Tuesday 27 September 2016

What is a customs union? And how does it relate to the EU?

Published 28/07/2016 | 02:30

The former EU Commission President Jacques Delors
The former EU Commission President Jacques Delors

A customs union is a grouping of countries which agree not to apply tariffs or quotas on trade. Usually, they also agree to apply common tariffs and quotas to goods coming from outside.

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In reality, the European Union has a customs union at its core, which is the cornerstone of the whole operation.

What is now called the European Union began life as essentially a customs union. The 1957 Treaty of Rome, which established the European Economic Community (EEC), banned duties on imports and exports between the six participating states, with common tariffs applying to outside countries.

There had been various smaller-scale attempts at customs unions before the EU came on the scene. German and Italian unification in the middle of the 19th Century began in part as customs unions.

After very slow progress with defence and other forms of European cooperation in the mid-1950s, the focus switched to trade. Following that Treaty of Rome stipulation, ambitious deadlines were set for the elimination of customs duties and quotas as impediments to trade.

The EEC's customs union was completed ahead of the 1970 deadline in summer 1968. That gave the whole enterprise a big boost in internal morale and international reputation.

That was surpassed in December 1992, when the border-free single market was created. This was driven by the inspirational EU Commission President, Jacques Delors (left), and it effectively established free trade between the then 12 EU member states.

Other customs union examples include the Gulf Cooperation Council in the Middle East; Mercosur, which groups many South American states; and the Andean Pact, which also groups South American nations.

Irish Independent

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