Brexit Information Report: February 2018 update

STATES OF JERSEY

BREXIT INFORMATION REPORT: FEBRUARY 2018 UPDATE

Presented to the States on 6th March 2018 by the Minister for External Relations

STATES GREFFE

2018  R.21

INTRODUCTION

BREXIT UPDATE

This is a Report to the States Assembly on the steps taken by the Government of Jersey since its last Report on Brexit, and the progress to Phase 2 of negotiations regarding the future relationship between the United Kingdom ("UK") and the European Union ("EU").

MINISTER FOR EXTERNAL RELATIONS 28th February 2018

TABLE OF CONTENTS  Page INTRODUCTION BY THE CHIEF MINISTER ..........................................................  5

FOREWORD BY THE MINISTER FOR EXTERNAL RELATIONS ........................  6 PURPOSES ....................................................................................................................  8 SECTION I

POLITICAL DEVELOPMENTS ..................................................................................  9 SECTION II

ENGAGEMENT WITH THE UNITED KINGDOM AND EUROPEAN UNION ......  11 SECTION III

ENGAGEMENT WITH THE EUROPEAN UNION ....................................................  12 SECTION IV

GLOBAL MARKETS ENGAGEMENT .......................................................................  14 SECTION V

THE EUROPEAN UNION (REPEAL AND AMENDMENT) (JERSEY) LAW 201-  16 SECTION VI

WORK UNDERTAKEN BY THE GOVERNMENT OF JERSEY SINCE

1ST AUGUST 2017 .......................................................................................................  17 SECTION VII

CONTINGENCY PLANNING......................................................................................  22 SECTION VIII

STAKEHOLDER ENGAGEMENT AND COMMUNICATIONS ..............................  23 SECTION IX

RESOURCING ..............................................................................................................  26

SECTION X

PREPARATIONS FOR THE ELECTION OF A NEW ASSEMBLY AND

COUNCIL OF MINISTERS ..........................................................................................  27

APPENDICES

APPENDIX A – SCHEDULE OF PROGRESS AGAINST BREXIT OBJECTIVES..  28

APPENDIX B – SCHEDULE OF ROUNDTABLE MEETINGS AND UK ENGAGEMENT ............................................................................................................  32

APPENDIX C – SCHEDULE OF EU ENGAGEMENT .............................................  33

APPENDIX D – SCHEDULE OF ENGAGEMENT WITH STATES MEMBERS & SCRUTINY....................................................................................................................  34

GLOSSARY OF ACRONYMS .....................................................................................  35

REPORT INTRODUCTION BY THE CHIEF MINISTER

Brexit represents one of the most fundamental challenges that Jersey has faced in a generation,  requiring  a  measured  analysis  and  development  of  our  international priorities, relationships and legislation.

From June 2018, the new States Assembly will be required to scrutinise and debate the considerable amount of secondary legislation that will be necessary to ensure that our Island can successfully pursue its objectives in the circumstances created by the new relationship between the United Kingdom and European Union.

I  am  confident  that,  through  our  continued  positive  engagement  with  the  UK government, our interests are well understood and will be taken into account during the forthcoming transitional and future relationship negotiations.

This Report provides an invaluable roadmap for the work that the States Assembly will need to undertake, both before and after the May 2018 elections, and reflects the significant  amount  of  cross-governmental  preparation  in  terms  of  workstream engagement, legislative analysis, and contingency planning.

I would like to thank the Ministry of External Relations and Government Departments for their continued work to prepare Jersey for Brexit, and for presenting this Report to the Assembly.

Senator I.J. Gorst Chief Minister

FOREWORD BY THE MINISTER FOR EXTERNAL RELATIONS

This is the fourth report on the Government of Jersey's Brexit preparations presented by the Minister for External Relations to the States Assembly, and will be the final Report to this Assembly, as presently constituted.

Since the publication and in-committee debate on R.87/2017, the Brexit negotiations have  progressed  through  their  first  phase,  reaching  a  provisional  agreement  in December 2017 on the Brexit divorce bill', the border between Northern Ireland and the Republic of Ireland, and citizens' rights.

The negotiations between EU and UK representatives will now turn to the matter of the transition/implementation period, before progressing to the second phase focusing on the nature of the future relationship between the two. These are difficult negotiations, and it is not possible to predict what the outcome might be.

I reiterate that we retain a positive, open and productive working relationship with the UK government, and the Ministers and officials within the Department for Exiting the European Union ("DExEU") and Cabinet Office. This has proved invaluable in our contingency planning so far. We are as prepared as we can be for any eventuality.

We have repeatedly made clear to the UK government that –

• our interests should be fully recognised and taken into account during the Phase 2 negotiations;
• we require sufficient time to be able to implement the eventual arrangements that are reached between the UK and the EU, in so far as they have an impact upon Jersey; and
• the implementation period (or transition period as it is also known) should apply to Jersey in so far as Protocol 3 applies to us.

Whilst our relationship with the United Kingdom remains of fundamental importance to us, I would also highlight the successful programme of direct interaction we have established with representatives of EU Member States and EU institutions co-ordinated by the Ministry of External Relations and our offices in Brussels ("CIBO"), in London ("JLO"), and in Caen ("BIAN").

In parallel, the Global Markets Team within the Ministry of External Relations is also working to promote and expand Jersey's commercial and political relationships with high-growth Global Markets outside of the EU. Developing trade relationships with these markets has never been more important for the Island's continued economic success, and it complements Jersey's EU/Brexit activity. The Global Markets Team has developed, and is implementing, a cross-government strategy that seeks to increase Jersey's international visibility, access to decision-makers and business flows in priority global markets.

The management of the Jersey's Brexit planning is a cross-governmental undertaking. Led by the Brexit Ministerial Group, who provide political oversight and direction, and facilitated by the Brexit Working Group of officials, this one government' approach has resulted in improved communications, risk management, and contingency planning.

We remain committed to engaging all stakeholders in our Brexit preparations, as evidenced by the success of the Let's Talk Brexit campaign, which will continue to provide  regular,  accessible  information  to  the  public  and  Island  businesses  as negotiations progress.

The coming 12 months will represent a challenging period in terms of the volume and complexity of legislation that must be considered by the Assembly. This Report has been produced with the aim of providing the new Assembly with a fundamental understanding of the political background, legislative provisions, and departmental preparations that form the basis of our Brexit work. It also provides an update on progress made within individual workstreams and should be read in conjunction with the Brexit objectives as set out in R.87/2017.

Being mindful that the new Assembly will need to be engaged on Brexit matters at the earliest  opportunity,  work  is  already  underway  by  officials  to  ensure  that  a comprehensive program of briefings is available to all new Members and the newly appointed Council of Ministers following the May 2018 elections; this Report should form a solid basis for that work.

I continue to believe that Jersey has a positive, successful and globally engaged future post-Brexit, that the work we are undertaking is preparing the government for that future, and I commend this Report to Members.

Senator Sir Philip M. Bailhache Minister for External Relations

PURPOSES

The purposes of this Report are –

• to update States Members on Brexit developments that are relevant to Jersey;
• to  update  States  Members  on  the  work  that  has  been  undertaken  by  the Government of Jersey in its engagement with the UK government since the last Report (18th July 2017) and in-committee debate (1st November 2017);
• to provide a core basis for, and to inform States Members of, the preparatory work  being  undertaken  by  the  Ministry  of  External  Relations  and  other Government Departments to brief the new States Assembly and Council of Ministers after the May 2018 elections; and
• to provide a contextual background for the debate of  P.16/2018, the Draft European Union (Repeal and Amendment) (Jersey) Law 201-.

SECTION 1

POLITICAL DEVELOPMENTS

"Sufficient progress" on first phase negotiations

1. On 15th December 2017 the European Council, on the recommendation of the European Commission, agreed that sufficient progress' had been made in the first phase  of  Brexit  negotiations  (withdrawal)  to  enable  talks  to  move  on  to transition/implementation period and the second phase (future relationship).
2. Agreement on sufficient progress had originally been expected at the European Council meeting in October 2017 yet, at that time, EU leaders were of the view that significant matters remained outstanding, particularly in relation to the land border in Ireland and the financial settlement. The agreement reached in December 2017 was predicated upon an improved offer from the UK in relation to the financial settlement and a commitment – should other agreed solutions to the Irish border issue not emerge – to maintaining alignment with EU rules to ensure both the smooth  operation  of  the  Irish  border  and  the  continuation  of  North/South cooperation.
3. This latter commitment, initially drafted as a commitment to maintain alignment within the island of Ireland in the absence of other agreed solutions, led to last- minute  difficulties  for  the  UK  government.  The  Democratic  Unionist  Party ("DUP"), on whom the Conservative Party relies for their majority in Parliament, signalled their unwillingness to support any deal which led to divergence between Northern Ireland and the rest of the UK.
4. The commitment was therefore amended to clarify that the UK government would ensure that "no new regulatory barriers develop between Northern Ireland and the rest of the  United Kingdom, unless,  consistent with the  1998 agreement, the Northern Ireland executive  and  assembly agree that distinct arrangements  are appropriate for Northern Ireland" and that, "[I]n all circumstances, the United Kingdom will continue to ensure the same unfettered access for Northern Ireland's businesses to the whole of the United Kingdom internal market". This avoided, in the words of the DUP leader a "red line in the Irish sea", though depending on the outcome of discussions on the future relationship, could have implications for the UK's ability to diverge from EU rules post-Brexit.
5. A joint report containing these commitments was agreed between the UK and the EU  Commission  on  8th  December,  giving  rise  to  the  Commission's recommendation to move to the second phase of negotiations. The joint report, which sets out agreement to date on the 3 key issues of citizens, financial settlement and the Irish border, as well as noting progress on various other separation issues, is not legally binding in and of itself, but is expected to be incorporated into the final Withdrawal Agreement. The European Council has been clear that second- phase negotiations can only progress "as long as all commitments undertaken during the first phase are respected in full and translated faithfully into legal terms as quickly as possible".

Transition (Implementation) periods

6. The  next  phase  of  negotiations  will  focus  on  arrangements  for  a transition/implementation period following the UK's departure from the EU in March 2019. This period, which is expected to last for approximately 2 years, is not intended to provide an extension on the time available for negotiations on either withdrawal arrangements or the future relationship. As the transition arrangements will form part of the Withdrawal Agreement, there will be no transition, unless this is concluded prior to March 2019, It is also intended that all substantial elements of the future relationship should be agreed by this point.
7. The  transition/implementation  period  is,  therefore,  designed  to  provide governments and businesses on all sides with sufficient time to put into place the necessary systems and arrangements to ensure a smooth transition to the future relationship. During this time, whilst no longer a member of the EU, it is expected that the UK will continue to be bound by EU rules, including those of the Customs Union and Single Market.
8. In his evidence to the UK Parliament's Exiting the European Union Committee on 24th January 2018, Secretary of State for Exiting the European Union, David Davis MP, indicated that he expected agreement on the transition period before the end of March 2018. He suggested that he was relaxed about the nature of the transition period, which he believed could last for between 21 and 27 months, as his focus was on the future relationship. He also noted that the substantive elements of the future relationship needed to be agreed before the start of the transition period, to enable both Government and business to use this time to plan for a known outcome.
9. Whilst Jersey's relationship with the EU is narrower than that of the UK, it is the Government of Jersey's intention that the Island should be included within the transition/implementation arrangements to the extent of our existing relationship with  the  EU  under  Protocol 3.  This  will  allow  Government,  businesses  and individuals on-Island to prepare for our own future relationship with the EU, from a position of certainty. We are working closely with the UK government on the mechanics of Jersey's inclusion within the transition arrangements that will form part of the Withdrawal Agreement.

Second phase talks

10. The second phase of negotiations is due to commence in the coming weeks, though initial talks are already underway at official level. The second phase will not include the detail of future trade relations, which will be the subject of a further EU mandate, but will feature preliminary discussions on a framework for the future relationship between the UK and EU (not only on trade and economic matters, but also issues such as co-operation on defence, security, foreign policy and law enforcement).
11. Both the UK and EU agree that during the transition, whilst no longer a member of the EU, the UK will continue to abide by the rules of internal market and be under the jurisdiction of the European Court of Justice ("ECJ"). Areas for negotiation will likely centre around the extent to which, during this period, the UK is able to independently pursue trade agreements, whether and on what basis it is able to contribute to EU decision-making and whether it will need to implement any EU regulations or directives that enter into force. The European Council's negotiating directives on the transition period were formally issued on 29th January 2018.

SECTION II

ENGAGEMENT WITH THE UNITED KINGDOM The United Kingdom

12. As noted below in Section VI, regular contact is maintained at official level with the UK government, conducting the detailed and technical work necessary to prepare for Brexit. This work is supported by a programme of engagement with UK Ministers  and  Parliamentarians  to  maintain  understanding  of,  and  political commitment to defending, Jersey's key interests.
13. The primary formal interaction at Ministerial level with the UK continues to be via the quarterly meetings between the Chief Ministers of the Crown Dependencies and Robin Walker MP, Parliamentary Under-Secretary of State at the Department for Exiting the European Union ("DExEU"). The most recent of these meetings took place on 13th November 2017, with the next scheduled for 5th March 2018. These formal  meetings  are  supplemented  by  additional  conversations  as  necessary, including in the margins of summits of the British-Irish Council (most recently hosted in Jersey on 9th–10th November 2017).
14. The British Irish Council Summit also provided an opportunity for discussions with representatives of other member jurisdictions, including the Taoiseach (the Prime Minister of the Republic of Ireland) and the First Minister of Scotland, as well as a number of UK Ministers, including the then First Secretary of State  and the Northern Ireland Secretary
15. The Government of Jersey has also sought to provide an understanding of the Island's Brexit interests amongst UK Parliamentarians, who play a key role in scrutinising the work of the UK government. Meetings in Westminster and at the political Party Conferences have included the Chairs of the Exiting the European Union Select Committee, the Treasury Select Committee and the International Trade Select Committee, as well as a range of other Parliamentarians from all parties. The Channel Islands All-Party Parliamentary Group is also a significant channel  for in-depth  engagement  with  interested  Parliamentarians,  convening formally 3 times a year with briefings and informal meetings in the interim.
16. With the assistance of Jersey's representative to the British Irish Parliamentary Assembly ("BIPA"), the Government of Jersey has also had the opportunity to engage with Parliamentarians from across Britain and Ireland in relation to Brexit. Jersey hosted a visit by the BIPA Steering Committee in September, during which a detailed presentation was given by the Ministry for External Relations; and in January, the Jersey London Office provided oral evidence to the Economic Affairs Committee as part of their inquiry into the impact of Brexit on the agri-food industry.
17. In addition, the Minister for External Relations met International Trade Minister, Rt. Hon. Greg Hands MP, in December, to discuss the ongoing matter of an entrustment to enable Jersey to negotiate Bilateral Investment Treaties to support our non-EU economic links. Further discussions with the Minister are expected shortly.

SECTION III

ENGAGEMENT WITH THE EUROPEAN UNION

18. Whilst the Government of Jersey is clear that the Brexit negotiations themselves are firmly a matter for the UK government, it is at the same time vital that Jersey maintains and builds upon our positive relationships with other EU Member States.
19. We recognise that once the UK withdraws from the EU and loses its seat at the table, we will no longer be able to draw on the UK government's support in protecting our interests and influencing the direction of EU policy. Meanwhile, we still have the same range of bilateral interests at stake. Decisions taken at an EU-level will continue to significantly impact upon our interests.
20. It is therefore important that our constitutional position and the matters that are key to us are well-understood by EU Member States. While our formal relationship with the EU is through Protocol 3 to the UK's Treaty of Accession, we have good relationships in place with representatives from a wide range of important EU Member States.
21. Our intention is to continue actively pursuing our good neighbour policy in our relations with the EU and to emphasize the economic, social and cultural benefits of the Island's relationship with Europe. This includes highlighting Jersey is a conduit for investment into the EU to the value of EUR188 billion, which equates to 4% of the EU's total stock of liabilities, and that the Island supports over 88,000 jobs on the continent.
22. The Government's strategy for EU engagement was revised and updated during the course of 2017 to take account of the potential ramifications of Brexit. We have an established programme of direct interaction with the representatives of EU Member States and EU institutions co-ordinated by the Ministry of External Relations and our offices in Brussels ("CIBO"), London ("JLO"), and Caen ("BIAN").
23. As well as Jersey Ministers travelling to engage with EU Member States, the Government has also regularly welcomed Ambassadorial representatives to Jersey and maintained a programme of EU diplomatic relationship building meetings in London, facilitated by JLO.
24. Recent notable engagement has included –

1. France –  Meetings  with  the  French  Ambassador  and  the  Permanent Representative in Brussels, and with the French Deputy Ambassador in London;
2. Germany –  A  meeting  with  the  German  Permanent  Representative  in Brussels;
3. Ireland – Attendance of the Taoiseach at BIC and a meeting with the Ambassador of Ireland in London; and
4. Italy – Meetings between the Chief Minister and the Italian Minister for Finance and Deputy Minister for Taxation in Rome.

25. Meetings were also held with the Permanent Representatives of Austria, Bulgaria, Portugal, Romania, Malta and Cyprus in Brussels, and with the Ambassadors of Austria,  Bulgaria,  Portugal,  Belgium,  Denmark,  Estonia  and  Luxembourg  in London.
26. The Minister for External Relations also hosted a dinner for EU representatives in London on 5th February 2018, attended by 9 EU Ambassadors, 5 Deputy Heads of Mission and 2 further senior officials (See Appendix B).

SECTION IV

GLOBAL MARKETS ENGAGEMENT

27. Developing trade relationships with high-growth markets outside of the EU has never  been  more  important  for  Jersey's  continued  economic  success.  These countries are increasingly important as the engines of growth in the global economy: the EU itself estimates that approximately 90% of global economic growth in the next 10 to 15 years will be generated outside of Europe. As the UK prepares for Brexit and seeks new trade alliances outside of the Single Market, Jersey must also strengthen its value proposition in Global Markets.
28. The Ministry of External Relations established a dedicated Global Markets Team in 2017. It is primarily responsible for developing and delivering the Government of  Jersey's  engagement  with  Global  Markets  (prioritised  non-EU  countries), designing  an  engagement  strategy  approved  by  the  Council  of  Ministers  in September 2017. The  team  produced the  strategy  through  a  cross-government process and with input from non-government bodies including the Jersey Financial Services Commission ("JFSC"), Jersey Finance Ltd ("JFL"), and Jersey Overseas Aid ("JOA").
29. The  team  is  implementing  a  tailored  approach  to  Jersey's  engagement  with prioritised Global Markets – based on the identification of shared interests and opportunities for co-operation. It is pursuing a strategy of long-term investment to secure high-quality commercial and political relationships with high-growth Global Markets that are the economic powerhouses of the future. By increasing Jersey's visibility  in  target  markets  and  improving  access  to  decision-makers,  the Government of Jersey hopes to secure greater business flows – leading to a positive measurable contribution to jobs and growth objectives.
30. The Government of Jersey has limited resources, so there is a need to focus on where we  can  achieve  maximum  impact  in  a  selected  number  of  priority  markets. Accordingly, the team follows an approach based on strict prioritisation. Having conducted  comparative  market analysis,  the  Ministry of External Relations  is focussing  on  broadening  and  deepening  Jersey's  valuable  relationships  with selected high-growth economies in sub-Saharan Africa, the Middle East, China and India – as these markets offer the greatest business opportunities for Jersey. There is also a secondary focus on the Americas, with a particular emphasis on the market for sophisticated financial services products in the USA.
31. The strategy places great importance on expanding Jersey's network of international agreements  with  priority  jurisdictions.  These  agreements  strengthen  the  ties between  partner  jurisdictions,  encourage  greater  business  flows,  and  promote Jersey's good reputation as a trusted and responsible international actor. The Global Markets Team is therefore putting in place the legislative and treaty framework that underpins trade flows.
32. The team achieved increased levels of high-profile Ministerial access across 2017. Highlights  included:  outbound  Ministerial  visits  to  8 countries  (South  Africa, Kenya, Rwanda, Saudi Arabia, Bahrain, India and the USA); 2 meetings with Heads of State; and multiple meetings with Finance Ministers and Foreign Ministers from priority countries. Jersey also hosted 2 inbound Ministerial-level visits (Rwanda

and  Nigeria)  as  well  as  hosting  the  Philippines  Ambassador  and  a  Chinese delegation.

33. In addition to increased levels in Ministerial access, we saw improved visibility and dialogue with international institutions and participation at multilateral fora. This has provided a cost-effective means of expanding diplomatic connections with a broad range of partners gathered in a single location, such as at well-attended international fora such as the International Monetary Fund ("IMF"), World Bank, OECD, and Commonwealth meetings. It is also an opportunity to promote Jersey's expertise within priority sectors (e.g. on tax transparency and anti-corruption) to a wider  audience.  Ministers  have  also  conducted  an  increased  programme  of engagement with High Commissions and Embassies in the UK and overseas.
34. A priority for the Global Markets Team is putting in place the legislative and treaty framework  that  underpins  trade-flows.  This  includes  negotiation  of  Double Taxation  Agreements  ("DTAs"),  based  on the  OECD  Model  Convention  and updated with the latest international standards in line with the anti-Base Erosion and Profit Shifting ("BEPS") project. Work is also underway to develop a Jersey model Bilateral Investment Treaty ("BIT"), tailored specifically to reflect the nature of Jersey's sophisticated, service-driven economy. The Jersey model BIT is a modern, balanced legal instrument and includes best practice in investment treaty design. Taken together, DTAs and BITs can provide tax certainty and investor protection, thereby supporting investment-hungry economies by facilitating inward Foreign Direct Investment (FDI) into target markets.
35. In addition, and where relevant, Jersey will actively seek to negotiate and conclude Asset-Sharing  Agreements  and  bilateral  Memorandums  of  Understanding ("MOUs") to further knowledge-sharing and international co-operation across a range of sectors, such as tourism, conservation, agriculture, heritage, digital, culture and education.

SECTION V

THE EUROPEAN UNION (REPEAL AND AMENDMENT) (JERSEY) LAW 201-

36. On 23rd January 2018 the Draft European Union (Repeal and Amendment) (Jersey) Law 201- [P.16/2018] ("EURAL") was lodged au Greffe.
37. The purpose of the EURAL is to make necessary changes to Jersey's domestic laws governing its relationship with the EU and provide the States Assembly with the powers  it  requires  to  provide  for  a  smooth  transition  to  Jersey's  new  legal relationship with the EU. The States Assembly endorsed the Council of Ministers' intention to repeal the European Union (Jersey) Law 1973 (the "1973 Law") when it approved Proposition P.7/2017 on 15th February 2017 by 40 votes to 3. As well as repealing the 1973 Law, it also repeals the European Economic Area (Jersey) Law 1995. Both of these Laws would become ineffective once the UK and Jersey's existing treaty relationship with the EU comes to an end.
38. It is crucial that the States Assembly and the Government of Jersey are equipped to make timely corrections to Jersey law to reflect Jersey's changing relationship with the  EU.  The  existing  European  Union  Legislation  (Implementation)  (Jersey) Law 2014 (the "2014 Law") provides powers to implement both directly applicable EU law (in relation to customs matters and agricultural products) and other EU laws.
39. The EURAL will amend the 2014 Law so that in future the Assembly will continue to have the power to implement EU law where that is necessary or in Jersey's interests. The EURAL will amend and, in some respects, expand the Assembly's existing powers in the 2014 Law to enable it to –

1. swiftly implement change to domestic legislation where that is necessary or expedient as a result of Brexit; and
2. bring directly applicable EU law, subject to any modifications that may be required as a result of Brexit, into domestic law.

40. It is important to note that EURAL does not itself provide new, general powers for Ministers to make Orders amending Jersey law for the purposes of implementing Brexit. However, it will allow the States Assembly to make Regulations that empower Ministers to make Orders where that is appropriate. In this respect, EURAL maintains the legislative role and oversight of the Assembly.
41. There has been active engagement on EURAL with members of the Brexit Review Panel in informal session during drafting and on the day of lodging, in preparation for the formal review. EURAL has been subject to modifications in light of the Scrutiny Panel's constructive interventions.
42. The EURAL is scheduled to be debated in early March 2018, and – should it be adopted by the States Assembly – the drafting of the secondary legislation required to achieve Brexit will commence in earnest, for consideration by the new States Assembly.

SECTION VI

WORK  UNDERTAKEN  BY  THE  GOVERNMENT  OF  JERSEY  SINCE 1ST AUGUST 2017

43. The engagement between the Government of Jersey and the UK government on Brexit is split into a series of 6 formal workstreams. The departmental officials with responsibility  for  each  workstream  are  in  frequent  contact  with  their  UK counterparts, as well as meeting on a regular basis in a series of roundtable meetings.

Customs Union and Trade Roundtable meetings

44. Meetings  of  the  Customs  and  Trade  roundtable  took  place  on  3rd July  and 27th September 2017. A number of further meetings have taken place with the relevant section of the Department for International Trade ("DIT") and other UK departments to take forward work on specific issues.

WTO extension

45. It is a longstanding policy objective of the Government of Jersey to secure extension of the United Kingdom's membership of the World Trade Organisation ("WTO"). Over the last year, this objective has been progressed in close conjunction with the UK government, particularly DIT.
46. Government  of  Jersey  officials –  working  closely  with  DIT –  are  currently conducting a cross-departmental review of the Island's ability to comply with WTO obligations and commitments. This review is progressing well and its outcome will inform the future progress of, and mechanism for, WTO extension. DIT officials are  conducting  a  similar  due  diligence  exercise  in  advance  of  the  planned rectification of the UK's WTO Schedules.
47. DIT  officials  with  responsibility  for  WTO  matters  visited  Jersey  on 24th August 2017 for detailed discussions. A further meeting took place in London on 24th November 2017 and again on 24th January 2018.
48. At the same time, work to progress the related issue of extension of the Paris Convention on Industrial Property continues. A resolution of this issue is expected within the first quarter of 2018.

Relationship with the UK

49. Jersey's  priority  in  relation  to  customs  and  trade  has  consistently  been  the maintenance of our relationship with the UK. Whilst the ability to export goods into the UK free of tariffs has been repeatedly guaranteed under the Royal Charters, these historical documents make no provision for a common external tariff, or product  standards.  Therefore,  we  are  working  closely  with  H.M. Treasury  to consider the future customs arrangements between Jersey and the UK.

Free Trade Agreements

50. In its Trade White Paper (published 9th October 2017), the UK government set out its intention to roll over' current Free Trade Agreements ("FTAs") between the EU and third countries into new UK FTAs ("continuity agreements"). The existing FTAs apply to Jersey to the extent necessary to ensure the implementation of the arrangements  set  out  in  the  UK's  Treaty  of  Accession.  Therefore,  technical discussions are taking place between DIT and the Crown Dependencies ("CDs") to ensure  our  continued  participation  in  the  relevant  sections  of  the  continuity agreements.
51. As mentioned above, whilst the UK remains a member of the EU, it is unable to conclude Trade Agreements on its own behalf. Its discussions with third countries with which the EU does not currently have an FTA are therefore, necessarily, high- level at this stage. Nevertheless, the Government of Jersey has made clear our wish that any new agreements should be capable of being extended in whole or in part, as appropriate, to the Island. We have also made it clear that we seek to conclude Bilateral Investment Treaties with non-EU countries.
52. The Government of Jersey's core objectives in this area remain –

1. Continued free movement of goods between Jersey and the UK;
2. Continued tariff and friction-free movement of goods between Jersey and the EU, or at least on terms no less favourable than those of the UK;
3. To maintain and build trade with non-EU countries through participation in FTAs, and to secure extension of WTO territorial application to Jersey; and
4. To secure  an  entrustment  from  the  UK  government  to  negotiate  and conclude Bilateral Investment Treaties ("BITs") with non-EU countries in accordance with our Global Markets Strategy.

Immigration, Migration, Common Travel Area and Security Roundtable Meetings

53. Detailed discussions between representatives from the Crown Dependencies and the Home Office have continued since the last report to the States Assembly. The most recent immigration roundtable was held on 21st November 2017, with another scheduled for 27th February 2018. In between these formal engagements, there has been regular discussion at operational level as part of the ongoing monthly calls on the operation of the Common Travel Area ("CTA").

UK/EU Negotiations

54. The focus of negotiations between the UK and EU during the second part of 2017 has been on matters including the position of EU Citizens currently living in the UK and British nationals living in the EU.

55. During 2017, the following documents were published by the UK as the negotiations took place: UK White Paper Safeguarding the Position of EU Citizens Living in the UK and UK Nationals Living in the EU' (August 2017) and UK Technical Note Citizens' Rights – Administrative Procedures in the UK' (7th November 2017).
56. The negotiations culminated in the publication of the UK/EU Joint Report from the Negotiators of the European Union and the United Kingdom Government on Progress during Phase 1 of Negotiations under Article 50 TEU on the United Kingdom' Orderly Withdrawal from the European Union' (8th December 2017). On the basis of the Joint Report, on 15th December 2017, the European Council determined that sufficient progress had been made in the first phase of negotiations, allowing the negotiations to proceed to their second phase.
57. The future relationship between the UK and EU in respect of immigration, migration and security between the UK and EU will form part of the Phase 2 negotiations.
58. As noted above, the content of the Technical Note and Joint Report is expected to be incorporated into the Withdrawal Agreement together with provisions relating to the transition period.
59. The UK government has set out the impact of these documents on EU Citizens in the UK[1] and British Nationals in the EU[2]. In accordance with the core objectives set out below, we will continue to work closely with the UK government as the negotiations progress, with particular focus on ensuring the continued successful operation of the CTA by maintaining our integrated approach to immigration law with the UK, whilst maintaining our own controls on access to housing and labour markets.
60. The Government of Jersey's core objectives in this area remain –

1. Freedom of movement of people between the Channel Islands and the UK without formal border controls in (a recognisable version of) the Common Travel Area;
2. To maintain and strengthen existing working relationships between Jersey law enforcement agencies and UK (and EU) law enforcement agencies;
3. To secure a no less favourable deal on movement of persons in the EU for British nationals resident in Jersey as for British nationals generally;
4. To provide certainty on the position of citizens as early as possible; both for EU citizens resident in the Island and for British citizens – including those from Jersey – resident in the EU; and
5. To ensure that Jersey will still control access to its housing and labour markets, while protecting the position of non-British EU citizens who currently live and work in Jersey.

Agriculture and fisheries Roundtable Meetings

61. The latest full roundtable on agriculture and fisheries matters took place on 8th February 2018, with a further meeting arranged for 1st March 2018. The full roundtable has now taken on an oversight role of the work of sub-groups covering Fisheries Management and Marine Issues and Trade, respectively. A meeting of the Fisheries Management and Marine Issues sub-group most recently took place on 1st November 2017, with a conference call featuring both sub-groups taking place on 19th January 2018.
62. UK officials from the Fisheries Management and Marine Issues sub-group conducted a fact-finding visit to Jersey on 5th – 6th September 2017, with officials from the Trade sub-group visiting on 12th – 13th October 2017.
63. The Government of Jersey's core objectives in this area remain –

1. The continued success of our agriculture and fisheries industries;
2. Continued free movement of agricultural and fisheries goods  between Jersey and the UK; and
3. Continued tariff and friction-free movement of goods between Jersey and the EU, or at least on terms no less favourable than those of the UK

Financial services Roundtable Meetings

64. The latest Financial Services roundtable took place on 1st November 2017, with a further meeting due to be scheduled shortly. As the policy of the UK in relation to financial services crystallises in the run-up to negotiations on the framework of the future relationship with the EU, we expect work in this area to increase significantly in the coming months.
65. The Government of Jersey's objectives in this area remain –

1. The continued success of Jersey's financial services industry;
2. To maintain our mutually beneficial relationship with the financial and professional services sectors in Jersey and the UK;
3. To maintain and build upon our existing market access into the EU; and
4. To maintain existing business flows with, and develop new business with, markets outside the EU.

Transport Roundtable Meetings

66. A further transport roundtable took place on 6th November 2017. The objectives of the UK and Crown Dependencies remain broadly aligned in this area and, whilst detailed work continues between officials, this roundtable will meet on an ad hoc basis going forward.
67. Work is ongoing at an official level within the Department for Infrastructure to analyse any measures that may need to be implemented in order for the Island to meet the provisions of the Vienna Convention on Road Traffic.
68. The Government of Jersey's objectives in this area remain –

(i)  To maintain the existing transport links between Jersey and the UK, and with the EU, across all modes.

Communications Roundtable Meetings

69. Discussions took place between UK officials and the CDs at the time of the publication of the UK White Paper on proposals for data protection post-Brexit (24th August 2017). An update call was held with the Department for Culture, Media and Sport ("DCMS") on wider communications, data and cyber-security matters on 11th January 2018. Whilst detailed discussions between officials will continue, formal meetings of the roundtable for this workstream will take place as necessary.
70. The Government of Jersey's objectives in this area remain –

1. Maintaining appropriate alignment to permit the free flow of date between Jersey and the UK;
2. Maintaining our adequacy' status to permit the free flow of data between Jersey and the EU;
3. Ensuring the Island maintains robust cyber-security protections, in line with international standards; and
4. Seizing opportunities to promote and develop Jersey's digital sector.

SECTION VII CONTINGENCY PLANNING

71. Over the last 18 months, the Ministry of External Relations and other Government Departments have been preparing for the substantive changes that will come about through Brexit. The Government started this process before the referendum, and have continued that work through the intervening period.
72. Four formal reports, including this one, have been presented to the States Assembly, and 7 workshop sessions have been held for States Members. These sessions sought the views of States Members on the questions facing Jersey and what the Island's Brexit objectives should be. The outputs from these sessions have been helpful in guiding the rationale that has gone into Brexit planning in Jersey.
73. Jersey's broad strategic approach to Brexit planning has been to establish clarity on objectives as early as possible, to make these public, and to test the validity of these objectives against Jersey's political, public and business opinion. This has proven to be a sound strategy. High-level objectives were published following the UK's referendum in July 2016 in the form of P.7/2017, and were reviewed in July 2017 in R.87/2017.
74. On 19th January 2018, States Members were provided with an overview of the likely options for the UK/EU's future relationship in the form of scenarios based on existing EU-third country agreements, and were asked to consider the potential ramifications of each of these options for Jersey. Members were also asked to consider the extension of the UK's WTO membership to the Island and the necessary logistical and legislative changes that would have to be made.

SECTION VIII

STAKEHOLDER ENGAGEMENT AND COMMUNICATIONS Public Engagement

Let's Talk Brexit

75. The Let's Talk Brexit stakeholder engagement campaign has secured a sustained level of interaction from the Public through social media, and has been a useful vehicle to successfully socialise messages on Brexit developments. This has been notable from the response to the Brexit Residents Survey, which showed that 87% of Islanders surveyed felt that they had a sufficient understanding of the issues associated with Brexit, but just under half said that they would still like to receive further information.
76. The first phase of the Let's Talk Brexit campaign (focusing on socialising the Government's Brexit objectives and engagement with the UK) was completed at the end of 2017. The campaign fulfilled its stated objectives by –

1. successfully engaging the media to provide regular and informed coverage of the Island's preparations for Brexit;
2. the impact of any transition/implementation period on Jersey;
3. the direct implications of aspects of future relationship arrangements on individual Islanders through a series of persona-based scenarios;
4. the progress of the EURAL and subsequent secondary legislative changes.

Surveys

77. A detailed campaign plan has been produced for the second phase of Let's Talk Brexit (running from March 2018 to March 2019) to ensure that the Public are informed of –

1. the progress of negotiations and the engagement between the Government of Jersey and UK government departments;
2. the impact of any transition/implementation period on Jersey;
3. the direct implications of aspects of future relationship arrangements on individual Islanders through a series of persona-based scenarios;
4. the progress of the EURAL and subsequent secondary legislative changes.

Surveys

78. A Research Report, based on the findings of the Brexit Residents' survey, was published on 4th September 2017.

79. The responses to the survey have helped to provide clarity on the most pressing issues for Islanders, as well as the areas where respondents think Jersey has the potential to benefit over the coming months and years –

1. overall, two-thirds of respondents were concerned to some extent with regard to the impact of Brexit on Jersey. Those residents born in the EU or EEA were most likely to be concerned (83%), but a majority (61%) of those born in Jersey were also concerned;
2. the primary concerns regarding Brexit related in some way to potentially higher costs to Jersey's residents following Brexit. Secondary concerns related to the impact on Jersey's economy, some of its specific industries and its workforce;
3. the greatest opportunity presented by Brexit was perceived to be Jersey having more control over immigration and the size of its population, followed by increased incentives and opportunities to develop new relationships and expand trade with markets outside of the EU (including the UK);
4. a majority of residents considered it important for EU nationals to be able to move to Jersey to live and work, subject to Jersey's own system of housing and employment licensing. Two-thirds felt that this was important to Jersey's economy, while half felt that this was of social and cultural importance to the Island.

80. The Brexit Business Survey closed on 28th July 2017. The survey was designed to ascertain the prospective impact of Brexit on Island industries; the preparations that businesses have undertaken in advance of Brexit; and the overall effect on workforce recruitment and retention, business growth and the relocation of operations.
81. A Research Report, based on the findings of the Business Survey, was published on 19th December 2017. The key findings of the Report were –

1. when shown a list of potential impacts of Brexit on Jersey, the primary concerns related in some way to potentially higher costs to businesses following Brexit, as well as the impacts on travel;
2. the main perceived opportunities presented by Brexit were growth in visitors to Jersey as a result of the weakness of sterling, and improved freedom to trade elsewhere or to set up direct trade deals
3. two-thirds of respondents thought that the overall impact of Brexit on their business would be neither positive nor negative;
4. only 6% said that the end result of Brexit would be likely to cause their business to consider moving any of its operations out of Jersey, but for those that did, France was the main country under consideration.

States Member Engagement

82. Following the initial series of States Member Briefings, between February and July 2017,  a  planning  session  was  held  with  a  working  group  of  backbench Members. It was agreed that, where possible, future briefing sessions would follow a discursive roundtable format.
83. Two subsequent sessions were scheduled for States Members; the first, on the Legislative  Work  Programme,  hosted  by  the  Law  Officers'  Department  on 1st December 2017 and the second focusing on contingencies (see Section VII), held on 19th January 2018.
84. Two further briefing sessions for States Members have been planned on the subject of  Trade  (2nd March 2018)  and  EU  and  Rest  of  World  Engagement (27th March 2018).

Scrutiny Engagement

85. The Brexit Review Panel was formed on 19th June 2017. The Panel consists of Deputy  J.A.N. Le Fondré  of   St. Lawrence  (Chairman),   Deputy  S.M. Brée  of St. Clement  (Vice-Chairman),   Deputy  D.M. Johnson  of   St. Mary ,   Deputy R.J. Renouf of St. Ouen and Deputy J.M. Maçon of St. Saviour .
86. The  first  formal  meeting  of  the  Brexit  Review  Panel  took  place  on 18th December 2017,  with  the  Minister  for  External  Relations.  A  number  of informal' briefing sessions have also occurred with the Panel, focusing on a variety of key Brexit matters. These include –

1. 7th November 2017 – Legislation
2. 17th November 2017 – Immigration, Migration and Citizen Rights (People)
3. 22nd  November  2017 –  Financial  Services,  Trade,  Agriculture  and Fisheries (Business)
4. 15th December 2017 – EURAL session 1
5. 23rd January 2018 – EURAL session 2.

87. A schedule of engagement with States Members and Scrutiny is at Appendix C.

SECTION IX RESOURCING

88. As set out in R.72/2016, presented to the States Assembly on 27th June 2016, the Government of Jersey is committed to resourcing the Ministry of External Relations and other Government departments in order to effectively manage Jersey's interests during the Brexit negotiations.
89. A  Brexit  Unit  was  established  within  the  Ministry  of  External  Relations  in June 2016, charged with the central co-ordination of the Government's Brexit- related activities. In September 2016, the Council of Ministers agreed to ring-fence £3.7 million of cross-departmental funding to meet Brexit resource requirements, including  backfilling  staff  who  are  working  on  Brexit,  research  funding  and additional travel requirements over 3 years (2016 – 2019).
90. During  2017,  £699,000  was  spent  across  Government  departments  (External Relations, Law Officers' Department, Financial Services Unit, and Community and Constitutional Affairs) to prepare for Brexit.
91. As Brexit has progressed and further details are known of the potential ramifications for the Island, further funding is expected to be required, and a business case is being drawn up by departments that seeks to address resource requirements to the end of the current Medium Term Financial Plan.
92. As Brexit negotiations progress to Phase 2, it is anticipated that key agreements, including  on  new  immigration  provisions  and  the  future  trading  relationship between  the  EU  and  UK,  will  develop  rapidly.  These  will  have  potentially significant effects on Jersey. The Government repeats its commitment to keep these matters under constant review, and to ensure that appropriate funding and resources are allocated in order to meet Jersey's Brexit objectives.

SECTION X

PREPARATIONS  FOR  THE  ELECTION  OF  A  NEW  ASSEMBLY  AND COUNCIL OF MINISTERS

93. The management of Brexit preparations is a cross-government initiative. Whilst the co-ordination function is led by the Ministry of External Relations, matters are dealt with by officials across departments. Political direction is provided by the Brexit Ministerial Group ("BMG"), chaired by the Chief Minister, which meets on a monthly basis. Officials also meet on a monthly basis at the Brexit Working Group ("BWG"), where all government departments and non-executive departments are represented.
94. The preparations for the May 2018 election period have been raised with the members of the BWG, and an action plan is being formulated to ensure that the new States Assembly and Council of Ministers are briefed at the earliest possible opportunity.
95. Post-election actions will include, but not be limited to –

1. a series of briefings to provide new States Members with an overview of Brexit preparations, including workstream developments and the proposed legislative programme, as part of their induction process;
2. the production of briefing packs and in-depth officer-led sessions for the new Chief Minister and Minister for External Relations on all aspects of Brexit,  including  legislative  changes,  workstream  developments,  UK engagement, and contingency planning;
3. workstream-centric briefings for individual Ministers with relevant Brexit responsibility, by lead departmental officials;
4. a  meeting  of  the  BMG  comprising  the  new  Chief  Minister  and  lead Ministers with areas of Brexit responsibility, in June 2018.

APPENDICES

APPENDIX A

SCHEDULE OF PROGRESS AGAINST BREXIT OBJECTIVES

APPENDIX B

SCHEDULE OF ROUNDTABLE MEETINGS AND FORMAL UK ENGAGEMENT

APPENDIX C

SCHEDULE OF EU ENGAGEMENT

APPENDIX D SCHEDULE OF ENGAGEMENT WITH STATES MEMBERS & SCRUTINY

STATES MEMBERS

SCRUTINY

GLOSSARY OF ACRONYMS

BEPS  Base Erosion and Profit Shifting

BEIS  Department for Business, Energy and Industrial Strategy

BIAN  Bureau des Isles Anglo-Normandes (Office of the Channel Islands, in Normandy) BIPA  British-Irish Parliamentary Association

BIT  Bilateral Investment Treaty

BMG  Brexit Ministerial Group

BWG  Brexit Working Group

CD  Crown Dependency

CIBO  Channel Islands Brussels Office

CTA  Common Travel Area

DTA  Double Taxation Agreement

CU  Customs Union

DCMS  Department for Culture, Media and Sport

DEFRA  Department for the Environment

DExEU  Department for Exiting the European Union

DIT  Department for International Trade

DfT  Department for Transport

DUP  Democratic Unionist Party

EEA  European Economic Area

EU  European Union

EURAL  European Union (Repeal and Amendment) (Jersey) Law 201-

FCO  Foreign and Commonwealth Office

FDI  Foreign Direct Investment

FMA  Fisheries Management Agreement

FTA  Free Trade Agreement

HMT  Her Majesty's Treasury

IMF  International Monetary Fund

JFSC  Jersey Financial Services Commission

JFL  Jersey Finance Limited

JOA  Jersey Overseas Aid

MEP  Member of the European Parliament

OECD  Organisation for Economic Co-operation and Development

TEU  Treaty on European Union

WEF  World Economic Forum

WTO  World Trade Organisation