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Brexit: What Is A Customs Union And Why Does It Matter?

This week, Theresa May is reportedly sitting down with her senior ministers to decide what the government actually wants from Brexit. 

But every week seems to throw up a new issue in the ongoing chaos of Brexit negotiations. Over the last few days the biggest buzz word has been the ‘customs union’ – and whether we’ll be in ‘the’ customs union, ‘a’ customs union or no customs union at all. If like many people you got lost at ‘customs union’, we’ve answered the most common questions below. 

What is a customs union?

A customs union is the name for a group of countries who don’t charge customs duties to each other and establish a common external charge for goods from countries outside the union.

When commentators refer to ‘the’ customs union, they are referring to the EU customs union we are already members of, along with all other EU countries. 

One incentive to join a customs union is to allow goods and supply chains to move easily across the members of the union, with no charges applied to goods moving across borders during the production process. Major industries, such as aerospace and car manufacturing, rely on the ability to move goods in this way.

What does this mean for workers?

Whether Britain remains in the customs union has huge implications for British workers. Several trade unions have backed the customs union as the best way to protect jobs and supply chains, as well as giving the UK more certainty on trade. Unite analysis has shown that businesses would see increased costs outside of a customs union to cope with the bureaucracy of paperwork and checks at ports, and the Trades Union Congress (TUC) has also warned that leaving the customs union with the EU will cost jobs

Why do some want to rule out a customs union?

There are differing arguments for ruling out membership of a customs union. Some commentators see membership of the customs union as too close to EU membership and want to rule it out on principle; others want to rule out a customs union because they are concerned about the impact on our ability to make trade deals with third party countries (countries not in the customs union).

As membership of the customs union means agreeing common external tariffs, the UK cannot negotiate trade deals as an individual country if we remain a member. However, the conversation about a UK trade agenda is frequently misleading. For instance, while the government claims that free trade deals would be fantastic for the UK, modern trade deals can be used to tie the hands of progressive governments on regulation, particularly where they are the smaller party (and in a trade deal with the USA or China, we would obviously be in a weaker negotiating position).

For the facts on trade and the big issues with the government’s trade agenda see our handy guide

What about Ireland?

The Irish border question has been front and centre of any discussion on the customs union. At the end of tense negotiations in December, there was an agreement reached on the Irish border question – the government agreed to maintain “full alignment” with the rules of the customs union in order to protect the Good Friday agreement. Since then, Theresa May has ruled out customs union membership.

Some have advocated a ‘tech border’ in Ireland, with vague references to scans and number plate recognition, but there is no system currently in existence with the capabilities to carry out the right checks and there are serious privacy concerns about the levels of surveillance that would be required.   

If the UK isn’t in a customs union with the EU but has an open border with an EU country, that means goods could enter and leave the EU and UK through a back door. It’s very difficult to see how ruling out a customs union can lead to anything other than a hard border between Northern Ireland and the Republic of Ireland.

What does this mean for Brexit?

If this feels like a step backwards, that’s because it is. By ruling out customs union membership, the government has once again put the UK in a fundamentally contradictory position on the Irish border and caused more uncertainty for businesses. 

We are hurtling towards a de facto deadline of this autumn for concluding negotiations (the deal needs to be approved by the EU and our parliament before March 2019) but the government has failed to get their act together, and we can expect more chaos and more uncertainty in the year to come. The government is gambling with our economy and jobs by being unclear about what they want from Brexit, and this is bad news for everyday working people in the UK.