Customs Union Agreement option
After the UK leaves the European Union, one of the possibilities is to maintain a customs union agreement with the EU. The EU currently have three customs unions, with Andorra, San Marino, and Turkey. (Europa, 2017) The most comparable example is Turkey as the other two are micro states, and it can help to explore whether or not a customs union is a suitable solution for the future relationship between the UK and the EU. The basis of Turkey’s relationship with the EEC was formed when the Ankara Agreement was signed in 1963, which would later evolve to become a customs union agreement with the European Union in 1995. (Shepherd & Wedderburn, 2016) A customs union involves two or more countries, creating a free trade area with a common external tariff. If the UK were to adopt a similar customs union agreement to Turkey’s, it would have partial access to the single market but in return would have to still align its rules and standards to those of the EU, and it would impact the ability of the UK to negotiate their own trade agreements with non-EU countries such as the United States and countries in the commonwealth.
Retaining partial access to the single market is the largest gain of a customs union between the UK and EU, and would mean that there would remain to be no customs checks and tariffs on the products covered in the agreement. It would include all trade in processed agricultural goods and manufactured goods, and raw agricultural goods would most likely be regulated by a separate agreement. (Shepherd & Wedderburn, 2016) There is a clear benefit of no customs tariffs and the World Bank have reported that it has considerably benefitted Turkey. They’ve estimated that Turkish exports to the EU would’ve been 7.2% lower without the customs union, and EU exports to Turkey would’ve been 4.2% lower. In 2015, about 44% of UK exports in goods and services went to other countries in the EU, totalling £220 billion out of £510 billion total exports, additionally 53% of our imports into the UK came from other countries in the EU in 2015. (Sippit, 2016) This shows how important it is to maintain this benefit of exports passing freely into the EU without being subject to customs controls or rules-of-origin’ documentation, which has extremely high administrative costs.
Another benefit, that is individual to the UK’s possible customs union, is the important political advantage of maintaining that there is no custom controls at the border between Northern Ireland and the Republic of Ireland. (Emerson, 2016) In 1998, the Good Friday agreement was signed and the ROI agreed to drop its constitutional claim to the six counties which formed Northern Ireland, removing British military checkpoints on main border crossings and bring an end to the Troubles. Other alternatives to a customs union such as a hard ‘Brexit’ could likely involve additional costs and domestic issues due to the possibility of introduction of border checks and tariffs. Although nothing as extreme as border checks on passports would be a possible result of this, a customs union agreement is the best way to ensure that there will be no changes at all.
However, maintaining a customs union with the EU isn’t compatible with Theresa May’s aim to ensure that Britain is a “fully independent, sovereign country” as this is one of the main reasons many voted to leave in the referendum. If the UK was to select this alternative to EU membership, they could find themselves in a similar situation to Turkey, who have little to no freedom to develop their own trade policies with other countries across the world. (Booth, 2016) Turkey do have 20 free trade agreements with non-EU countries, but due to the customs union limitations they aren’t equal and put Turkey at a competitive disadvantage. Another issue there could be with a customs union is that Turkey has to open its markets to any country that the EU strikes a trade agreement with, but don’t get any say in how the agreement is formed, and also don’t get the same immediate duty free access to that country’s market that the EU member states do. (Booth,2016) Striking their own trade agreements is essential after the UK leaves the EU, this is because exports to other countries have been increasing at a faster rate.The European Commission has said that “over the next ten to 15 years, 90% of world demand will be generated outside Europe”. (Sippit, 2016)
The UK having to align its rules, regulations and standards to those of the EU has been extremely unpopular with the public, and many believe that the UK has been controlled by the European Parliament and other EU bodies such as the European Commission and the Council of the EU. It is safe to say that EU laws have a very significant presence and effect in UK law, and varying on which EU obligations are counted, it’s estimated that between 13% to 62% of laws introduced between 1993 and 2014 that apply in the UK were implemented because of obligation to the EU. (Coleman, 2016) There are many laws that affect UK trade, and in the primary sector there has been significant issues with fisheries and agricultural policies. For example, the fishing policies impose quotas on UK fishermen, and leave only 12 miles exclusive to UK fishermen, granting equal access to all other EU fishing fleets to the UK 200-mile exclusive economic zone around the UK coastline. (Foster,2016)
Overall, there are both many benefits and issues to a customs union agreement between the UK and EU, but an important area that needs to be considered is how it affects security against internal threats, and external threats such as terrorism. The EU has security measures such as the EAW, Frontex, Europol, EURODAC and SIS and has a Common, Foreign and Security Policy (CFSP). This currently only applies to members of the EU, so upon leaving the UK won’t be protected by this common policy anymore unless an agreement is made to opt in to some of the security measures. There is a possibility the UK may be allowed access if they made a customs union agreement, but this does not look likely especially as the only comparable customs union is with Turkey, who aren’t part of any of these EU security policies.
Biblography
Shepherd & Wedderburn. (2016). Brexit: The Turkish Model. [ONLINE] Available at: http://www.shepwedd.com/sites/default/files/Turkish_Model_Brexit.pdf. [Accessed 16 March 2017].
Emerson, M (2016). Which Model for Brexit?. [ONLINE] Available at: http://aei.pitt.edu/80225/1/SR147_ME_Which_model_for_Brexit.pdf. [Accessed 16 March 2017].
Booth, S. (2016). Turkey is no model for Britain’s post-Brexit trade policy. [online] The Telegraph. Available at: http://www.telegraph.co.uk/news/2016/10/06/turkey-is-no-model-for-britains-post-brexit-trade-policy/ [Accessed 16 Mar. 2017].
Sippitt, A., 2016. Everything you might want to know about the UK’s trade with the EU. Full Fact. Available at: https://fullfact.org/europe/uk-eu-trade/ [Accessed March 21, 2017]
Coleman, C., 2016. Reality Check: How much UK law comes from the EU? BBC News. Available at: http://www.bbc.co.uk/news/uk-politics-eu-referendum-36473105 [Accessed March 21, 2017].
Foster, P., 2016. What would Brexit mean for British sovereignty? The Telegraph. Available at: http://www.telegraph.co.uk/news/2016/05/19/how-does-the-eu-impinge-on-british-sovereignty-and-if-the-uk-vot/ [Accessed March 21, 2017].
European Commission Directorate-General for Trade. Agreements – Trade – European Commission. Available at: http://ec.europa.eu/trade/policy/countries-and-regions/agreements/ [Accessed March 21, 2017].