The special chapter on Gibraltar to be included in the Brexit deal is nearly ready, but there are still some wrinkles that Madrid and London need to iron out. The price of tobacco products is one of them.

Madrid is negotiating with London the establishment of limits on the price differences between tobacco products sold in Spain and those sold in Gibraltar, where they are much cheaper.

As reported by the Spanish newspaper EL PAÍS, Gibraltar is the biggest entry point for illegal tobacco products into Spain. Last year Spanish authorities seized more than 600,000 cartons of cigarettes, a 158% rise from 2016, according to official data.

Gibraltar, which is located in the south of the Iberian Peninsula, was ceded to Great Britain in 1713 under the Treaty of Utrecht, wants a single global price differential limit on all tobacco products. Spain, however, wants these limits to be applied to individual product categories, to make sure that they affect the most popular ones and not just the ones with the lowest sales.

While Gibraltar has tried to secure easier traffic flows across the border, Reuters reported that Spain is refusing because it would be tantamount to recognising privileges for Gibraltar envisioned only for Schengen countries, which have abolished mutual border checks. The UK is not part of the passport-free travel arrangement, which includes 26 EU countries.