Guernsey to secure new customs union with UK
GUERNSEY’S fiscal independence will be secured through a new customs deal with the UK – which will also help ensure businesses benefit from ‘frictionless’ trade after Brexit.
That is the message from Home Affairs vice-president Rob Prow, who has been helping lead work on the new customs union agreement between the UK and the three Crown Dependencies.
‘This is a hugely complex piece of work. We have worked hard [to] politically establish what the red lines are as regard to Guernsey and then let the officers on a technical level negotiate with the UK, mainly HM Revenue and Customs but also the Department for Exiting the European Union,’ said Deputy Prow, who is Home’s lead member on Brexit and a member of P&R’s Brexit sub-committee.
‘We needed to ensure that we maintained fiscal independence with regard to applying our own indirect taxation and maintain our own prohibition and restrictions regime because businesses have set up here on that basis for 40 years.’
Deputy Prow added: ‘We are in the process of signing off a customs agreement between the three Crown Dependencies and the UK. We have agreed the arrangements.
‘They were negotiated hard, but we are satisfied that we have come up with good customs arrangements that work for the Crown Dependencies and work for the UK – but will allow us sufficient independence and flexibility within those arrangements.’
The new arrangements are needed because the current legal structure is based around European Union agreements, which will fall away after Brexit.
Deputy Prow said that the new deal with the UK was designed to ensure ‘frictionless’ trade within the Crown Dependencies-UK customs territory – with goods from outside this area being subject to the same tariffs. This means applying the same external tariffs on imported goods as the UK.
In the event of a no-deal Brexit, these third country tariffs could be based on World Trade Organisation requirements to ensure that local businesses can continue to trade. However, Guernsey could also benefit from any final customs arrangements agreed by the UK and EU as well as other free trade deals with other countries in future.
‘I would like to give some reassurance to businesses that the mechanisms are in place to look after their interests. It avoids having a trade barrier between us and the UK,’ said Deputy Prow.
It made ‘complete sense’ to have a customs union with the UK but avoided being drawn into other arrangements such as VAT, which is in place in the UK and the Isle of Man, and Jersey’s general sales tax – unlike the situation in Guernsey.
Deputy Prow added: ‘Guernsey has maintained its fiscal independence which is massively important and protects our long-standing trading arrangements with the UK as established in the Royal Charters.
‘Once the EU arrangements fall away, it is about having new tools in the box to trade internationally and to gain the benefits from other UK agreements not only with the EU but globally.’
P&R president Gavin St Pier has also said that he was reassured that Guernsey’s interests were being represented after a call with UK Brexit minister Robin Walker.
Writing on Twitter, Deputy St Pier said: ‘Thanks as ever @WalkerWorcester for taking time and trouble to call to discuss the draft withdrawal agreement. Reassured that Guernsey’s interests continue to be well understood and represented including need for proportionate application to us of UK’s future relationship with EU.’
A UK government spokesperson said: ‘In line with established constitutional arrangements, the UK Government has negotiated the draft withdrawal agreement on behalf of the whole of the UK, including the Crown Dependencies.
‘This means that Guernsey and the other Crown Dependencies are included in the withdrawal agreement and the implementation period, providing their businesses and citizens with certainty. The Crown Dependencies will need to pass their own legislation to ensure that the withdrawal agreement is fully implemented in their jurisdictions.’