The President of the Government, Pedro Sánchez, 'resurrected' this Thursday in the Cortes the integration of Ceuta and Melilla into the Customs Union, already proposed in 1986 when Spain entered the European Union (EU). He has also proposed promoting the two cities as an outermost region. Businessmen and experts recognize that it would reinforce their European identity, and are committed to completing both ambitions. However, both proposals require the endorsement of the Twenty-Seven and the Customs Union may impact the Economic Regime of Ceuta and Melilla residents.
The Confederation of Entrepreneurs of Ceuta (CEOE Ceuta) welcomes the Government's proposals. "It is a question of political will: Ceuta must move towards greater integration into Europe and that integration must be done by preserving and reinforcing fiscal and economic singularities," the Ceuta employers' association emphasizes.
For local businessmen, the case of the Canary Islands shows that "it is perfectly possible to make European customs integration compatible with a unique economic and fiscal regime." The employers' association highlights that joining the Customs Union should allow them to eliminate barriers, as well as "facilitate our commercial relationship with the Peninsula and the European market." At the same time, they add, their tax regime must serve to compensate for "the structural extra costs" as a border city.
The precedent of 1986
The vice dean of the College of Economists of Ceuta, Piku Sunderdas, acknowledges to La Información Económica that the integration of the autonomous city into the Customs Union "would reinforce our image within the EU and, above all, in the face of Rabat (Morocco)." Sunderas explains that "it would no longer be a border for the transit of people, but there would also be the transit of goods."
"It would strengthen our image within the European Union (EU) and, above all, in the face of Rabat (Morocco)," says Piku Sunderdas (vice dean of the College of Economists of Ceuta).
The representative of the Ceuta economists remembers that, until 5 years ago, the border operated with "atypical trade" of products (clothes, blankets, meals...). However, this economist agrees that the key lies in the conditions under which they would join the Customs Union. Sunderdas elaborates that "there was already a first attempt in 1986 for the Canary Islands, Ceuta and Melilla to be part and all three said no, but in 1990, the Canary Islands said yes because it maintained its tax advantages."
The endorsement of our European partners, essential
For the person responsible for European Affairs at LLYC, Pablo García - Berdoy, the procedure to include the two enclaves in the Customs Union would be simpler. 'Only' the unanimity of all European partners would be required, while the inclusion of Ceuta and Melilla as an outermost region (ORP) requires a reform of the European treaties. "A procedure that involves the ratification of the Twenty-seven countries," specifies this specialist.
The head of European Affairs at LLYC, Pablo García-Berdoy, warns that the inclusion of Ceuta and Melilla in the Customs Union will require the unanimity of all European partners.
Ceuta is looking for a tailored suit: Gibraltar reason
The EAE Business School professor, Miguel Ángel López, also agrees that it will not be easy to achieve both objectives, especially the outermost region: "The EU is always betting on freedom of movement and equality, which is why it is reluctant to accept exceptions," says this expert who points to the short geographical distance with the European continent.
From CEOE Ceuta they contrast the Gibraltar model, which they describe as "a tailored suit" that addresses a certain territorial and economic reality. "If there has been political will to build a specific solution for Gibraltar, it must also exist for Ceuta, which is part of Spain and the European Union," they argue in the Ceuta employers' association.
For López (EAE Business School) incorporation into the Customs Union and designation as an outermost region would be that "tailored suit" for the enclave. This expert defends that opting only for the first would be "choosing the free circulation of goods, losing all the (fiscal) advantages."
"The EU is always committed to freedom of movement and equality, which is why it is reluctant to accept exceptions," says Miguel Ángel López (EAE Business School)
The fiscal 'peculiarities' of Ceuta
Ceuta has a lot at stake in this stake, above all, the viability of its Economic and Fiscal Regime by which the Value Added Tax (VAT) is not applied. A place occupied by a local tax, with lower rates than VAT, called the Tax on Production, Services and Imports (IPSI), which ranges between a minimum rate of 0.5% and a maximum rate of 10%.
To which are added other 'peculiarities' such as 50% bonuses on taxes on the profits of companies, for those profits generated in the autonomous city and as long as they effectively operate there. In addition to a reduction of up to 50% in Social Security contributions and a 60% bonus in Personal Income Tax (IRPF).
The canarian route
The vice dean of the College of Economists of Ceuta looks, openly, in the Canarian mirror: "If we enter as the Canary Islands, it would benefit, if not, it would not benefit," says Sunderdas, who recalls that for this Spain must request it from the European Union.
From the College of Economists of Ceuta, its vice-dean Piku Sunderdas, opts for the 'Canarian route' to enter the Customs Union: "Without tax advantages, we are dead," he asserts
The Ceuta economist believes that "without tax advantages, we are dead" and mentions "the peripheral situation" of the enclave that adds certain extra costs, especially from the logistics field. This expert is committed to "a balance while maintaining tax and financing advantages" such as personal income tax bonuses.
García-Berdoy, who has also been Spain's permanent representative to the European Union (2016-2021), agrees that joining the Customs Union may suit the enclaves if they increase their Europeanness: "It would mean greater integration and would send a political message. In addition to being easier than with the outermost regions," he emphasizes.
"Do numbers" and take into account the people of Ceuta
The LLYC consultant clarifies, regarding the above, that "the flexibility of the Customs Union is limited" although Ceuta and Melilla would not produce relevant distortions in the European market. It would also depend, he explains, on whether the integration is complete or not. For example, whether VAT would be applied or not. In the event of a similar incorporation to the Canary Islands, he concludes, there would continue to be "additional control" for all merchandise.
"What should be done is a report based on the economic agents of Ceuta on why they would be interested in belonging to the Customs Union," says Pablo García-Berdoy (LLYC).
