Trade defence legislation: Turkey agrees to consult and coordinate on provisions on trade defence legislation to ensure the free movement of goods. Identical customs legislation. However, all movement of goods between Turkey and the EU still require customs declarations in order to distinguish between goods that are in scope and those that are not. Turkey must consult the Customs Union Joint Committee when drawing up its own legislation with relevance to the functioning of the EU-Turkey customs union.
The agreement is controversial in Turkey, but was agreed to as the Turks at that time believed the EU was going to accept it as a member state. By the same token, the Turkish arrangement should not be a model for Britain — we are leaving, not joining! Further, whenever the EU enters into a new trade agreement, Turkey must grant market access e. Turkey has FTAs with 19 countries. To note:. Turkey runs an independent trade remedies system on goods destined for Turkey. For products destined for the EU and covered by the EU-Turkey customs union , this system relies on additional administrative checks either at first entry into Turkey to distinguish between goods destined for Turkey and the EU, or during the customs checks between Turkey and the EU.
I believe there are at least two cases where the third party has simply refused to do a deal with Turkey — Algeria and South Africa — even after they have concluded an EU trade agreement. This is a big potential problem for the UK. We would be in a worse position than Turkey, both because our EU customs union would doubtless cover all goods and because the UK would probably have more difficult asks than Turkey. In short, when it comes to new trade agreements, tariff and other market access decisions made by the EU would have to be implemented by the UK.
We would have no guarantee that the same privilege would be afforded to us. Should it seek a customs union arrangement with the EU, the UK would, of course be in a different position to Turkey, both politically and economically. Nevertheless, some implications from the EU-Turkey customs union can be identified. These include the following. Trade defences like anti-dumping would be run by the EU with the UK having no say. Punitive tariffs have been placed on goods from China, the EU, Canada and more, particularly in steel and, probably soon, cars. Currently in the UK, because all trade policy is an EU competence, all decisions relating to trade defences against unfair trade practices are taken in Brussels.
There are more than a hundred such measures in place across the EU, notably in sectors like steel and ceramics. It is worth noting that these punitive tariffs are placed on specific products from specific countries, rather than sectors — e. The full list of current EU trade remedies is available here. To be WTO-compliant, trade remedies have to follow an investigation into dumping, subsidy, or some other unfair trading practice. This may become a UK competence in just a few weeks. The TRA is based in Reading and is expanding quickly to fill a need, actual or potential.
It consulted last year on the roll over of existing EU trade remedies, and found — from the evidence provided by businesses and others — that 66 of these measures should no longer apply after we leave the EU. However, if the UK set up a customs union with the EU, these trade remedies would be highly likely administered by Brussels.
It is not clear what right they would have to raise punitive tariffs beyond the shores of the EU. It may even be that the EU would drag its feet over punitive measures on Chinese dumping of steel if the particular product were made only in the UK.
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Either way, it is very hard to see the EU giving UK industries or consumers as fair a crack of the whip as those in the EU. Moreover, here again a democratic deficit kicks in. Trade remedies would be determined in Brussels, without any UK say. This could cost jobs, and those employees currently lobbying their UK MPs or MEPs I know — the steel and ceramics lobbies in Westminster are strong, and rightly so would have nowhere to go, if we were in an EU customs union. The decision would be made in Brussels, and the UK would have no say.
It is hard to see why any MPs representing steel and ceramic producing constituencies in particular, would favour such a customs union.
It would be unsustainable for both economic and political reasons in the medium term. Trade Preferences for the developing world would be decided in Brussels, with no UK input, with a catastrophic impact on UK influence. Asymmetric trade preferences are given by developed countries to goods from developing countries, to benefit exporters from poorer countries. Under the WTO agreements, countries cannot normally discriminate between their trading partners. Grant someone a special favour such as a lower customs duty rate for one of their products and you have to do the same for all other WTO members.
This principle is known as most-favoured-nation MFN treatment. Exceptions allow for preferential treatment of developing countries, regional free trade areas and customs unions. Haiti, most African countries, Bangladesh, Burma. The EU carries out an assessment of each country on a regular basis and this can be very controversial. In the case of Sri Lanka and Pakistan, focus will be on their human rights and labour laws. Many of the more protectionist EU countries dislike some of the schemes, fearing for example Sri Lankan or Pakistani clothes competing with their own garment industries.
These schemes have also faced some criticism in this country, from two angles. First, some EU critics see them as driving production in the developing world towards raw material production and against finished products. Second, some development activists think they should be more generous still. The UK currently takes a full role in these schemes.
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In fact, the UK is the most influential country in these schemes in the European Union. In Brussels, the UK is the best friend of developing countries. The UK has been the strongest supporter of poorer countries seeking to export into the EU.
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The Department for International Trade has always taken the view that it will roll over first, and then seek to make more liberal or generous. However, all of this would be in vain if we joined a customs union with the EU. Trade preferences would become less generous. The UK would be forced to follow. Moreover, this has a significant impact on our foreign policy.
Currently, the UK uses its trade liberalising voice within the EU as leverage in those countries. I know, because I have been in the room. Our High Commissioners in Islamabad or in Colombo can use this leverage to help other key UK asks, like in security, counter-terrorism, anti-corruption and post conflict peace.
Moreover, many of these countries have big diasporas in the UK. Many of these diasporas are doing a lot of trade with their countries of origin. Many more are looking to do so post-Brexit. In other words, being in an EU customs union would lead to a sharp decline in UK trade influence in many key developing countries.
It would lead to a sharp decline in political influence too. Yet these are the very countries where the UK wants to maintain or enhance its influence! Remarkably, it is the Labour Party which now has this reduction in our links with developing countries in south Asia and Africa as their official party policy! It is remarkable that Labour has chosen this policy. It has some superficial attractions — it allows the flow of goods between the EU and the UK to be more frictionless, without having necessarily to sign up to free movement although Labour seems to be in favour of this as well.
But being in a customs union with the EU would be a disastrous policy choice. Whatever gains were to be made in the short term by securing supply chains and by preventing customs disruption would gradually seem smaller compared with the loss of trade opportunities, the asymmetric nature of trade agreements, the inability to properly defend UK industry from unfair trade practices and the acute loss of foreign policy influences.
Some might prefer to take the long term pain for the short term gain, but in the medium to long term, I strongly believe that such an arrangement would be economically and democratically unsustainable and must be rejected once again by the House of Commons, if it gets put to the vote again. CapX depends on the generosity of its readers. If you value what we do, please consider making a donation. Please try again , or if problems persist, contact us with the above error message.
We apologise for the inconvenience. CapX Exclusive. Sign up to our popular email briefing to get the most interesting stories from CapX and the wider web delivered direct to your inbox. Share The customs union option means short-term gain but long-term pain A customs union with the EU would leave the UK in the Turkey trap Being in a customs union with the EU would be a disastrous policy choice. If it can be managed at all.
A nation state is a much more nimble and focused entity than a trade bloc. Trade deals between the UK and say New Zealand are relatively straight forward as there are limited items traded between the nations. So can be concluded pretty quickly, relatively speaking. Anyhow, just stuff to ponder. It is best to know what is the use of customs union in that certain country. Learning about the advantages and disadvantage would be a great help for decision making. Thank you for sharing! Your email address will not be published.
Leave this field empty. Skip to content. The Customs Union was completed in Advantages of a customs union Free trade amongst member countries. For an area like the EU, this is a substantial part of the economy. Customs union eliminates the need for some regulations and customs checks at the border. Note: It has been suggested that technology can implement custom checks automatically without the need to stop at borders.
UK gov — future customs relationship Easier to negotiate trade deals as large economic block.
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A customs union with common external tariff stops this. In that case, a US firm would export the steel to the UK or set up a factory in UK and then have the steel transported through the continent to Spain. This is why in a free trade area, they have rules to check the country of origin and avoid this inefficient tariff avoidance This is a reason why a common external tariff makes the most sense if you want a truly free trade area. This reduces economic and national sovereignty.
Critics of the EU argue it has meant the UK has experienced higher food prices and reduced the welfare of low-income consumers who face higher prices. It is worth noting — Deals can be struck if they respect the common external tariff. Turkey is in a partial EU customs union so is free to negotiate deals in other areas like agriculture where it is not bound by its customs union arrangement. A country cannot give preferential tariffs to a declining industry.
A ‘global Britain’ is only possible outside a customs union –
Trade diversion. A common external tariff can lead to trade diversion. This means higher prices for imports of butter and lamb. Would prices come down? Guardian link The price of some agricultural goods would fall and become cheaper. Free to negotiate new deals If the UK was outside any formal customs union, it would be free to negotiate any trade deals with countries around the world. Levels of Economic integration Difference between customs union and Free Trade Area A free trade area does not have a common external tariff and countries are free to pursue their own trade deals.
Difference between customs union and single market A customs union has free trade and common external tariff A single market has free movement of people, goods and services. Countries like Norway pay substantial sums to get Single Market access. A single market aims to have common rules and regulations about the quality of products.
Related EU Customs union at Economist.