What is the 'European Customs Union'?

The European Union Customs Union is an alliance formed by the members of the European Union that fulfills two primary functions for its members: It ensures the tariff-free movement of goods within the territory, whether those goods are made within the union or imported, and implements standardized rates of customs duties on goods imported from outside the union. The EU Customs Union also enforces a comprehensive system of regulations for the region's imports and exports.

BREAKING DOWN 'European Customs Union'

Administered by the European Commission, the duties of the EU Customs Union are implemented by the national customs offices of all member nations -- a total of 28 countries pre-Brexit. The officials of EU Customs handle the logistics of a huge volume of imported goods to the EU. These imports account for approximately 16 percent of the all imports around the world and are estimated to weigh more than 2 billion tonnes per year. In 2015, this volume of goods required the processing of more than 270 million declarations.

EU Customs is also responsible for enforcing rules designed to maximize security within the union. These rules focus on the following areas:

  • Protection of health and safety in the region through regulations governing the import of potentially dangerous goods such as contaminated foodstuffs or faulty electrical products.
  • Ensuring that technology exports that could be used in the manufacture of weapons are for legitimate purposes.
  • Environmental protection through the prevention of smuggling of endangered or protected plants, animals or prohibited products such as ivory.
  • Cooperation with law enforcement officials to clamp down on illegal activity such as drugs or weapon trafficking, money laundering, tax evasion and the trading of counterfeit goods.

Differences Between the European Customs Union and the Single Market

Although both the EU Customs Union and the European Single Market are formed primarily by the member states of the EU, there are some fundamental differences between these two entities.

It is possible for a country to be a member of the Single Market but not the Customs Union and vice versa. While the Customs Union regulates international trade deals and handles imports from outside the union, the Single Market requires a much greater level of integration of policies focused on the free movement of labor, working conditions, and health and safety standards within the region.

Norway is an example of a country that is not a part of the EU Customs Union but is a member of the Single Market. Norway sets its own trade agreements for imports from outside the union but must comply with EU regulations when moving goods and people within the Single Market. Because it is not a member of the Union, Norway may only circulate domestically produced goods within the Single Market on a tariff-free basis and must prove the origin of these goods.

Turkey, Andorra and San Marino are not part of the EU or the Single Market. However, the European Union has customs union agreements with these countries.  

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