Report from all Ministries on the bilateral repercussions of the UK’s exit from the EU
Brexit is a common, unprecedented challenge for Europe and for the United Kingdom, which will have countless bilateral repercussions which will need to be negotiated with the 27 member countries which will remain in the EU and with millions of personal situations which will need to be resolved. The Spanish government has completed an internal report which will be distributed to all affected regions and which will set the framework for each ministry’s position, especially in the new transitional period which will continue until the final exit from the EU. The European Council has begun work on it, and its main priority is to maintain the current status quo of the existing agreements until the situation concludes at the end of 2020, especially for the almost 200,000 Spaniards living in the United Kingdom and the 300,000 Britons living in Spain.
Employment and Social Security
This is the main concern for the Spanish citizens who are currently working in the United Kingdom. The Ministry of Employment explains that it is in favour of a transitional period (TP) following the withdrawal of the UK from the EU and a new future collaboration agreement coming into effect, as long as it “the community heritage regarding free movement of persons and rules on Social Security systems coordination are preserved in their entirety”. A clear reaffirmation stating that EU and British citizens “will have the same rights regarding the free movement of persons which they currently have” is requested.
To reach that aim, the EU Court of Justice would have to maintain total jurisdiction and competency, and EU citizens would have to still have the right to reside and work in the UK and vice versa. Once the period was over, EU citizens who had moved to the UK (and vice versa) during that time would have “the same rights recognised for EU citizens who currently reside in the withdrawal agreement” and that includes “access to permanent resident”.
In the document entitled “Positions of the Ministries regarding a transitional period and the framework of the future EU-UK relationship, there isn’t a single word about Gibraltar. This oversight is no coincidence. Spain understands that there is currently nothing to talk about with the United Kingdom, nor with Gibraltar, and that argument should not appear in the negotiations undertaken globally by the European Union until the UK as a whole is in a completely different situation.
Nor did Mariano Rajoy comment on it when he met in London with British Prime Minister Theresa May. Spain’s position continues to be to offer shared sovereignty, which is rejected by Gibraltar residents and the British government, as reiterated by the Secretary of State for Foreign and Commonwealth Affairs, Boris Johnson. The Spanish Minister, Alfonso Dastis, has repeated Spain’s position on the matter several times: “when the UK leaves the EU it must do so completely, and our intent and desire is that once outside the EU it remains as a whole and we will work towards that”.
In the Government report, the Ministry of Foreign Affairs, does mention the need to find formulas to go back as little as possible in matters regarding police cooperation, but without any singling out or à la carte exceptions. As the UK will no longer be part of EU institutions, the Ministry for Foreign Affairs sees the need to establish clear rules (such as the principals of shared and reciprocal security) which should be met by all parties. As the transitional period over the next three years could affect the status of British residents in Spain the conclusion is that a decision will have to be made regarding the type of ID with which they will be issued (general regime or EU regime) and the rules which will apply to them entering, being denied entry or deported from EU countries.
The Ministry aims to minimize changes which will take place in matters of security and police cooperation (in settings such as Europol, Cepol, Prüm or SIS II) and when it comes to border control, the plan is to do away with visas for short stays.
During the transitional phase, guarantees must be obtained that the future final agreement between both parties will include a chapter on movement of persons with a “fluid system” which allows that traffic to flow normally; “balanced”, based with no inequalities on “reciprocity” and “complete” which would include considerations regarding “aspects of the entrance and exit of citizens, aspects on access to the labour market, regulations on treatment given to workers, a regime for their relatives, a regime for students, a regime linked to commerce and regulations on Social Security.
The Spanish government is demanding a “more ambitious” plan that the “insufficient” one originally outlined by the European Commission, based on the historical commercial agreement signed with Canada (CETA). It also suggests that options such as the Norwegian model be explored, as this allows the free movement of persons, or the Swiss model, which also tolerates it, although it includes an “emergency brake” to be used in case of destabilising movements.
Economy, Tax, Industry and Trade
The United Kingdom is Spain’s fourth client and seventh provider, with Spanish exports amounting to 19 billion euros in 2016, and imports up to 11 billion euros. It is also the main investment destination (82 billion euros in the financial, telecommunications and energy supply sectors, for example) and the second investor in Spain (44.6 billion euros, especially in telecommunications).
The areas which be affected would like to maintain the status quo and the current acquis communautaire throughout the transition in order to minimise uncertainties in the markets and delay companies’ contingency plans as much as possible until the future commercial agreement is known, and it is expected to be even more “extensive and deep” than the one reached with Canada (CETA plus).
The outset aim intends to maintain economic flow, equality of conditions, and that when the United Kingdom is no longer under common policies and fiscal, social, environmental and regulatory rules, “no measures are introduced which distort the competency” and it is not given “more benefits than it is willing to give in fair reciprocity and which would avoid other members from being encouraged to leave”.
At a bilateral level, “Spain would be interested in the agreement reached with the United Kingdom during the second phase avoiding European products being phased out by-products from third countries, with which the United Kingdom may have more advantageous commercial agreements”.
Regarding border control, the report by the Spanish Government states “an agreement to facilitate procedures between territories which are under their own rule and which have different regimes, seems very limited, and the British proposal of “a new customs partnership” as a separate agreement from the commercial agreement, would be unacceptable, as it would mean relinquishing EU sovereignty over the control of the entrance of merchandise from third countries, on which the United Kingdom would impose customs clearance, applying EU Law”.
Regarding investments, the work document admits that “Spain would be interested in putting rules in place to allow for transparency and objectivity of regulations, as well as regulatory cooperation mechanisms, as there are substantial Spanish investments in the United Kingdom in regulated sectors.”
Regarding the relocation of London’s financial business, Spain considers it fundamental that all supervisory authorities prepare adequately to monitor new risks and apply EU legislation. More specifically, current authorization standards must not be reduced and measures should be taken in order to avoid tensions, including management and risk mitigation plans.
When it comes to taxes, it states that one of the aims that should be of interest to both parties is maintaining administrative cooperation mechanisms. It is suggested that an agreement should be established between the European Union and the United Kingdom similar to those already signed with Switzerland, Liechtenstein, Monaco, Andorra and San Marino to fight against fraud or consider extraterritorial application of the necessary directives. In the field of direct tax laws and administrative cooperation, in case of a lack of elements included in the general agreement of future bilateral relations, it has been pointed out that international conventions based on OECD standards would allow the most important aspects to be covered. Also, in some cases, specific bilateral agreements could be adopted, such as agreements to avoid double taxation.
Tourism
Spain is the favourite destination for British tourists (receiving almost 18 million in 2016, with a growth of 12.4%). Regarding British citizens coming to Spain, the Ministry of Tourism wants to do away with visas for British tourists, as they could put them off coming. When it comes to them accessing the public health service and pensions, the aim is to keep health care agreements in place, both for the European Health Card and for assistance for pensioners (“in this case, also guaranteeing it for stays of less than 6 months, as planned British legislation which aims to guarantee benefits only after that time period could potentially cause serious damage to British tourism in Spain).
Regarding British residents and home owners in Spain, double taxation agreements must be guaranteed in order to avoid taxes increasing when buying property.
Justice
During the transitory phase, the implementation of EU Law and the jurisdiction of the European Court to interpret rules, propose prejudicial matters, judicial resolutions and the execution of cases which were underway until their conclusion (even if they conclude when the transitory period is over) and of cases which started during this period or events which took place or damages caused at any moment during that stage. For Spain it is not enough for the British courts to “take into account” European jurisprudence because when “they don’t take it into account” there would be a severe risk of breaking uniformity of interpretation and application of a common legal order and cause for either a “British law of the EU”, different from the common law, or for an EU legal corpus “interpreted in the English manger” to be created.
The Ministry of Justice also warns of “unconditional rejection of the British plan to submit mercantile controversies for international arbitrage” and demands that the EU make it possible for the most important elements of the courts of arbitrage to be moved to Europe. For the Spanish Ministry, which is against the position proposed by the United Kingdom, there would be no reason to apply any thresholds to determine whether a case has been started or not when they are already underway. And regarding the exchange of police or penal data, the rank of principle of mandatory compliance would remain in place, and failing to observe would require data to be erased or destroyed.
Interior
This Ministry wants to divide the transitory period into two stages of between 18 and 24 months. The first part would be to extend the current systems (but without the institutional participation of the British) and the second would be for a progressive disconnection and the start-up of future solutions.
When it comes to police cooperation, it has been pointed out that the aim should include formulas so it takes as few steps back as possible, but with no singling-out or à la carte exceptions. As the United Kingdom will no longer take part in European institutions clear rules will need to be put in place (such as the principle of shared security or reciprocity) which need to be obeyed by all parties.
The upcoming transitory period could affect conditions for Britons residing in Spain. The Interior Ministry suggests that a decision will need to be made regarding the documentation they are given (general regime or EU regime) and the rules which will apply to them entering, being denied entry or hypothetically deported from EU countries (RD 240/2007 or Organic Law 4/2000).
The Ministry aims to minimize changes which will take place in matters of security and police cooperation (in settings such as Europol, Cepol, Prüm or SIS II) and when it comes to border control, the plan is to do away with visas for short stays.
Education and Culture
What is most worrying people when it comes to Education is whether diplomas will be issued and recognised. There are more Spanish workers who move to the UK than vice versa, so during a transitory period, the aim would be to maintain full application of EU laws, including directives regarding the recognition of professional qualifications.
The transitory period would give Spaniards who hold teaching positions in the UK the chance to prepare for a potential future return home. The Ministry’s proposal is to maintain their conditions and not increase fees to access British universities so they do not miss out on the chance to access student loans while they are studying.
The Ministry of Culture points out that “there should not exist, in any case, services provided from British soil or by British companies to the rest of the EU in the field of creative industries and digital platforms in equal conditions to other companies based in other member States.” And it points out that once the United Kingdom leaves the EU it must also completely exit the Digital Single Market and it will no longer be able to benefit in any way from community rules and the free provision of services in this area.
It has been established that the United Kingdom, once outside of the EU, is not expected to “improve its collaboration in the fight against piracy or other similar areas”. And it has been confirmed that the same restriction should be in place to regulate the commercialization of rights.
Health
One fundamental proposal from this Ministry is to maintain “agreements regarding health care”, both for pensioners and for holders of the European Health Card. Under current legislation, there is a regime of reciprocity for accessing benefits for citizens of Spain and the United Kingdom. If that legislation is maintained during the transitory period, Spanish citizens residing in the United Kingdom should have access to the whole range of benefits on the British National Health Service under the same conditions as Britons accessing the Spanish health service.
With a view to the future, the aim is to jointly negotiate a model for assistance between the EU and the United Kingdom like the one existing with countries of the European Economic Area or with Switzerland.
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