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| Customs union: What is it, what would leaving it mean and what post-Brexit alternatives are there? | Customs union: What is it, what would leaving it mean and what post-Brexit alternatives are there? |
| (35 minutes later) | |
| Jeremy Corbyn has pledged that a Labour Government would seek a new customs union with the European Union after Brexit. | Jeremy Corbyn has pledged that a Labour Government would seek a new customs union with the European Union after Brexit. |
| Ending months of uncertainty over the party’s position on the subject, the Labour leader argued for a "comprehensive" arrangement "to ensure that there are no tariffs with Europe and to help avoid any need for a hard border in Northern Ireland". | Ending months of uncertainty over the party’s position on the subject, the Labour leader argued for a "comprehensive" arrangement "to ensure that there are no tariffs with Europe and to help avoid any need for a hard border in Northern Ireland". |
| Mr Corbyn’s position contrasts with the Government’s stance that the UK should leave the existing customs union - and not be tied to a new bloc that restricts Britain striking deals with other countries. | Mr Corbyn’s position contrasts with the Government’s stance that the UK should leave the existing customs union - and not be tied to a new bloc that restricts Britain striking deals with other countries. |
| Here we explain the customs union, the cost and benefits of remaining signed up to one, and what the alternatives could be. | Here we explain the customs union, the cost and benefits of remaining signed up to one, and what the alternatives could be. |
| The customs union is a 50-year-old agreement between European member states that facilitates free trade by ensuring they all charge the same import duties to countries outside the union. | The customs union is a 50-year-old agreement between European member states that facilitates free trade by ensuring they all charge the same import duties to countries outside the union. |
| The countries also agree not to impose tariffs on goods travelling between countries in the union. The agreement reduces administrative and financial barriers to trade such as customs checks and charges. | The countries also agree not to impose tariffs on goods travelling between countries in the union. The agreement reduces administrative and financial barriers to trade such as customs checks and charges. |
| This is different from a free trade area, which means no tariffs, taxes or quotas are charged on goods and services moving within the area but allows its participants to negotiate their own external trade deals. | This is different from a free trade area, which means no tariffs, taxes or quotas are charged on goods and services moving within the area but allows its participants to negotiate their own external trade deals. |
| The single market differs from this in that it is a broader agreement that encompasses the free movement of goods, services, capital and people. | The single market differs from this in that it is a broader agreement that encompasses the free movement of goods, services, capital and people. |
| The EU's customs union is the largest in the world by economic output, which gives it considerable negotiating power. | The EU's customs union is the largest in the world by economic output, which gives it considerable negotiating power. |
| The clearest effect of leaving the customs union is likely to be increased tariffs leading to rising prices. | The clearest effect of leaving the customs union is likely to be increased tariffs leading to rising prices. |
| Countries such as Switzerland and Norway do enjoy tariff-free access without being part of the customs union but both accept free movement and make contributions to the EU budget. | Countries such as Switzerland and Norway do enjoy tariff-free access without being part of the customs union but both accept free movement and make contributions to the EU budget. |
| If the UK restricts the free movement of people with immigration controls it cannot have completely tariff-free access to the single market. The cost of doing business will therefore rise, with those costs ultimately passed on to consumers. | If the UK restricts the free movement of people with immigration controls it cannot have completely tariff-free access to the single market. The cost of doing business will therefore rise, with those costs ultimately passed on to consumers. |
| The UK could negotiate a free trade deal with the EU, as Canada has recently done, for example. This means the UK would have access to the single market to sell its products but would not be part of it - ie, it would not have to sign up to free movement of people. Agreeing such a deal could take many years. The EU-Canada trade pact took seven years to negotiate. | The UK could negotiate a free trade deal with the EU, as Canada has recently done, for example. This means the UK would have access to the single market to sell its products but would not be part of it - ie, it would not have to sign up to free movement of people. Agreeing such a deal could take many years. The EU-Canada trade pact took seven years to negotiate. |
| Another tangible impact of leaving the customs union would be on cross border trade between Northern Ireland the southern Republic. | Another tangible impact of leaving the customs union would be on cross border trade between Northern Ireland the southern Republic. |
| Around a quarter of Northern Ireland’s exports go south, while the Republic sends just 2 per cent of its goods north. | Around a quarter of Northern Ireland’s exports go south, while the Republic sends just 2 per cent of its goods north. |
| So exiting the customs union would impact the Northern Irish economy. | So exiting the customs union would impact the Northern Irish economy. |
| But it would also increase the likelihood of a hard border returning to island of Ireland, undermining the Good Friday Agreement. | But it would also increase the likelihood of a hard border returning to island of Ireland, undermining the Good Friday Agreement. |
| In the divorce agreement reached between the UK and EU in December, Britain promised that “no new regulatory barriers” would emerge between the mainland and Northern Ireland. | In the divorce agreement reached between the UK and EU in December, Britain promised that “no new regulatory barriers” would emerge between the mainland and Northern Ireland. |
| But the Government has yet to spell out exactly how it would perform the necessary checks on goods entering Northern Ireland without erecting a physical barrier with the south. | But the Government has yet to spell out exactly how it would perform the necessary checks on goods entering Northern Ireland without erecting a physical barrier with the south. |
| Around 43 per cent of Britain’s exports go to the EU, according to the Office of National Statistics. They would be subject to import tariffs as well as extra administrative costs. | Around 43 per cent of Britain’s exports go to the EU, according to the Office of National Statistics. They would be subject to import tariffs as well as extra administrative costs. |
| If the UK did not negotiate a more favourable trade deal with the EU, it would have to trade on standard tariffs under World Trade Organisation rules. | If the UK did not negotiate a more favourable trade deal with the EU, it would have to trade on standard tariffs under World Trade Organisation rules. |
| An analysis by The Independent found that the cost to Britain’s exporters -- in extra tariffs alone -- would be at least £4.5bn per year. This estimate does not include the difficult-to-measure costs of non-tariff barriers, such as the enforcement of different market standards and regulations. | An analysis by The Independent found that the cost to Britain’s exporters -- in extra tariffs alone -- would be at least £4.5bn per year. This estimate does not include the difficult-to-measure costs of non-tariff barriers, such as the enforcement of different market standards and regulations. |
| The extra costs on companies could force them to relocate UK operations within the EU after Brexit, potentially leading to job cuts. | The extra costs on companies could force them to relocate UK operations within the EU after Brexit, potentially leading to job cuts. |
| The main positive proposed by Brexiteers for leaving the customs union is that Britain would be free to negotiate its own trade deals with non-EU countries. | The main positive proposed by Brexiteers for leaving the customs union is that Britain would be free to negotiate its own trade deals with non-EU countries. |
| Liam Fox, the International Trade Secretary, has touted China's economic expansion as a reason to prioritise the UK’s ability to strike deals around the world. | Liam Fox, the International Trade Secretary, has touted China's economic expansion as a reason to prioritise the UK’s ability to strike deals around the world. |
| This could allow the lowering of barriers elsewhere to help to make up for any loss of trade with the EU. | This could allow the lowering of barriers elsewhere to help to make up for any loss of trade with the EU. |
| However, trade deals take a long time to negotiate. The UK would also be in a far less advantageous negotiating position on its own. | However, trade deals take a long time to negotiate. The UK would also be in a far less advantageous negotiating position on its own. |
| Being the world’s largest economic trading bloc with 500 million relatively wealthy consumers gives the EU hefty clout which the UK alone cannot match. | Being the world’s largest economic trading bloc with 500 million relatively wealthy consumers gives the EU hefty clout which the UK alone cannot match. |
| The second positive put forward is that the country would not have to contribute to the EU's budget, though there would be other, potentially huge, costs to businesses. | The second positive put forward is that the country would not have to contribute to the EU's budget, though there would be other, potentially huge, costs to businesses. |
| European officials have also mooted charging an annual fee if the UK wants access to EU markets to buy and sell its products but remain outside the customs union. | European officials have also mooted charging an annual fee if the UK wants access to EU markets to buy and sell its products but remain outside the customs union. |
| Norway is set to pay £140 per head for its access to the single market between 2015 and 2020. The UK currently pays £220, according to analysis by factchecking organisation, Full Fact. | Norway is set to pay £140 per head for its access to the single market between 2015 and 2020. The UK currently pays £220, according to analysis by factchecking organisation, Full Fact. |
| The Brexit referendum asked voters to choose between remaining in the EU or leaving it - and was not a question of whether Britain would remain in the customs union. | The Brexit referendum asked voters to choose between remaining in the EU or leaving it - and was not a question of whether Britain would remain in the customs union. |
| But both Labour and the Tories have committed to leaving the current trading pact after Brexit. | |
| There are examples of countries that are in a customs union with the EU while not being a member state. | There are examples of countries that are in a customs union with the EU while not being a member state. |
| Turkey, Andorra and San Marino have customs union agreements with the EU but are not part of the single market. These agreements only cover certain goods. Turkey's agreement with the EU for example, excludes agricultural products, services and public procurement. | Turkey, Andorra and San Marino have customs union agreements with the EU but are not part of the single market. These agreements only cover certain goods. Turkey's agreement with the EU for example, excludes agricultural products, services and public procurement. |
| In practice, it is possible to be outside the customs union but still have access to the single market, as Norway is. This means it can negotiate its own trade deals but has to accept free movement of people and must comply with EU legislation. | In practice, it is possible to be outside the customs union but still have access to the single market, as Norway is. This means it can negotiate its own trade deals but has to accept free movement of people and must comply with EU legislation. |
| Labour says its policy on Brexit has been “evolving”. | Labour says its policy on Brexit has been “evolving”. |
| The party is split between those who favour remaining in the single market and those who say the UK must leave, with 80 senior figures warning Mr Corbyn that leaving the single market could scupper his efforts to ease austerity. | The party is split between those who favour remaining in the single market and those who say the UK must leave, with 80 senior figures warning Mr Corbyn that leaving the single market could scupper his efforts to ease austerity. |
| Last summer Labour announced it was backing an extended “transitional” period after Brexit that would keep existing ties to both the single market and customs union. | Last summer Labour announced it was backing an extended “transitional” period after Brexit that would keep existing ties to both the single market and customs union. |
| And the party appears to have shifted towards remaining part of a customs union, too. | And the party appears to have shifted towards remaining part of a customs union, too. |
| The Shadow Brexit Secretary, Sir Keir Starmer, said Labour had "long championed being in a customs union with the EU and the benefits". | The Shadow Brexit Secretary, Sir Keir Starmer, said Labour had "long championed being in a customs union with the EU and the benefits". |
| He said Britain was more likely to strike new deals if it works "jointly with the EU" | He said Britain was more likely to strike new deals if it works "jointly with the EU" |
| Theresa May’s Government has insisted that Britain must leave the customs union and single market if it is to honour the June 2016 referendum. | Theresa May’s Government has insisted that Britain must leave the customs union and single market if it is to honour the June 2016 referendum. |
| But critics say the simple in/out question does not provide a mandate for cutting ties with Britain’s most important trading partners. | But critics say the simple in/out question does not provide a mandate for cutting ties with Britain’s most important trading partners. |
| And some of those on the Brexit side of the argument promised before the vote that Brexit did not mean exiting those arrangements. | And some of those on the Brexit side of the argument promised before the vote that Brexit did not mean exiting those arrangements. |
| “Absolutely nobody is talking about threatening our place in the single market,” Daniel Hannan, a Tory MEP , said when the referendum was first announced. | “Absolutely nobody is talking about threatening our place in the single market,” Daniel Hannan, a Tory MEP , said when the referendum was first announced. |
| “No one has ever suggested in Brussels, and I have been here for 16 years, that if we withdrew from the union we would be excluded from the single market.” | “No one has ever suggested in Brussels, and I have been here for 16 years, that if we withdrew from the union we would be excluded from the single market.” |