Download In Tynwald 16th May, 2017 The Chief Minister to move – That

In Tynwald
16th May, 2017
The Chief Minister to move –
That Tynwald notes the ongoing work of the Council of
Ministers on the implications for the Isle of Man of the United
Kingdom's withdrawal from the European Union
Mr President,
As Chief Minister it is my privilege and my duty to ensure that, alongside
my colleagues in the Council of Ministers, and here in Tynwald, we are
taking the Island in the right direction and that we are delivering
services, providing support, opportunities and protection for local people
and businesses.
As part of this role, it is also my privilege to represent the Isle of Man
beyond our shores.
This is crucial in ensuring that we are able to understand how current,
and emerging, international issues will, or may, affect our Island.
So, building and maintaining relationships with those who can influence,
support us, and represent us is vital.
Mr President, I have made it clear that I believe Brexit is the biggest
challenge for this administration.
This in no way diminishes other major domestic challenges that we will
have to tackle over the next five years.
Such as; growing our economy and working population, balancing the
budget addressing the public sector pension deficit and the future of
health and social care provision.
These are set down in the Programme for Government and will be
addressed by this administration.
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However, in relation to these domestic challenges, we can set our own
direction and address issues as they arise.
But as I have set out previously this is not the case for external issues,
where we do not set or control the agenda, the timetabling, or the
delivery.
The implications of the United Kingdom’s withdrawal from the European
Union have the potential to be significant and long-lasting for our Island.
For over forty years our relationship with the European Union has been
set out in Protocol 3 to the UK’s Treaty of Accession.
Through this we are included in the EU customs union and in the Single
Market for free trade in goods.
But, when the UK leaves the EU, on the 30th of March 2019, Protocol 3
will fall away and our existing relationship will end.
As we know the UK has triggered Article 50 and we are now starting to
see greater clarity as to the UK’s aspirations.
The UK Prime Minister’s speech in January set out her vision of a “Global
Britain” and the UK’s desire for strong EU relations and trading links.
Since then the UK Government has published two White Papers. One on
the UK’s future partnership with the European Union; and the other on
the “Great Repeal Bill”, which gives clarity regarding UK and EU
legislation.
The EU has agreed its negotiating stance and we are now in a period of
‘talks about talks’, when the mechanics of how the negotiations are
conducted will be agreed.
Michel Barnier, the EU’s Chief Negotiator, has now put forward a
recommendation for the negotiating mandate, based on the political
guidelines set by the European Council.
This recommendation is to be discussed and agreed by EU Foreign
Ministers next week.
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Mr President, my purpose in bringing this Motion is twofold;
• Firstly, I would like to bring Honourable Members and the public
up to date on our work on Brexit;
• And secondly, I want to provide an opportunity for Honourable
Members to debate this key issue.
But, I need to be clear about what I can’t do.
I cannot give any certainty about what our position will be two years
from now and I cannot give a running commentary.
The issue is very fluid and is extremely complex.
We must also remember this is a negotiation process, and it would be
unrealistic to expect the UK to make its negotiating position public every
step of the way.
But, as Honourable Members know, the Council of Ministers has
published four interim reports. Each provides an overview on the work
we have completed or are undertaking.
Each also provides a series of snap-shots which explain some of the
issues as they unfold. These reports are important because their focus is
on what Brexit means for the Isle of Man.
They also provide some balance, in the context of the many other
sources of information on the Brexit process; which are UK-focused and
often partisan and politicised.
Mr President, in the past year we have become very familiar with the
simple term “Brexit”, but Brexit is a complex and far from simple
process.
In reality it is potentially five interlinked, and interdependent, processes.
These processes are;
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• The UK’s withdrawal from the European Union;
• The negotiation of a new relationship between the UK and the EU;
• Potentially, the negotiation of a transitional agreement, so there is
a managed transition for the UK as it leaves the European Union;
• The UK revision of its membership of, and relationship with, the
World Trade Organisation, as it leaves the EU trading bloc. This is
because World Trade Organisation Rules form the basis of trading
relationships between more than 180 countries around the world;
• And the fifth process will be the UK’s aspiration to negotiate
Free Trade Agreements with countries outside the EU.
To some extent; these processes are all happening at once, but we can
give them some order, and priority.
For example, the UK cannot formally negotiate Free Trade Agreements
with countries outside the European Union, until it leaves, whereas the
shaping of the withdrawal agreement and the legislative preparations
are very much underway now.
In the Isle of Man, we need to ensure we understand what Brexit means
for us and to communicate this to the UK.
Immediately after the UK Referendum result, the Isle of Man
Government’s European Union Advisory Group was established.
It built on the work undertaken in advance of the Referendum and is
now leading and coordinating Brexit work across the Government.
The European Union Advisory Group is chaired by the Chief Secretary
and comprises Her Majesty’s Attorney General and senior government
officials.
The European Union Advisory Group reports to our National Strategy
Group.
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But oversight of this work is undertaken by the Council of Ministers and,
ultimately by me.
To give some shape to what is required we are working across four main
themes, in order to make this huge task more manageable.
These are: • The implications of withdrawal for the Isle of Man and specifically
the legislative impact;
• Engagement, and crucially, the negotiation of a new agreement
between the UK and the EU;
• Opportunities and risks for the Island; and
• The Isle of Man’s new trading relations with the rest of the world.
This will be determined by, both the UK’s membership of the
World Trade Organisation, and the UK’s success in negotiating
new Free Trade Agreements with other countries outside the
remaining 27 EU Member States.
But again it is worth remembering and emphasising that each of these
themes are inter-linked, and inter-dependent.
So, looking at the first theme in more detail.
As we know, the Isle of Man is not withdrawing from the European
Union, because it was never a Member.
But we do have a limited relationship with the EU under Protocol 3, and
as I have said this will fall.
So, over the next two years our legislative preparations will follow two
distinct phases.
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In the first phase, we will bring forward our own Bill which will deal with
the immediate impact of the loss of Protocol 3.
This will mean repealing our European Communities Act and amending
all primary legislation which refers to EU institutions or EU law.
We will also need to retain EU law which currently applies to the Isle of
Man directly and to retain EU law which we have applied voluntarily in
Manx law.
The second phase will involve taking all of the EU law we have retained,
and modifying it, to reflect our new position.
All legislative changes will of course be subject to approval either in the
Branches, or in this Honourable Court.
And whilst these changes will be needed to deal with the loss of Protocol
3; at the same time, we will need to take account of the new
relationship between the UK and the EU.
These two processes will run side-by-side.
Customs and trade, and immigration, will be the most significant areas
for the Isle of Man and are likely to require new Isle of Man legislation
to reflect the new relationships.
Looking next at the second main theme in more detail; this covers our
engagement with the UK, which is the key to ensuring our interests are
understood, when the negotiations between the UK and the EU begin.
We have been holding discussions on an unprecedented level across a
range of policy areas.
This is at political level, with the relevant UK Government Ministers with
Members of Parliament and relevant UK Parliamentary Committees, and
also with senior officials across Whitehall.
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This is so the people, who will be conducting the negotiations for a new
UK/EU relationship, understand our priorities.
All of this work will inform the UK of the Islands’ position as the UK
develops its overall negotiating stance.
Whilst negotiations have not yet begun, effective positioning is vital to
ensure our interests are represented.
For our Third theme we are working to assess the risks and
opportunities of Brexit for the Isle of Man.
As I have said, the situation is very fluid, and we are analysing potential
scenarios as the full picture of what Brexit might mean for us unfolds.
But things are becoming clearer.
We know that the UK will not be part of the Single Market.
And we know it will leave the Customs Union.
So we also know that we cannot replicate Protocol 3.
Consequently, we are now assessing the key risks and opportunities and
we are working with the private sector to develop these.
Broadly speaking, the risks will be centred on the potential introduction
of tariffs, or non-tariff barriers, when trading in agricultural and
manufactured goods.
In other words, trading with the EU will not be as easy in the future.
In addition, freedom of movement of people between the UK and the
European Union is likely to be restricted or reduced.
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This may make life more difficult for people who live in the Isle of Man
but who originally come from outside the UK, and also for our people
living in the European Union.
It could also mean access to labour is more difficult or costly.
The main opportunities are likely to be commercial.
New markets may open up for us, particularly in our stronger sectors
like financial services or e-business.
But, this increased market access is unlikely to be in the EU, and may
potentially be further afield.
Finally, the fourth theme we are progressing is the development of our
understanding of the UK’s revised position within the World Trade
Organisation.
And flowing from this; the Island’s position in relation to the Free Trade
Agreements the UK intends to negotiate with countries outside the EU.
I am not underestimating the position when I say this is a complex and
highly technical area.
Post-Brexit the UK will have to establish a series of WTO schedules to
determine its tariff levels.
And these will apply across the board to all other WTO members.
We know the UK Government will seek to replicate the schedules it
currently has in place as an EU Member State.
But, it cannot vary tariffs for one country without a Free Trade
Agreement, or Customs Union being in place.
This is because the Most Favoured Nation principle requires WTO
members to treat all other members equally.
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WTO Rules also forbid sector specific deals.
So, any Free Trade Agreements must cover “substantially all” categories
of goods.
Whatever the outcome of the Brexit negotiations, the UK will have to
prepare WTO schedules which set out its tariffs for all classes of goods
for all other WTO members.
And, if there is no UK/EU Free Trade Agreement in place, these
schedules will also apply to trade with the EU.
As the UK’s membership of the WTO extends to include the Isle of Man,
the UK’s WTO schedules will apply to the Island.
These schedules will therefore determine not only the UK’s, but also the
Island’s, external tariffs on Brexit day.
This is because we are in customs union with the UK, and therefore our
external tariffs must be consistent with theirs.
So, we must ensure that we have the right legal and administrative
framework in place to give effect to these external tariffs.
In addition to the WTO issue, we are also assessing how the Isle of Man
can be included in future Free Trade Agreements that the UK may
negotiate with the EU, and with other countries.
I would emphasise again this is another complex area both technically
and politically.
And, it is important to remember that a Free Trade Agreement can be
viewed as a form of contract with rights and obligations.
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We cannot expect to gain the right to free trade, without having to meet
certain obligations.
It is not clear what these obligations may be; but this will become
clearer as the negotiations between the UK and the EU progress and the
content and shape of any Free Trade Agreement between them
emerges.
Honourable Members will be aware there has been a great deal of
speculation on this aspect of the Brexit process and, that many have
suggested that these agreements may take years to conclude.
I will keep you informed on these matters as there is much to consider
in the short and long term.
Honourable Members, I hope that this overview has given a valuable
insight into both the importance of Brexit for the Isle of Man, and the
considerable and complex work which is being undertaken by this
administration to ensure the Island is well positioned as the United
Kingdom leaves the European Union.
I hope my insight will also inform the debate in this Honourable Court
today.
Mr President I beg to move the motion standing in my name.
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