Brexit discussion thread X (Please read OP before posting)

fash wrote: »

You understand that FOM has nothing to do with a CU? Turkey is in a CU but has no FOM. Do we really need to go through the basics in this?

This reply is aimed at the poster you've replied to.

It would be very helpful if a thread on basic international trade jargon could be set up.

A customs union, as the name implies, unites the customs rules of different countries.

It means that each member of the customs union applies the same tariffs from goods outside of the customs union and the members of the customs union do not apply tariffs on goods from other members.

A customs union facilitates* the movement of goods between its members. It has nothing to do with the movement of people.

*A customs union does not allow for free movement of goods between its members.

The EEC (now the EU) completed its customs union in 1968.

However, there were still non-customs barriers to trade between member states of the EEC, such as different standards for different products. This is why the Single Market (or Internal Market) was created as regulatory union.

This Regulatory Union means that the members of the EU apply the same standards to almost all goods (there are some exceptions, allowed for in the EU treaties), so that there can be genuine free movement of goods between member states, not just the removal of tariff barriers (aka customs).

Imagine if there were 28 different standards across the EU for house paint. A house paint manufacturer in Ireland would have to meet multiple different standards, massively increasing production costs and the regulatory burden on the business, if it wanted to sell its products across the EU and the Single Market.

The Single Market means it can make its products in Ireland, gain regulatory approval in Ireland, and sell its products to the other EU members, plus other countries that aren't in the EU but in the Single Market: Norway, Iceland and Liechtenstein.

Leaving the EU/Single Market will actually increase the regulatory burden on businesses as they have to meet EU standards AND UK standards (which may eventually become significantly different), plus they may need to get certification in the EU, or have someone based in the EU to take legal responsibility for meeting EU standards/getting EU certification, if they want to export to the EU.

Customs duties (tariffs) are not the only barriers to trade.

In fact, 85% of all goods imported into the EU pay 0% tariffs, even goods imported into the EU from countries which the EU has no trade agreements with, as the standard EU tariffs on many goods is 0%.

In the case of Foods of Animal Origin (see my previous post), the EU has to list a non-EU country first before there is even a possibility of exports of such foods from the non-EU country in question.

There is no guarantee that the EU will list the UK for this purpose, especially since listing requires the UK to co-operate and allow EU inspectors into the UK to carry out the necessary checks before listing can be approved.