Where we are
Brexit happened on 31 January 2020.
The UK has already legally exited the European Union (EU), following the ratification of the Withdrawal Agreement. We are now in the 'Transition Period', where the UK and EU negotiate the future relationship between the two parties, for instance how both will trade and cooperate with one another when the Transition Period ends on 31 December 2020.
The UK Government has reiterated that there will be no extension to the Transition Period.
Despite the current situation surrounding coronavirus, these negotiations have continued apace over the last few months. The negotiations will determine whether the UK will leave with a new trading arrangement with the EU or not.
Both parties will need to have reached an agreement and allow time for any Free Trade Agreement (FTA) to be ratified before the end of the transition period on 31 December 2020.
During the Transition Period, alignment with EU law and regulation is maintained. For Jersey, this means no significant changes (apart from the introduction of the Jersey EU Settlement Scheme for EU citizens) to our existing arrangements under Protocol 3. This means that the UK's "economic exit" will take place at the end of the year, and any new relationship with Europe will start at the beginning of 2021. Protocol 3 will therefore will fall away on 1 January 2021.
The UK has now formally left the European Union, following passage of the Withdrawal Agreement in January 2020.
Prior to this, a significant portion of the Government's work was preparing for the possibility of a 'Day One No Deal' (D1ND), for instance if the UK was to crash out without an agreement with the EU in place. This work looked at how a D1ND could impact on Jersey, particularly on the Island's critical supply of food, fuel and medicines.
Fortunately, a D1ND outcome did not materialise, and in January this year the focus shifted to any Future Relationship between the UK and EU, and how both parties will work, cooperate and trade with one another.
At the time of writing, these negotiations are ongoing. There is the possibility that no future relationship, or even a trading agreement, will be reached and both the UK and EU would then default to trading on simpler, less favourable WTO terms. This outcome is known as a No Further Negotiated Outcome (NFNO).
To mitigate such a scenario, the Government of Jersey completed a number of significant pieces of work in preparation. In November 2018, Jersey and the UK signed a joint Customs Arrangement, allowing the continued tariff-free movement of goods between both jurisdictions.
In October 2019, Jersey secured extension of the UK's membership of the WTO, providing a baseline of rules for Jersey's external trade industries. Both the Customs Arrangement and extension of the UK's WTO membership will come into effect from 1 January 2021.
Ministers and officials across government have been working closely with counterparts in UK government - and through our offices in London, Brussels and Caen - to ensure that during these ongoing negotiations, Jersey's interests are understood and protected.
A comprehensive look at the work that has been undertaken can be found in the latest Brexit Update Report, presented to the States Assembly by the Minister for External Relations on 30th June 2020.
Brexit report June 2020 on States Assembly website
Ready for change
The full detail of any future relationship between the UK and the EU, if one is agreed, is not yet known. The UK and the EU are yet to agree on a number of key areas, and negotiations look set to carry on throughout the summer. The UK has argued that any extension to the Transition Period just prolongs the time when UK business does not know what its future trading arrangements will be, or how to adapt to them.
In addition, the impact of the coronavirus pandemic has further complicated what is already a complex, broad and challenging period for all parties.
Jersey has strong and productive relationships – economically, culturally and politically - with both the UK and the EU, and the Island will inevitably be affected by whatever outcome the negotiations take.
Jersey has for many years pursued a "good neighbour" policy towards the EU which is not altered by the UK's departure, given that Jersey been outside the EU ("third countries") for most purposes.
Whilst Jersey remains committed to continuing close cooperation with both the UK and the EU – through engagement with Ministers, officials and our overseas offices – Jersey must be proactive, pragmatic and ready for change.
It has therefore been imperative that Government of Jersey have fed in Jersey's defensive interests into the negotiations and ensured there is an open and transparent dialogue between the Government of Jersey, businesses and the public.
The Jersey-UK Customs Arrangement, and extension of the UK's WTO membership, will help mitigate any potential disruption should no future relationship be agreed between the UK and EU. This will provide an element of stability and continuity, but the Island is not entirely immune to possible knock-on effects as a result of the negotiations.
The UK will be leaving the EU Customs Union and Single Market, regardless of the outcome of the current negotiations. Whilst there will be no changes for Jersey regarding trade with the UK, there will be changes and additional processes for trade to and from third countries (including the EU).
As such, businesses will need to be aware of, and be preparing for, what is needed by way of customs processes when the EU becomes a third country for the purposes of trade. Firms will need to factor in these new processes as part of their preparations for life outside the EU customs union.
Guidance will be published to inform, advise and help Islanders and businesses prepare for any new relationship, accompanied by an extensive communications campaign beginning over the summer. Two campaigns were run last year – 'Let's Talk Brexit' and 'Let's Talk Trade' - which comprised of consultations and workshops allowing businesses and the Government of Jersey to exchange information. We will continue this engagement throughout the transition period to ensure stakeholders can prepare as the final UK-EU relationship becomes clear.