What Is The Customs Union?

According to recent reports, cross party talks are progressing as a means of resolving the Brexit issue, which suggests we may be moving towards a scenario where the UK remains in the Customs Union.

While it has been suggested that a high number of Tory MP’s won’t vote for this option, the backing of the leaders of both our main political parties would probably be enough to get this over the line. 

The UK is currently in the Customs Union automatically as a member of the EU.  So what is the Customs Union?

The customs union is an arrangement between EU countries which means that they do not have to pay taxes to move their goods and services between member countries, making it easier to buy and sell products.

By remaining part of the customs union, the UK would also agree to continue to charge non-EU countries the same tariffs to bring their goods into the UK or EU, which would mean we would not be able to do our own trade deals with the rest of the world.

We would effectively be part of a ‘club’ that strikes their own deals with global countries. Whatever agreement the EU enters regarding customs will be effective for the UK too.

Turkey, Andorra and San Marino are not full EU members but have agreements to act as part of the Customs Union, albeit with some nuances and caveats. This is the type of arrangement that the UK may seek to adopt.

Teresa May’s original plan, which was defeated three times in parliament, was built around Britain leaving the Customs Union. However, it is understood that she may be willing to compromise this point during the talks with the Labour party. 

One of the main sticking points for Mrs May’s defeated plan was that border checks, to monitor goods, may have been introduced between Ireland (EU) and Northern Ireland (UK).

This would have meant a potential return to a physical border between the countries, which would not be needed if the UK was a member of the Customs Union.   

Sources: Customs Insights