By letter dated 23 March 1999, the Clerk to the Foreign Affairs Committee sought a supplementary memorandum from the Foreign and Commonwealth Office. This memorandum addresses the specific points raised by the Committee.

1. Her Majesty's Government's understanding of any Spanish undertaking in respect of Gibraltar consequent upon Spain's admission

(a) into the European Union

  In anticipation of Spanish membership of the EC, paragraph 1(a) of the Brussels Communique of 27 November 1984 committed Her Majesty's Government and the Spanish Government to "the provision of equality and reciprocity of rights for Spaniards in Gibraltar and Gibraltarians in Spain . . . through the mutual concession of the rights which citizens of European Community countries enjoy, taking into account the transitional periods and derogations agreed between Spain and the European Community". The Communique also committed the two Governments to the establishment of the free movement of persons, vehicles and goods between Gibraltar and the neighbouring territory (paragraph 1(b)).

  An Exchange of Letters of 22 April 1985, between the UK and Spanish Permanent Representatives to the European Communities at Brussels, established the conditions under which members of families of Spanish workers in Gibraltar would have access to employment in Gibraltar from 5 February 1985. This was reflected in Article 57 of the Spanish Act of Accession to the EC, of 12 June 1985, without making specific mention of Gibraltar.

  With regard to the general EC principle of free movement of labour, Article 55 and 56 of the Act of Accession provided that reciprocal free movement of labour would only apply as from 1 January 1993. Again, there is no specific reference to Gibraltar.

  Regarding sovereignty, an exchange of Notes between the then Foreign Secretary (Sir Geoffrey Howe) and the Spanish Foreign Minister (Fernando Moran), on 13 June 1985, confirmed that Spain's accession to the EC "[did] not involve any alteration in the position of the Kingdom of Spain/United Kingdom of Great Britain and Northern Ireland concerning Gibraltar and [did] not affect the bilateral negotiating process established in conformity with the terms of the Joint Communique agreed . . . in Brussels on 27 November 1984."

(b) into the integrated military structure of NATO

  The main concern of Gibraltarian public opinion was that there should be no Spanish military presence on, or command over, the Rock. This objective was secured in the run up to Spanish entry into the integrated military structure. Spain's new status as a full NATO Ally has also offered us the opportunity to develop new arrangements for the use of Gibraltar as a NATO asset.

2. Details of the articles in the EU Treaties under which: (a) the Commission; and (b) the UK Government could take the Spanish Government to the European Court of Justice for obstruction of the free movement of persons and goods at the border between Spain and Gibraltar
  (a) Regarding action by the Commission, Article 169 of the Treaty Establishing the European Community (TEC) gives it the power to take any Member State to the European Court of Justice (ECJ) where it considers that such a State has failed to fulfil an obligation under the Treaty. After giving the State concerned the opportunity to submit its observations on the matter the Commission is required to deliver a reasoned opinion. If the relevant State does not comply with the reasoned opinion within the period specified in it, usually two months, the Commission may bring the matter before the ECJ.
  (b) Regarding action by one Member State against another, Article 170 TEC enables a Member State which considers that another Member State has failed to fulfil an obligation under the Treaty to bring the matter before the ECJ. Before doing so the plaintiff Member State must bring the matter before the Commission. Each of the States concerned has an opportunity to submit its case and observations on the other's case both orally and in writing after which the Commission is to issue a reasoned opinion. If no reasoned opinion has been issued within three months of the date the matter was brought before the Commission the absence of such an opinion does not prevent the matter being brought before the ECJ. In only a few instances since 1957 has this procedure run its full course with actions before the ECJ.

3. What extra powers or responsibilities will be given to Spain after the coming into force of the Treaty of Amsterdam so far as the border between Spain and Gibraltar is concerned, and, specifically, what is the Government's assessment of Article 7A in the Treaty establishing the European Community in enabling the Government to challenge Spanish border control delays at Gibraltar legally once the Protocol referring to this Article comes into effect?

  Spain will acquire no extra powers or responsibilities when the Treaty of Amsterdam comes into force so far as the border between Spain and Gibraltar is concerned. The Protocol on the application of certain aspects of Article 7a of the Treaty establishing the European Community to the United Kingdom and to Ireland will confirm the right of the UK and Gibraltar to maintain frontier controls on persons seeking entry from other Member States. The Protocol will also confirm the reciprocal right of other Member States, including Spain, to maintain frontier controls on persons seeking to enter their territories from the UK or from Gibraltar. In each case such controls must be exercised in a proportionate manner and for clearly defined purposes only. These purposes are specified in the Protocol: in the case of persons exercising rights conferred by Community law, it is to verify their right to enter, and in the case of other persons, it is to determine whether or not to grant them permission to enter.

  The Government do not consider that the entry into force of the Protocol will affect their ability to challenge Spanish border control delays at Gibraltar in circumstances where such delays violate Community law.

4. A statement on the rights under the Treaty of Amsterdam for the United Kingdom to take part in: (a) some or all of the provisions of the Schengen acquis; and (b) any new provision in the justice and home affairs field; and what rights other states have to prevent the United Kingdom from taking part in (9a) or (b), with particular reference to the Protocols relating to the United Kingdom and Ireland; and whether any distinction may be drawn between the United Kingdom and Gibraltar in this area.

  Under Article 4 of the Amsterdam Protocol integrating the Schengen acquis into the framework of the European Union, the UK may at any time request to take part in some or all of the provisions of the Schengen acquis. The Council must decide on such a request with the unanimity of the thirteen Schengen States and the UK. By Conference Declaration 45 annexed to the Amsterdam Final Act the High Contracting Parties invited the Council to seek the opinion of the Commission before it decides on a request under Article 4, and they also undertook to make their best efforts with a view to allowing the UK to use the provisions of Article 4.

  Under Article 5 of the same Protocol, the UK will be free to take part in measures which build upon the Schengen acquis, by notifying the President of the Council in writing within a reasonable period of the tabling of a proposal or initiative for such a measure. Other States will have no right to prevent the UK from taking part in these circumstances.

  As regards new provisions in the justice and home affairs field which do not build upon the Schengen acquis—

(a)  The UK will, as now, be a full participant in measures to be adopted under Title VI of the Treaty on European Union (provisions on police and judicial co-operation in criminal matters);

(b)  the UK's right to participate in measures to be adopted pursuant to new Title IV of the Treaty establishing the European Community (visas, asylum, immigration and other policies related to free movement of persons) will be governed by the Protocol on the position of the United Kingdom and Ireland. Under Article 3 of that Protocol, the UK will be entitled to take part in the adoption and application of any such proposed measure, provided that it notifies the President of the Council in writing that it wishes to do so within three months of the proposal being presented to the Council. If after a reasonable period of time such a measure cannot be adopted with the UK taking part, the Council may adopt the measure without the participation of the UK. Other States have no other rights to prevent the UK from taking part under this Article. Under Article 4 of the same Protocol, the UK may at any time after the adoption by the Council of a measure pursuant to Title IV notify its intention to the Council and the Commission that it wishes to accept it. In this case the Commission must give an opinion within three months of receipt of the notification, and within four months of the date of the notification the Commission must decide on it and on such specific arrangements as it may deem necessary. Other States have no rights to prevent the UK from accepting such a measure.

  None of these treaty provisions makes any distinction between the United Kingdom and Gibraltar.

5. What proposals have been made by HMG in respect of accession to the Schengen acquis, or to measures building upon that acquis; whether those proposals apply to Gibraltar as well as to the United Kingdom, and what reaction there has been from Spain to those proposals?

  The Home Secretary announced at the Justice and Home Affairs Council on 12 March that the UK would seek to participate in those areas of the Schengen acquis that relate to reinforced co-operation against cross-border crime. We intend to seek participation in measures relating to police co-operation, judicial co-operation, measures against illegal drugs and the Schengen Information System.

  The UK's approach to participation in the Schengen acquis is predicated on the Protocol on the maintenance of our frontier controls agreed at the Amsterdam Treaty. This argues against participation in those areas of the acquis that relate to external and internal frontier controls and visas. The measures in the Schengen acquis relating to asylum have been overtaken by the Dublin Convention.

  Spain's initial reaction at the JHA Council was positive. We believe our position will be seen by the majority of our European partners as proof of our determination to play a positive role in Europe. Certain press reports after the Council did however indicate that the issue of Gibraltar remains a sensitive matter for Spain.

  Our approach to participation by Gibraltar is based on the assumption that Gibraltar will wish to participate in the same areas of the Schengen acquis as the UK. We shall need to continue our contacts with the Government of Gibraltar about this.

6. A list of all inter-governmental Conventions and other Treaty instruments entered into by the present Government from which Gibraltar has been excluded.

  Before the start of the UK Presidency, Spain objected to various draft instruments in the Justice and Home Affairs field because of the terms relating to the inclusion of Gibraltar. We fully consulted the Government of Gibraltar throughout the ensuing negotiations during our Presidency. The Government of Gibraltar reluctantly decided that Gibraltar should be excluded from these instruments rather than participate as part of the UK legal jurisdiction. Two instruments were adopted at the Justice and Home Affairs Council on 28-29 May on this basis (i.e., with Gibraltar excluded): the Driving Disqualifications Convention and the European Judicial Network Joint Action. Gibraltar was excluded from a third measure at the JHA Council which has not yet been adopted (the Eurodac convention).

7. To what extent the arrest of all those present on fishing vessels which fish in Gibraltarian waters accords with the normal principles of maritime law, and what is the position in law of a member of a ship's crew who wishes not to fish in Gibraltarian waters though ordered by his skipper to do so.

  We are not aware of any general principles of maritime law governing such arrests. Practice in the enforcement of fishing laws in the territorial sea would normally be governed by local legislation and depend on local circumstances. The law applicable in British waters around Gibraltar is the Nature Protection Ordinance. Offences under this legislation are formulated in terms of commission by a "person" without specifying any job description.

  The question of skippers forcing crew members to fish in Gibraltar against their will would be a matter primarily for the law of the flag state. With respect to offences allegedly committed under the Nature Protection Ordinance, issues of coercion, if relevant, would be a matter for the defence counsel to address in proceedings before the Gibraltar courts.

8. A statement on the responsibility of HM Forces to prevent incursions by Spanish vessels into Gibraltarian territorial waters.

  HM Forces in Gibraltar are responsible for maintaining and asserting the security and integrity of British territorial waters around Gibraltar, and for providing military aid as appropriate to the civil authorities.

  Spanish vessels, in common with any other foreign-flagged vessels, are entitled to enjoy the right of innocent passage throughout the British territorial sea adjacent to Gibraltar. Under international law passage is innocent so long as it is not prejudicial to the peace, good order or security of the coastal State.

1. Whether Her Majesty's Government intends to provide funding for a new vessel for the Royal Gibraltar Police.

  We are aware of the Royal Gibraltar Police's recent request for funding for a new boat. We are discussing with the Government of Gibraltar the possibility of joint funding for this project.

10. A statement on the extent to which the Commissioner of the Royal Gibraltar Police is subject to operational control, either by Her Majesty's Government or the Governor or the Chief Minister, and a statement on the extent of his discretion so far as the enforcement of the law is concerned.

  Under the despatch attached to the 1969 Gibraltar Constitution, the Governor has "direct responsibility for all matters primarily concerned with . . . internal security, including the police". Day to day operational management of the Royal Gibraltar Police rests with the Commissioner himself, acting under the overall control of the Governor. The Commissioner exercises normal policing discretion when taking decisions on operational matters, on the same lines as Chief Constables in the United Kingdom.

11. The extent to which HM Treasury has taken account of the interests of Gibraltar in determining the national interest in its discussion of taxation policy in the European Union.

  Her Majesty's Government take their responsibility for representing Gibraltar's interests in the EU seriously, and consult the Government of Gibraltar regularly. We take Gibraltar's concerns into account at every stage of the negotiating process with our EU partners.

  On taxation policy, Her Majesty's Government encourages Gibraltar to match up to the same standards as the rest of the EU. Of course, the UK is concerned to maintain a level playing field, and to ensure that Gibraltar is not unfairly disadvantaged vis-a-vis its international competitors. UK officials maintain an ongoing dialogue with officials of the Gibraltar Government on matters relating to implementation of EU-tax related measures.

12. The Government's policy on ensuring that Gibraltar receives the full benefit from European Union financial services legislation so that it can develop as an international financial centre with particular reference to passporting for insurance, banking and investment services.

  Her Majesty's Government has consistently supported Gibraltar's efforts to build up a thriving financial services sector as an economic motor for the territory. The aim is to create a well-regulated financial sector with access to the UK and EU markets. To achieve this, Gibraltar needs to have the appropriate legislation, and the appropriate regulatory structures and procedures in place.

  We have sought to achieve this through close collaboration with the Government of Gibraltar on the legislative front, and through the establishment and support of the Gibraltar Financial Services Commission as a regulator for the banking, insurance, investment services and trust and company management sectors.

  In early 1997, the Financial Services Commission reported to the Governor that Gibraltar had the full range of insurance legislation to EU standards in place, together with the necessary regulatory structures and procedures. In June of that year, after discussions involving the Department of Trade and Industry, the Foreign and Commonwealth Office, and HM Treasury, HMG approved the passporting by Gibraltar-based insurance companies of insurance services into the UK and elsewhere in the European Union.

  Her Majesty's Government, acting on advice from the Financial Services Authority, has explained to the Government of Gibraltar and the Gibraltar Financial Services Commission what measures need to be in place before HMG will be in a position to approve the passporting by Gibraltar-based credit institutions of banking services into the UK and elsewhere in the European Union. We understand that the Government of Gibraltar and the Financial Services Commission expect to satisfy these requirements in the near future.

  The regulation of investment services in Gibraltar is less advanced than the regulation of banking services and insurance services. Her Majesty's Government hopes to provide the Government of Gibraltar and the Financial Services Commission in the near future with guidance on which measures need to be in place before Gibraltar seeks Her Majesty's Government's approval for the passporting of investment services into the UK and elsewhere in the European Union.

13. A comparison of how the European Union acquis is being applied to the French departements and territoires d'outre-mer compared to Gibraltar.

  The departments d'outre-mer (DOMs—Martinique, French Guyana, Guadeloupe, and Reunion) are an integral part of France. Except where specific exceptions exist (e.g., in individual Community Relations), Community law applies in them. The DOMs are automatically covered by French legislation and so do not separately transpose EC directives.

  Due to their economic weaknesses and distance from France, they are covered by Maastricht Declaration No. 26 "on the outermost regions of the Community". The Declaration acknowledges that these islands suffer from major structural problems, and that while the provisions of the EC Treaty and secondary legislation apply, specific measures can be adopted to assist their economic and social development. A variety of special arrangements exist for particular agricultural products produced by the DOMs.

  The territoires d'outre-mer (TOMs—New Caledonia, French Polynesia, Wallis and Futuna) are within the French Republic but are not part of the EU. They are Overseas Countries and Territories (OCTs) associated with the EU as provided for in Articles 131-136 and 227(3) of the Treaty, and Council Decision 91/483.

  The purpose of association is to promote the economic and social development of the OCTs. Member States are required to apply the same conditions to their trade with the OCTs as they do within the Community, and to abolish customs duties on imports from the OCTs.

  The OCTs are however permitted to impose (non-discriminatory) customs duties. The right of establishment of nationals and companies also applies between OCTs and Member States.

  Both the DOMs and TOMs vote in French national and European Parliamentary elections.

  Gibraltar, as the Committee is aware, is within the EU. There are however, four areas of Community policy from which Gibraltar is excluded: the Common Agriculture and Fisheries Policies, the Common Customs tariff, the free movement of goods (but not services) and the levying of VAT.

  Except in these areas, EC directives require transposition in Gibraltar.

March 1999