I have set up something called the Treaty Liaison & Advisory Group, involving all the representative bodies that are economic actors in Gibraltar: the Chamber of Commerce, the Gibraltar Federation of Small Businesses, the Gibraltar Finance Centre Council, the Gibraltar Gaming and Betting Association and our unions, so that we understand the limits of what we might be prepared to agree to in the context of that negotiation. This will be a very fluid and dynamic process, we hope, in the first six months of this year, but we await respectfully what position the Commission might take in this context.

Baroness Primarolo: Given that you cannot speak directly to the Commission, does that mean you will speak to Spain about those issues, and Spain will represent that in its discussions directly with the European Commission?

Chief Minister Fabian Picardo: I do not accept that we cannot speak to the European Commission. We would not be making representations through Spain to any party. If anything, we would be making representations through the United Kingdom. The treaty that we are proposing is a piece of public international law between the United Kingdom and the European Union, so there would be a United Kingdom negotiating team. I will lead the Gibraltar team and I expect the Foreign Secretary will lead the United Kingdom team. Our engagement will therefore be as one United Kingdom team with the European Union team, which I have no doubt will have regard to the position of Spain as set out in the framework, and may even include those of our colleagues who have been part of the Spanish negotiating team.

The Chair: Thank you very much indeed. That is a very interesting area.

Q8                Lord Sharkey: Paragraphs 16 to 25 of the proposed framework cover a number of provisions, including transport, social security, cross-border cohesion, frontier workers and data. Will you say a few words about what you see as the key elements of these proposed chapters, especially as regards data?

Chief Minister Fabian Picardo: The issue of data has been quite vexed. The relevance of data has changed in the past five years. In the context of this negotiation, one thing that became very clear to us was that data was almost as important as persons and goods. So much information now passes about persons and goods that the movement of data requires the fluidity that we are seeking in respect of persons and goods.

For us, the key issue here was understanding that to keep things as efficient as possible for our people, and for those who work in Gibraltar and live outside Gibraltar, we needed to ensure that we had a continued flow of data between us and the Spanish Administration and the European Commission in respect of individuals, even after the cliff edge of 31 December.

The best way for us to achieve—excuse the jargon—the equivalent of equivalence in the context of the free movement of data, after 31 December, was to say that we would continue to give a commitment on dynamic alignment at least in the period of the negotiation, so that, while we went through the negotiation, the European Union could determine whether it would give Gibraltar equivalence on matters relating to data, or we could agree dynamic alignment in respect of the data going forward so that the data could continue to flow as freely as it does today. That is on the key issue of data.

After 31 December, we have had quite a seamless transition into this period of bridging transition, if I may call it that, in respect of data.

The other items that you refer me to are day-to-day life—transport, the movement of workers, social security arrangements, recognition of documents. Of course, it is all very well to say that you will allow people and goods and data to move freely, but if you require a different driving licence of the person who is moving freely, or you require new insurance documents of the person who is moving freely, you are simply putting different administrative controls in place of those immigration controls.

We want to recreate as much as possible the regime there is today in the context of recognition of documentation, whether it is your car logbook, driving licence, or Gibraltar identity card. There is such a thing as a British ID card, believe it or not. It is issued in Gibraltar and is recognised for travel in the European Union. It has been validated for that purpose by the British Government for some 30 years now. There should be the continued recognition of documentation, so that people can continue to move as freely as a common travel area with Schengen will permit, as freely as a customs union between Gibraltar and the customs union would permit, and as freely as the recognition of documentation would permit. That is what those additional clauses are all designed to do.

That requires a lot of negotiation because those are matters within the competence of the European Commission on the European side, and we will have to engage with them to see, respectfully, what it considers it is prepared to agree in that respect.

Lord Sharkey: Could you give some sense of how the governance of the agreement will actually operate?

Chief Minister Fabian Picardo: We have set out in the provisions of the framework non-paper that a governance mechanism within the treaty will provide for the enforcement of any concerns any of the parties may have. The mechanism that we have today under the withdrawal agreement is working well with the specialised committee, where Gibraltar is represented on issues relating to Gibraltar. Where there are any disputes, they are dealt with in the withdrawal agreement governance mechanism. We envisage that it is very likely that we will see a similar mechanism in the context of the treaty between the European Union and the United Kingdom, but again we have not yet engaged on that matter, and I can only tell you what it is that we envisage and what we have agreed with the United Kingdom and our Spanish negotiating counterparts. That does not necessarily represent the view of the Commission.

Baroness Brown of Cambridge: This has been extremely interesting, so thank you, Chief Minister. As regards the agreement and the chapters of this agreement, I would be really interested to know how closely you think it will reflect the terms of the UK-EU trade and co-operation agreement, and where the main differences are likely to be.

Chief Minister Fabian Picardo: The TCA contains some areas that are of interest to Gibraltar. Indeed, the whole purpose of the TCA was to seek to pull the United Kingdom out of the area of free movement of persons. Therefore, the negotiating imperative of the Government of Gibraltar, with the support of the Government of the United Kingdom, was a differentiated solution for Gibraltar. It is differentiated because the socioeconomic and geographic circumstances of Gibraltar are different from the geographic nature of the relationship the United Kingdom has with the European Union, and the socioeconomic needs of the United Kingdom. We need to continue that enhanced mobility of persons and goods.

Aspects of the TCA row in the opposite direction of what Gibraltar wants and needs. Aspects of the TCA are exactly what we believe the European Union, the United Kingdom, Gibraltar and our negotiating colleagues on the Spanish side will want to settle in some aspects of our relationship going forward, if there is a treaty. For example, you can see yourself importing parts of the governance mechanisms of the treaty. You can see yourself looking at the social security aspects within the withdrawal agreement and the TCA. There is a lot of work that we will want to import into the negotiated framework of the treaty between the United Kingdom and the European Union, subject, again, to the views of the European Union when it has its mandate to seek a negotiated outcome, if it pursues this in the way that we hope it will.

Baroness Brown of Cambridge: May I follow up quickly on the open border with Spain? It will clearly have enormous benefits, but will the European arrest warrant be operational in Gibraltar?

Chief Minister Fabian Picardo: I may have said this in the evidence I gave the Committee last time. Gibraltar believed that the European arrest warrant had helped us to settle a difficulty as to jurisdiction that we had had for many years between us and Spain. We thought it was a good thing to continue. Whether it is the European arrest warrant as we have known it, or whether it is the new arrangements that might be agreed between the United Kingdom and the European Union, which might have similar effect, the reality is that the United Kingdom, the European Union, Spain and Gibraltar will agree that we require a mechanism to provide very efficient extradition from Gibraltar. If you have a very fluid border at the crossing point between Spain and Gibraltar, where somebody can rush in to Gibraltar, but they cannot be got out of Gibraltar if they are a fugitive from one of the other Schengen member states, what you have created is not efficient in every respect.

The free movement, the fluidity of persons, needs to be efficient in every respect to be acceptable to the United Kingdom and Gibraltar, and no doubt also to the European Union and to Spain. Whether we call it the European arrest warrant, and whether it is the existing European arrest warrant— which I think has worked fantastically well for Gibraltar, and I would happily accept as the mechanism going forward—or whether there is a new hybrid arrangement, is still for negotiation with our European colleagues. I think this will be an area of very broad agreement between all parties. It is a question of getting it right technically to ensure that those who are seeking to evade justice are not able for one moment to see Gibraltar as a safe haven.

Baroness Brown of Cambridge: May I follow up with one quick question about the implications of the level playing field? Clearly, you do not have anything in the way of export of goods. I am interested in the implications of the level playing field provisions, but perhaps particularly as regards the environment.

Chief Minister Fabian Picardo: There is already broad agreement between Gibraltar, Spain and the United Kingdom in the MoU that we entered into under the withdrawal agreement on the protection of the environment. Gibraltar has been a leader on the protection of the environment. We exceed European standards in many respects. Where we are not up to European standards, we are seeking to establish at least that standard in Gibraltar.

You have to understand that Gibraltar is a small place with great difficulties, arising from our history and our location. There are very few places that are 2.5 square miles by 1 square mile where you would find a power station, for example. Therefore, some things are very bespoke in the context of Gibraltar. We are committed to the highest environmental standards. In many respects, we already exceed European standards. That is where we want to be. We do not for one moment see our involuntary departure from the European Union as somehow permitting us to lower standards on the protection of the environment.

Q9                Lord Faulkner of Worcester: Chief Minister, it is always a pleasure to see you, and thank you for coming to see us today. May I ask you a little about how life has been since 1 January—and I know it has not been very long—in particular in the context of border fluidity? Both the British Foreign Secretary and the Spanish Foreign Secretary say that they are committed to this. Can you give us a sense of how it has been and how those good intentions have been fulfilled?

Chief Minister Fabian Picardo: You ask me a question that starts quite broadly about what life has been like in Gibraltar since 1 January. Unfortunately, the pandemic has wreaked havoc in Gibraltar in the last few days. Yesterday, unfortunately, I had to announce the greatest loss of life in the last 100 years in Gibraltar, just since the start of the year. It has been a very difficult time.

The relevance of that, of course, is that Gibraltar is in lockdown. Areas around Gibraltar are also suffering from imposed different degrees of lockdown, which the Junta de Andalusia, the neighbouring regional administration of Spain, has imposed. You see movement across the frontier now only for work or for essential purposes.

I am pleased to be able to report that that transit across the frontier has not appeared to suffer in the way that it might have if we had gone through a hard Brexit. Passports are not being stamped and people are not being required to produce their passports for stamping. There are still issues about the continued recognition of the Gibraltar ID card in this period of transition, or bridging transition as I have called it, while we await the views of the European Commission, both in respect of arrangements that Spain might put in place for that bridging transition and, indeed, the European Commission’s view of what might be agreeable in a treaty going forward. We have seen that those who are entering or exiting Gibraltar for purposes that are permitted despite the lockdown have had no difficulties, other than ad hoc difficulties, in the way they have been able to move from one jurisdiction to the other. I think that is a very positive demonstration of the indications that the parties have given of their commitment to this framework becoming a reality on the ground.

Of course, that will be tested when the relative positions on lockdown of the different jurisdictions are lifted, and we see the unrestricted movement of people. We will see then whether there are at the frontiers any problems in respect of movement that we have not experienced to date. There is a desire to see the movement continue as it was on 31 December.

Lord Faulkner of Worcester: What is your guess on whether that can be achieved?

Chief Minister Fabian Picardo: I am not paid to guess. I am paid to worry and to ensure that, if there is a problem, we can fix it. I always say that I look forward to continued co-operation with Spanish colleagues. I expect that we will be able to achieve that co-operation in the way we have proposed. I take nothing for granted. I keep a cynical eye on every move, and that is what I am paid to do.

Lord Faulkner of Worcester: You have our sympathy for your awful news yesterday. It is not very good here either, as you will have gathered.

What is the feeling among Gibraltarians about this great change in their lives that Brexit has brought about? They were not enthusiastic supporters of it, as we know—absolutely the reverse. Are they now resigned to it? Do you think this will affect their view of you and your Government, and their view of Spain? How do you think they will respond?

Chief Minister Fabian Picardo: May I start by absolutely recognising that in the context of Covid things are not good in the United Kingdom, or, indeed, in Spain, or Europe and the world? I express my Government’s solidarity, as I have done before, with the suffering that is being experienced in the United Kingdom, in particular, in Spain, and around the world. The United Kingdom is giving us the lifeline of the vaccine. We received some vaccine a week and a half ago from the UK and we expect to receive some more on Wednesday, and within some 10 days thereafter, even more vaccine, which is enabling us to inoculate our four key at-risk cohorts and our front-line workers.

The people of Gibraltar, as you know, were not enthusiastic Brexiteers. Only 4% of us voted for Brexit and some 96% of us, myself included, voted to remain in the European Union. If there is one thing that makes us British, it is our respect for democratic outcomes. If there is one thing that we were proud of, it is that we were included in the franchise in the United Kingdom. One thing David Cameron did not require persuasion on was the inclusion of the people in Gibraltar in that franchise because we had been in the European Union with the United Kingdom since 1972. After the result of the Matthews case, in which we were represented by Gibraltar’s Attorney-General, Michael Llamas, before he held that role, we had been voting in European parliamentary elections, and so we voted in that referendum. We did not like the result, but we accepted the result and, therefore, we have worked to ensure that we could see Brexit happen and the key things that we need to protect happen as well.

I am not able to tell you how people regard the framework non-paper because there has been no plebiscite since we announced it two weeks ago. However, people voted in the 2019 general election for a party that was proposing that we should seek arrangements with the European Union that created a Schengen arrangement for Gibraltar, and greater fluidity of goods for Gibraltar, if those things could be agreed in a way that was acceptable.

We are in the process of doing so. It is at a very early stage. I have said to the Gibraltar Parliament that I consider that the framework non-paper we have agreed is imperfect—because of course it is the fruit of negotiation; it is not the fruit of dictation. If the Governments of Gibraltar and the United Kingdom together had set out to dictate the terms of the framework non-paper, it would look very different. If our Spanish colleagues had set out to dictate the terms of the framework non-paper, it would also look very different. This is the fruit of compromise that we hope will enable us to reach an arrangement that delivers what we need, and, as far as Spain is concerned, what the region needs in the context of Brexit not causing difficulties for everyday life in Gibraltar, either for Gibraltarians, or for those from other member states who work in Gibraltar but live outside Gibraltar.

That is not easy. Of course, there are many people who will become detractors of the framework non-paper. My key ask is that people who are detractors do not fall into the trap of thinking that just because there is today, apparently, less Spanish hostility, we should become the hostile aggressor, and we should be the ones to say we eschew anything that is an agreement simply because it involves Spain. Of course, anything that involves the European Union now will involve Spain because it is a member and we are not. We must act with good will, looking for the best interests of the people of Gibraltar and understanding that we must also have partners on the other side of the table who also have an interest in this.

Leaving aside completely the issues of sovereignty, jurisdiction and control, I think it is possible, if the European Commission agrees that it wants to seek to mandate a negotiated treaty, and we respect its right to do that in its own time and in its own way, that the United Kingdom, the European Union, Spain and Gibraltar could enter into arrangements that are safe and beneficial to all parties and eschew the historic issues of sovereignty, jurisdiction and control, with those being left to one side entirely.

I would ask that the critics look at the reality of what is proposed and what we agree eventually, and not seek to find what we call in Spanish the fifth leg of the cat and pretend there are problems when there are not.

The Chair: We are overrunning a bit and I anticipate that we will be about 15 minutes late, but I gather you have that flexibility in your diary, and I hope you would allow us to use it up. We have five colleagues to go.

Q10            Lord Oates: Thank you for such an informative session, Chief Minister. You said that the treaty negotiations with the European Union were likely to take six months, or possibly more. What bridging mechanisms do you think are necessary, or desirable, to put in place until any treaty might come into force? What discussions have you had with Spain and the EU about putting those in place?

Chief Minister Fabian Picardo: I am happy to continue for as long as committee members wish.

The issue on bridging measures is addressed in different ways. There are issues of national competence for Spain, issues of Community competence for the European Union and issues of national competence for Gibraltar, and areas that we are working on closely with the United Kingdom. All those, I hope, are producing what I might call relative normality. That is what we are trying to achieve. We are trying to preserve as much of what we might call normality as it was on 31 December as we go forward, hopefully, into this period of negotiation with the European Commission. I must be respectful of the position of the European Commission and whether, and when, it determines that it wishes to take a mandate on this.

Under my obligation to protect Gibraltar, the obligation of the Spanish Government to protect its citizens and interests, and, in the context of the European Union, its obligation to protect the citizens of the other member states who come in and out of Gibraltar, and to protect the single market, we need to try to ensure that we have bridging measures that do the transition that we need for the, hopefully, positively negotiated outcome in respect of a treaty, in a way that preserves all those equities.

The Spanish have issued a real decreto, a royal decree, which sets out provisional conditions. Some apply directly to Gibraltar. Some apply also to British citizens in the context of giving additional time after the end of the transitional period for British citizens who are living and working in Spain, et cetera, not necessarily from Gibraltar.

The European Commission, as you know, has some bridging measures in some of its law. Some of those do not include Gibraltar, unfortunately, but we are trying to ensure that the mechanisms that we put in place deliver as near normality as they can to those businesses that rely on cross-border trade, such as our hauliers, et cetera, and our British supermarkets, which bring their fresh produce from the United Kingdom to retail in Gibraltar. It would be a supreme irony if Brexit, which is designed to make us feel more British, ended up making us able to source less British produce in our supermarkets. I hope that these bridging measures and the treaty measures going forward will protect us from that very sad potential eventuality.

Lord Oates: Finally, some of us had naively assumed that the difficult part of the negotiation would be between the UK and Gibraltar on the one hand and Spain on the other, but from what you have said, and reading your interview in the Gibraltar Chronicle, it sounds like this treaty negotiation with the EU is very far from a formality and could even be more complicated. Is that correct?

Chief Minister Fabian Picardo: I absolutely do not believe that the negotiation of a treaty between the United Kingdom and the European Union in relation to Gibraltar is a formality, in any respect. You have absolutely rightly concluded that I take a very respectful view of what this negotiation will be. I believe that the European Union has equities that it needs to protect as the guardian of the treaties, and as the guardian of both the single market in services and the single market in goods. We have to understand that as we go into this process.

It is true that this has been a very tough negotiation with our Spanish counterparts, because there are many more things in heaven and earth than just sovereignty and control that the parties wanted to protect. It has been a tough negotiation. I have full respect for my Spanish negotiating counterparts for the way in which they have conducted that negotiation. It has been tough. I hope that they have found that we have been tough and have reached compromises that have protected all our equities. The Spanish Government have a large number of critics setting out what they think they have given away/failed to protect. The Government of Gibraltar have their large number of critics in the same way, which more or less tells you that we have probably done the right sort of job.

As we go into this treaty negotiation, we have to understand that the European Commission has its equities in respect of this negotiation. The United Kingdom, given its responsibilities under the Gibraltar constitution, and Gibraltar, given the Government of Gibraltar’s responsibilities under the Gibraltar constitution, will also have important equities to protect. That is our obligation as we go into this difficult negotiation.

Q11            Baroness Verma: Thank you very much, Chief Minister. It has been an absolute joy to listen to you this afternoon, with all your detailed explanations.

I wanted to ask you what impact you think this agreement will have on Gibraltar’s relationship with the UK, in particular as regards the movement of goods, people and services. You touched on it yourself, so could we look at how you intend to do a recovery plan post Covid, and what relationships you think will play a part outside the UK with your neighbours in making that recovery much easier and smoother, given the difficulties that every single economy will have on recovery?

Chief Minister Fabian Picardo: Thank you for your kind words. I will go through in detail one by one the three areas that you have set out. Let me start with services.

Services have flowed between the United Kingdom and Gibraltar freely, on the basis of what was known as passporting in the time that we were members of the European Union, because we were members of the single market with the United Kingdom. We had an advantage there that other overseas territories have not had, and we had it because we were in the European Union, and we were subject to the control of standards in the European Union.

Let me give you the most high-profile recent example. Gibraltar already has an open register of beneficial ownership because that was a requirement of the fifth anti-money laundering directive. We have applied all the previous anti-money laundering directives. The UK did not need to require this of us. Gibraltar was doing it because we were complying with our obligations in a European timeframe.

Recently, the United Kingdom, in one of the Finance Acts, provided for Gibraltar to continue to have that market access in services. Very usefully this is summarised in a Bank of England notice headed “Gibraltar passporting”, which was issued at the end of last year.

Gibraltar financial services entities and service providers will be able to continue to provide their services in the UK, as they did before 31 December, on a free movement passporting basis. That is how these arrangements are impacting the UK.

None of what we are looking at doing with the European Union relates to that. We determined that our market in services, after the heatmaps that we set up after the referendum in 2016, was principally—94%—with the United Kingdom. We reached this arrangement with the United Kingdom Government and that is now set out in statute going forward. As the United Kingdom does trade deals with third countries outside the European Union, Gibraltar is included with them. We trade with the United Kingdom, under the arrangements provided for in our continued access to services, and through the United Kingdom, with the UK DIT’s arrangements for Gibraltar to be included in the new trade deals.

In the context of the movement of people and goods, there is already, and I think it is important to remind ourselves of this, an immigration border between Gibraltar and the United Kingdom. Throughout the period of membership of the European Union, the arrangements were the same as the period before 1972. If I travel to the United Kingdom, I have to show my passport to gain access. If I travel from the United Kingdom to Gibraltar, I have to show my passport on arrival at Gibraltar. There will be no new controls for arrivals from the United Kingdom for British citizens when arriving in Gibraltar. The position will stay as it is today.

The same is true of goods. We have never formed part of the common customs union, so when the UK was in the EU goods had to be cleared into Gibraltar by Gibraltar customs. The arrangements between Gibraltar and the United Kingdom in respect of goods will stay at least as they have been until now. However, if we are able to have an arrangement with the European Union on customs, we may be able to negotiate an easier transit for goods from the United Kingdom to Gibraltar, by not having to have those exit controls of fresh produce, or goods of animal origin, when they are coming into Gibraltar from the European Union. There will be only one check as those goods go into the EU and not when they come out of the customs union.

There is an opportunity for greater fluidity of goods between Gibraltar and the United Kingdom if we enter into these arrangements with the European Union.

We see our relationship with the UK post Brexit becoming ever closer, closer than it ever has been, because now our market in services is not the whole European Union single market—it is the UK, and the world through the UK.

As to how we pull ourselves back from Covid, which is the final limb of your question, already one thing that the United Kingdom has done is provide support for Gibraltar, with a sovereign guarantee to enable us to borrow up to an additional £500 million for the purposes of ensuring that we are able to meet the financial burden of Covid. I have told you about the vaccines that have been provided by the United Kingdom. Again, our principal lifeline remains the UK.

The one thing that has become very clear—and if there was any need to understand it, the pandemic has really made it obvious—is that Gibraltar is an epidemiological zone with its hinterland. That is a reality. As we have entered this difficult time, a lot of political barriers have broken down. The Chief Minister of Gibraltar being on the phone with the Minister for the Interior and Foreign Secretary and with the President of the Junta de Andalusia was not as common before Covid. We have been able to work together on these epidemiological issues in a way that perhaps critics might never have expected, and cynics might be surprised to see we have been able to achieve, in a way that is designed to protect life and protect our citizens. I hope that is a way that can focus the future.

The Chair: We come to the last speaker in what we call normal time: Lord Teverson. After that, the two colleagues who did not have a question in our standard set of questions—Baroness Neville-Rolfe and Lord Goldsmith—will come in.

Q12            Lord Teverson: Chief Minister, congratulations on your diplomacy in getting to a position that, certainly when I was a Member of the European Parliament, I would have thought impossible. Congratulations on that, although, obviously, you are not there yet.

Do you feel there are any political ramifications to the fact that, if this goes through, you will, essentially, have a closer relationship with the EU than the UK will?

Chief Minister Fabian Picardo: The relationship that we have with the European Union going forward will be one that is designed to avoid friction in immigration matters, and to provide fluidity for goods, so that the movement of goods does not add friction where immigration has provided a solution.

That does not mean that, institutionally, we will be closer to anyone other than the United Kingdom. This is the point that I tried to make when I said that neither the carrot nor the stick will ever cleave us from Britain.

Our institutional relationships are with the United Kingdom. I was setting out a moment ago, as you heard me say, that our market in services is with the United Kingdom. The relationship that has demonstrated to be the closest is the one with the United Kingdom. That is where we are getting our vaccine and our financial support from, in the way of a sovereignty guarantee for our own borrowing.

More than that, given what is happening in Gibraltar today, the way demographically Gibraltar is changing is concerning in some respects. For example, a lot of our young people are losing their second language, Spanish. We are losing bilingualism in favour of seeing a younger generation speak exclusively English. We want to control that if we can because bilingualism is an advantage.

Our education, our courts and services, all of these things, have flowed, and will flow even more closely, with the United Kingdom. Because we will have arrangements that remove friction in relation to immigration, and which may create a goods arrangement between us and the European Union, you must not for one moment think that will in any way make us closer to the EU than it makes us to the United Kingdom. Far from it. What you are seeing going forward is that the knot between the people of Gibraltar and the people of the United Kingdom is ever tighter and closer. Our relationship is one that we will treasure and nothing will change how British we are.

Lord Teverson: Chief Minister, you have convinced me completely, so thank you for that. I want to test a little the durability of this process. You obviously have a very good relationship with the present Socialist Government in Madrid, but the Cortes is much broader than that. There is the People’s Party and Vox. Spain sometimes quite unexpectedly changes government because of coalitions not working. If that happened between now and six months’ time, or in the next year while these negotiations are taking place, would the same thing happen, or is it vulnerable to a change of Government in Madrid?

Chief Minister Fabian Picardo: We have to recognise that Spanish politics will sometimes see Gibraltar played as an issue. Principally, right-wing parties and extreme right-wing parties will play Gibraltar hard as an issue. It has ever been thus, in particular, since Franco played the Gibraltar ball in 1954 when Her Majesty visited Gibraltar, for example. We have to be alive to that reality. No treaty can ever give us complete security against a change of Spanish Government.

Spain will remain members of the European Union. The treaty will be between the United Kingdom and the European Union, not between the United Kingdom and Spain, or Gibraltar and Spain. However, Spain remains a member state of the European Union, so a change of government could give rise to Spain then persuading the European Union to apply any termination provisions that might be in the treaty. We have to understand that.

The first person to explain to you that no treaty will ever be bombproof is the Gibraltarian, because we are the ones who know that, in Utrecht, Gibraltar was ceded in perpetuity, and no sooner was it ceded in perpetuity than the Spanish were sieging the UK and Gibraltar to take Gibraltar back, in breach of the treaty. However, with good will, once there is a public international legal document, it is harder to undo than if there is just a political commitment.

Lord Teverson: Yes, it seemed to me that the fact that it is an EU-UK treaty makes it much more difficult to move out of it afterwards. I was trying to understand what the attitude of, say, the People’s Party is now. Will this be resisted by it in the Cortes, in due course?

Chief Minister Fabian Picardo: The Spanish Foreign Minister, Ms González Laya, is giving evidence before the Foreign Affairs Committee equivalent of the Spanish Cortes tomorrow. There are already questions set out in the public domain by the Popular Party, and complaints by the Popular Party. There are vociferous remarks by Vox. Vox has filed a motion in the regional parliament seeking the closure of the frontier with Gibraltar, which is not in the interests of the Spanish citizens who live around Gibraltar, let alone those who work in Gibraltar. I think that is the sort of example you are getting at. They are already playing the Gibraltar issue. It is impossible to talk in respect of the volatility of the Spanish political process in a way that I could give you any certainty because we do not know tomorrow what it is that Vox or Partido Popular might propose. Our negotiating interlocutors are those in Madrid in government today.

The only point I would make, and it is important, is that it is very easy, in every one of the relevant jurisdictions, to say things from the freedom of opposition. The responsibility of government is quite different. I can tell you that I carry the responsibility to ensure that my Cabinet and I make decisions, with the benefit of the experience that I have with my colleagues in government, which are the right, safe and proper decisions for Gibraltar, not jingoistically to issue a press release that might seek to persuade a few people to vote for me.

It is also true that, in Spain, the Partido Popular when it was in government said it was putting aside the issue of sovereignty in the context of the Brexit negotiations, at least in the context of the withdrawal agreement, which is when it was in power. It was Señor Dastis, a Spanish diplomat elevated to Minister by Señor Rajoy, who said it was important, and your Lordships will remember I gave evidence on this at some stage before you, to deal with the “irritants” between Gibraltar, Spain and the United Kingdom before the issue of sovereignty was to be on the table. There is a very good video that went viral on Gibraltar WhatsApp some weeks ago of former Spanish President, Mariano Rajoy, leader of Partido Popular, saying, “This is Brexit. This is not a time to put sovereignty on the table. We have to deal with other arrangements”. Thus it is also true that, when the Partido Popular was in government, it was doing that which it now vociferously criticises Ms González Laya, Mr Josep Borrell and Mr Pedro Sánchez for doing now they are in government as part of the Spanish Socialist coalition with Podemos, pursuing the same position as the Partido Popular had set out.

The responsibility of government makes people more aware of the reality of what it is that they need to do, I think, rather than the freedom to criticise that you often have when you are in opposition.

Lord Teverson: It must be in the European Union’s interests to want to do this, but that potential instability—I know it is not great—means that you should make sure that it happens as quickly as possible to solidify what you have brilliantly done.

The Chair: Thank you very much indeed, Lord Teverson. That is a very helpful line of questioning. The penultimate of my colleagues is Baroness Neville-Rolfe.

Q13            Baroness Neville-Rolfe: Chief Minister, when you very kindly hosted the Committee in March 2018, and showed us the border and the half-empty airport that you described, one of the issues that you raised was problems with the UK on taxation, which I recall was hurting Gibraltar. Is this an issue in the new world of the proposed treaty?

Chief Minister Fabian Picardo: It was good to have you in Gibraltar. I hope you will soon return, in better times, when we have re-established fluidity between all nations on the planet and we have left behind this pandemic.

The issues that we were concerned with at the time, as you rightly point to, related to access to the market in services, and the potential for VAT issues to have arisen between the United Kingdom and Gibraltar. All those issues have now been dealt with between the Treasury in London and the Treasury in Gibraltar.

We have seen a renaissance of the relationship between Gibraltar and the United Kingdom. Our Treasuries now work closely together. We have concluded a double taxation agreement between Gibraltar and the United Kingdom, which is very positive. We have also concluded an agreement on taxation with the Spanish authorities, and I hope we will soon be going through the process of formal ratification.

It will soon be impossible for anyone in Spain to pretend to describe Gibraltar as a tax haven, because we have an agreement between us in respect of taxation. This is a coming of age of relationships between Gibraltar and the United Kingdom, and between Gibraltar and the European Union, and Gibraltar and our Spanish colleagues.

Baroness Neville-Rolfe: Thank you for that. That is great news.

The Chair: Thank you very much. We come to our final colleague, Lord Goldsmith.

Q14            Lord Goldsmith: Chief Minister, I want to join everybody in congratulating you on your diplomacy and on the way you have answered all our questions so fully this afternoon. I am particularly pleased about that. As you may know, I have a bit of an interest in Gibraltar, having been pleased to have been called to the Bar in Gibraltar on several occasions. I look forward to coming back when that becomes possible.

I want to ask you one question, and it is a subject on which I had some correspondence with your Deputy Chief Minister. In the light of Brexit now having taken place, has there been any agreement with Her Majesty’s Government about how Gibraltar will be consulted on future trade agreements with third countries?

Chief Minister Fabian Picardo: Lord Goldsmith, thank you very much for that question. It is always a pleasure to see you in the local press when you are representing someone in our courts. No doubt local lawyers being led by you are delighted to be involved, and local lawyers on the other side are delighted to have your intellectual arguments to deal with. I am delighted to see that somebody must be making money and they must be paying us tax on that at some stage. All is good for litigation in the jurisdiction.

The relationship between the Department for International Trade and the Government of Gibraltar is, I must say, an excellent one. I think the work that Ms Truss has done has taken into consideration the needs of Gibraltar, in the context of both the continuity trade agreements done with those nations with which we had relationships through the European Union and the new trade agreements that are being done.

There is a very fluid process of consultation. We had an issue with the Japanese agreement, which was resolved, I am very pleased to say, and, as a result, mechanisms have been put in place so that there is a direct consultation, usually led by the Attorney-General, who is a key member of my Brexit negotiating team. He is taking forward those aspects alongside the work that we were doing in the negotiation of the framework, and hopefully, in the treaty as the European Union works up its mandate, if it agrees to do so.

I think we are in a very good place on that. The Deputy Chief Minister has ensured that he has been following through on it, and all the potential hard Brexit arrangements, with a number of technical notices dealing in part with the continuity FTAs that were being done and the new trade agreements that were being done.

Lord Goldsmith: That is very good to know. Thank you for that reassurance.

The Chair: That is a good note to end on. Thank you very much to all my colleagues, and thank you, Chief Minister, for a record-breaking session for you, I think. You have been very frank, very clear and very thorough.

I know I speak on behalf of us all when I say that we wish you well in two matters: first, in Gibraltar’s battle with Covid—it is horrible and we wish you well with that—and, secondly, in this process of turning the framework non-paper into a treaty. I think you are absolutely right in thinking this is not a formality at all and that there will be some hard yards to achieve that. We hope very much that you have success. We look forward to seeing you again here in due course.