REPORT ON CONTINGENCY PLANNING FOR THE UK's WITHDRAWAL FROM THE EU WITHOUT AN AGREEMENT

The Council of Ministers has presented a report on contingency planning for the UK's exit from the EU without an agreement.

On 29 March 2017 the UK submitted a formal notification of its wish to leave the EU.

After a year and a half of negotiations, the EU reached an agreement with the UK backed by the British Government on 14 November, and endorsed by the European Council on 25 November.

The Spanish Government has been very active in protecting Spain's interests during these negotiations. It identified precisely what these interests were through detailed work involving inter-ministerial coordination at all levels. The Government has also worked together with the autonomous regions within the Commission for Issues Related to the EU (CARUE). The result of this process has been submitted officially to the EU Negotiator, who has visited Spain seven times, and to the rest of the Community bodies.

The process for ratifying and signing the Treaty was initiated on 25 November. As of today there are doubts about whether this process will be successful. Not ratifying the Withdrawal Agreement would imply the UK's no-deal withdrawal from the EU. It is an improbable and undesirable scenario, but nevertheless it cannot be ruled out.

That is why the Government has been working for some time on a number of contingency plans. Based on the contributions from various ministerial departments, a report has been prepared and was approved today on contingency planning for the UK's no-deal exit:

The plan contains three types of measures:

• Legislative measures: incorporated in a Draft Royal Decree-Law, whose adoption is planned for February. It modifies some legal matters and includes the implementation via regulations of additional measures.

• Logistical measures aimed at providing personal and material measures to deal with the scenario of a no-deal exit.

• Work involving communication to citizens, focused on a page on the website of the President of the Government's Office directly informing people of what individuals and companies must do to prepare for the different scenarios.

The main aspects included in the contingency measures will be as follows:

Citizens' rights: The UK's exit will mean the end of freedom of movement and employment for Spanish citizens in the UK and British citizens in Spain. The Government wishes to preserve their overall rights as it considers that they made their decisions for the future believing in the European project. That is why a system will be implemented by which the status of British citizens in Spain will be changed from EU citizens to legal residents in the country. The necessary measures will also be taken to guarantee rights, social security, healthcare, recognition of degrees, professional qualifications, etc. for Spanish and British citizens.

Special mention should be made of the right to vote and stand in municipal elections, which will be recognised under a specific bilateral agreement, as provided for in Article 13 of the Spanish Constitution.

Trade relations: the UK's withdrawal without an agreement would mean the UK's exit from the Customs Union and Single Market. Its trade with the EU would then be governed by WTO rules. All EU legislation on goods imported and exported to a third country would be applicable to the UK, including charging customs duties and taxes. In addition, considering the UK as a third state would mean applying strict sanitary and phytosanitary measures. All this raises specific logistical needs that are being tackled by the corresponding ministries. The Government and the European institutions want to facilitate the flow of goods between the UK and the EU as far as is possible and desirable. Seminars are being organised across Spain to prepare companies for the new scenario. Financial assistance is also being planned to help them in this preparatory process.

Particularly sensitive economic sectors

There are three economic sectors that are particularly sensitive:

• Air transport: this sector may be considered critical, given the enormous flow of passengers between Spain and the UK (45 million passengers and 18 million tourists in 2017). The European Commission has planned contingency measures, currently being negotiated, to preserve basic air connectivity. In addition, both the Commission and the Government have informed operators of the need to adapt to a no-deal scenario. Spain supports an ambitious project of contingency measures in this area, because the aim is to maintain air connectivity. In any event, the Government will try to preserve the interests of passengers as far as it is able within its competence.

• Financial services: withdrawal from the EU will give rise to a loss by British entities of the "passport" needed to provide these services in the EU-27. Given the critical nature of this sector, the European Commission has proposed certain contingency measures. The Spanish Government will supplement them with measures at a national level. Both the Commission and the Spanish Government have informed operators of the need to adapt to a no-deal scenario.

• Agriculture and fisheries: this is another very sensitive area in which Spain has specific interests. As well as the necessary preparatory measures at internal level, Spain will vigorously support the need for specific assistance at Community level, as well as the need to bear in mind this new situation in the debate on the future of the CAP/CFP.

Gibraltar is a special case with respect to the contingency measures for two reasons: first, the territory benefits from a selective application of the EU Treaties (it does not participate in the Customs Union, the CAP, the Common Fisheries Policy (CFP) or the single VAT area); second, Gibraltar is also the subject of a sovereignty claim by Spain, which the Government is maintaining in its entirety.

With respect to the contingency measures, Gibraltar has been excluded from the package of measures presented by the Commission on 19 December. This is consistent with the above approach.

The national contingency measures related to Gibraltar will have two main objectives:

• Preserve the rights of our citizens, including the right of our workers to collect pensions and social security benefits.

• Guarantee that when EU law is no longer applicable, this does not lead to conduct damaging to EU and Spanish interests, such as smuggling, tax evasion or concealment of earnings.

These objectives are included in the bilateral agreements signed between the UK and Spain with respect to Gibraltar. Our firm will is that they should continue in force regardless of any future scenario. If there is a hard Brexit, their application must be adapted to the new circumstances, and in fact they constitute a major part of the contingency measures for Gibraltar.

The contingency measures are in line with the requirements set by the Commission, which stipulates they must be unilateral, comply with EU law and have a limited scope in terms of time and resources, to ensure that they do not reproduce the advantages of belonging to the Union.

Source: Council of Ministers, 11 January 2019 Ministry for Foreign Affairs, the European Union and Cooperation

Non official translation