Customs union or single market: what’s the difference?
5 April 2019

There has been a lot of talk this week about customs unions and single markets, with a special session in Parliament this week to explain technicalities to Conservative MPs. Do you know the difference?

A customs union is where countries club together and agree to apply the same tariffs to goods coming from outside as a group. Goods can then be moved around the union countries easily without other tariffs being imposed. It does not cover services, which makes up a very large proportion of the UK economy.

A customs union might mean paying money to the EU and accepting European Court of Justice judgments about trade, but agreeing to a customs union would mean the border in Ireland would remain open. Members of customs unions cannot negotiate their own trade deals with external countries.

Turkey, Andorra and the Isle of Man are in the European Customs Union but not the Single Market.

In a single market goods, services, investment and people can move freely, which is why regulations have to be harmonised.

It is possible to be a member of the single market without being an EU member. The EEA agreement covers Norway, Iceland and Liechtenstein. They can make their own trade deals but have to comply with complicated regulations about where goods come from if they are selling within the single market.

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