Regardless of which side you favoured in the run up to the UK’s vote to leave the European Union, you were likely to have been taken by surprise at the result. Even the most hardened Leave campaigners barely dared to think they would win but with the result in, it’s clear that the UK has chosen to enter unchartered waters. The question for Jersey, Guernsey and the Isle of Man is will the UK drag them with it?
The Crown Dependencies have built their well-respected financial sectors upon the foundation of their rather unusual relationships to both the UK and the EU. The Islands form a part of neither but do have strong relationships with both.
Their relationship with the EU was first formalised in Protocol 3 to the Treaty of Accession 1972, in which the Islands were confirmed as part of the European Customs Union and as operating within the Single Market for the purposes of trade in goods, but lying outside the EU in all other respects.
The Islands’ relationship with the UK is a little less clear. As British Crown Dependencies, they are not entirely independent of the UK but they do have considerable rights to self-government and independence of their judiciaries. Whilst there are no formal documents describing their exact constitutional status, by remaining outside of the EU through Protocol 3, the Islands actually managed to define a point of difference with the UK from a European perspective, and it is this that they are now seeking to highlight as they attempt to maintain the status quo.
To Jersey, Guernsey and the Isle of Man, the status quo represents access to the single market in goods, maintenance of their status within the Customs Union and the continuation of separate rights such as those gained by their acceptance into EU passporting for the marketing of funds.
The Islands’ view as to what constitutes the status quo was clearly stated by the Chief Ministers of the Crown Dependencies who wasted no time in writing to then Prime Minister David Cameron, shortly after the referendum result.
“The Crown Dependencies’ long held position on our future relationship with the EU is that we wish to retain the status quo. We believe our interests will be best served by a continuation, as far as is possible, of the substance of the current arrangements, and in particular, the provisions of Protocol 3 relating to trade in goods between the Islands and the EU.”
Initial signs from the UK suggest that the Islands’ wishes will be taken into account during Brexit negotiations but as the referendum result has already shown us, the issue of Brexit can be full of surprises.
Until the UK’s negotiations for leaving the EU are complete, the status quo will remain in place. If the Crown Dependencies get their way, then Brexit will have little or no effect, leaving them to do what they do best, which will be to continue as some of the most successful International Finance Centres in the world.