Oval design shape Oval shadow
Oval design shape Oval shadow Oval glow

Brexit – Labour wants to make new customs union with the EU

Labour calls for UK to enter customs union

The shadow Brexit secretary Sir Keir Starmer has said that Labour wants the UK to enter a new customs union with the EU post-Brexit, rather than to remain in the existing customs union. This new customs union is the result of customs arrangements being directly linked with membership. Starmer explains:

“The customs arrangements at the moment are hardwired into the membership treaty, so I think everybody now recognises there is going to have to be a new treaty [between the UK and the EU]. It will do the work of the customs union. So it is a customs union.”

Government planned clean break

It would appear that the UK government had planned to make a clean break from the customs union, given that the Secretary of State for International Trade Liam Fox and his new department were tasked with striking new international trade deals. As a member of the customs union, the UK is prohibited from negotiating

The current government wants to be able to negotiate trade deals with non-EU countries post Brexit. Under the custom union rules, the EU operates as a trade bloc, enforcing common external tariffs, and negotiating trade deals as a single market.

No credible analysis to leave customs union

According to Starmer there is no credible analysis, that he is aware of, indicating that the UK would perform better on its own than it would be negotiating deals with the EU.

He further explained:

“But the real point is – because we all want trade agreements, more trade – we will be more likely to get them if we do it jointly with the EU [than] on our own.”

Government’s position

Liam Fox has spoken about the government’s strategy regarding the question of leaving the customs union. He acknowledged that they were delaying the key votes on the trade bill because they feared losing the vote on the customs union question.

He conveyed that the current government wants to persuade their colleagues of the benefits of going it alone outside of the customs union before they take the bill forward. He stated that 90% of global growth was due to come from outside the EU in the coming years and that the UK needed to be outside the customs union if it wanted its own trade deals with non- EU countries.

How the customs union operates

Under the EU customs union, all the EU member states follow a set of common rules in enforcing customs controls over goods entering the EU from non-EU countries. The levying of tariffs and the imposition of trade quotas is a major part of the customs union’s activities. However, their areas of control go far beyond tariffs and quotas. The customs also control areas such as the safety standards of consumer goods, the prohibition of certain items, and the health standards of foods.

For the EU customs union to operate successfully all members must enforce the rules correctly. Even the occurrence of a misinterpretation in rules by one member could result in dangerous goods entering the customs union’s market. To prevent this from happening it is essential that the customs union has regulatory control of its members.

If the UK stays out of a customs union

If the UK stays out of a customs union it is free to set up trade agreements with non-EU states. It can be in control of its own lawmaking and govern itself independently. However, this would come at a cost. One example is tariffs. The tendency of goods to be made in the EU from components imported from another country and then re-exported means that the burden of tariffs could be quite high for UK businesses if we are outside the customs union. Staying out of a customs union could also result in border issues with Northern Ireland.

If the UK stays in a customs union

If the UK does remain in the EU customs union it would affect their ability to fully govern themselves independently, as they would be in the European Court of Justice’s (ECJ) jurisdiction. Being a part of the customs union would also stop the UK from creating an independent trade policy with non-EU states. They would, however, be able to benefit from the zero tariffs and the ease of trade that a customs union provides.

It would appear that free trade isn’t exactly free, and when you’re a part of an EU customs union, you are very much a part of Europe.

If you are interested in setting up a company in Ireland you can contact using the form below:

Contact Form



Your Message

Oval design shape Oval design shape