The Falkland Islands’ government has sounded the alarm over leaving the EU single market, warning that the territory would take a “catastrophic” economic hit if it faces new tariffs and quotas as a result of Brexit.
The Independent understands that representatives of the islands’ fishing industry and government have been lobbying British politicians over the dangers of losing seamless access to the EU – where the vast majority of the territory’s exports go.
The Falkland Islands’ fishing industry exports almost exclusively to the EU, with 94 per cent of fishing exports by bulk heading to the single market in 2017. Fishing accounts for 41 per cent of the islands’ economy and two-thirds of the corporation tax received by its treasury.
Any negative impact from Brexit on the islands’ economy is likely to be a thorny issue for Brexiteers, for many of whom the Falklands is a touchstone issue.
Speaking after recent trips to Brussels and London the chair of the islands’ eight-person legislative assembly told The Independent that potential disruption caused by exit from the single market “would put at risk the current profitability of our fishing industry and would impact both the wider economy and government revenue”.
The Falkland Islands government also says “any material change that results in less beneficial import/export access could be potentially catastrophic for the Falkland Islands economy and people”, according to a report drawn up by the UK Overseas Territories Association.
The British government says it has “prioritised securing the freest and most frictionless trade possible with the EU”, although in fact it has pledged to leave the single market and customs union.
The islands mostly export loligo squid to Spain, a seafood that accounts for 89 per cent of their exports to the EU. The Falklands provided over a third of the loligo squid imported by Spain last year; once it arrives in the port of Vigo it enters the EU supply chain and is distributed around the world.
Representatives of the islands’ fishing industry believe that the “worst case scenario” of having to trade on World Trade Organisation rules as advocated by some Brexiteers would cause a £9m hit to revenues because of tariffs – a large sum for the 3,400-population archipelago that would amount to more than £2,600 per person.
The islands’ fishing association says cultivating other markets for squid would be “difficult”, especially in Asia, where “demand is highest but competition is strong, and both political and tariff barriers exist”. In the event of a “no deal” Brexit the islanders say they would be left with no choice but to seek support from the British state to prop up their fishing industry.
Theresa May has pledged to leave the single market, stating that remaining in it would be incompatible with properly leaving the EU. The British government hopes to secure tariff- and quota-free access to EU markets for fish and seafood through a free trade agreement – but Seafish, a non-departmental public body that supports the British fishing industry, says Brexit has caused “considerable levels of uncertainty” for the sector.
While not technically a member of the single market the Falkland Islands currently enjoys preferential access as a result of its status as a self-governing UK overseas territory and Britain’s membership. It pays no tariffs and is exempt from quotas.
Teslyn Barkman, one of the eight elected members of the Falkland Islands’ legislative assembly told The Independent: “We have worked hard over many years to establish and grow our fishing industry – it really is a Falkland Islands success story, and one that has allowed us to stand on our own two feet financially.
“As a result of our current tariff- and quota-free access to the EU single market, our fishing companies have been able to develop strong markets across Europe for our premium loligo squid, which is our primary export.
“If Brexit results in the loss of that tariff- and quota-free access, it would put at risk the current profitability of our fishing industry and would impact both the wider economy and government revenue.”
Liberal Democrat MEP Catherine Bearder said: “This is an outrage. Falkland Islanders didn’t even have a vote in the referendum. Michael Gove must show Falkland Islanders that he is speaking up for them at the negotiation table.”
A UK government spokesperson said: “We appreciate the importance to the Falklands Islands of access to the European market for fish and meat.
“The European Commission shares our view of seeking zero tariff, zero quota trade in this area. We have prioritised securing the freest and most frictionless trade possible with the EU, and will continue to listen to fishermen, trade organisations, producers and the public throughout this process.”