While a Brexit deal stumbles on Ireland, the UK is closer to an agreement with Brussels over Gibraltar.

Gibraltar’s first minister Fabian Picardo was in Brussels on Sunday for consultations that also involved the UK’s Sovereign Base Areas in Cyprus, the Gibraltar Chronicle reports. Constitutionally, the UK is responsible for entering any international agreements on behalf of Gibraltar.

Thus far, the Gibraltar government has been aligned with the UK’s “no deal is better than a bad deal” position. However, both London and Brussels are seeking a separate protocol with Spain.

The protocol will “a set of practical measures spelt out in separate arrangements with Spain covering tax cooperation, police and customs cooperation, the environment, citizens rights, and tobacco.”

The initial protocol is envisaged as a time-limited arrangement that will be in force during the transition period, that is, December 2020.

However, should there be no agreement, there will be no transition period. Both Spain and Gibraltar are eager to avoid this cliff-edge scenario.

Spain has refrained from making sovereignty over Gibraltar part of Brexit negotiations.

To facilitate the process, Madrid is not making its demands for joint operation of the Gibraltar airport part of its list of demands. Part of the airport is built on land which Spain claims is its own sovereign territory.

However, Spain is demanding from the Rock to address the problem of tobacco smuggling from Gibraltar to Spain. The Rock is considered a hub for contraband tobacco making its way to the Spanish market. In addition, Spain wants stricter tax-residence criteria to prevent business operating in Spain to register in Gibraltar for tax avoidance purposes. Finally, Spain wants guarantees for the rights of 12,000 workers who commute daily to work on The Rock.