If the UK leaves the Single Market but stays in the Customs Union, what will be the difference, if any, to what we have now?
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Your question assumes leaving the single market but staying in the customs union, correct? bbc.com/news/business-36083664– Denis de BernardyApr 19, 2018 at 16:00
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I am not sure that possibly is on the table and I have trouble seeing how it would work in practice. What does exist are countries with an (increasingly higher) integration in the single market but outside of the customs union (Norway, Switzerland), the exact opposite combination.– RelaxedApr 19, 2018 at 22:15
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@Relaxed Turkey is in the customs union but not the single market, for example.– user5097Apr 20, 2018 at 8:32
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@Relaxed: Correct. Article 50 means Britain leaves the EU, and therefore the Single Market and the Customs Union. By unanimous approval of the remaining members, a new treaty defining the future relation could be created, but no such offers have been made public and I see little interest. E.g. the British attitude towards Poles does not exactly encourage Poland to be lenient.– MSaltersApr 20, 2018 at 8:39
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@NajibIdrissi I thought about that, for that's a commonly discussed example but upon further examination that's not a good analogy at all. Turkey is supposed to have a customs union with the EU, which is more akin to an enhanced trade agreement. Importantly, it mostly entails obligations for them. For example, Turkey's external tariff is supposed to converge towards the EU tariff but Turkey does not influence EU negotiations with third parties or automatically benefit from them.– RelaxedApr 20, 2018 at 17:34
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2 Answers
The European single market guarantee the four freedoms: free movement of goods, capital, services, and labour. The customs union is merely about free movement of goods. So compared to the customs union, the single market notably also includes the famous "financial passport" for banks and financial companies, freedom of movement and establishment for citizens, freedom to provide services (including digital services). The customs union already requires the country to let the EU negotiate all trade deals (for obvious reasons).
The only countries which are in the customs union but not the single market are Turkey and some micro-States (Monaco, Andorra, San Marino). Within the single market, you also have to distinguish the EFTA (which participates in the single market with some minor exceptions), countries that are in at some stage of joining the EU and have entered a SSA with the EU, and countries that have signed a DCFTA treaty with the EU.
The respective Wikipedia pages are very detailed, with lots of sources, and provide good starting points:
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(-1) This answer is full of contradictions, it's not nearly as neat and simple as that. First the notion that the single market is broader because it encompasses services, capital and labour while customs unions only cover goods is belied by the fact that Switzerland, Norway, etc. have a very high level of integration with the single market while remaining outside the customs union (which you mention yourself). Meanwhile, last generation trade agreements also include (limited) integration regarding services or capital.– RelaxedApr 20, 2018 at 17:44
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The real difference is that the single market is about moving rule-making to the EU level and encompassing all rules that have some bearing on economic integration including safety standards, etc. whereas customs union are mostly about tariffs and trade policy in a narrower sense.– RelaxedApr 20, 2018 at 17:46
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The second set of contradictions pertains to Turkey, which is a very bad analogy and actually a good example why simply being a member of the (EU) customs unions is not easy. Turkey chose to bind itself to the EU and that's called a “customs unions” under GATT/WTO rules but it's not at all a member of the EU customs unions on par with full EU members. For example, contrary to what you write in the first paragraph, it is still negotiating and concluding trade deals, only it committed itself to strive for trade deals tracking those of the EU as closely as possible.– RelaxedApr 20, 2018 at 17:48
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@Relaxed Feel free to articulate your thoughts and post an answer.– user5097Apr 21, 2018 at 15:18
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1I posted my thoughts... in a comment, which you didn't seem to like either. I don't have a neat comprehensive answer or much to add beyond that but that's not a reason to post stuff that's clearly wrong.– RelaxedApr 23, 2018 at 20:46
Leaving the single market (SM) but staying in the customs union (CU) makes differences as follows:
Leaving the SM would make the UK:
- Able to apply tariffs and taxes to EU countries, and vice-versa.
- Able to prevent imports of goods from EU countries,and vice-versa
- Able to prevent immigration of Poles, etc, and vice-versa.
- Able to create non-tariff barriers by, for example, abandoning or de-fanging Health and Safety regulations, and vice-versa.
- Able to prevent EU-based financial services operations (Goodbye, Santander?), and vice-versa.
Staying in the Customs Union would make the UK:
- Unable to negotiate its own global trade deals.
- Liable to pay the EU for the cost of membership
- Subject to the decisions of the European Court of Justice (ECJ)
- Safe in regard to Irish border problems
- Unprotected in regard to farming and fishing
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2It doesn’t make sense to look at these separately. E.g., point 1 would only be true for a no-SM no-CU situation (but the scenario is CU). Points 8 and 10 seem dubious, too.– chirluApr 19, 2018 at 19:20
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"Unprotected" isn't quite the right word. In fact some argue that we have more protections in the customs union than we will have outside it.– userApr 19, 2018 at 19:51
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