The Rock of Gibraltar is now fully integrated into the Schengen Area and will continue to follow EU rules

LondonPractically, ten years after the Brexit referendumGibraltar returns to the single market, the fence is definitively taken down, and while it remains under British sovereignty, the Rock cedes border control of ports and airports to the Spanish police. The future of Gibraltar now has a defined legal roadmap according to the full text of the agreement between Brussels, London, and Madrid, which the Spanish and British foreign ministries made public this Thursday morning. The legal formulation –a text of more than 1,000 pages– puts it in black and white the political agreement to which the three capitals involved In the negotiations, in addition to Gibraltar itself, they reached an agreement in June of last year.

The Rock, therefore, is heading towards "a new stage of coexistence and opportunities," according to the assessment of the Spanish Foreign Minister, José Manuel Albares, and puts an end to the frictions of recent decades. Likewise, it ends the legal limbo in which the enclave found itself after the effective withdrawal of the United Kingdom from the European UnionIt's been just over six years now.

The essence of the pact is little more than a piece of legal rhetoric: while sovereignty will remain in the hands of London, and ultimately, the citizens of Gibraltar, in practice it will function as an extension of the European Union regarding the movement of goods and people. Fabian Picardo, the Chief Minister, has asserted that the treaty "unequivocally protects our sovereign position, safeguards our economy, and provides the certainty that our citizens and businesses need."

From a sovereignty standpoint, however, the agreement has been carefully crafted to prevent either party from having to relinquish its historical aspirations. Specifically, Article 2 states that nothing signed will serve as a basis for any claim or denial of sovereignty over the territory. The United Kingdom, for its part, maintains absolute control over its military operations and the Royal Air Force.

In exchange for this deliberately ambiguous political architecture, Gibraltar, quite willingly because that was what its government wanted, agrees to align itself with the rules of the European Union's single market and will therefore fall under the jurisdiction of the Court of Justice of the EU. This will put an end to the haven for so-called "stagnant products": tobacco and alcohol will become more expensive as the minimum European tax rates are applied from April 10th.

Until now, they were much cheaper than on the other side of the fence, since Gibraltar did not apply EU VAT or excise duties. To avoid unfair competition and smuggling into Spain, the Rock is now obliged to apply the aforementioned minimum rates mandated by Brussels. In other words, the smuggling of tobacco and alcohol will end from April 10th. Consumers in the territory will notice this in the price.

The fence is gone: how will people get in?

The most visible change for residents throughout the Campo de Gibraltar region will be the disappearance of the land border and the infamous fence erected by the Franco regime in 1969. The 15,000 workers and residents who cross daily between La Línea and the Rock will no longer have to have their passports stamped. A kind of invisible border is thus established, and the physical fence, a symbol of tension for generations, will be removed to allow for the free movement of people and goods. Furthermore, the new situation will allow for direct flights from Gibraltar Airport to EU capitals, thus opening up connectivity for the 300,000 inhabitants of the Campo de Gibraltar. However, security and controls are not disappearing; they are being relocated. Gibraltar is effectively becoming part of the Schengen Area, which will require the relocation of controls at its external points of entry: the airport and the port. This is the most sensitive point of the treaty: who holds the key to the Rock? The agreement establishes a "dual" control system for arrivals by air and sea. British and third-country travelers will have to show their passports twice: first to a Gibraltarian official and then to a Spanish official. It is at this point that Spain's influence grows exponentially. According to the legal text, Spanish police and border officers will have the final say on who enters the territory and, more importantly, will be able to make arrests and take coercive measures within Gibraltar's border facilities. This model is inspired by the system used by French police at St. Pancras station in London for Eurostar passengers. To prevent smuggling and unfair competition, Gibraltar will enter into a tailor-made customs union with the EU. This will allow the free movement of goods with Spain, but with one condition: customs controls for goods entering Gibraltar will be carried out at designated points in Spanish territory, specifically in Algeciras, La Línea, and Sagunto. Furthermore, Gibraltar will introduce, for the first time, a 15% import tax, which will rise to 17% in 2028, ending the colony's historical absence of VAT.

The rights of cross-border workers

One of the most significant new features detailed in the document is the protection of the rights of cross-border workers. The treaty guarantees that social security contributions, benefits, and pensions can be managed without interruption, providing a secure labor framework that sustains the integrated labor market between Gibraltar and the surrounding region. Furthermore, the agreement establishes an unprecedented financial mechanism: a cohesion fund designed to promote economic convergence. The parties will finance joint initiatives in areas such as education and training, ensuring that Gibraltar's economic growth directly benefits the social well-being of the entire region. This treaty not only changes the political geography of the region but also ensures that, as long as the British flag still flies over the Rock, Gibraltar's economic and social heart will beat in sync with Spain and Europe. Madrid is satisfied, knowing it has achieved the maximum possible without crossing the red line of sovereignty, vital for both Gibraltar and London. Anything else would have been suicidal for both the Rock of Gibraltar and the Camp de Gibraltar, which would have continued to have an island and a tax haven surrounding it.