The European Union (EU) Customs Union Agreement: Everything You Need to Know
The European Union Customs Union is an agreement between the EU member countries that eliminates tariffs, quotas, and other trade barriers among them while imposing common external tariffs on goods coming from outside the union. The EU Customs Union Agreement aims to promote free trade amongst the member countries, increase economic growth, and enhance cooperation amongst European nations.
The creation of the EU Customs Union Agreement dates back to the 1950s when the European Economic Community (EEC) was formed. The EEC aimed to promote economic cooperation amongst members and boost the European economy following World War II. The customs union was established in 1968, and since then, it has been continuously expanded to include more countries.
As of 2021, the EU Customs Union has 27 member states, including EU countries such as Germany, France, Italy, Spain, and the United Kingdom (until the end of the Brexit Transition Period), and three non-EU countries: Norway, Iceland, and Liechtenstein. These countries, alongside the EU, form the European Economic Area (EEA). Switzerland is not a member of the EEA but has a separate bilateral agreement with the EU.
One significant advantage of the EU Customs Union Agreement is that it simplifies the movement of goods within the union. Businesses can trade freely within the borders of the EU without worrying about the customs procedures, documentation, and taxes that are necessary when trading outside the union. It also eliminates the need for customs inspections at the borders of EU member states, which can delay the movement of goods and increase costs.
However, the EU Customs Union Agreement also has its limitations. Because the EU member countries all share the same external tariffs, they cannot negotiate their trade agreements independently. This means that they cannot set their tariffs on goods coming from outside the EU, and they have to agree on any new trade deals collectively. As a result, any changes to the EU`s trade policy must receive unanimous approval from all member states.
Moreover, the EU Customs Union does not cover services, which are becoming increasingly important in the modern economy. This means that businesses that want to provide services in other EU countries must comply with different regulations and standards, which can be challenging and time-consuming.
In conclusion, the EU Customs Union Agreement has been a significant driver of economic growth and cooperation amongst European nations. It has eliminated trade barriers and simplified the movement of goods within the union. However, it also has its limitations, such as the inability of member countries to negotiate their trade agreements independently and the exclusion of services from its scope. As the world becomes more interconnected, it will be interesting to see how the EU Customs Union evolves to meet the changing needs of its member states and the global economy.
