Growers and exporters across the Mediterranean country would be hit with customs duties of £189million every year under World Trade Organisation (WTO) rules. The industry relies heavily in the UK market to sell its goods and fears Britain will shun its fruit farmers for those in Morocco under a trade pact signed by the two nations.
Spain and Gibraltar want to reach a side deal with the UK to avoid having a hard EU border in southern Spain after the Brexit transition period expires on December 31.
But a Spanish diplomatic source claimed they were up against “a lack of political will” in London.
The source said any deal aimed at creating a “shared prosperity zone” in Gibraltar, a British territory over which Spain claims sovereignty, was unlikely before a full trade deal between the UK and the EU.
But as negotiations between Michel Barnier and David Frost continued in Brussels on Thursday with no breakthrough in sight, the prospect of deal between Spain, Gibraltar and the UK remained in doubt.
Last October the UK signed a continuity trade agreement with the Moroccans which ensured “tariff-free trade of industrial products together with liberalisation of trade in agricultural, agri-food and fisheries products” after Brexit.
This means growers in the North African nation will enjoy much freer access to the UK market than their Spanish counterparts will on January 1 if there is a no-deal Brexit.
At present, the UK is the third largest buyer of Spain’s fresh produce.
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A Spanish diplomatic source said on Wednesday the ball was in the UK’s court.
The insider said: “We’ve made our suggestions, explored technical solutions on how to get there.
“What is lacking is the political will to close the deal.
“The ball is in the United Kingdom’s court,” the source said on Wednesday.
Failure to reach a side deal on Gibraltar would carry a heavy social, economic and political cost, the source added.
Britain’s foreign office said it was committed to finding a solution to support Gibraltar.
A spokeswoman said: “The UK and Government of Gibraltar have held a number of constructive discussions with Spain on this issue.
“It is clearly in all parties’ interests to find a solution, to ensure ongoing well-being and prosperity in the region.”
Gibraltar and Spain share a border measuring 1.2 km in length.