What’s happening with Brexit? The customs union problem explained.
Brexit seems boring, but it’s really important. So, we at The Yorker will give you a rundown of what has happened so far and what you really need to know.
On the 23rd of June 2016 the UK voted in a referendum to leave the European Union. That much is common knowledge. The UK is scheduled to leave the EU on 29th of March 2019. At that point we will enter into what’s called a transition period, which is designed to give other sides time to implement any new rules. It also gives the UK time to negotiate trade deals with other countries. This transition period will extend to 31st of December 2020, at which point on the 1st of January 2020, any trade deals the UK has negotiated will come into force.
So that’s all the key dates out of the way, but what are the key issues? Here’s what you need to know.
The biggest and greatest speed bump by far in these negotiations is the issue of Northern Ireland. As you may well know, for thirty years Northern Ireland was locked in a bloody conflict known as The Troubles. The Good Friday deal saw a peaceful resolution, but for many Irish Nationalists, an open border between The Republic of Ireland and Northern Ireland is a key part of the peace deal. We should stress that we are not on course for The Troubles to resume, but it does highlight the importance of getting the issue of Northern Ireland right.
This is where talks about the second big issue come into play: the customs union. You may well have heard talk of a ‘Hard Brexit’ or ‘Soft Brexit’, and an important divide (although not the only divide) between those two types of Brexit is the customs union. The customs union is itself is pretty simple to explain: when an EU country wishes to import something from a non-EU nation, that EU country must charge that non-EU nation an amount of money to import that good into their country. That charge, known as an import duty, must be the same among all EU members. The customs union ensures that the charge remains the same. A hard Brexit would mean leaving the customs union, a soft Brexit would mean remaining in the customs union. This is an issue for Northern Ireland because when the UK leaves the EU, and if the UK leaves the customs union, then they won’t be under any obligation to charge the EU’s import duty – they could make it cheaper to import stuff to the UK. This means that goods could end up in the Republic of Ireland that have not had the full EU import duty paid.
Here’s an example of what could happen if the UK left the customs union: pork could be imported from China to Northern Ireland. As, in this hypothetical scenario, Northern Ireland is no longer in the customs union, therefore, the UK could charge China lower import duties compared with the rest of the EU. If there were no systems in place at the Irish border, Chinese pork could be sold to The Republic of Ireland cheaper than Danish pork. This would put the UK in direct competition with the EU and for obvious reasons, the EU doesn’t want this. This could mean that the EU would want a harder border between Northern Ireland and The Republic of Ireland, but this could cause issues as we said.
Why not just stay in the customs union? Well that’s what some people are calling for, but those against it say that by remaining in the customs union would mean we don’t get the same level of control people voted for. Some also say that it would restrict our ability to make trade deals with other non-EU countries. This is why Labour are calling for ‘a’ customs union, which basically amounts to a treaty that will operate the same as the current customs union. The Government has ruled out any form of a customs union with the EU citing concerns that the UK wouldn’t have full control over duties without leaving. The Government instead is proposing a ‘customs partnership’, which would involve collecting the EU’s duties on goods that arrive to the UK that are destined for the EU. Critics say this is untested and unprecedented, and while the government acknowledges this, they believe it could work.