The EU-UK treaty on the post-Brexit status of Gibraltar will enter provisionally into force on 15 July. The hope had been to do this on 10 April when the bloc’s new automated Entry-Exit-System (EES) for non-EU nationals, introduced last October, comes into full operation at all EU external borders, but it was not possible. However, the EES will not apply to any Gibraltar residents until the treaty is operating. They can continue to cross into Spain (since 2020) without having their passports manually stamped.
The failure to agree a treaty would have been a bad for everyone, as it would have meant a hard and not a fluid border. Around half of Gibraltar’s working population of some 30,000 crosses the border daily, most of them Spanish nationals, as well as many tourists. The territory, which voted 96% in favour of remaining in the EU in the 2016 Brexit referendum, accounts for an estimated one-quarter of the employment of those living in the much poorer and adjacent Campo de Gibraltar just over the frontier. Gibraltar’s economy could not function without them (see Figure 1).
Figure 1. Key facts on Gibraltar
| Population | 38,000 (2022 census). The great majority are Gibraltarians. The territory is one of the most densely populated in the world (close to 4,000 people per square km). |
| Language | English is the official language. Many people also speak Spanish. Llanito is recognised as a specifically Gibraltarian dialect and can be considered an amalgamation of English and Spanish laced with words from other languages such as medieval Genoese, Hebrew, Maltese and Portuguese. |
| Currency | Gibraltar Pound (tied to Sterling) |
| GDP | £3.1billion; per capita GDP: £80,885. |
| Economy | The main pillars of the economy are financial services, maritime services, e-gaming and tourism. Gibraltar does not take development aid from the UK. |
| Territorial waters | Under the United Nations Convention on the Law of the Sea, British Gibraltar Territorial Waters extend three nautical miles to the south, east and south-west, and as far as the median line of the Bay of Gibraltar. |
Under the treaty, weighing in at more than a thousand pages and taking far longer to produce than the Brexit Withdrawal Agreement, Gibraltar, for the purposes of free movement, will effectively be part of the EU’s passport-free Schengen area. Immigration checks will take place at Gibraltar’s airport –and, if needed, the port– rather than the land border. This ends the often-lengthy queues there; part of the 1.2km border fence will be removed. José Manuel Albares, the Foreign Minister, described the removal as bringing down ‘the last wall in continental Europe’, comparing it to the dismantling of the Berlin Wall. Franco closed the border in 1969 and it was not fully re-opened until 1985, shortly before Spain joined the EEC.
Passports will be shown to both Gibraltar and Spanish border officers inside a shared facility that spans the border line known as the ‘Schengen shack. This system mirrors the Eurostar-style dual border checks (British and French) conducted before departure at St Pancras railway station in London.
Gibraltar was not covered in the negotiations on the new UK-EU agreement that culminated in the UK-EU Trade and Cooperation Agreement (TCA) in December 2020. Instead, the UK and the EU agreed on a framework for negotiations on a separate agreement on Gibraltar’s new relationship with the EU, which required the prior agreement of Spain.
The treaty is without prejudice to the respective legal positions of the UK and Spain in respect of sovereignty and jurisdiction. Spain has long claimed Gibraltar, ceded to Great Britain under the 1713 Treaty of Utrecht. The UN defines Gibraltar as a ‘non-autonomous territory that must be subjected to a process of decolonisation’. Furthermore, it states that decolonisation must be undertaken through bilateral negotiations between Spain and the UK, negotiations that the UN has been recommending since 1965.
Following the Brexit referendum, the Spanish government tabled a proposal at the UN for joint Spanish-UK sovereignty over Gibraltar, joint UK-Spanish nationality for Gibraltarians and a special status for Gibraltar within the EU. The proposal was rejected by the Gibraltar government. Gibraltarians voted 99.2% in favour of remaining under British sovereignty in the 1967 referendum, and in 2002 98.9% of voters rejected a proposal for joint UK-Spanish sovereignty.
The Gibraltar treaty is pragmatic, as it needed to be (see Figure 2). Both sides can claim victory. For example, Spain has ‘boots on the ground’, a sensitive issue, which was required if the territory was to be part of Schengen for travel, and there is more of a level playing field on taxes. A higher transaction tax replaces import duty, starting at 15% on 10 April and rising to 17% by 2028 (in line with the lowest standard rate of VAT in the EU). ‘The boots will be there, but in the joint facility, not outside’, said Fabian Picardo, Gibraltar’s Chief Minister, who insists sovereignty remains intact.
Figure 2. Key provisions of the draft UK-EU agreement on Gibraltar
| Common & institutional provisions | There is no direct application of EU law to Gibraltar or enforcement role for the Court of Justice of the EU in Gibraltar. Gibraltar will introduce its own legislation in line with EU legislation. A Cooperation Council will supervise implementation, facilitate dialogue and adopt decisions. |
| Circulation of persons | Gibraltar remains outside both Schengen and the EU, but Schengen border rules will apply at its external border under a tailored arrangement between the UK and EU. Residence permits to allow access to the Schengen area are granted in line with key provisions of EU law designed to protect public safety and security. There are mechanisms for evaluation, monitoring and, where required, temporary suspension of obligations in cases of serious non-compliance or security threats. |
| Economy & trade | A bespoke customs model between Gibraltar and the EU is established, removing tariffs, duties and quotas on goods moving between them. The majority of goods destined for Gibraltar will be cleared by EU customs offices in Spain so they can enter Gibraltar without further checks. Enabling flights between Gibraltar and the EU, which have, for the most part, been suspended for decades, will bring new economic opportunities. |
| Frontier workers | The rights of workers who live in one territory and work in the other are defined, ensuring they continue to benefit from clarity, certainty and fair treatment. There are to be mechanisms for social security coordination so that contributions, entitlements and benefits can be administered without disruption. |
| Dispute settlement | There will be a mechanism for resolving disputes, including a process of consultations between the parties and referral to an independent arbitration tribunal and provisions on compliance and proportionate remedies in case there is non-compliance. |
EU nationals and non-EU nationals who reside legally in the bloc are allowed to enter Gibraltar for up to 90 days in any 180-day period. The reverse applies to Gibraltar residents. Treaty provisions under which Spain can object to a residency permit issued by Gibraltar only apply to foreign nationals, not to Gibraltarians. Gibraltar will notify Spain about foreign nationals, whose authorities can object if there is ‘a threat to public policy, internal security, public health or the international relations’ of any EU state, including on the basis of an alert in the EU’s Schengen Information System.
The transaction tax on goods is bad news for shops, largely concentrated in Gibraltar’s Main Street, as it diminishes one of the territory’s main attractions. The counter argument is that a hard border would likely have meant a drop in footfall, while the treaty should help attract more visitors and will allow shops to sell to the wider EU market. There will be no tax on services (not covered by the treaty) for companies in the financial, gaming, gambling and tech sectors. Gaming accounts for 30% of Gibraltar’s GDP and employs around 3,500 people.
Continued access to the EU single market, notably in relation to services, is vital for Gibraltar. Three of the four main sectors of its economy (tourism, financial services and online gaming) were developed on the basis of access. The financial services and gaming sectors, however, are primarily UK-facing. This was key to their continued growth after Brexit and was protected by a bilateral deal with the UK allowing access to the UK market for Gibraltarian companies.
Paradoxically, Gibraltar is now more integrated into the EU out of the bloc than when the UK was part of it, but it is not fully integrated into Schengen. The treaty is the closest to membership that is on offer. Hardline Brexiteers in the UK view the treaty as a betrayal, which Picardo refutes. ‘After Brexit, doing nothing would have left Gibraltar with a hard border: delays of up to six hours would have inflicted a devastating cost’, he said. ‘Compared to a non-negotiated outcome, this treaty could open economic value worth an estimated £200mn per year for Gibraltar, equivalent to roughly 6% of our GDP’.[1]
The treaty ends years of disagreement over the airport when Gibraltar was part of the EU and Spain blocked attempts to develop the Rock’s air connectivity. Prior to Brexit, Gibraltar was entitled to EU air connectivity as of right but this was blocked by Spain. That right was lost after Brexit. Thanks to the treaty, UK airlines can continue to operate between Gibraltar and the UK, while EU airlines will be able to fly between Gibraltar and the EU. ‘While we were in the European Union, the airport was an area of controversy’, said Joseph García, the Deputy Chief Minister. ‘Now that we are outside the European Union, it is set to become an area of cooperation’.
Alberto Nuñez Feijóo, Spain’s Popular Party leader, who would have pushed a harder line in the treaty negotiations had he been in power (today with the support of the hard-right VOX, according to the latest polls), views the UK as the main winner. VOX says that since ‘Gibraltar is a territory illegally colonised by the United Kingdom’ it follows that, ‘Any agreement that does not contemplate the total reintegration of that territory under Spanish sovereignty is illegal, illegitimate and unjust’.
The treaty text gives the UK and the EU powers to end the agreement. The EU, because of its legal structure, also agreed to give Spain those powers. Whether this happens depends on whether both sides believe their interests over time are being served.
[1] See https://www.politicshome.com/opinion/article/post-brexit-gibraltar-deal-is-triumph.
