Brexit and the Falkland Islands

A LIST of the potential implications on the Falkland Islands, of the UK exiting the EU, is to be drawn up between the Chief Executive and the Falklands private sector and presented to the Foreign and Commonwealth Office Minister Hugo Swire.

In an interview with Penguin News this week Members of Legislative Assembly Roger Edwards, Ian Hansen and Michael Poole (pictured) accepted that it was a time of uncertainty for the Islands, “but we will find a way through it,” said MLA Poole.

He said there were, “obviously key things in terms of access and tariffs that will be focussed on,” adding that the Chief Executive Keith Padgett had already begun work on looking at the potential risks and implications across the Islands. 

“He will be talking to industry groups about that and making sure they have got a complete list, and put that in the form of a letter to Minister Hugo Squire in the next few weeks,” so that once the UK begins exit negotiations  with the EU the Falklands voice, “will be heard.”

Impact on the Falklands economy might be the imposition of tariffs on imports to the EU, less access to development funding and scientific research, and a loss of political clout as an overseas territory of a member state via the Overseas Countries and Territories Association (OCTA). 

Many things are, however, unclear. MLA Edwards indicated that although the Islands are a member of OCTA until 2020, when he made enquiries about whether this would still stand after the UK left the EU, he received a vague response. 

When Penguin News spoke to local industry representatives the reaction varied from very uncertain through to optimistic.

Wool
Robert Hall from Falkland Wool Growers, agents for a proportion of Islands sheep farmers acknowledged that last week’s vote by the UK to leave the EU was causing considerable upheaval at both economic and political levels.  

He said markets generally had not anticipated Brexit and adjustments were, “ongoing”. Mr Hall said: “Both volatility and uncertainty have increased in many financial markets. From the perspective of Falklands exports however the relatively weaker pound makes Falklands products such as wool more attractive to foreign buyers.”

He said this week the global market for Falklands wool has generated some good export enquiries and sales.  

In the medium term, he believed it would take at least two years for Britain to leave the EU, adding: “Companies in Europe have to import wool from countries throughout the world and that will continue to be the case. There are no tariffs on raw wool into the EU and that won't change. As ever prices will be materially affected by currency exchange rates and the buoyancy of the wider economy. Falklands wool will continue to be in demand and find opportunities amongst our fine customer base in Britain, the EU and further afield.”
Meat

Manager of the Falkland Islands Meat Company John Ferguson’s confidence was dependent on a number of factors. He said because  FIMCo was a, “3rd Country supplier,”  he expected the company’s  EU licence to remain in place, “however, as with other Falkland Islands’ export industries to the EU, we are ‘tariff and quota free’ by nature of being an OCT (Overseas Countries and Territories of an EU member) so this is likely to have a real impact unless the continuation of this status can be negotiated.”

Mr Ferguson said FIMCo still had some export product left to sell from 2016 and much depended on market confidence in the coming weeks and months in relation to pricing levels achievable. 

He said: “We will work with the relevant authorities and organisations in due course to ascertain the effects on our export industry and potential impact on product into the UK once Britain does eventually leave the EU.”
Fish

Penguin News also asked the opinion of local fishing companies via the Falkland Islands Fishing Companies Association. In a statement they noted: “It is rather too early to speculate, and we do not yet know what changes might result. However, FIFCA, will endeavour to work closely with the Falkland Islands Government to address any such changes as they become apparent. We would hope that FIG would work with us to ensure that any negative impacts are mitigated against, and any positive impacts are capitalised on. The fishing industry is already an extremely volatile sector of the world economy, and our members’ businesses are generally structured to absorb major changes in their operating environment. We therefore look forward to continued growth in our fishing industry and the Falkland Islands economy for years to come.” 

Marketing Manager for Consolidated Fisheries Ltd Janet Robertson told Penguin News: “I am appalled and taken completely aback by this result from a personal point of view, but from CFL's perspective it won't really have an impact on us in terms of our core business as the European market is extremely marginal for us. A weak pound also has its advantages to us so at this moment in time I can't visualise any negative impact on our business.”

Tourism

Director, International Communications for the Falkland Islands Tourist Board, Tony Mason told Penguin News “...it’s business as usual.  “We accept that the British people have voted for change in the future and acknowledge that this is an industry that adapts more quickly than most.”

He explained that the Falkland Islands Tourist Board was an active member of the Association of National Tourist Offices and Representatives (ANTOR).  ANTOR had called on the industry to work together in order to make this new situation as trouble free as possible, said Mr Mason.

He said ANTOR and its members would, “lobby governments for negotiations that provide continued freedom of movement, ease of access, security and bi-lateral trading arrangements and give the consumer the confidence needed to continue to travel.”

He said he was confident  the Falklands would not see a reduction of tourists in the upcoming season. 

“We may see a slight decline in the following year from the UK and European markets as consumer confidence has been damaged and currencies weakened. To ensure our tourism markets are sustainable, the Tourist Board will be increasing marketing efforts in the North American and Australian markets, whose outbound tourism markets are not directly affected by the UK’s exit from the European Union.”

He added: “While there is uncertainty about the future at the moment, the United Kingdom is still strong, British and European citizens love to travel, and we will work hard to sustain our tourism markets from the EU. I note that while the pound has dropped significantly, it is still strong against the US Dollar.  The majority of cruise lines sell in US Dollars making cruise holidays one of the most economical ways to travel.”

He concluded: “Until the UK officially leaves the EU, not sooner than two years’ time, there will be no changes to holiday arrangements including those already booked for next year. 
“Travellers are as free to move between the UK and the EU as they were before the vote, European Health Insurance cards remain valid and regulations such as Air Passenger Rights remain in place and there will be no changes to passports, visa requirements, which queue to stand in/exit to take and unlimited goods can be brought home until the UK officially leaves the European Union.”

Scientific research

The EU has been an excellent source of environmental research funding for Britain and its overseas territories explained Dr Paul Brickle on behalf of the South Atlantic Environmental Research Institution in Stanley

Within SAERI, there are three projects currently financed by the EU: EU BEST III, EU 2.0, and a Marie Curie Post Doc on peat as a record of climate change in the southern hemisphere. Importantly, SAERI is the South Atlantic Hub of the EU BEST 2.0 and III. 

The BEST 2.0 programme is a funding facility that has been established to provide on-the-ground environmental projects over a five year period for EU OCTs while a longer term funding source is set up through the BEST Initiative. 

The first round of grants have already been allocated across the OCTs, including four funded projects in the South Atlantic. The second opportunity for funding is already underway. BEST III is a two year project laying the groundwork for establishing a long-term funding mechanism as part of the overall BEST Initiative, which would be accessible primarily to EU OCTs. This scheme was set up in response to the difficulties experienced by OCTs in accessing external funding for environmental work. Its aim is to start the distribution of funds between 2019 and 2020 and ultimately have up to €12 million available for environmental projects. However, if these projects are going to continue beyond any formal separation of the UK from the EU, it is uncertain whether the Falklands and the other UK OCTs will be able to apply for these subsidies and how they will be affected.

Dr Brickle said: “Therefore, Britain leaving the EU is likely to mean that SAERI’s ability to tap into these various extremely valuable funding sources will be taken away, or at the very least, be significantly restricted. Will other funding opportunities be made available from the UK? And what will this mean for the shape of research to come? Only time will tell.”

Between 2007 and 2013, the UK paid €78bn into the EU, and received €48bn back, of which €8.8bn was for research and development.