LONDON – As negotiations with the European Union over Brexit begin, one of the biggest debates is over whether the UK should remain a member of the Customs Union.
On Sunday morning the Chancellor, Philip Hammond, told the BBC’s Andrew Marr Show that “we’ll be leaving the customs union,” yet in his Mansion House speech on Tuesday morning he said that the UK would need to remain a part of the customs union after Brexit for an “implementation period”, also known as a transitional phase.
Sir Keir Starmer, Labour’s shadow Brexit secretary, has said that remaining in the Customs Union “should be left on the table,” as part of negotiations over leaving the EU.
What is the Customs Union?
The Customs Union is a central part of the EU which means that member states trade freely with each other and have all agreed to charge the same tariff on imports from outside of the bloc.
Countries importing goods into the EU pay the same tariff regardless of which member states they are importing to. Crucially, members of the Customs Union cannot negotiate their own trade deals elsewhere in the world, as they are tied to the tariff arrangements of the 28-nation bloc.
This is why many Brexiteers do not want Britain to remain in the Customs Union after Brexit, as it would prevent the country from striking new trade deals around the world. Countries often touted as being open to UK trade deals are places like India, China and Brazil.
Why is there so much debate over membership?
The UK seems destined to leave the single market when Brexit happens, but it is less clear whether it will withdraw from the Customs Union as well.
The shock general election results have created a hung parliament in which there might be a majority for a ‘softer’ Brexit, which might include continued membership of the Customs Union.
Maintaining membership of the Customs Union means that the soft border between Northern Ireland and the Republic of Ireland can continue, avoiding threats to the peace process and Good Friday Agreement.
There is free movement of traffic and people at the Irish border that both the Republic of Ireland and Northern Ireland’s economies rely on.
But, if the UK continues as a member of the Customs Union, it might still be subject to European Court of Justice laws, something that many Brexiteers object to.
What has the EU said about the Customs Union?
The EU has made it very clear that if the UK wants to keep the benefits of being part of the Customs Union, it needs to stay within the Customs Union.
Guy Verhofstadt, the EU’s Brexit negotiator said “If you want the advantages you of a Single Market and Customs Union, you have to take the obligations,” meaning the UK would have to stay within its confines if it wished to have the benefits.
Jean Claude-Juncker, the President of the European Commission, told Prime Minister Theresa May that “Brexit cannot be a success” at a dinner at Downing Street in April, commenting that Britain will not even be in the Customs Union.