The UK and the EU have reached a new Brexit deal that will allow Gibraltar to open its borders with Spain, abolish passport controls with the EU and join the EU customs union.

Speaking in Brussels on Wednesday, Maroš Šefčovič, EU Trade Commissioner, described the deal as a “truly historic milestone” that will remove “all physical barriers, checks and controls on people and goods” crossing the border, while bringing legal certainty. The British overseas territory will become part of the EU’s passport-free Schengen area, which will facilitate the transit of the 15,000 people who cross its borders daily.

The Gibraltar government has been trying to reach such an agreement for a long time, expressing dissatisfaction that border crossings have become more difficult since Brexit, negatively affecting residents and workers in the area.

Spanish Foreign Minister Jose Manuel Albares commented that the pact would mean that “the last wall in continental Europe” would be removed and people would be able to move freely.

What the agreement consists of:

To protect the integrity of the Schengen area, EU border controls will operate alongside British controls at the Rock’s airport, in a configuration similar to the “juxtaposed controls” that operate at London St Pancras Eurostar station.

The territory has also made some concessions on taxation, particularly with regard to its low tobacco taxes. Albares said the “tax convergence process” will “ensure that everyone gets a fair deal.”

Although the agreement includes a specific clause stating that it does not affect British sovereignty of the territory, it is unlikely to be welcomed by Euroskeptics in the UK, for some of whom the territory is an emotive issue.

Asked whether EU border guards could prevent British citizens from entering the British Overseas Territory, the Spanish Foreign Minister replied “Of course the European agent – which in this case is the Spanish police – will guarantee the full integrity of the Schengen area.”

In a written statement issued Wednesday afternoon, UK Foreign Secretary David Lammy said the situation his party inherited from the previous government – which was negotiating a similar agreement – had put “Gibraltar’s economy and way of life at risk.” He said the agreement would offer “a practical solution after years of uncertainty”.

For his part, Fabian Picardo, Chief Minister of Gibraltar, was very pleased with the agreement in principle.

“I have worked hand in hand with the UK Government throughout this negotiation to achieve the agreement that Gibraltar wants and needs: one that protects future generations of British Gibraltarians and in no way affects our British sovereignty.” Both sides will now get down to work to turn the political agreement in principle into a legal text. Asked whether he believed the agreement would be ratified, Šefčovič said he was “absolutely convinced.”

As for ETIAS, Gibraltar will join the ETIAS system once the new post-Brexit agreement is ratified.