Sticking With Protocol 3 6 April 2004
The special Protocol 3 relationship with Europe remains the best option for the
Island despite concerns about the future development of the EU, according to
Chief Minister Richard Corkill MHK.
Mr Corkill confirmed that agreement had been reached to safeguard the
relationship in the event of the creation of a new Constitution for Europe. The
outcome follows successful negotiations - also involving Jersey and Guernsey,
and supported by the United Kingdom - to protect the status quo.
The Protocol 3 arrangement, in place for more than 30 years, keeps the Isle of
Man outside of the European Union but allows free trade in manufactured items
and agricultural produce between the Island and EU countries.
The Chief Minister was commenting following calls from the Manx EU Realist Group
for the Isle of Man Government to consider radical
measures, including abandoning Protocol 3 and declaring complete independence,
to insulate the Island against the influence of the EU.
Said Mr Corkill:
"It is the Manx Government’s policy to maintain
a high level of vigilance and scrutiny over the EU, and to keep the relationship
under regular review. But we have to face the hard facts of geography and economics – it is absolutely
unrealistic to think that the Island could prosper in total isolation from our
The Chief Minister continued:
"We are a small island surrounded by EU member states. Even as an independent
entity in a globalised economy we would still need a
trading link with Europe at least equivalent to Protocol 3.
"The Isle of Man Government does not have a
crystal ball and we cannot accurately predict, anymore than anyone else can,
which of the many scenarios for the future of the EU will actually materialise.
It is still not clear if and when the UK will adopt the euro, whether the
European Constitution will be agreed, and how the ten new member states will
change the nature of Europe.
"However, in the meantime there is nothing definite on the horizon that would
justify the huge risks of scrapping Protocol 3. To abandon a sound position on
the basis of fear and speculation as to what might happen in the longer term
would be premature and irresponsible, to say the least.
"Nor should the Island jeopardise its success and stability just to make a
dramatic gesture against the EU and set an example for others. That might be
good for the wider anti-EU movement but it would not be good for the Isle of
Mr Corkill added:
"Nevertheless, I do appreciate the genuine concerns of the Manx EU Realist
Group, and its members should be congratulated for stimulating public debate on
these vitally important issues. I agree entirely that the Island needs to remain
vigilant in regard to Europe, that there is no room whatsoever for complacency,
and that our economy should grow on a truly global
"It could be that, eventually, the group’s worst-case vision of the future of
the EU may be justified by what transpires. But the Island should not be
panicked into reacting short-term to what are still only longer-term
The Protocol 3 arrangement was established for the British Crown Dependencies
(the Isle of Man, Jersey and Guernsey) when the United Kingdom joined the then
EEC (European Economic Community) in 1972.
The relationship is a limited one, providing for the free movement of goods -
manufactured items and agriculture produce - between the Island and EU
countries. Otherwise the Island is not bound by EU legislation and it pays
nothing to, and receives nothing from, EU funds.
Manx Government representatives have been ensuring
that the draft Treaty to introduce a new European Constitution, should it be
agreed and ratified by EU member states, will not materially alter the Protocol
Nor will the relationship be changed by the forthcoming enlargement of the
European Union to take in ten new members: Cyprus, the Czech Republic, Estonia,
Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia.
References in Manx law relevant to Protocol 3 are being updated, via the
European Union (Accessions) Bill 2004, to reflect the increase in EU membership
from 15 to 25 countries. The Bill takes account of the fact that the EU will be
much larger, but does not affect the nature of the relationship itself.
Any migrants from the new EU member states arriving in the Isle of Man will be
subject to work permit requirements and will not be entitled to most social
security benefits, including two of the main benefits, Income Support and
Although the Isle of Man is not part of the European Union, the Manx Government is co-operating with two initiatives from
Brussels known collectively as the EU Tax Package. They are the Savings
Directive and the Code of Conduct on Business Taxation.
The Savings Directive is designed to combat tax evasion by EU citizens with bank
accounts outside their home countries. It requires member states, their
dependencies and certain other countries to exchange information on such
savings, or deduct a withholding tax for return to the home country.
The Isle of Man is opting for the withholding tax approach, in line with Jersey,
Guernsey, Austria, Belgium, Luxembourg and Switzerland. The tax, to be
introduced in January 2005 at the earliest, will be charged only on savings
interest earned by individuals resident in EU countries. It will not apply to
businesses or non-EU residents.
The Code of Conduct on Business Taxation seeks the
phasing out of preferential tax rates, or tax exemptions, for particular types
of business. The Isle of Man - where tax exempt sectors provide significant
employment and economic activity - is complying with the Code’s desire for
greater uniformity by moving to a standard zero rate of income tax for business,
and is on course to achieve this by 2006.
The Island is not constitutionally bound to accommodate these EU measures, but
does so as an internationally responsible jurisdiction co-operating with
neighbouring countries which are important to its economy. The Manx Government’s response to the EU Tax Package, endorsed
by Tynwald, is seen as reinforcing the Island’s international reputation while
protecting the finance sector and boosting the development of a diverse economy.
THE Isle of Man Government monitors EU
developments through a range of bodies and sources.
These include the Constitutional and External Relations Committee of the Council
of Ministers, and the External Relations Division of the Chief Secretary’s
Office, which scrutinises information from and about the EU on a daily basis.
Through the UK Department of Constitutional Affairs, the Manx Government has access to British Government
information on the EU. But it has an additional, independent and expert source
of monitoring and analysis through the Brussels-based legal firm White & Case.
The Isle of Man is also a member of the Islands Commission of the Conference of
Peripheral Maritime Regions (CPMR), an international organisation that focuses
on EU activities relevant to island and coastal areas around the edges of Europe.
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