Customs Union, Single Market, Brexit — What you need to know
Alexander Pearson
June 22, 2018
Prime Minister Theresa May is against it, level-headed business leaders say it's essential: Britain's membership of the EU Customs Union and Single Market is a divisive issue. DW looks at what it all means.
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The EU Customs Union
- What is the EU Customs Union? It is a trade agreement between member states to abolish tariffs on the goods they trade with each other and create a common tariff on products that enter from non-EU countries that aren't in the customs union.
- Who is a member of the EU Customs Union? All 28 EU member states are in the Customs Union. Turkey, Andorra and San Marino are partial members. They have separate agreements with the EU that do not cover trade in certain areas such as agriculture or services.
- When was the Customs Union created? The six founding members of the EU — Belgium, France, Germany, Italy, Luxembourg and the Netherlands — agreed to form a customs union in the 1957 Treaty of Rome. They completed it in 1968.
- What makes the Customs Union different from a standard free trade agreement? Free trade deals do not include an agreement on a common tariff on third-country goods.
- Do customs unions in other regions exist? Yes. Uganda, Tanzania and Kenya formed an East African customs union in 2005. Russia, Belarus and Kazakhstan formed a Eurasian customs union in 2010.
The European Single Market
- What is the European Single Market? In the Single Market, members agree to reduce and eventually eliminate all barriers to the "four freedoms" — free movement of goods, services, capital and people. This means they not only eliminate tariffs, but also more indirect trade restrictions, and allow citizens from all member countries to move and work freely across the bloc.
- Who is a member of the Single Market? All 28 EU member states are automatically members. Countries in the European Economic Area (EEA) — Norway, Iceland and Liechtenstein — and Switzerland are partial members who have opted out of certain parts of the market.
- When was the Single Market created? The founding members of the EU paved the way for the modern Single Market in the 1957 Treaty of Rome. Since then, the bloc has taken consistent steps to eliminating restrictions to the "four freedoms."
- Do other regional single markets exist? Yes, but none are as developed as the European Single Market. The member countries of the Eurasian Economic Union — Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia — have also set themselves the goal of eliminating internal barriers to goods, services, capital and people. Likewise the Caribbean Single Market and Economy (CSME) aims to provide an enlarged economic space through the removal of restrictions on trade, services and people.
Brexit Factor
- What does this all have to do with Brexit? The EU has said Britain could remain within the Customs Union and Single Market after it leaves the EU in March 2019. But British politicians on both sides of the political spectrum disagree on whether the country should remain in either.
- What would happen if Britain left the Customs Union? Britain would become a third-country and the common EU tariff would apply to British imports. That would harm many British exporters. Outside the Customs Union, Britain would also be exempt from the common EU tariff on third-country goods. That means it could start negotiating trade deals with non-EU countries — a right many pro-Brexit politicians want.
- Could Britain remain in the Customs Union and negotiate independent trade deals? No. The EU has consistently ruled this out. Non-EU countries with a free trade deal with Britain could get around the EU common tariff by selling their goods via Britain.
Brexit timeline: Charting Britain's turbulent exodus from Europe
Britain shocked the world when it voted to leave the European Union on June 24, 2016. DW traces the major events that have defined Brexit so far.
Image: picture-alliance/empics/Y. Mok
June 2016: 'The will of the British people'
After a shrill referendum campaign, nearly 52% of British voters opted to leave the EU on June 23. Polls had shown a close race before the vote with a slight lead for those favoring remaining in the EU. Conservative British Prime Minister David Cameron, who had campaigned for Britain to stay, acknowledged the "will of the British people" and resigned the following morning.
Image: picture-alliance/dpa/A. Rain
July 2016: 'Brexit means Brexit'
Former Home Secretary Theresa May replaced David Cameron as prime minister on July 11 and promised the country that "Brexit means Brexit." May had quietly supported the Remain campaign before the referendum. She did not initially say when her government would trigger Article 50 of the EU treaty to start the two-year talks leading to Britain's formal exit.
Image: Reuters/D. Lipinski
March 2017: 'We already miss you'
May eventually signed a diplomatic letter over six months later on March 29, 2017 to trigger Article 50. Hours later, Britain's ambassador to the EU, Tim Barrow, handed the note to European Council President Donald Tusk. Britain's exit was officially set for March 29, 2019. Tusk ended his brief statement on the decision with: "We already miss you. Thank you and goodbye."
Image: picture alliance / Photoshot
June 2017: And they're off!
British Brexit Secretary David Davis and the EU's chief negotiator, Michel Barnier, kicked off talks in Brussels on June 19. The first round ended with Britain reluctantly agreeing to follow the EU's timeline for the rest of the negotiations. The timeline split talks into two phases. The first would settle the terms of Britain's exit, and the second the terms of the EU-UK relationship post-Brexit.
Image: picture alliance/ZUMAPRESS.com/W. Daboski
July-October 2017: Money, rights and Ireland
The second round of talks in mid-July began with an unflattering photo of a seemingly unprepared British team. It and subsequent rounds ended with little progress on three phase one issues: How much Britain still needed to pay into the EU budget after it leaves, the post-Brexit rights of EU and British citizens and whether Britain could keep an open border between Ireland and Northern Ireland.
Image: Getty Images/T.Charlier
December 2017: Go-ahead for phase 2
Leaders of the remaining 27 EU members formally agreed that "sufficient progress" had been made to move on to phase two issues: the post-Brexit transition period and the future UK-EU trading relationship. While Prime Minister Theresa May expressed her delight at the decision, European Council President Tusk ominously warned that the second stage of talks would be "dramatically difficult."
Image: picture-alliance/AP Photo/dpa/O. Matthys
July 2018: Johnson, Davis resign
British ministers appeared to back a Brexit plan at May's Chequers residence on July 6. The proposal would have kept Britain in a "combined customs territory" with the EU and signed up to a "common rulebook" on all goods. That went too far for British Foreign Minister Boris Johnson and Brexit Secretary David Davis, who resigned a few days later. May replaced them with Jeremy Hunt and Dominic Raab.
Image: picture-alliance/empics/G. Fuller
September 2018: No cherries for Britain
May's Chequers proposal did not go down well with EU leaders, who told her at a summit in Salzburg in late September that it was unacceptable. EU Council President Tusk trolled May on Instagram, captioning a picture of himself and May looking at cakes with the line: "A piece of cake perhaps? Sorry, no cherries." The gag echoed previous EU accusations of British cherry-picking.
Image: Reuters/P. Nicholls
November 2018: Breakthrough in Brussels
EU leaders endorsed a 585-page draft divorce deal and political declaration on post-Brexit ties in late November. The draft had been widely condemned by pro- and anti-Brexit lawmakers in the British Parliament only weeks earlier. Brexit Secretary Dominic Raab resigned along with several other ministers, and dozens of Conservative Party members tried to trigger a no-confidence vote in May.
Image: Getty Images/AFP/E. Dunand
December 2018: May survives rebellion
In the face of unrelenting opposition, May postponed a parliamentary vote on the deal on December 10. The next day, she met with German Chancellor Angela Merkel to seek reassurances that would, she hoped, be enough to convince skeptical lawmakers to back the deal. But while she was away, hard-line Conservative lawmakers triggered a no-confidence vote. May won the vote a day later.
Image: Getty Images/S. Gallup
January 2019: Agreement voted down
The UK Parliament voted 432 to 202 against May's Brexit deal on January 16. In response to the result, European Council President Donald Tusk suggested the only solution was for the UK to stay in the EU. Meanwhile, Britain's Labour Party called for a no-confidence vote in the prime minister, her second leadership challenge in as many months.
Image: Reuters
March 2019: Second defeat for May's deal
May tried to get legal changes to the deal's so-called Irish backstop in the weeks that followed. She eventually got assurances that the UK could suspend the backstop under certain circumstances. But on March 12, Parliament voted against the revised Brexit deal by 391 to 242. EU leaders warned the vote increased the likelihood of a no-deal Brexit. Two days later, MPs voted to delay Brexit.
Image: picture alliance/AP Photo/T. Ireland
March 2019: Extension after second defeat
Following the second defeat of May's divorce deal, the European Council met in Brussels on March 21 to decide what to do next. EU leaders gave May two options: delay Brexit until May 22 if MPs vote for the withdrawal deal or delay it until April 12 if they vote against the deal. If the deal were to fail again in Parliament, May could ask for a long extension.
Image: picture-alliance/AP Photo/F. Augstein
March 2019: Brexit deal rejected a third time
On March 29, the day that the UK was supposed to leave the EU, British lawmakers voted for a third time against May's deal — rejecting it this time with a vote of 344 to 286. Following the latest defeat, May approached the main opposition Labour leader Jeremy Corbyn in an attempt to find a compromise, angering hardline Brexiteers in her own Conservative party.
Image: picture-alliance/AP Photo/House of Commons/M. Duffy
April 2019: Brexit delayed until Halloween
With the April 12 deadline looming after the third defeat of May's deal, EU leaders met again in Brussels to discuss a second delay. The only question was how long should it be? In the end, the UK and EU agreed to a "flexible" extension until October 31 — which can end sooner if the Brexit deal is approved. The UK had to take part in EU elections in May because their exit wasn't secured in time.
Image: Reuters/E. Plevier
May 2019: Prime Minister Theresa May resigns
Weeks of talks between Prime Minister Theresa May and the Labour party to reach a deal proved unsuccessful and further eroded her political capital. She triggered an angry backlash from her party after she tried to put the option of a second referendum on the table. The series of failures led May to announce her resignation, effective June 7, in an emotional address.
Image: Reuters/H. McKay
June 2019: Search for a new prime minister
After Theresa May announced on June 7 that she would leave office, other members of her Conservative party began clamoring for the top job. Within a month, the leadership battle came down to Jeremy Hunt (left), an EU proponent who fears a no-deal scenario, and Boris Johnson (right), one of the main proponents of Brexit.
July 2019: Prime Minister Boris Johnson
At the end of July 2019, Johnson was officially named Theresa May's successor as British prime minister. "We are going to energize the country, we are going to get Brexit done by October 31," he said after he was elected leader of the Conservative Party.
Image: Imago Images/Zuma/G. C. Wright
September 2019: Johnson's election threat
Conservative rebels and opposition MPs backed efforts to delay an October 31 Brexit deadline in fear of a no-deal departure. In response, Johnson called for a general election, saying his government cannot rule without a mandate after he stripped 21 rebel MPs of their Conservative status. The Labour Party said it would not back elections until legislation to block a no-deal Brexit was in place.
In late September, Britain's highest court ruled that Johnson's decision to suspend Parliament ahead of the UK's planned exit was unlawful. "This was not a normal prorogation in the run-up to a Queen's Speech," said the Supreme Court. Political rivals immediately called on Johnson to leave his post. Johnson said he would abide by the court ruling, though said he "strongly" disagreed.
Image: Reuters/H. Nicholls
October 2019: A new deal
British Prime Minister Boris Johnson managed to secure a deal with European negotiators that would allow the UK to leave the EU in an orderly manner. The deal received unanimous backing from the leaders of 27 other member states. But an attempt to get the UK Parliament to sign off on the deal failed. Instead, Parliament pushed for the Brexit deadline to be extended until the end of January 2020.
Image: picture-alliance/AP Photo/F. Augstein
December 2019: Lawmakers vote for Johnson's Withdrawal Bill
On December 22, UK lawmakers vote for Prime Minister Johnson's European Union withdrawal bill, which will see a leave date of January 31 2020 enshrined in law. Getting a majority to vote to pass the bill in the lower house has proven a major sticking point for the PM, but following a general election Johnson's Conservative party won control of the house and the bill passed with a 124 majority.
Image: picture-alliance/empics/House of Commons
December 2020: EU, UK 'finally' reach trade deal
After months of disagreements over fishing rights and future business rules, the EU and UK clinched a post-Brexit trade deal on Christmas Eve. Prime Minister Boris Johnson hailed the deal, saying the UK has "taken back control of our laws and our destiny." The deal will allow the UK and the EU to trade without tariffs, but also impose limitations on free movement and financial services.
Image: Pippa Fowles/Xinhua/imago images
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- What would happen if Britain left the Single Market? British goods, services, capital and citizens may have a hard time moving freely in the remaining 27 member states if the EU decides they do not meet EU regulations or standards. The same goes for EU goods, services, capital and citizens in Britain. At the same time, Britain could cut, change or create regulations and standards as it pleased and restrict migration from the rest of the EU. Many Brexiteers have cited those controls as key benefits to leaving.
- Could Britain remain in the Single Market and have control over regulations and migration? No. The EU has also repeatedly ruled this out. Differences in British and EU rules would undermine the EU's ambition to maintain the "four freedoms." London could also slash its standards to make British goods cheaper to produce than comparable EU ones or restrict the rights of EU citizens living in Britain.
- What has Ireland got to do with this? Britain and the Republic of Ireland are members of the Customs Union and Single Market. That means there are no customs checks at the border between Northern Ireland, a British territory, and the Republic. The Republic, Britain and the EU have all said they do not want a "hard" border to reappear, but if Britain leaves the Customs Union or Single Market, border checks will be difficult to avoid.
The 499-kilometer Irish border wasn't originally intended to be an international frontier. Since the Republic of Ireland was created, the situation at the border has mirrored the changing nature of Anglo-Irish relations.
Image: imago/UIG
The Irish Free State
Britain's response to Irish demands for independence was devolution within the UK, or home rule. Pro-British Unionists didn't want to be governed by Dublin, so two parliaments were set up, for Northern and Southern Ireland. However, nationalists still pushed for full independence and in 1922 Southern Ireland was superseded by the Irish Free State as enshrined in the Anglo-Irish Treaty (pictured).
Image: Getty Images/Topical Press Agency
The Six Counties
Northern Ireland had been carved in a way that allowed Protestant loyalists to stay in control, but also ensure the region was large enough to be viable. It included four majority-Protestant counties in the ancient province of Ulster, as well as the two Catholic nationalist counties. Three of Ulster's counties — Donegal, Monaghan and Cavan — were placed on the Southern Ireland side of the border.
No laughing matter?
Involving members of the British, Irish and devolved Belfast governments, a 1924-25 boundary commission looked at the whether the border should stay where it was. It broadly remained in the same place, often cutting through communities across its 310 miles. The Spike Milligan novel "Puckoon," made into a film (above), charted the problems brought to a fictional Irish village divided by the border.
The new border's checkpoints initially regulated the movement of certain goods, with movement of people being free. However, the Anglo-Irish Trade War of the 1930s saw tariffs imposed on foods and later coal and steel. The dispute ended in 1936, but Ireland still pursued protectionist policies into the 1950s. Customs stayed in place until the advent of the EU Single Market in 1993.
Image: picture alliance/AP Images/S. Smart
Bloody legacy
With an escalation in fighting in Northern Ireland in 1969, British troops were sent to the province, fueling nationalist resentment. The border was heavily guarded to stop weapons smuggling from the Republic. The South Armagh stretch was particularly notorious. The Irish Republican Army's South Armagh Brigade is thought to have killed about 165 British troops and police from 1970 to 1997.
Image: picture alliance/empics/PA
South of the Border
The border was also policed by the Republic of Ireland's security forces, who intensified their anti-terror efforts in the late 1970s. They worked with the British, but the working relationship was not an easy one. To communicate with Irish counterparts, British troops at one time had to speak to the Northern Irish police, who would contact the Irish police, who would then call the Irish army.
Image: picture alliance/empics/PA
Watchtowers and rifle sights
Despite the end of customs in 1993, the threat of terror still loomed and the border remained militarized, with watchtowers and soldiers. After the 1998 Good Friday Agreement — which brought back devolved government to Northern Ireland and sought to address issues such as policing and paramilitarism — the IRA eventually halted its campaign of violence as border security disappeared.
Image: picture-alliance/dpa/P. McErlane
Barely noticeable
The border today remains as invisible as it has ever been, with free movement of traffic between the Republic and the North. The picture shows two policemen, one British, one Irish, watching as a foreign leg of the Giro d'Italia crosses the border in Armagh.
Image: picture alliance/dpa/P. McErlane
Anything to declare?
There were fears that Brexit would make a hard border necessary, given that Britain has left both the EU Customs Union and Single Market. The border issue was one of three conditions laid out by the EU for talks on future trade after the separation. Campaigners, like those pictured above, had sought to remind the public of what a hard border would look like.
Image: picture alliance/empics/N. Carson/PA Wire
Border in the Irish Sea
Customs officials check freight trucks as they disembark from a ferry at the Northern Irish port of Larne. The inspections effectively created a customs border in the Irish Sea, avoiding the need for checks on land. The arrangement has led to supply problems for some businesses. However, it has been touted as good for Northern Ireland, giving firms there free access to both the UK and EU markets.