Brexit in the context of the Customs Union

In the early summer 2018 the United Kingdom the parliamentary discussions intensified on certain aspects of Brexit. They revolve around the plans of Great Britain to leave the European Union Customs Union as well as the single market, which allows some non-EU countries to benefit from the customs union’s advantages. As the announced date of Brexit is coming closer the debates go about the future of trade and border arrangements between the UK and the EU. Will there no longer be frictionless movement of goods between the UK and the EU?

At this moment, 28 of the EU member states participate in the Customs Union – which exists for decades and subsequently became the cornerstone of the EU itself. Throughout its years of existence, it was gradually developing towards harmonisation of legislation, unification of tariffs and customs procedures in the participating states and designing of single trade policies in relations with third countries. In 1992, it led to the adoption of the Community Customs Code. The improvement process still continues, in particular, with Decision No 70/2008/EC of the European Parliament and of the Council of 15 January 2008 on a paperless environment for customs and trade, which set the goal to set up a harmonised, integrated system for exchange of information contained in customs declarations, accompanying documents and other information. It announced the transition to an electronic customs systems, aimed at increasing the speed, transparency and effectiveness of customs procedures. In May 2016 it was further supported by the coming into force of the main provisions of the modernised, adapted to the changes in the international trade, Union Customs Code (effectively abolishing the previous Community Customs Code). Although, some provisions, including the complete implementation of the mentioned electronic customs systems, due to the complexity of their nature, can be prolonged until 2020.

In general, the benefits of participation in the European Customs Union for countries and their businesses are obvious – the absence of paperwork, border control, customs duties and fees related to the movement of goods within the European Union. It is not only customs duties which are abolished within the Customs Union. The European Union went to a great length to get rid of any other possible payments which might be a less obvious substitution of duties or protection measures. For trade outside the EU a set of rules exists ensuring that all the Member States make use of single customs duties rates as well as agreements on trade with third countries. This makes transfer of goods a simple, well-organised and straightforward process, thus ensuring efficiency in trade or supplying.

Naturally, these rules and benefits apply to each and every Member State equally. If some goods trading or manufacturing companies currently incorporated in the UK consider changing their principal place of business upon or in the wake of Brexit, they will orient on other factors in deciding where to relocate. Even with the common rules Europe remains widely dissimilar in a geographical, logistical and even economic sense. There can be a particular chance for the Netherlands to attract businesses at that point. As a nation whose success throughout history has been highly dependent on trade, they led the unification tendencies with Benelux (union of Belgium, the Netherlands and Luxembourg) which predated the creation of the European Union. At the same time, this country historically has a well-developed infrastructure for trade, especially maritime. The port of Rotterdam, largest in Europe, provides great logistic choices and highly intensive connections to ports in Asia and the Americas. The Netherlands also have a developed railway network, connecting it to the economically developed neighbours. An additional bonus is that the Netherlands position themselves as a country welcoming foreign specialists and business – and as part of this strategy, the Dutch government encouraged the use of the English language by state agencies, and it allows an easier flow of workforce from other, especially English-speaking countries.

As the Brexit preparation goes on, some uncertainty remains. The matter is complicated by the promise given by the British government to keep the border with Ireland unaffected. Ireland, however, as a Member State, should not be able to have free movement of goods with a state outside the Union. All these aspects make it difficult to estimate the final agreement on the future move of goods between Europe and the UK. We can be sure that the changes are imminent, and in these circumstances certain loss of business by the United Kingdom is a very likely perspective. How this situation will be used by its neighbours to their own avail remains to be seen.

Scroll to Top