The Channel Islands align themselves with Britain and the EU through Protocol 3 of the UK’s 1972 Accession Treaty and article 355(5)(c) of the EU Treaties. The Islands are members of the Customs Union and participate in the single market for the purpose of free movement of goods, but essentially classify as non-EU countries in all other respects. For the areas covered by Protocol 3, EU legislation is directly applicable and the Islands are regarded as part of the UK. Protocol 3 does not cover services, and so the Channel Islands are regarded as non-EU countries for services legislation. However, the Channel Islands have a close relationship with the EU in many ways not officially covered by the Treaties.
Following the vote to exit the EU, there is confidence that the relationship between the Channel Islands and the UK will continue unchanged. The relationship with the EU will depend upon the results of Britain’s exit negotiations, and again there is confidence that the Channel Islands will piggy-back on negotiations to secure a relationship with the EU that is identical, if not better than the current one. However, if the UK cannot secure a deal that is suitable for the Channel Islands than there may be stark choices ahead, but this is a worst-case scenario. There has been optimism from the leaders of the Islands since the result, who stated in an open letter that they wish to “retain the status quo”.
Find a comprehensive overview of the Channel Islands' relationship with the EU here.