Theresa May ended months of speculation on Tuesday when she announced that Britain would no longer be a full member of the EU customs union after Brexit. She said the country could no longer be bound by the customs union's Common Commercial Policy or its Common External Tariff.
These two central elements of the customs union mean, among other things, that the EU negotiates as a single entity on trade, imposes no tariffs on goods and services from within the European Union and that each member state applies the same tariffs to goods from outside the EU.
May wants Britain to be able to negotiate its own, bilateral trade deals with countries around the world, with the option of agreeing different tariffs to those imposed by the EU.
At the same time, the prime minister wants to negotiate a new customs arrangement with the EU which would retain tariff-free trade with Europe and ensure that cross-border trade will be as “frictionless” as possible.
“Whether that means we must reach a completely new customs agreement, become an associate member of the customs union in some way, or remain a signatory to some elements of it, I hold no preconceived position. I have an open mind on how we do it. It is not the means that matter, but the ends,” she said.
Tariff-free trade
The EU has customs agreements with a number of countries, including Turkey, which allows tariff-free trade in industrial goods but not in services or agricultural products.
Under the agreement, Turkey cannot agree new trade deals with other countries without consulting the EU, must apply the same external tariff as the EU on goods covered by the agreement, and must submit to rulings from the European Court of Justice on issues relating to the customs union.
Under the customs union, all EU member states are responsible for policing the EU’s external customs border, a potentially crucial issue for Ireland as the only member state sharing a land border with the UK.
The EU has already taken steps towards making customs controls less intrusive, including the use of technology such as X-rays to speed up inspections of cargo and a simplified system for the collection of duty on imported goods.
The border between Sweden, which is in the EU, and Norway, which is in the single market but not in the customs union, is among the most technologically advanced and co-operatively managed in the world. Even here, however, goods must clear customs and vehicles are subject to spot checks.
