Any free trade agreement the Isle of Man enters into after Brexit will come at a cost.

That was the warning from Chief Minister Howard Quayle this week when Tynwald debated the impact of the United Kingdom’s planned exit from the European Union.

He told members the government was assessing how the Isle of Man could be included in future free trade agreements that the UK may negotiate with the EU and with other countries.

’We cannot expect to gain the right to free trade without having to meet certain obligations,’ he said.

’It is not clear what these obligations may be, but this will become clearer as the negotiations between the UK and the EU progress and the content and shape of any free trade agreement between them emerges.’

Members backed unanimously a motion from Mr Quayle calling on Tynwald to note the government’s continued work to prepare for Brexit.

’The implications of the United Kingdom’s withdrawal from the European Union have the potential to be significant and long-lasting for our Island,’ Mr Quayle said.

’For over 40 years, our relationship with the European Union has been set out in Protocol 3 to the UK’s Treaty of Accession. Through this, we are included in the EU Customs Union and in the Single Market for free trade in goods.

’But when the UK leaves the EU on March 30, 2019, Protocol 3 will fall away and our existing relationship will end.’

Mr Quayle said it was clear the UK would not be part of the Single Market and that it would leave the Customs Union, so Protocol 3 could not be replicated.

’Broadly speaking the risks will be centred on the potential introduction of tariffs or non-tariff barriers when trading in agricultural and manufactured goods. In other words, trading with the EU will not be as easy in the future.’

There could be commercial opportunities, he said.

’New markets may open up for us, particularly in our stronger sectors like financial services or e-business. But this increased market access is unlikely to be in the EU and may potentially be further afield.’

If there was no UK/EU Free Trade Agreement in place, World Trade Organisation schedules would apply to the UK’s trade with Europe as well as with other WTO members. The UK’s membership of the WTO included the Isle of Man, so those schedules would also apply to the island.

’These schedules will determine not only the UK’s - but also the island’s - external tariffs on Brexit day. This is because we are in customs union with the UK and therefore our external tariffs must be consistent with theirs.

’So, we must ensure that we have the right legal and administrative framework in place to give effect to these external tariffs.’