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The EU is both a single market and a customs union. The EU Single Market seeks to guarantee the free movement of goods, capital, services and people (the “four freedoms”) among its member states. It does not, however, specify how the EU Single Market member states deal with imports from non-member states (third countries). This is where the EU Customs Union comes in. The EU Single Market member states jointly agree to apply the same tariffs to goods from outside the Single Market.
The EU Customs Union covers ‘all trade in goods’, involving:
the prohibition between member states of customs duties on imports and exports and of all charges having equivalent effect, and
the adoption of a common customs tariff in their relations with third countries.
The first of these underpins the EU Single Market for goods, but the Single Market goes further to cover the free movement of people, capital and services as well as goods. The second ensures that it doesn’t matter which member state imports goods from a third country, the tariff imposed on the imports are the same for all, so there can be no under-cutting by one member state over another. It also means that once goods are imported from a third country, they can subsequently move freely around the member states without any further tariffs or barriers.
The tariff charged on goods imported from third countries is set at the EU level as part of the EU Common Commercial Policy. Individual member states cannot set their own import tariffs and so an individual member state cannot have an independent free trade deal with third countries.
The EU Customs Union is also responsible for preventing the trade of dangerous goods, plants, and animals, as well as fighting organized crime, terrorism-related activities, and tax fraud.
All 27 EU member states are in the EU Customs Union.
In addition EU is in customs unions with Andorra, San Marino and Turkey (with the exceptions of certain goods), through separate bilateral agreements.
Yes, the UK could join the Customs Union, the Single Market, or both, without becoming a full member of the EU.
Norway is a member of the Single Market but not the Customs Union.
Turkey, Andorra, and San Marino are not part of the EU or the Single Market. However, the European Union has customs union agreements with these countries.
Joining the EU Customs Union, but not the EU Single Market and not becoming a full EU member state, would make it easier for UK companies to trade with the 27 EU member states, harmonise customs duties on goods from outside the EU, and help to protect citizens, animals and the environment. Although this means the UK would not be able to negotiate its own separate third country trade deals it would benefit from all the trade deals negotiated by the much larger EU trading block, and we could still trade with countries outside the Customs Union on World Trade Organisation (WTO) terms.
Joining the EU Customs Union would undo much of the economic damage done by Brexit to UK trade in goods and allow the UK to benefit from future trade deals negotiated with the full power of the massive EU trading block.
