The Customs Union Unicorn

A customs union is a type of trade bloc which is composed of a free trade area with a common external tariff.

The World Trade Organization (WTO) thorugh GATT defines a customs union as follows:

(a) A customs union shall be understood to mean the substitution of a single customs territory for two or more customs territories, so that

(i) duties and other restrictive regulations of commerce (except, where necessary, those permitted under Articles XI, XII, XIII, XIV, XV and XX) are eliminated with respect to substantially all the trade between the constituent territories of the union or at least with respect to substantially all the trade in products originating in such territories, and,

(ii) subject to the provisions of paragraph 9, substantially the same duties and other regulations of commerce are applied by each of the members of the union to the trade of territories not included in the union.

So duties are regulated, while a wide range of non-tariff barriers could be or are not handled withon the Customs Union (in most Customs Unions there is not a single market like in the EU).

There are also valid reasons for why Customs Unions and Free Trade Agreement take a long time to agree on. Ot is complicated and not a quick fix.

There are several Customs Unions in the world and I have been working with the development of all of them.

Now in the present Brexit debate I see (again) that people are referering to different types of Customs Unions as the silver bullet for future relations. Let me saybit here and now. It is not. A Customs Union can be a part of solution regulating the tariffs. It does not automatically solve a range of other challanges.

It was the same when I was involved in the debate about the Irish Border (ROI-NI). From everywhere appeared people claiming to be “Customs and Border Experts” with absolutely no experience from desgoning, developing, implementing (laws, policies and pricesses) and managing a border. Some so called experts claims technology and techniques does not exist and would take ten years to implement, which is toally wrong. Anybody with branch knowledge know this.

Same happened when talking about “Leaving on WTO terms”. This is not an alternative to the present situation. To become a third country over kight has severe consequences regardless of preparations. Any professional can testify to this. Most people simply don’t know what these things means in reality. So why are they not asking the professionals? If you want to do a heart transplant you normally seek the support of a surgeon in this field, ypu don’t try to donit on your own at home? Or ask the butcher och dentist to help. So why not ask the international Customs professionals now.

My guess and I suspect that these people don’t want to know the real answers, since it is simple enough to pick up the phone and call a professional in this field. Maybe there is a suspicion that the reply from the professional community might not fit the agenda at hand.

So when people talk about different types of Customs Unions and/or leaving with no-deal on WTO terms – please ask if this has been discussed with the global customs community.