Customs Union – What’s it all about ?

A Customs Union is a trade agreement between two or more countries where the members agree to apply the same import tariffs on goods entering into the area covered by that union. No tariffs are applied to goods and services moving within that area.

The EU Customs Union applies to member states only and will not apply to the UK when no longer members of the EU. It is managed by the EU Commission which also sets the common external tariffs.

The EU Single Market is a broader agreement and covers the free movement of goods, services, capital and people within EU member states.

A Free Trade area differs from a Customs Union and allows members to trade freely with each other but members are still able to set their own tariffs on goods from the rest of the world.

The Customs Union between Turkey and the EU was implemented in 1995 and the tariffs charged on goods coming from countries outside the customs union are set by the EU Commission and Turkey must change its tariffs accordingly.

Further analysis about the EU-Turkey Customs Union can be found in documents published by the World Bank:

Evaluation of the EU-TURKEY Customs Union (2014)

The Turkey-EU Customs Union at 20: Time for a Facelift (2015)

and interesting articles on the EU Customs Union are available from The Institute for Government

Leaving the EU Customs Union: what is involved?

Five things to know about a customs union

Has a proposed Customs Union arrangement between the EU and UK already been discussed as part of the Withdrawal Agreement and is it possible that this become the basis of a future Customs Union between the UK and the EU ? Around 200 pages in the agreement define in great detail the obligations of the UK in respect of the “single customs territory”

Included in the Withdrawal Agreement, as part of the Protocol on Northern Ireland, Article 6 states:

Until the future relationship becomes applicable, a single customs territory between the Union and the United Kingdom shall be established (“the single customs territory”). Accordingly, Northern Ireland is in the same customs territory as Great Britain

and

Annexes 1 to 10 shall form an integral part of this Protocol.

These annexes define the obligations demanded by the EU of the UK in respect of the single customs territory which, more than likely, would morph into a future Customs Union with the EU.

I hope our illustrious Parliamentarians have read and considered this part of the Withdrawal Agreement and understand its possible implications when considering a future Customs Union with the EU.