BRUSSELS (Reuters) – The British parliament will on Monday hold a second round of indicative votes on various Brexit alternatives, and the customs union could emerge as a preferred solution for lawmakers who have rejected Prime Minister Theresa Mays deal.
FILE PHOTO: A lorry is driven past dozens of others parked after travelling by ferry between Britain and France at the Port of Dover, Britain, February 14, 2019. REUTERS/Toby Melville/File Photo
A customs union would allow an easier flow of goods, but would not itself guarantee frictionless trade and would limit, but not prevent, Britains capacity to strike its own free trade deals.
HOW INDEPENDENT?
The European Union is itself a customs union and is also part of three other customs unions with Andorra, San Marino and Turkey.
In the case of Turkey, the arrangement does not include agricultural or coal and steel products. Other goods can circulate without paying customs duties and the whole zone applies the same import duties for products from third countries – such as the 10 percent rate for imported cars.
Unlike a free trade deal, a customs union removes the need for complex rules to determine whether a good is really from a given partner – such as a machine with multiple imported components. Such “rules of origin” can prove costly and time-consuming for exporters.
Being a member of a customs union limits, but does not prevent the separate participants from striking their own free trade agreements with other countries.
Turkey, the junior partner in the customs union with the EU, does face a challenge. The EUs recent free trade deal with Japan opens Turkey up to inbound Japanese cars without providing reciprocal access for Turkish products to Japans market.
The junior customs union partner, which Britain would likely be, can find itself playing catch-up with a reduced bargaining position, given their own market is already open.
Turkey did for example begin a free trade deal covering goods with South Korea in 2013, two years after an EU-South Korea accord came into effect. It remains in exploratory talks with Canada, whose deal with the EU began in 2017.
However, Turkey is free is in those areas not covered by the customs union. So, following their agreement on goods, Turkey and South Korea also struck in 2015 a bilateral deal covering services and investment.
Depending on the nature of an EU-Britain customs union, Britain would still be able to negotiate with others trade access covering its large financial services market, investment, public procurement, data flows and possibly agricultural quotas.
FRICTIONLESS TRADE
Delays that can even extend beyond 24 hours at the EU-Turkish land border show that a customs union in itself is no guarantee of frictionless trade.
Turkish trucks laden with goods bound for the European Union still need to show documents including export declarations and invoices and transport permits for each EU country through which the truck plans to travel.
So far the EU has limited deals on road transport access to countries that accept free movement of people, such as Norway and Switzerland.
The controls come despite Turkey having aligned its legislation with certain EU internal market rules, such as covering product standards, intellectual property rights and competition controls.
Goods also can be subject to inspections at the border to confirm they comply with EU regulations.
HARD IRISH BORDER
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