Prices could rise as Jersey formally accepts UK-EU deal

Wednesday 24 February 2021

Ministers have formally decided to accept the UK-EU trade deal, meaning Jersey will have tariff-free trade with Europe and take control of its territorial waters - though it is likely the cost of extra 'red tape' for retailers will be passed onto consumers.

Having considered a report setting out the deal’s potential impact on Jersey, they decided not to invoke a clause that would have allowed the island to reject it.

That decision will be set out in a report to be shared with States Members today.

“The Council of Ministers considered a report setting out the detailed policy and legal analysis which has been undertaken of Jersey’s involvement in the UK-EU Trade and Cooperation Agreement," External Relations Minister Senator Ian Gorst said.

Pictured: External Relations Minister, Senator Ian Gorst, and the Chief Minister, Senator John Le Fondré.

“Ministers agreed to continue to support Jersey’s participation in the agreement, in line with the unanimous vote of the States on 27 December, and the recent recommendations of Scrutiny. Ministers will therefore not be seeking to invoke the 90-day termination clause which forms part of the Agreement."

After approving the deal last month, the States Assembly then agreed that two Scrutiny panels - one looking at trade and the other at fishing - would then go away to see if the 90-day termination clause should be enacted.

This was because, when they voted on the Sunday after Boxing Day, States Members had not seen the full text of the trade agreement. 

On Friday, both panels reported back that Jersey should stick with the deal. However, they did raise some concerns.

Pictured: States Members had not seen the full text of the trade agreement when they voted.

When it comes to trade, the Brexit Review Panel said that costs for businesses that traded with the EU were likely to rise because of that extra administration required, including paperwork, VAT requirements and providing the ‘Rule of Origin’ of products.

Under the latter rule, relief from tariffs is only granted for goods that are treated as originating from within Jersey.

The panel had heard that some smaller retail businesses had stopped deliveries into Europe because they were “daunted by the large amount of administration and the VAT rules they need to navigate."

One large business told the panel that they expected increases of 2-5% could be passed onto consumers as a result of the increased bureaucracy they were facing.

Pictured: The panel had heard that some businesses had stopped deliveries into Europe because they were "daunted" by the increased levels of red tape.

Senator Gorst told the panel that accepted that there would be extra 'red tape' for goods coming in and out of Jersey from the EU.

However, he thought there would be opportunities for Jersey businesses to fill the gap in the UK left by EU businesses who can’t overcome their own bureaucratic challenges.

He also thought that exporters of quality Jersey products could find new opportunities in the EU as well.

The panel also heard during its review that the External Relations Minister and Government representatives were arguing for direct representation by Jersey in relevant UK-EU trade committees to ensure that the island's interests were upheld - something the panel said it supported.

The Minister said that discussions about what form that involvement will take remained at an early stage, but that Jersey was "arguing for a structure that means that we will be informed when issues arise that would have an effect upon our participation in the TCA or any suggestions coming from the EU."

Pictured: Jersey's Government wants to ensure it is properly represented on relevant UK-EU trade committees.

While Jersey has decided not to invoke the 90-day clause, it is not known if the EU will do the same. If they did, Jersey would not feature in the deal. 

However, Senator Gorst told the panel that the agreement had been reached “after compromise, after three years or so of negotiation, and I cannot think of any good reason why the EU would wish to terminate this agreement only, so far, 30-odd days into the agreement.”

However, during a diplomatic storm last month over fishing rights, it was reported that the French Minister for the Sea said that the country was “getting ready for battle” and lobbying Brussels to get Jersey removed from the UK/EU trade deal.

That issue has abated since the EU accepted Jersey’s original plan to let Norman and Breton fishermen operate under their Bay of Granville licences in Jersey’s territorial waters until the end of April.

Pictured: Last month, a diplomatic row broke out over fishing rights.

However, Express understands that very few applications for new licences issued under the rules of the TCA have been received by Jersey since an initial batch during the dispute. The TCA requires that boats provide evidence of past fishing activity between Jersey’s three- and 12-mile fishing limits.

It is unknown whether this means another battle with French fishermen and their political supporters come the beginning of May, but the Environment Minister has made it clear that he will not be giving the French more time to get their new licence applications, with supporting evidence, in.