Exiting the European Union Committee
Oral evidence: The UK's negotiating objectives for its withdrawal from EU, HC 1072
Wednesday 25 January 2017
Ordered by the House of Commons to be published on 25 January 2017.
Members present: Hilary Benn (Chair); Alistair Burt; Maria Caulfield; Joanna Cherry; Mark Durkan; Michael Gove; Peter Grant; Jeremy Lefroy; Karl McCartney; Craig Mackinlay; Seema Malhotra; Emma Reynolds; Stephen Timms; Mr John Whittingdale; Sammy Wilson.
Questions 704-754
Witnesses
I: The Hon. Dr Joseph Garcia MP, Deputy Chief Minister of Gibraltar; Michael Llamas QC, Attorney General of Gibraltar; and the Hon. Fabian Picardo QC MP, Chief Minister of Gibraltar.
Witnesses: The Hon. Dr Joseph Garcia MP, Michael Llamas QC and the Hon. Fabian Picardo QC MP.
Q704 Chair: Good morning. You are most welcome. It is very kind of you to give up your time to come and give evidence to the Select Committee. Do you want to introduce your team?
Fabian Picardo: Good morning, right hon. and hon. Members. On my left is Joseph Garcia, who is the leader of the Liberal party in Gibraltar and the deputy Chief Minister. The Gibraltar Socialist Labour party that I lead and the Liberal party that Dr Garcia leads have been in coalition since 1999. We fight elections together and we have formed the Government in Gibraltar since December 2011. We were re-elected in November 2015. To my right is Michael Llamas QC, Gibraltar’s Attorney General.
Q705 Chair: Thank you very much. Can I kick off with this question? Once the referendum result was declared—we are well aware of how the people of Gibraltar voted—Spain said, “Right then, joint sovereignty.” Can you tell us what the reaction was in Gibraltar to that announcement?
Fabian Picardo: You can see the reaction to that in the result. The people of Gibraltar did not vote on the basis of whether we liked the European Union or whether the European Union was faultless. I think we could all understand many of the issues that were being put in argument by those who were arguing to leave the European Union. Many of the frustrations that people felt with the European Union are equally felt in Gibraltar, as they might be felt in the United Kingdom and elsewhere throughout the EU.
The people of Gibraltar were voting because we were very clear that the minute the result came in, if it was to leave, Spain would be putting the issue of Gibraltar’s sovereignty on the table. I think you can read our attitude to that in the result of the referendum in Gibraltar, which was more akin to the referendums we have had in respect of sovereignty. The first one we had was exactly 50 years ago in 1967 and the second was on the very issue of joint sovereignty in 2002. The view in Gibraltar held almost unanimously to a man, woman and child is that Brexit does not represent any change whatever in Gibraltar’s attitude to continued perpetual British sovereignty over the Rock in partnership with the people of Gibraltar.
I have seen it said just this week in the Spanish press that they consider the offer of joint sovereignty to Gibraltar to be a generous offer that would allow us to remain in the European Union through Spain. Well, the people of Gibraltar left the referendum on leaving or remaining in the European Union behind them on the 24 June. We are not looking to remain in the European Union and be partly Spanish. The only way that someone could describe that offer as generous would be to be entirely disingenuous. It is the generosity of the predator that thinks its prey is finally prone, and it will take the price it has been seeking to extract for the past 300 years. Neither the people of the United Kingdom nor the people of Gibraltar are a prey that is on its knees seeking any generous offer from the people of Spain. All we seek is positive engagement with the people of Spain—as we do with the people of all the world and the rest of Europe, and particularly the people of Spain, as our neighbours—but we are not going to be accepting the payment of any price in our sovereignty, jurisdiction or control for our future participation with the United Kingdom in any trade deals with the European Union.
Q706 Chair: Thank you. The second question is, what sense do you have of the likelihood that Spain might choose to push the question of joint sovereignty during the negotiations, given the need to get agreement? If it is a straight deal under article 50 it is QMV, but if it were to turn into a mixed agreement that would require the approval of every single member state. It is a political judgment, but I think the Committee would be interested in your view of how far this might go, in so far as you know.
Fabian Picardo: Obviously, the less the United Kingdom seeks in the context of the article 50 negotiation—let’s talk about the trade deal later—the harder it is for Spain to try to extract a price. If you are looking at it from the sidelines, potentially, you might say that it is a very good thing that the Prime Minister has said that the United Kingdom is looking to leave the customs union and the single market, et cetera. Not that I might have shared those views, but if you were looking at it dispassionately, you might say, “Well, that’s a very good thing because it takes leverage away from those who might be trying to use that negotiation in some way to push the issue of Gibraltar.”
Historically, the United Kingdom has been very supportive of Gibraltar, but in some instances, unfortunately, at the last minute, where it has tried to negotiate agreements that have involved Spain, has mortgaged the issue of Gibraltar to the people of Gibraltar accepting some change of sovereignty, jurisdiction or control.
In particular, I am thinking about the Brussels agreement of 1984, and the airport agreement of 1987. I do not think that the present British Government are anywhere near that sort of attitude, nor anybody in the British Parliament. There is widespread support for the people of Gibraltar, and if Spain thinks that the Government of the United Kingdom, or indeed the people of Gibraltar, haven’t got the stomach to stand up for full exclusive British sovereignty going forward, I think they are misreading the situation and what this negotiation is going to be about.
Given that we are in inauguration week, if I could paraphrase a former, much-quoted President, Gibraltar will pay any price, bear any burden and meet any hardship in the context of ensuring that we have a future that is bright and exclusively British post-Brexit.
Q707 Joanna Cherry: We have already heard that Gibraltar is not in the customs union—that is correct, isn’t it? That means that there is no free movement of goods. Can you tell us a little about how the border between Gibraltar and Spain operates—how fluid it is or otherwise?
Fabian Picardo: Thank you for the opportunity to deal with that issue, because it is one that bears understanding in the context of what is important for Gibraltar going forward and what may be relevant for the rest of the United Kingdom.
I might have to look at my calendar and see what day it is. Today might be a very easy day on Gibraltar’s frontier. When people want things to work well, things can be very easy. Not having been in the common customs union since 1972, or indeed being a part of the common commercial policy or the agricultural policy—Gibraltar is out of all those—Gibraltar has always had what I see now described as a “hard frontier” in the context of potential future relationships with the UK and the European Union.
That does not mean that goods don’t flow into Gibraltar. They take a little longer. Those who are involved in the logistics of getting things into Gibraltar know that they need to allow two or three hours for their vehicles to come through the commercial gate. They will be inspected and there will be documentation to prepare, but if you get into the rhythm of things, this can be quite easy.
We have a difficulty that one of the border checks cannot be carried out at the frontier between Gibraltar and Spain; it has to be carried out in Algeciras for livestock, meat, et cetera, and that adds a complication. But that does not mean that our shelves are bare in Gibraltar. We are able to manage those things. We have important names in the British supermarket industry represented in Gibraltar. They have their deliveries carried out three or four times a week, and that comes through the frontier without any difficulty, although, of course, there are days, if the Gibraltar football team has scored a goal or been allowed into UEFA for example, that we might find that the frontier, for some reason, does not work as well as it might. So, this is more about good will than it is about the rules, necessarily.
Q708 Joanna Cherry: Would I be correct in understanding that difficulties occur at the border when politicians—the Spanish—choose to be difficult. Is that correct?
Fabian Picardo: That would be absolutely the way that the people of Gibraltar have traditionally understood it for the past 35 years since the border opened.
Q709 Joanna Cherry: But if the Spanish choose to be co-operative, the border operates in a fairly fluid fashion?
Fabian Picardo: In an absolutely fluid fashion that does not interfere with anybody’s life and enables people to move across that frontier, and goods to move across that frontier, without more control than is necessary.
Q710 Joanna Cherry: I am looking at some statistics here and I understand that approximately 14,000 workers cross the border every day from Spain to work in Gibraltar. Is that correct?
Fabian Picardo: Yes. It depends where we are in the cycle of the number of people crossing that frontier. So, 14,000 would probably be the high watermark of when Gibraltar is having a building boom and we have additional workers in Gibraltar, but it is between 10,000 and 14,000 people who would be coming into Gibraltar to work. Additionally, in the peak summer months you will also see a lot of tourists crossing into Gibraltar. Most of them are British, spending their time on the Costa del Sol and wanting to come in to see Gibraltar.
Q711 Joanna Cherry: So we should understand that the workers who are crossing the border every day are coming from Spain into Gibraltar to work and then going home to Spain again in the evening and then coming in the next day. Is that correct?
Fabian Picardo: That’s absolutely right. Gibraltar provides 25% of the GDP of the region and 24% of the jobs in the region around Gibraltar, known as the Campo de Gibraltar.
Q712 Joanna Cherry: How fluid is that movement of workers and people across the border? Does it have days when it is less fluid than others?
Fabian Picardo: It is extraordinarily fluid in the mornings on most days and extraordinarily fluid on the way back in the afternoons. I have described to people the situation down at the Gibraltar border as being a bit like Liverpool Street station in the morning, when you see many thousands of people coming in, in a way that is very easy, to their jobs and being at their desks in time to start work.
Of course, if there is a strike, people find it very difficult to get to their jobs and there is a build-up of people in stations and it becomes very difficult. In this case, in the case of Gibraltar, what is more relevant is, again, the good will of the politicians in Madrid, who might give an instruction that border controls be more obstructionist than usual and then you can see a build-up of people very quickly.
In the context of the last five years, for example, in terms of access to Gibraltar in the mornings, we have seen lengthy queues to come in on random days, and we have seen hugely long queues to leave Gibraltar in the evenings—queues of up to five hours if you are in a car or an hour and a half if you are a pedestrian—because, at that time, the then Spanish Foreign Minister, Señor Margallo, had a particular beef with Gibraltar on some issues and he wanted to demonstrate to us with his strong arm that he was able to impose restrictions at the frontier.
Who were affected? Principally Spanish people working in Gibraltar because they can’t get jobs in Spain, who are going back to their homes to be with their families of an evening. Who is affected in the morning? Who is late to work? Exactly the same sort of people.
With co-operation and understanding, and without politicians trying to show off about what power they have or don’t have, none of this needs to happen.
Q713 Joanna Cherry: Would the Committee be correct in understanding, then, that although Gibraltar has a different arrangement from Spain, in so far as you are not a member of the customs union, whereas Spain is in the EU and is a member of the customs union, nevertheless, the border operates fairly freely, unless Spanish politicians choose to be difficult about it?
Fabian Picardo: That would be a good paraphrase of the last 10 minutes of what I have said, with the added nuance that Spain is also a member of the Schengen area, so people coming into the European Union post-Brexit from Gibraltar would also be accessing the Schengen area of the European Union. The fact that we are going in and out of Schengen has never caused a difficulty in movement since the Schengen acquis was completed—
Q714 Joanna Cherry: So Gibraltar is not in Schengen but Spain is, but going in and out of Gibraltar does not cause any difficulty despite the fact that Spain is in Schengen and you are not?
Fabian Picardo: That’s exactly right.
Q715 Joanna Cherry: That’s very interesting. I just wanted to ask you something else to make sure my understanding is correct: my reading of the constitutional settlement in Gibraltar is that the Gibraltar Government have the power to control and legislate on immigration. Is that correct?
Fabian Picardo: That’s absolutely right.
Q716 Joanna Cherry: Can you tell us how that works?
Fabian Picardo: Gibraltar has had the power to control immigration since the 1969 constitutional settlement. At that time it was a devolved power. Since the 2006 constitution, this is a matter entirely in the purview of the Government of Gibraltar. As it is not a reserved power to the United Kingdom, there is an immigration Act in Gibraltar, which is currently undergoing review, and we are therefore able to control who comes in and out of Gibraltar. Importantly, although the United Kingdom and Gibraltar are extraordinarily close, as you know, there are immigration controls between the United Kingdom and Gibraltar. If somebody finds themselves in Gibraltar that is not a back door into the United Kingdom, in the same way as being in the United Kingdom is not a back door into Gibraltar.
Q717 Joanna Cherry: How do those immigration controls work so that people coming into Gibraltar do not use it as a back door to the UK?
Fabian Picardo: The only way to get to the United Kingdom from Gibraltar, of course, is either to drive in, which is a lengthy drive and you will come up against many immigration controls in the process, not least the one when you access Spain, or on a ship. You meet immigration controls in the United Kingdom when you arrive on a ship. When you arrive by air with one of the airlines flying to Gibraltar—easyJet, Monarch or British Airways—you will meet the controls at any of the UK airports. If you are a British citizen and an EU citizen, you have one sort of immigration control, and if you are a non-EEA citizen you have another sort of immigration control.
Q718 Joanna Cherry: What outcome would you like from the Brexit negotiations for Gibraltar? What is your ideal outcome?
Fabian Picardo: Principally, we would want to ensure that any process that the United Kingdom enters into for a future trade relationship with the European Union applies to Gibraltar with such differentiation, graduation or nuance—however you want to express the same principle—as may be relevant to the circumstances of Gibraltar, in the same way as the current European acquis applies to Gibraltar with the nuances that you have observed in the context of the questions that you have asked me. I think that is eminently doable. With good will in the context of that negotiation, Gibraltar does not need to be a victim of the Brexit process. In shorthand, that is what I think is most important vis-à-vis the relationship with the EU.
In relation to the United Kingdom, what is important is that the bilateral relationship between Gibraltar and the United Kingdom is a strong one. What is in the bilateral gift of the United Kingdom to support Gibraltar must flow quickly and promptly. We have seen how that is already the case in the context of the statement from Secretary of State Fox that the arrangements for financial services from Gibraltar to be sold into the UK market, which arise from a statutory instrument, would continue to apply between Gibraltar and the United Kingdom even post-Brexit, although they were born out of common membership of the European Union. A trade agreement between Gibraltar and the United Kingdom to allow the sale of services from Gibraltar into the UK and from the UK into Gibraltar is an important part of that future process also, which we are embarked upon already in discussions with colleagues in the Foreign Office and in the Treasury. Of course, the issue of free movement of people across the frontier into the Schengen area of the EU should continue to operate as it does today.
Q719 Joanna Cherry: Would I take from that correctly that in so far as your membership of the EU is concerned at present, you would have a differentiated arrangement from the rest of the UK, and in so far as exiting the EU is concerned, if it is necessary to protect your interests, you would like to see a differentiated arrangement for Gibraltar?
Fabian Picardo: That’s right. That is the position agreed in 1972 at the time of accession. That is the way I think it is likely that we will see things pan out.
Q720 Joanna Cherry: Were you consulted last week before the Prime Minister made her speech laying out her objectives for Brexit?
Fabian Picardo: I was not consulted by the Prime Minister, but I have been involved in a very detailed process of consultation in what is known as the Joint Ministerial Council (Gibraltar EU Negotiations), which is a JMC set up specifically for Gibraltar in the context of article 50 negotiations that we expect will commence soon. We have been working very closely with Robin Walker and Alan Duncan in that Committee, so we have been feeding in all the issues that are relevant to Gibraltar in the context of that vehicle for Downing Street to have the information that it is necessary for them to have in the context of statements and negotiations about Gibraltar. I don’t think that the Prime Minister said anything in her speech that runs contrary to the interests of the people of Gibraltar.
Q721 Mr Whittingdale: You have spoken a bit about the differentiated arrangements for Gibraltar. Could you elaborate? Gibraltar is outside the customs union. Was that the explicit request of Gibraltar at the time of accession? What advantages and disadvantages has it given Gibraltar?
Fabian Picardo: The three aspects of the current European acquis of which we are not a part are the common customs union, the commercial policy and the agricultural policy. When you look at the three of them together, you understand why the territory of Gibraltar did not want to see these parts of the acquis apply to them. There is not enough room to grow any crops.
Remember that in 1972 the frontier with Spain was closed, so Gibraltar had a business as a free port in the context of shipping which at the time those who were negotiating for Gibraltar thought it was important to preserve—and quite right they were too, because as a result we have been able to preserve a business that attracts cruise ships and many tourists to Gibraltar. Gibraltar is able to offer goods at a relatively attractive price. There is no value added taxation in Gibraltar, which makes services and goods in Gibraltar that little bit more attractive. In the context of our economy that has worked very well indeed, and that is something we want to ensure continues to be the case, so there are people who might say that Gibraltar was heartened to hear that the Prime Minister was not looking to enter into an arrangement that preserves the customs union, which might see Gibraltar dragged into that in future.
Q722 Sammy Wilson: Obviously, your situation is rather similar to that of Northern Ireland because you are one part of United Kingdom territory that has a common land border with another country that is part of the EU. A lot of the comments that you have made about the border arrangements are particularly of interest to us in Northern Ireland. I would like to ask you a couple of things. First, you have indicated that the movement of people or indeed of goods very often was determined more by the good will of officials than by the strictures of rules from the European Union, in particular the movement of goods. You are not part of the customs union, yet there is movement of goods from Gibraltar to Spain. What exactly are the checks that are involved in the movement of goods across the border?
Fabian Picardo: There are full customs checks across what is an open border, even though it is not a border between two territories that are part of the common customs union. Spanish customs and Gibraltar customs are entitled to check vehicles and people to see what they are bringing into Gibraltar in terms of the importation or exportation of goods. That happens as there is importation of goods into the European Union customs union or exportation from it. There are forms that need to be filled in. There are agencies that deal with those issues to make it logistically easier. There are TR1 forms that are relevant in the context of the movement of goods and so on.
All of that can be seen to create an obstacle to the movement of goods. It is an obstacle that the people of Gibraltar have long accepted and want to see continued because of course one of the things that is important for Gibraltar is that it is clear that there is an international frontier between Gibraltar and Spain and that this should continue to be the case, although it should be an international frontier that is open and free flowing, subject to such checks as may be necessary. In the context, therefore, of the debate as it is in the United Kingdom, what is clear is that Gibraltar has been living what some have been calling here now a hard Brexit might look like in the context of the free movement of goods and sometimes in the context of the free movement of persons.
As I was saying earlier, good will is sometimes more important than the terms of the agreement that might be done. Because with good will the application of those rules in a way that is designed not to affect in any negative way the trade between two states and the movement of people between those states can work very well indeed. It can work very badly indeed if people bring bad faith to the equation and bad faith to the management of those arrangements.
Q723 Sammy Wilson: The picture has been painted in many instances that there has to be a physical check of every vehicle and parcel moving from Gibraltar to Spain. That is not what being outside customs union requires.
Fabian Picardo: That is not what happens. Let me explain it to you in the context of two heads: the commercial head and the retail head.
We have something we call the commercial gate. I was talking earlier about the flow of goods into supermarkets and into Gibraltar generally for sale; those come through the commercial gate. That gate operates for not enough hours: if you ask my traders, they would like to see the Spanish side of the gate operate later. Our side operates until necessary; the Spanish side, I think, closes at 3.30. So you have all of the lorry loads coming through from 8 in the morning until that time; they are checked by customs and come through. There, most lorry loads would be checked because you are dealing with containers and large vehicles, so a check is applied to almost every vehicle on the Spanish side. We do randomised checks. We have an automated system called ASYCUDA which enables traders to pay duties on an automated, self-declaration basis. That is a success story for Gibraltar customs. It has been developed by the UN customs agencies with Gibraltar, and it is something that they like to talk about exporting as a single-window interface for other customs authorities around the world.
Then there is the retail space. In the retail space, as you walk or drive through the frontier between Gibraltar and Spain, you’ll see that we operate a red and green channel system. Therefore, we would check anyone who comes in through the red channel and charge any relevant duties. People who come in through the green channel will be waved through unless there is a suspicion on the part of customs officer that they may be bringing items into Gibraltar that are subject to duty or are prohibited, as you might have expected in the old days. There is no blue channel in effect, because that is what you would expect to see if you were moving between areas within the common customs union. The Spanish also operate a red and green channel system but, unfortunately, in living memory since the frontier opened, the green channel has always been closed. Everyone is forced to go through the red channel, and you are subject to random checks whenever they wish.
Q724 Sammy Wilson: You said in your brief that it is of absolute importance that the free movement of people between Spain and Gibraltar is safeguarded. Given what I think you said earlier in your evidence, that Spain would pay any price and endure any hardship—
Fabian Picardo: Sorry, but I said Gibraltar would pay any price, bear any burden and meet any hardship, because we will not give up sovereignty. Spain may make us pay any price, bear any burden or meet any hardship—they have done it before—but I hope that cool heads prevail and that they do not in the future.
Q725 Sammy Wilson: So do you think that there is the willingness from the Spanish government to recognise that, when Britain negotiates to leave the EU, they will not be using Gibraltar as a kind of lever to hold up any deal. Do you believe that the good will that you have referred to exists? Or if not, what does the UK Government need to be stating early on in negotiations to safeguard your position?
Fabian Picardo: I think I have given up on hoping for Spanish good will. I sincerely believe that it is in the interests of the people of the neighbouring region of Spain and the people of Gibraltar and the United Kingdom that there should be good will on the part of the Spanish politicians involved in the negotiation of Brexit. They should not see this as an opportunity to advance their sovereignty claim, because they will not advance their sovereignty claim, however difficult they may want to make it for the people of Gibraltar in future.
They should not be looking to set up any difficulties for their people crossing the frontier, or indeed for other EEA or non-EEA nationals wishing to visit Gibraltar, because that creates jobs for the whole region—as I told you, a quarter of the region’s GDP and jobs—where there is unemployment of up to 50% among those under the age of 30, whilst in Gibraltar unemployment is 0.0 something per cent. There were 146 people unemployed in December; I know them all by name, I know what their issues are.
We want to be a driver for growth in the region. Ultimately, what we will be doing—I won’t go into what I hope or believe the Spanish will be doing—I will tell you that we will certainly be acting in good faith. While entirely ensuring that we preserve British sovereignty, jurisdiction and control over Gibraltar, exclusively, we will be looking to work together to make arrangements which facilitate that going forward and allow us to continue to be an engine for growth for mutual benefit in the region. I sincerely believe that that is also in the interests of the people of Spain, in particular those in the region around us. I commend that as the attitude that the Government of Spain should take.
Unfortunately, no sooner had the result of the referendum come in and David Cameron was on the steps of Downing Street giving us his assessment and resigning than the Spanish Foreign Minister was already on the Spanish television network saying this was the moment when they were going to take Gibraltar and that the Spanish flag would be flying over Gibraltar within the next four years. Well, he has gone since then and a calmer approach seems to have taken over at the Spanish Foreign Ministry under a new Minister.
I sincerely hope that, despite some of the things that we are hearing, the arrangements that are finally reached are the ones that I and, I am sure, the British Government are proposing, and that there won’t be an attempt to hold any of the negotiation up on the basis of somehow trying to take advantage in respect of the sovereignty of Gibraltar, or any aspect of control or jurisdiction over Gibraltar.
Q726 Sammy Wilson: Can you tell us what messages you would like to see, first, in the early statements by the Government about their negotiation position in relation to Gibraltar? Is there any work that they should be doing now to get that message over to other European Union countries regarding their position on the future of Gibraltar?
Fabian Picardo: A lot of good work has been done already in the context of the Governments of the United Kingdom and Gibraltar working together to get that message across, not just to Spain but to other European partners and the European institutions that would be relevant to this negotiation.
The United Kingdom has been clear that it stands steadfastly with the people of Gibraltar in our right of self-determination and to remain British entirely, if we wish to do so. The Foreign Secretary was, as usual, very clear in the way that he expressed the need for Britain to be seen to be in marmoreal support of the people of Gibraltar. He left no room for doubt about what the British Government’s position is going to be. It must be clear and repeated throughout so that nobody is persuaded that they might somehow, through some application of pressure, in some way be able to persuade the British Government to change their position or to take a position that mortgages Gibraltar’s future to the people of Gibraltar having to accept some change in our sovereignty, jurisdiction or control for any part of the new agreements to apply to us, as was the case in 1987 in the now infamous airport agreement.
The message is not just one that needs to be given now, it needs to be given continually in the process of negotiation. If anything, I think Gibraltar needs to thank the former Spanish Foreign Minister for having put the issue so bluntly and so clearly at the beginning of the process. Spain has traditionally allowed the United Kingdom to negotiate good deals and then at the last minute say, “Now you can have that good deal you’ve negotiated, but what about Gibraltar?” Saying, “What about Gibraltar?” at the beginning has ensured that everyone in the relevant Departments in the United Kingdom is as alive to the issue as the people of Gibraltar were from the first moment.
Q727 Sammy Wilson: Apart from the attitude of Spain, do you see any other obstacles stopping or preventing that free movement of goods and people?
Fabian Picardo: I think we have to be alive to the times in which we live. The application of a new Schengen border code, which will apply from 31 March, is an important moment that will affect the free movement of people throughout the European Union and outside the Schengen area coming into the Schengen area, including in and out of the United Kingdom.
Those new rules would be applied in a way that will be designed to ensure that there is still the fluidity that is required at airports, ports and land frontiers into the Schengen area throughout the European area and, I imagine, in particular in Gibraltar and Spain, where we have that flow of people at peak times that is so huge—as I told you, it is akin to what it is like at a busy underground station coming into the City every morning. With good will, understanding and working together I am sure we can achieve no obstacles in the context of the present, the near future or the distant future post-Brexit for how people move across the Gibraltar frontier in particular.
Q728 Emma Reynolds: Chief Minister, could you say a little more about how these new rules and the status quo affect people coming in? You explained in great detail how not being in the customs union works for goods. When Spanish workers come in to work during the day, do they have to show a passport or ID card? Are your officials checking those and are they being checked on the way out? Could you explain the mechanics of it on the ground?
Fabian Picardo: Thank you for that question because I have probably told you a little more about goods than people, and people are of course more important than goods. The volume of people coming across that frontier in the mornings and going back in the evenings, in particular in August, when you have the same number of workers coming across but you may have double the population of Gibraltar coming through as tourists from the Costas visiting Gibraltar, makes this a Herculean task.
There are two ways into Gibraltar from the frontier: a pedestrian route and a vehicular route. The Spanish have recently opened a second vehicular lane, which they sometimes open in the mornings and at peak times.
If I could start with vehicles, if you are coming across into Gibraltar by car, bicycle, moped or motorbike, you will come across a police officer. First of all you will come across a Guardia Civil officer who deals with goods, so you will be able to do your VAT refund if you are coming through with goods, or you will be able to deal with anything else to do with customs.
Then you will come to a Policía Nacional officer from Spain who has responsibility for immigration. He will check your travel documents. If you are in a vehicle, what tends to happen is that you flash your passport or your identity card. Gibraltar issues Gibraltar British identity cards that are recognised by the British Government and the rest of the EU for travel purposes. If you are a Gibraltarian that is what you will show. If you are an EEA national you will show your passport or identity card. Unless there is a reason for suspicion, you will tend to be waved through. There will not be a check of the passport; it does not need to go on a machine, unless the officer thinks that should be the case.
As you cross through into Gibraltar, you are met by an officer of the Gibraltar Borders and Coastguard Agency, who will carry out the same sort of check. Then you will go through to Gibraltar customs where, as I explained before, there will be two red channels and two or three green channels, and you will be able to access Gibraltar in that way. You are then in Gibraltar. There is a police officer there also, in case there are any other issues that might affect the vehicle.
In the context of walking across, if you are an EEA national—whether you are Spanish or British for now or any other nationality—in the mornings you will again come across a member of the Guardia Civil, in case you have any customs things to do, or you could just walk past them. Then there will be a police officer.
Recently, using modern technology, Spain set up some machines where you put your ID card if necessary, and the machine will then open up. When they tried to use those machines in the early mornings, even though the machine takes a few seconds to read a Spanish identity card, it only reads Spanish identity cards; it does not read our identity card or those of any other European nationality at this stage. That will take 10 or 15 seconds. That caused such a huge backlog, literally within 20 minutes, that they have had to open the gates and people just walk across. Otherwise it became very difficult. There is the cursory check that I am telling you about. You will be stopped if there is a reason for suspicion.
As you come into Gibraltar, you once again meet a Borders and Coastguard agent who will look at your passport or ID card and only inspect it if it needs to be inspected. Otherwise, you will be waved through.
In the context of Gibraltar, whether it is vehicular or pedestrian traffic, using technology we have also been able to ensure that we read any European licence plate that is coming through. We have a full record of that, and of course that is checked with the relevant international policing authorities, in case it shows up any particular issue. There is a constant check using technology also of facial features and should that throw up any issue involving the international law enforcement agencies’ computers, we would also know you had been in Gibraltar.
The technology, which you might say is as effective as the person there also—although humans have that ability to see whether there is something wrong and they are an important part of controlling and protecting our borders—the technology is non-invasive. We do not need a barrier for your car to stop so we can read your number plate and we don’t need you to stop walking to be able to read your face.
On the exit route from Gibraltar, Spain has implemented a similar system to read licence plates, although that has a barrier that can come down so your licence plate can be read. If that were to be implemented in a way that produced a 10 or 15-second clearance for a vehicle, you would have exactly the same problem that you had with pedestrians, when they were applying that sort of system using the identity card.
To a great extent, the human check that Guardia Civil and police officers do in Spain and BCA officers and customs officers do in Gibraltar is the most flexible and enables people to determine, “These are the faces I know coming in every day, these are the faces that don’t cause any suspicion” and, with tourists, to apply the same sort of feel for who is trying to come into or out of Gibraltar.
Q729 Emma Reynolds: If you are a Spanish worker coming in at peak time in the morning, having to get to work—an office job, for example—how long, typically, would it take for that Spanish worker to get through the border?
Fabian Picardo: Let me set it in context for you. The number of people who come across that border—three quarters of them Spanish—into Gibraltar every day means that Gibraltar is the second largest employer in Andalucía. The only larger employer in Andalucía is the Junta de Andalucía, which is the Spanish regional government of Andalucía. If there were any delay in people crossing that frontier, the backing-up of people would be huge, as I have indicated happened on one particular occasion.
The fact is, because you have humans doing these checks in the morning and looking at passports and looking at ID cards, people will not be required to stop for a second. They will literally walk past an officer, with their passport or ID card in their hand, and they will not be stopped for a moment. There is no stopping at all. The officer will be looking at the ID card or the passport as they come through.
When they come into Gibraltar, the BCA officer will be looking very carefully at those ID cards and passports to make sure they identify the person and that they know this person is holding the relevant travel document, but they will not be checked. There will not be a moment’s delay, where people are brought aside and their passports checked, unless there is a good reason or suspicion for that check to be carried out.
In answer to your question, therefore, there will be absolutely no delay whatsoever when somebody walks across in the mornings.
Q730 Craig Mackinlay: Mr Picardo, it’s great to have you here today, really fascinating. I am feeling a little sorry for Dr Garcia, but I am sure we will hear from him in due course.
I have been to Gibraltar many times, and the last time was in September, when I arrived on HMS Diamond. I think evaded your passport control—I don’t think I had my passport on the way in, and I certainly didn’t on the Monarch flight on the way out.
What you say about the movement of people and the movement of goods is interesting. We have always been told that, when dealing in the EU, you need to comply with the four freedoms. Well, you don’t need to comply on goods, you are outside of that. You are not complying with the free movement of people entirely, even though it works very well. Obviously services are internationally free to move, and on capital, I can get a bank account wherever I fancy one quite easily, including Gibraltar or probably Australia. Two of those freedoms are pretty open anyway.
You say there is this huge flow of people over the border every day. How many Gibraltarians go into Spain to work?
Fabian Picardo: First, I am delighted to hear you came to Gibraltar aboard HMS Diamond. She and all members of the British armed forces are very welcome in Gibraltar.
Craig Mackinlay: We were made very welcome, yes.
Fabian Picardo: And I am very much looking forward to HMS Queen Elizabeth II coming into Gibraltar. It will be a very proud day indeed for the people of Gibraltar. Mike Penning was out in Gibraltar recently.
Craig Mackinlay: Yes, he took me around the territorial waters on his launch, and he was a fabulous host.
Fabian Picardo: I know he is very keen to see the Queen Elizabeth come to Gibraltar in the next 18 months, if at all possible. That is something to look forward to, whatever else is going on in respect of Brexit or otherwise.
On the number of people flowing into Gibraltar in the morning, it is almost one-way traffic in the sense that Gibraltar provides the jobs. There will be very few Gibraltarians who are employed in Spain; I would say a handful. Of course, Gibraltarians are providing services in Spain and in the rest of the European Union, but the actual number registered as employed in Spain is low. I can tell you that there are 154 Gibraltarians registered as actually living in Spain. They would tend to live there but come into Gibraltar to carry out their work.
In terms of doing the analysis of the four freedoms, I will just pursue that for a moment. You are absolutely right, the freedom of movement of capital was a relevant freedom at the time of the treaty of Rome when you had exchange controls on the continent and elsewhere, and this was relevant in terms of liberalisation.
The freedom of movement of services is something we need to keep our eye on, particularly in terms of financial services, because regulatory barriers can be put up in the context of what we understand today as the freedom to provide services, with the right to passport and so on. That may change in the future and we have to be alive to those issues, in particular the issue of equivalence. In shorthand, I am told that equivalence is sometimes less about meeting legal requirements and more about the politics of equivalence and the protectionism of some of what we might call the remaining member states, so we need to keep an eye on that.
On the freedom of movement of people, it is fair to say that, in the Gibraltar context, we are actually talking about frontier fluidity for day travellers. Whether it is a tourist or someone coming to work, they tend to come in to Gibraltar for the day. We do not suffer, as I recognise the United Kingdom suffers, immigration into Gibraltar. The large numbers of people you see coming into Gibraltar are not rubbing up against our welfare system; they are not asking us for housing; they are not coming to be treated in the Gibraltar health authority unless they have an accident at work. So I recognise that the words “freedom of movement” create a spectre of issues in the United Kingdom that they do not create in Gibraltar, and it is better that express what is relevant to Gibraltar, which is fluidity across the frontier rather than freedom of movement of people in the context of the four freedoms.
On the final freedom, the freedom of movement of goods, that freedom has never applied in Gibraltar. That does not mean that we have a closed frontier with the rest of the European Union. We have an open frontier, subject to checks on goods as I have described.
Q731 Craig Mackinlay: Would it be fair to say that if Spain decided to cut up rough in any way, those 10,000 people coming from Spain who are reliant on Gibraltar for their living will probably be your most powerful advocates for things to change and the fluidity to continue? For many people living in La Linea, Algeciras and those sort places that have very high levels of unemployment, Gibraltar is their living.
Putting that aside for a moment, I want to explore a little more the customs union in goods, or lack of one. I would assume there are not too many goods that are manufactured in Gibraltar that pass over the border to Spain. I am guessing—is there anything? Are there a few textiles, or some locally produced goods that go over the border?
Fabian Picardo: There’s a cottage industry in Gibraltar producing curios, but there isn’t a real production in Gibraltar at all. People try to steal the odd monkey, but we are very protective of those.
Q732 Craig Mackinlay: Okay. I would imagine you have to import a good number of goods in from Spain: building materials would be an obvious one, lots of food, and those types of items. Do you—I imagine you do, but you will explain it to me—raise a tariff against those Spanish goods coming in to Gibraltar, say, a bag of cement?
Fabian Picardo: We do. We’ve been raising duties on the importation on of goods into Gibraltar since time immemorial. It was something Governors introduced in the old days of absolute British control. We have reduced the tariffs in some instances to keep products keen in the age of Amazon and the internet, and in the context of construction in Gibraltar. When we want to promote construction, we can play with those tariffs. Principally, the import duty into Gibraltar is 16%. There is a graduation of that as we see what we want to promote the importation of.
The goods come not just from Spain: they are not just Spanish goods. They come principally across the frontier from Spain, wherever they may be sourced in the European Union or indeed the world, because there is easier container shipping into Algeciras, which is the largest container port in the Mediterranean, than there is into Gibraltar, so a lot of the traffic comes through frontier, even though it is not goods sourced in Spain.
The lorries of the relevant supermarket come directly from the United Kingdom. The big names represented on the high street in the United Kingdom are represented in Gibraltar. Those goods will come from the UK to Gibraltar. Some building goods will come from the UK to Gibraltar, and they will be subject to the tariffs at the frontier. That is why we have this electronic system that has made it very easy for traders to pay their duties and in that way ease the administration.
Q733 Craig Mackinlay: Quite oddly and perversely, if you buy a building good from the UK, because somebody wants to reproduce something British-looking in Gibraltar, which is natural and to be assumed, you will charge a tariff against a pile of bricks from Wickes that has been bought in the UK.
Fabian Picardo: That is absolutely right, unless for some reason—
Craig Mackinlay: Because Britain is stuck within the EU’s tariff arrangements.
Fabian Picardo: Yes, indeed. In some instances we may waive those tariffs for a particular project because it is in the socioeconomic interest of Gibraltar. I have the right to waive those tariffs. For example, if we need the development of more office blocks, I may waive import duties for those sorts of products. I have the right to do that, because we are not part of the common customs union and have that flexibility.
Before I finish, can I make one point in relation to—
Q734 Craig Mackinlay: Also, as you are explaining stuff on the way in, perhaps you could explain stuff on the way out. Gibraltar is a container port itself, and you have a small industry. What happens to the goods on the way to Spain?
Fabian Picardo: Fine. If I may deal with this part of your introduction, which I think is important to put on the record, the people who come from Spain to work in Gibraltar are important advocates for Gibraltar in the region and nationally in Spain. They have been making their voices heard about the importance that Gibraltar represents to them and to their families.
I was therefore heartened to hear that when the Prime Minister went to Madrid, Mariano Rajoy, the Spanish Prime Minister and President of the Government, said that the continued free flow of workers across the frontier, in particular Spanish workers, was important to Spain. I hope that continues to be the case post-Brexit, not just in the period of the negotiations, and I hope that the Spanish Government understand that it is not just about those workers, it is also about the tourists who come in to fuel the industry that gives those workers their jobs.
If I may say so, those workers do not come to Gibraltar for handouts. They work very hard for their money. The people and Government of Gibraltar consider them our partners in Gibraltar’s economic success and the success of the whole region as a result.
On goods being exported from Gibraltar—people come to Gibraltar to buy duty-free—there is very tough control on the Spanish side. If people come to Gibraltar they know, and they are told by traders in Gibraltar—I have required that traders have a notice in each shop—that they can only take 200 cigarettes into the European Union, and that includes Spain and the United Kingdom. If they are flying to the United Kingdom they are told they can only take 200 cigarettes out of Gibraltar and the quantities of alcohol.
They are the absolutely appropriate and right restrictions in the trans-shipment of those goods, because we are not like the French supermarkets on the other side of the English Channel. You cannot just buy as much as you would like to consume for yourself. There is a control on that, you can only take what you are allowed to import: 200 cigarettes and a litre and a half of spirits.
Q735 Chair: Do you impose tariffs on food imports into Gibraltar? You referred to supermarket lorries coming in.
Fabian Picardo: I believe we have some tariffs in respect of some foods. For example, at the recent budget session of the Gibraltar Parliament I introduced a levy on sugary drinks. That is now being applied in respect of both goods crossing the frontier and sugary drinks produced in Gibraltar. There are other such restrictions.
Q736 Craig Mackinlay: Finally, are you using your tariff rates—you mentioned 16%—as an alternative means of financing your Government? You have zero VAT and I would imagine your income tax is fairly low as well. Is it just a means by which you finance your Government? The tariffs are another method and are becoming a primary method.
Fabian Picardo: Corporate tax in Gibraltar is competitive. It is at 10%, which the OECD considers should be a real rate of tax. Personal taxes in Gibraltar are not the lowest in the world, but they are lower perhaps than in the United Kingdom and Spain. There is no VAT, but if you look at rates of VAT and our import duties, in effect they are very close. What we have is flexibility that, if we were in the common customs union, we would not have. Therefore, I understand the argument being put by those who are arguing for Brexit in respect of that particular silo of the four freedoms, because we do have that freedom to calibrate where we fix import duties, depending on what we want to promote or do not want to promote in Gibraltar.
Q737 Seema Malhotra: Chief Minister, in your written evidence to the Committee you said that the basis for the success of at least part of Gibraltar’s economy is centred on its participation in the EU, and as a gateway to Europe. What is your assessment of the likely impact on Gibraltar’s economy of leaving the single market?
Fabian Picardo: If you look at the argument that we have put consistently in the run-up to the referendum and thereafter, we have said that access to the single market is hugely important to the financial services industry in Gibraltar in particular. I ask you to look at my arguments in the context of the arguments being put by the City of London, because it is really about the ability to passport the sale of services within the European Union.
I know that as we moved on from 24 June, all of us have matured in our understanding of how equivalence may work and what we may be able to do in the context of the sale of services into the European Union in the future. It is important to look at what Gibraltar’s market consists of and, therefore, to understand what we will lose, and to be ready to lose it if necessary, because it may be that we need to stare that possibility in the face.
That is important. We have to live in the truth; we can’t live in the hope of some things being different. What services are we selling? Well, principally we are selling financial services into the European single market. Of that, we have now determined that 90% of our sales of services, whether they are online gaming or financial services—although there is not a single market in online gaming, but sales of services into the EU—are sold into the United Kingdom.
It is becoming increasingly clear and accepted by the United Kingdom that they need to preserve that access to the market for Gibraltar. To break it down for you, in the context of the numbers for insurance services and online gaming services, more than 10%— close to 15%—of all motor insurance sold in the United Kingdom is sold by insurance companies established in Gibraltar. 60% of bets taken online in the United Kingdom are taken by online gaming entities established in Gibraltar.
That is not because we are a light-touch regulator but because we are the toughest regulator in the world when it comes to online gaming, much tougher than even the UK’s own online gaming regulator. When you are giving your money over the internet to place a bet, you want to ensure that the company you are betting with is going to be reputable and that the regulatory environment will protect your stake.
If you look at the top gaming companies in the world, the biggest names that might come into your head when you think of gaming, they are established for the purposes of online gaming in Gibraltar. Gibraltar is clearly the online Las Vegas. I say that proudly, by the way, because we built an industry based on very tough regulation indeed.
Having understood that, Liam Fox, the Secretary of State for International Trade—because the Foreign Secretary was not available that day—came to an event I organised in London in November, which we called Gibraltar Day. He gave the industry the assurance that Gibraltar would continue to have access to the United Kingdom market in respect of services. In particular, he gave the assurance I mentioned earlier in respect of financial services, because of the statutory instrument in financial markets that would continue to apply between Gibraltar and the United Kingdom bilaterally.
If we are therefore able, through what is in the bilateral gift of Gibraltar and the United Kingdom, to preserve 90% of our business, we are in a much better place than we might have been were that not assured by the United Kingdom—as it was not previously, but is now.
I hope that a free trade agreement between us will be able to preserve all the areas of the sale of services that we would have available to us today, if we were both parts of the European Union. That will be a much better place for us to be than with a market that did not know that it was going to be able to continue to provide 90% of its sales going forward. So I think that has steadied the market in Gibraltar.
We still consider that access to the single market is hugely important for us. You ask anybody whether they are prepared to lop off 10% of their business and obviously they will say that they don’t want to do that, and of course some who are established in Gibraltar selling services into the United Kingdom are also established there to sell services into the rest of the single market. If they lose that, they may look at somewhere else that they may be able to establish themselves to sell their services into the single market. So this is a complex area—it is not simple—but we will be able to get it right in co-operation with the United Kingdom.
This is not just about whatever deal the UK does with the EU also applying to Gibraltar. It is also about a parallel track of what the relationship between the UK and Gibraltar is going forward in respect of access to the UK market.
Q738 Seema Malhotra: May I probe a little bit on one aspect? As you also did in your evidence, you particularly highlight Gibraltar’s financial services and that dependency on being able to passport services into the EU and the UK. Are there any implications for the workforce? How is the workforce comprised within Gibraltar? Could coming out of the single market have any impact on that?
Fabian Picardo: The principal issue for us, as I have told you, is the fluidity across the frontier. It affects access to the single market in this way, if I can put it that way. The companies that are established in Gibraltar selling services into what is today the single market have a lot of their people resident not just in Gibraltar but also in Spain. That means non-Spanish nationals resident in Spain. As we come out of the European acquis, many of them may find that they become non-EEA nationals, because a lot of them are British.
I have the figure that I can give you in terms of financial services and gaming, and it is in the evidence that I gave the House of Lords. You will see that frontier workers generally make up 40.1% of those who work in Gibraltar. In the online gaming industry, out of 2,947 who were registered working in that industry in our October employment survey last year, 1,761 live in Spain. In the financial services sector, out of 3,510, 1,031 live in Spain. Those industries will have the challenges that I have explained in terms of selling their services. They will have the challenge of wanting to ensure that those of their key workers who live in Spain are able to continue to access their workplaces every day, even if by being British they become non-EU citizens resident within the EU, coming out of the EU every day and then going back every evening.
In the context of Gibraltar, housing an additional 2,800 people overnight would be extraordinarily challenging. I think we would have to take the Queen Elizabeth II and keep it in Gibraltar if we had to house that many people that quickly.
Q739 Seema Malhotra: In terms of the announcements made by the Prime Minister, I would be interested to seek your view on how confident you were that a comprehensive free trade agreement or free trade deal such as that being proposed at this early stage by the Prime Minister would contribute to addressing some of the risks that you have highlighted, or whether you think there would still be significant gaps that needed to be considered as part of the negotiation and that you were raising with the UK Government.
Fabian Picardo: The Prime Minister has skilfully set out the 12 headings of the areas that the United Kingdom is going to be seeking to negotiate on. As I told you before, I do not think that any of those contradict the key issues for Gibraltar. I sincerely believe that you will be able to discern from what I am telling you that the only potential issue is whether Spain might like to use the opportunity to restrict somehow Gibraltar’s access to those parts of the European Union that the United Kingdom might have access to in services in the future under a new deal.
Literally, this is about Spain singling out Gibraltar and seeking to exclude Gibraltar either throughout the process or at the last minute. That is the biggest concern that I have; I have no concerns that anything I have heard the Prime Minister say would have a seriously detrimental effect on Gibraltar’s operating model going forward, given that there is good will on the other side of the negotiating table, and I do not identify anything that suggests that anyone is coming at this with any bad faith in respect of Gibraltar, other than the issue that I have highlighted of Spain’s attitude.
As long as the United Kingdom has the stomach to take Spain on and to play the aces that it has up its sleeve in the context of that negotiation, there will be no issue. Having worked with Theresa May when she was in the Home Office, and having seen on her on the day that she became Prime Minister, when she gave Gibraltar an hour of her time, I can tell you that I have absolutely no concerns whatever about her having the stomach for this fight. She will stand by the people of Gibraltar.
Q740 Alistair Burt: Thank you very much for your evidence so far. It has been very good to see you, and we are honoured to have you here.
May I go back to the vexed issue of sovereignty for a second? Has the EU per se been of any use in resolving issues between the UK, Spain and yourselves? Has it played any part in those issues and discussions when you have had those spats and difficulties that you described?
Fabian Picardo: The European Union has sought to avoid becoming involved in the issues of sovereignty that Spain has raised in respect of Gibraltar since Spain’s accession. It has traditionally said, “That’s a bilateral matter between the United Kingdom and Spain,” which I think is a complete abrogation by the Commission of its obligations, because its duty of neutrality was to take the position that Gibraltar is a part of the territory of the European Union and a failure to defend that means that the Commission can be seen to have sometimes sided with Spain on the issue of the sovereignty of Gibraltar.
For example, the application of air liberalisation measures to Gibraltar airport has been a vexed issue only since Spain joined and air liberalisation became a reality in the EU. Spain’s attitude has been to block any EU measures involving aviation. Presently, for example, a Ukraine-EU agreement is blocked only because Spain will not agree that it should apply to Gibraltar airport, despite many billions of pounds being at stake. Agreements in respect of slots, Single European Sky II and air passenger rights, all of these things, are blocked because Spain does not want to see their application to Gibraltar airport.
I told you about the 1987 airport agreement, which I consider to have been the wrong agreement. The British Government agreed that air liberalisation would progress in all the European Union, but that it would not apply to Gibraltar and Gibraltar airport unless the people of Gibraltar agreed to share Gibraltar airport with the people of Spain, but Spain has a specific claim. Spain says that it has two sovereignty claims: one to Gibraltar and the other to the isthmus, which is where the airport is. So the people of Gibraltar would never accept that, because it was a sovereignty concession.
Cut forward to 2006, when an agreement was made with the then Socialist Government in Spain for a new style of agreement for air liberalisation measures to apply to Gibraltar, which was acceptable to Gibraltar and did not involve concessions in respect of sovereignty, like the 1987 agreement had. Although I had my concerns about it, and Dr Garcia had his own concerns about it, it was not the 1987 airport agreement. When the Partido Popular took over in Spain, they stopped the application of that new agreement, which had by then extended to Gibraltar air liberalisation measures that had previously been blocked. So we are now back in that situation, with the Ukraine agreement and the others that I told you about being blocked.
The Commission’s attitude is to say, “Ah well, this involves sovereignty; it is a bilateral matter for the UK and Spain,” but that is the wrong answer. There is an agreement between Gibraltar and Spain that air liberalisation measures should apply to Gibraltar and, in any event, air liberalisation measures apply to the whole territory of the European Union and should therefore apply to Gibraltar.
Let me give you one nuance in that respect and then a further example where the Commission has helped. The one nuance is that of course Spain has been blocking the application of air liberalisation measures to Gibraltar because she wants Gibraltar airport included as a Spanish airport. Gibraltar airport is today excluded from all air liberalisation measures because we will not agree to its inclusion as a Spanish airport or a joint British and Spanish airport. I wonder whether, in order to take the dogma of the Spanish position forward after Brexit, Spain will try to include Gibraltar airport in any aspects of air liberalisation in the European Union, without the United Kingdom or Gibraltar at the table, to demonstrate that it is a Spanish airport. Of course, if we are out, Gibraltar airport is out. That is what demonstrates it is a British airport.
I have dealt already with how the Commission has failed in its duty as guardian of the treaties, particularly to the people of Gibraltar as European citizens. In one instance, former Prime Minister David Cameron was able to jog the Commission into action. In 2013 and 2014, we had very lengthy queues at Gibraltar’s frontier under then Spanish Foreign Minister Señor Margallo. David Cameron was able to persuade the then President of the Commission, José Manuel Barroso, to send a delegation of the Commission down to Gibraltar to inspect the operation of Gibraltar’s frontier. Of course, the Commission frustrated everyone by moving slowly, and it made very few statements to be clear about what the position was in the way that we might have wanted them to. We saw things loosen up at the frontier and become much better.
The Commission wrote the United Kingdom and Gibraltar some letters about what they thought we were doing wrong and what we had to do right. We published those letters so that the public understood where the Commission was criticising us and what we were doing to ensure that we dealt with those issues. They sent some letters to Spain, and guess what? Spain refused to publish the letters and the Commission refused to say any of what it had told Spain. Eventually, one of these letters was published—I wonder whether anything is secret anymore. A newspaper published one of these letters, and it was clear that the Commission had said that Spain’s actions at the frontier were unjustifiable. So in that instance—a very important instance it was too, because it affected frontier fluidity—the Commission acted entirely properly, at the prompting of a British Prime Minister who, if I may say so, although he is no longer in office, was a champion of the rights of the people of Gibraltar, worked very hard with me and is considered by the people of Gibraltar to have been a very good friend indeed.
Q741 Alistair Burt: Thank you. That was a comprehensive answer. You give us a bit of a mixed picture on what the Commission has done, but thank you for what you said about the former Prime Minister. It is so easy to airbrush people when they have gone, and it is rather nice that you say what you do. Thank you very much.
Fabian Picardo: I soon expect to be discarded as well, and I hope people are kind to me about what I have done, but that is political life.
Q742 Alistair Burt: It is indeed, but there is always a chance of revival in political life, so I wouldn’t worry too much about it. You describe the Commission really not being of great benefit in dealing with these issues. Is there anything that Brexit allows technically that will improve the situation? Is there anything that Brexit allows that will put an extra bit in the balance when the issues in relation to Spain are weighed that will make Gibraltar’s life easier in the future? Do you gain anything on the issues in dispute from us leaving the European Union, or is that by and large irrelevant because it is actually about the bilateral relationship more than anything else?
Fabian Picardo: Let me start by adding something that I perhaps should have said earlier and I think goes to this question, as it did to the former one. The European Union—the European Economic Community, as it then was—used to file a statement at the United Nations in support of the right of self-determination of the people of non-self-governing territories. It filed that statement before the Committee of 24—that is the Special Committee on Decolonisation, which I address every year together with Dr Garcia—and before the Fourth Committee of the United Nations, which oversees the work of the Special Committee on Decolonisation. At the insistence of Spain, the Commission stopped doing that. Of course, what we argue for in that committee is the right of self-determination of the people of Gibraltar, and Spain says that does not apply to Gibraltar or the Falkland Islands. That is another area where the Commission fails to act. Without British influence around the table, I hope the Commission does not start filing statements that go the wrong way in relation to that issue, which would be a negative.
There are areas where the European acquis has of course hindered our opportunities for development. Although I was very much for remain, I wasn’t blind to the areas that we might take advantage of in the future. I will explore some of them now.
Commercially, of course, there are the issues of state aid and tax harmonisation agendas; all that will disappear from the agenda. In relation to the political issues that you are raising with me, for example, one of the areas in which we had many concerns, in addition to air liberalisation, was waters. Spain insisted on claiming the waters around Gibraltar. It doesn’t recognise British jurisdiction in those waters, despite the fact that the United Nations convention on the law of the sea clearly sets out what the territorial ambit of Gibraltar in the waters is—the 3-mile limit. The United Kingdom has the right, and is always encouraged by the people and Governments of Gibraltar, to claim the full 12-mile limit that it claims for all its overseas territories and for itself.
Spain entered a reservation in respect of UNCLOS, although that reservation is of no legal effect. However, in the European Union, another huge failure by the Commission was when it came to designating environmental protection sites in waters. Spain sought to include the waters around Gibraltar, or parts of them, within its own environmental protection, which created an overlap, because the United Kingdom and Gibraltar were designating those waters as part of the British protectorate. Although we challenged that in the European Court, we were not successful in knocking out the Spanish designation, although only on the technical basis that the Court was able to find to stop us doing so.
However, the European Union and its member states have no jurisdiction other than that recognised for them at the United Nations. Spain was being extra-territorial in that way, and neither the Commission nor the Court failed to stop it. If I may say so, that is an area that gave the people of Gibraltar very good reason to be sceptical of the fairness that we were receiving at the hands of the Court. I wrote a letter to the President of the Court—as, in fact, did the then Minister for Europe, the excellent David Lidington, who is also a very good friend of Gibraltar; he wrote a very clear letter on the United Kingdom’s position to the President of the Court—on the failure to deal with that issue fairly.
As we move out of the European Union, those designations will be absolutely irrelevant in the context of Gibraltar. We have always ignored them, because they were of no legal effect; they were always legally flawed ab initio. What will happen, of course, is that Spain will then be able to do whatever she likes within the European Union about designating, but it will have absolutely no effect whatever on Gibraltar, because we won’t even be bound by it as members of the European Union, which is ignoring that illegal designation. There will be myriad other areas like that. Of course, the difficulty will be that there will not be the United Kingdom to restrain Spain when she tries to do things like that at the European negotiating table.
Q743 Alistair Burt: We will have to find a different forum in which to convey that sort of pressure and understanding on your behalf.
Fabian Picardo: Indeed, it may be that the European Court may still have jurisdiction. Any designation that involves the territory of Gibraltar, through co-ordinates, must be one that the people of Gibraltar will have the right to challenge in the European Court, even if we are not members of the European Union at the time. We reserve our rights to take action in the European Court, and hope that they will act fairly in future.
Chair: Interesting. Jeremy Lefroy?
Jeremy Lefroy: All my questions have been covered.
Q744 Stephen Timms: Can I ask a rather naive question, because I haven’t had the opportunity to visit Gibraltar? You made the point in your evidence to the House of Lords Committee that there are lots of families in Gibraltar whose roots are in Spain, and who had a lot of difficulties when the border was closed—people couldn’t see their relatives; there were couples with members coming from each side of the border and so on. Given that fluidity, why is it that you and, from what one can see, the people of Gibraltar are so determined that Spain shouldn’t have any role in the sovereignty of Gibraltar?
Fabian Picardo: Thank you, because I think that is a pertinent question; far from being naive, I think it cuts to the heart of the matter and where I started, and I am grateful for the opportunity to be able to address it. If I may say so, I am very disappointed that you haven’t been to Gibraltar. I extend an invitation, not that you need one: I hope the whole Committee might agree to come to Gibraltar and see the operation of a frontier that is outside the common customs union and how it can be fluid.
Alistair Burt: If we all come on a destroyer, Chair, that would be great.
Fabian Picardo: It would take a few days, but it would be a pleasure to receive you at the dockside. It is true that the demographic make-up of the people of Gibraltar is principally Mediterranean. A lot of people come from Italy—many from Genoa, escaping the Napoleonic wars—and Malta, and many people come from Spain. There was a lot of intermarriage, also, with British people who were stationed in Gibraltar and then stayed. The surnames look sometimes like a British telephone directory, a Maltese and Italian telephone directory, and the telephone directory of half of Andalusia.
So why do we feel so passionately British? I am an example of that. I am principally Italian—half Italian, with some French and some Spanish blood. I am very proud of the Spanish blood that flows through my veins. I don’t think that this is something to be embarrassed about. My maternal grandmother was Spanish and she is the only one of my grandparents whom I knew, so anyone who thinks—to take the converse point—that we hate the Spanish does not understand the make-up of the Gibraltarian. We love Spanish people as much as we love Moroccan people, who also make up an important part of our demographic; in particular, in the last 40 or 50 years, they have been part of the bedrock on which we have been able to source labour to enable us to stay British when the frontier was closed. They came from Morocco and were an important part of how the Navy was able to continue to operate the dockyard with Spanish labour removed.
When you are born something, that is what you are. If I know anybody who felt more passionately about continuing to be British for ever than I do, it was my old grandmother, who was born Spanish but became British. She came to the United Kingdom during the evacuation of all men, women and children from Gibraltar—the men who were not able to stay in the forces. They all came to London and other parts of the British Empire—principally to the UK—and then went to Northern Ireland, and spent a lot of time in Northern Ireland, while the blitz was on in London. She always used to say to me: “British for ever.” She was a Spanish republican but a British monarchist—an interesting combination. That is harder to explain, but I will tell you why it happened. While the people of Gibraltar were evacuated to London, under the blitz, the British royal family stayed in London; and they looked at the royal family as people who had shared their sacrifice. When you look at that context and that make-up, it is impossible to be anything other than what you are.
You ask any British citizen today of a different ethnic origin who might not look like what a British citizen, we might imagine, might have looked like in the days of empire, going around the world conquering for Britain, and they will tell you passionately that they are British. So why should we change? We are born British and that rock is red, white and blue for us. There is nothing else that we have known. The system of government that we know, the system of education that we know, the make-up of my understanding of the world is British. How can I suddenly, now, do something else?
I can speak fluent conversational Spanish, but I do not speak professional or political Spanish, in the way that I might be expected to, should I need to navigate the waters of the Spanish system. Look at the Spanish political system today: it doesn’t have much to commend it to the people of the world. In the British system, we criticise ourselves so constantly and so constructively that we make it stronger. That is the system that we believe in. That is the rule of law that we believe in—the Supreme Court that ruled yesterday, and that everybody respects the views of. That is what makes up the Gibraltarian. My blood is red, but I am red, white and blue, inside-out, and so is that rock—and we will never, ever countenance changing that.
Chair: That was a most passionate—
Fabian Picardo: Come and see for yourself.
Chair—and eloquent answer.
Sammy Wilson: If you ever want to stand for Northern Ireland, by the way—
Chair: I think John, who only asked one question before, wanted to come back in. Mark, did you still want to ask something? While you are thinking about that, I will call John for one question.
Q745 Mr Whittingdale: I have visited Gibraltar; I came over to talk about the introduction by the British Government of the requirement for licensing of online gambling companies, which I know has caused quite a lot of concern in Gibraltar. On gambling, which you focused on as the other big employer on the rock, I wondered whether or not you have any concerns. I do not quite see that there should be any concerns about the impact on remote gambling of Britain leaving the European Union.
Fabian Picardo: Thank you; and thank you for the work that you did when you were Secretary of State for Culture. We had a good relationship with your Department at the time, as we continue to, and a constructive relationship. I think that is what characterises the way that my Government has worked with the British Government since I was elected—and, I dare say, most of our predecessors.
There is an element of concern, going forward, because as we all understand, there is not a single market in gaming in the European Union. There is still the requirement for licensing in each state. The way the United Kingdom and Gibraltar have been able to get the gaming companies licenced throughout the European Union is because we have servers within the territory of the European Union or the EEA, which is the definition that is relevant today in European law. If the United Kingdom and, with it, Gibraltar leave the European Union and/or the EEA, those who are involved in negotiating for that sector for the United Kingdom and Gibraltar will need to be very alive to that, and will need to ensure that the location of servers in the United Kingdom or Gibraltar continues to be sufficient guarantee for the rest of the European Union. But there should not be any negative repercussion for those currently licenced.
I saw an article yesterday in Spain saying “Ah, the United Kingdom and Gibraltar are leaving the European Union. The day that they leave, that is the end of all the gaming licences granted in Spain to Gibraltar gaming companies.” That is obviously not reasonable, it is not what should happen, it is probably not what can legally happen. Nobody here is saying Santander is going to lose its licence to provide banking services in the United Kingdom the day the United Kingdom leaves the European Union—that is not what modern business is about—but I do flag up that that is one issue. The location of servers for the online gaming industry is one issue where EEA or EU location has been relevant in facilitating and lubricating the granting of licences in other EU jurisdictions, and we need to be alive to that.
Chair: Finally, Mark Durkan.
Q746 Mark Durkan: Thank you very much, Chief Minister. I am glad that there was another intervention before I commenced and I wasn’t coming after your very bold profession of your Britishness and your being red, white and blue through and through. Like you, I believe that you are what you are born, and coming from the part of the UK that I come from, I am very clear that I was born Irish. Equally, I fully respect the constituents I represent who are also very clear that they were born British, and my compatriots, such as Sammy here.
I take you back to the point you made about people and how important they are. Going back to the position of frontier workers—cross-border workers—what is the position on tax and benefits for cross-border workers? I want to get a sense of how far the situation we are talking about for cross-border workers in Gibraltar would, say, compare with the situation for cross-border workers going between Northern Ireland and the south.
Fabian Picardo: If I may start on the red, white and blue aspect, I saw a lot of what I considered to be inappropriate criticism of the Prime Minister when she said, in the United Arab Emirates, that we were going for a “red, white and blue Brexit”. I was delighted to hear her say that, because it is exactly what I had said on Gibraltar’s national day, 10 September, when the siren calls were coming from Spain for us to continue as members of the European Union, as long as we gave up our British sovereignty and took Spanish sovereignty. Red, white and blue Brexit was what I had said we were in for, and red, white and blue Brexit was what the Prime Minister said the United Kingdom was in for, so there was a duality of understanding there that was very welcome in Gibraltar.
In terms of taxation of those who work across the frontiers, I will try and take you through the different taxes that people have to pay, or the different contributions that people make: tax, in terms of PAYE or self-employed taxation; there are social insurance contributions and the question of how those have been affected by the EU treaties; and double taxation arrangements, and how they will be dealt with in the future. Somebody who comes to work in Gibraltar and suffers PAYE on their salary will have made arrangements so that the Gibraltar tax office is able to tell the Spanish tax office what tax they are paying. There isn’t a formal double taxation agreement with Spain, but the amounts paid in Gibraltar are taken into consideration by the Spanish Exchequer.
We would like to have a double taxation agreement with the people of Spain. We want full and deep co-operation with the Kingdom of Spain. Gibraltar has proposed a double taxation agreement to Spain—it was very advanced—in the context of the trilateral process of dialogue established under the PSOE Administration in Spain, but the Partido Popular has not wanted to pursue it. That would have formalised that process. That would, equally, have affected people who are self-employed, who, in the same way, are able to use evidence of what they have contributed in Gibraltar to show the Spanish authorities what they paid. In some instances, I have seen evidence of people suffering double taxation. That is not an issue that affects relationships with other member states of the European Union today; that is a quirk of the unfortunate relationship that we are suffering with Spain, but it is not something that is covered by the European treaties.
One area that is covered by the European treaties and does cause me concern is the area of social insurance contributions, because there is a very open and fluid flow of information in respect of the amounts collected in Gibraltar, and how we tell the Spanish authorities that those resident in Spain are contributing, so that they are then entitled to social benefits in Spain, to health treatment in Gibraltar and, in particular, to pensions.
There is an area that you will want to understand in respect of pensions. That relates to the period before Gibraltar’s access to the European Union and flows through it, and raises the question for the future when we are out again of the European Union. Those who used to work in Gibraltar and who were withdrawn in 1969 when Franco closed the frontier will have made small contributions to the Gibraltar social insurance scheme and, therefore, will be entitled to an element of a state pension.
When Spain reopened the frontier with Gibraltar and people started to come back to work in Gibraltar, and they entered the European Economic Community negotiations, the United Kingdom and Gibraltar extended European rights to Spanish workers in Gibraltar, even before they were members of the European Union, so a Spanish worker had EU rights in Gibraltar from 1984. That was real generosity; I say that in the context of being told to surrender half my sovereignty to Spain in exchange for being able to continue as part of the EU. We asked for nothing in return; we extended rights to Spanish workers in Gibraltar as EU citizens from 1984.
What happened then was that a group of those pensioners said, “Hang on a minute. I have now got an EU right to have that pension respected and uprated every year.” The numbers would have bankrupted the Gibraltar social insurance scheme. The Government of Gibraltar said, “Look, this is not something that we can honour, because there was no EU right to them and no acquired right under EU law. We therefore cannot make these payments, because they would break the Gibraltar social insurance system.”
Successive Governments of Gibraltar insisted that we would not pay. Social insurance is a matter that is entirely for the Government of Gibraltar. As a matter of international comity, the United Kingdom agreed to pay—without recognising a right or obligation to pay, in the context of the agreements done in 2006, which covered Gibraltar, which I have referred to already—and also covered the payment of what we know as the Spanish pensioners case.
The United Kingdom and Gibraltar have never resiled from this obligation, although Spain resiled from its obligations under the air liberalisation parts of the agreement. That resulted in the Spanish pensioners receiving a large amount of back payment in respect of their pensions from 1984 for those who were entitled, and continuing to get their pension uprated every year since then, or a lump sum.
That is an amount of money that was actuarially estimated potentially to cost the British Exchequer £180 million, of which I think more than £100 million has already been paid. The issue will be, again, what happens now in respect of those who have been working in Gibraltar since 1984 and their acquired rights going forward? If they have acquired rights, there is a clear human rights law that says that that will have to be respected.
What will happen in future when somebody comes in to work from Spain and starts their working life after we have left the European Union? We need to ensure that we understand those rights going forward, so that we do not cause anybody who is making a contribution to the Gibraltar social insurance scheme a human problem when they reach retirement age.
We need to understand what is or is not affordable and what can be designed to protect those people who come and, in effect, give their labour in support of the people and Government of Gibraltar and our successful economy.
These are interesting interrogatories that we have to answer. They demonstrate that the process in which we are engaged is not simple; it is actually very complex indeed, and it is not just about, “Whatever deal the UK does with Europe applies to Gibraltar”. That deal in itself is going to be very complex. In order to protect the people we serve—we are all there to serve people—we need to understand the detail of the issues behind some of these potential agreements.
Q747 Mark Durkan: What you said about the provisions for pensions and the social insurance model is helpful and interesting. Can I ask about what, in the EU context, would be understood as work-related benefits? For instance, under EU provisions, child benefit, as it is in the UK, would be deemed to be a work-related benefit and is therefore paid by the jurisdiction in which the person works. Is that what obtains in Gibraltar? Would Spanish people working in Gibraltar have to claim their child benefit, or their equivalent of child benefit, from Gibraltar, and is that factored in, in relation to tax and other issues, when they are in Spain?
Fabian Picardo: Absolutely. The regulations apply in Gibraltar as they do in all other parts of the European Union. Whatever other rights pass between member states and their citizens when they work across borders apply between Gibraltar and Spain in the same way. For instance, what we call maternity benefit—a payment made by the Government to those who are in employment and then leave to have a child—is paid to a person wherever they may live.
We have other quirks. For example, Gibraltar issues identity cards, as I told you before. There is a red identity card for a British resident of Gibraltar. There are other graduations of pink for those who are working in Gibraltar but are not resident. Your Gibraltar ID card allows you free travel on the Gibraltar bus system. If you are a contributor to social insurance and tax in Gibraltar, you are given an identity card, and even if it is not a red one, it allows you to travel on buses and park your car in certain parking spaces in Gibraltar. You are given those benefits in the way that they accrue to all those who work in Gibraltar. The system has worked very well.
We have a system of unemployment benefit, which is not as generous as the Spanish system. We pay 13 weeks at a flat rate after unemployment. You would understand why that is the case in a place like Gibraltar, which has very low unemployment. Spanish people who work in Gibraltar become an employee and are entitled to unemployment benefits in the same way as anybody else who works in Gibraltar and contributes.
The system in Spain is different. It is very much more generous. You contribute, I think, a proportion of your salary rather than a flat amount, and you are entitled to two thirds of your salary, as it was at the time you were made unemployed, for a period of two years. If we are suffering an issue, it is that some people who have been made unemployed in Spain, and are therefore receiving that very generous amount of unemployment benefit, try to come and work in Gibraltar and not register for employment. Our system doesn’t talk to the Spanish system, and they continue to receive their unemployment benefit in Spain and their wage in Gibraltar. We want to ensure that that does not happen, with better systems to provide for the protection of benefits paid by either member state.
Q748 Mark Durkan: And is there an equivalent of the tax credit system?
Fabian Picardo: We have a different system in Gibraltar. We do not have a tax credit system. We have two systems of payment of taxation. One is called the GIBS system, which is a flat-rate payment without concessions. There is also a system that allows you to reduce your level of taxation by demonstrating that you are contributing to life insurance payments, mortgages, etc. Those two systems are applicable, and people who tend not to live in Gibraltar will probably opt for the first system, because it is a flat rate and more generous than the other rate, which requires them to file a very detailed tax return.
Q749 Mark Durkan: That is helpful. I am conscious, representing a border constituency, of a lot of the cross-border workers in my area. I know you have visited that area of Northern Ireland. The issue of tax credits, child benefit, etc. is going to be a key issue for many people. Thank you for that.
Coming back to your earlier point, can I take it that you are comfortable and confident that any of the previously differentiated positions for Gibraltar, in terms of UK-EU relationships, and any future differentiated position that might take place in no way ever diminish, jeopardise or compromise your sense of the integrity of your identity?
Fabian Picardo: Absolutely. Whether it is differentiated, graduated or nuanced, the fact is that those are the mechanisms that work well for Gibraltar. They work best to ensure a thriving Gibraltar economy, and a thriving Gibraltar economy is the road to self-sufficiency, which guarantees the road to self-determination. It is that road to self-determination that guarantees that we have the right to choose to remain British. I would see it in that way.
Q750 Mark Durkan: So deliberate and specific protection of your interests doesn’t jeopardise your identity in any way?
Fabian Picardo: No, it strengthens it and demonstrates an understanding of it. I feel like I am being cross-examined by a cross-examiner who wants me to say something in particular because it is important to his case, but I believe as passionately as I do that we will continue British. That is part of how we stay British: understanding what is relevant to Gibraltar, and ensuring that it can be applied to Gibraltar in a way that guarantees Gibraltar’s situation.
If I may give you another example in respect of benefits and concerns about the interests of children and so on, one of the issues that we have been labouring under—and the reason why I was in discussions with Theresa May when she was Home Secretary—was the failure of the United Kingdom to recognise Gibraltar for the purposes of, for example, recognition of judgments in cases involving child orders in matrimonial proceedings involving payments of maintenance, or the movement of prisoners between prisons in the European Union. There was an obstacle to those issues—not in terms of the United Kingdom and Poland, Bulgaria, France or Spain, but an issue that arose in respect of the United Kingdom and Gibraltar. All of that is tied up with the issue of whether Gibraltar is part of the same member state or should be considered a different member state for the application of laws, and that is before the European Court of Justice. A lot of the human issues have now been dealt with, but there are business issues that are relevant.
Today, looking at the judgment of the Advocate-General of the Court of Justice, he has come back with the happy proposition that the United Kingdom and Gibraltar are the same member state, but definitely part of the European Union and therefore when we look at the United Kingdom leaving the European Union, it is very clear that Gibraltar is a part of that exercise, and its negotiation of a future relationship and its exit from the European Union obviously therefore includes Gibraltar.
Q751 Chair: Thank you very much indeed. You have sat very patiently, Dr Garcia and Mr Llamas. Is there anything that you wanted to add that has not been covered in the many questions that we have asked, and the very full answers that we have had, which have been extremely helpful?
Dr Garcia: Thank you for the opportunity. I think the Chief Minister has covered all the issues really well. There is just one point that I would like to emphasise. It relates to the question of civil aviation, which we have already touched upon. It is important going forward that the UK maintains its red lines—that is to say, that Gibraltar Airport should be included in all EU civil aviation legislation for as long as we are in the European Union. Secondly, on exit, there needs to be a new aviation agreement between the UK and the EU presumably and also between the UK and third countries. It is also important that Gibraltar airport should be included in those agreements going forward. Otherwise, we may find ourselves in a position where Spain again tries to object and to undermine the inclusion of Gibraltar airport in civil aviation legislation.
Q752 Chair: That is extremely helpful. Do you have a sense from the discussions—you referred earlier, Chief Minister, to the committee that has been set up and the conversations that you are having with the British Government about that—and is it your understanding that the issue is on the long list of things that the Government are going to seek to negotiate, and that they are aware of just how important it is?
Dr Garcia: We have raised it already in discussion with the UK Government. It is well understood. In all fairness, the previous Government and this one have maintained the red line of Gibraltar airport’s inclusion in civil aviation legislation. We need to see what happens going forward—first, that it is maintained right up to the point of exit, and secondly, that our airport is included in future aviation agreements with the European Union or with third countries. I should say that the airport now generates considerable economic activity in Gibraltar. We have 50 flights a week, mainly to the United Kingdom, but also to Morocco. The airport achieved a record number of passengers in 2016, with over half a million passengers for the first time ever. It is important that that process continues, and that it continues to be a generator of economic wealth and activity for Gibraltar.
Chair: Thank you very much.
Fabian Picardo: May I tell the Committee that the airport to which Dr Garcia is referring is an airport developed as a result of the agreement of 2006 between Gibraltar, Spain and the United Kingdom? Part of Gibraltar’s obligation was to develop a new airport adjacent to the frontier fence. We were told that it would cost £24 million, but it ended up costing £81 million. We did not have European Union funding for it. There should be access to a Spanish entry into the airport, so that we could see more Spanish passengers using Gibraltar airport, but the Spanish have never kept to their part of the bargain. We have half a million coming through the airport, but it is designed for 1 million people. It could be an even greater driver of economic growth for the whole of the region, not just Gibraltar, and the creator of jobs in its own right.
Chair: Thank you very much indeed.
Craig Mackinlay: Why are we closing this down so early? We have half an hour until we need to be elsewhere. I am sure Members have some other queries.
Chair: If you are very keen to ask another question, please ask it.
Michael Gove: I must excuse myself, but I wanted to thank the Chief Minister and his team for their evidence—that was great.
Q753 Craig Mackinlay: Some people, but not me, think of Gibraltar as some sort of peculiarity in terms of its constitutional arrangements and where it sits in the world, but it is not unusual as far as I can see. Do you know of any other states or micro-states within the EU territory? It is rather empire-like, the way the EU describes all these areas. Would it be true to say that Andorra, Monaco, San Marino and perhaps even Mount Athos in Greece are part of EU territory but are not in the customs union? What I am saying is that your position is not unique at all in the EU; it actually happens elsewhere.
Fabian Picardo: Indeed, and those are the territories within the ambit of the continent of Europe that you have identified, but of course you could also include Vatican City and Liechtenstein. The Attorney General has provided me with—I can let you have this—a very useful table of those micro-states and of what parts of the European acquis do and do not apply to each of them. For example, Monaco, San Marino and the Vatican City—all of them considered micro-states—do not have the application of the Schengen agreement to them, but de facto the Schengen agreement does apply to them and they do not operate frontiers with the rest of the European Union. Monaco and San Marino are part of the common customs territory, but Vatican City and Andorra are not part of the common customs territory. Andorra does not levy EU VAT, but Monaco does, and San Marino and Vatican City do not. I could let you have, if you like, a copy of this table, which is very helpful.
Craig Mackinlay: That would be very useful.
Chair: That would be extremely helpful; it would answer the question. The final word goes to Jeremy, because you have a point that you want to make.
Q754 Jeremy Lefroy: Yes, this point has arisen out of questions subsequent to my saying that I did not have a sure question. It is on the flow of data. The issue has been raised by a number of organisations that have concerns about how data will flow across borders, post Brexit. Are there any specific points that you would like to make?
Fabian Picardo: This area has been burgeoning, of course, in the last decade. Gibraltar applies the data protection directives. We have a data commissioner in Gibraltar. As we move forward in respect of the application of rules for the free movement of data or the movement of data, we are going to need to see how the United Kingdom deals with the protection of data going forward. We are engaged already with the relevant Departments in the United Kingdom as part of the JMC process, to work with the UK to establish a regime that is in keeping with the regime that the UK itself will seek to establish in the future.
Can I bring you back to the answer I gave earlier on the freedom of movement of capital? Data now move so freely and so quickly that we really need to ensure we are applying the highest standards of regulation to the protection of personal data. Whether we are part of the European Union or not, this is an important part of the future for all states around the world. The European Union has been a driver of data protection for us in the last decade, or the last 20 years, when these issues started to come to the fore. I do not think that it will be the only driver in the future. I think that our own citizens will want to be sure that their data are protected, and our own businesses will want to ensure that their data are protected. Cyber-issues are becoming increasingly relevant in the context of relationships between states. They will be no different in Gibraltar because of our size. Data, whether you are big or small, are just as potentially relevant.
Chair: Chief Minister, thank you very much indeed, and thanks to your colleagues, Dr Garcia and Mr Llamas, for coming here today and for giving your evidence. It has been extremely helpful.