European Customs Union

What Is the European Customs Union?

The European Union (EU) Customs Union is an alliance formed by the members of the European Union that allows the tariff-free movement of goods within the territory and implements standardized rates of customs duties on goods imported from outside the union.

The EU Customs Union also enforces a comprehensive set of regulations for the region's imports and exports.

Key Takeways

  • The European Customs Union is the body that regulates imports and exports within the European Union.
  • The Union eliminated customs duties and import restrictions among its member nations.
  • It established and administers the tariff-free movement of goods among its member countries.
  • It also sets regulations for the quality and safety of goods imported into member countries.
  • The United Kingdom's exit from the European Union and the Customs Union has changed the rules for U.K. businesses doing business in Europe and for U.K. consumers buying European goods.

Understanding the European Customs Union

The European Customs Union traces its origins to 1968 when all customs duties and restrictions among the member countries of the European Economic Community (EEC) were lifted. A single customs tariff replaced national customs duties on imports to the six nations that were then members of the EEC.

There are now 27 nations in the European Union. Three other nations (Iceland, Liechtenstein, and Norway) are part of the European Economic Area (EEA) but not the European Union. (The United Kingdom officially withdrew from the European Union at the beginning of 2020, in a move known as Brexit.)

Administered by the European Commission, the duties of the EU Customs Union are implemented by the national customs offices of the member nations. The officials of EU Customs handle the logistics of imported goods to the EU.

These imports are vast in scope, accounting for approximately 15% of all imports worldwide. In 2019, the value of the EU trade with other countries amounted to EUR 4.09 trillion.

Quality Control

EU Customs is responsible for enforcing regulations designed to maintain the quality and security of goods imported to 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 weapons manufacturing are not used for that purpose.
  • 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 counterfeit goods trade.

The European Customs Union vs. the Single Market

Both the EU Customs Union and the European Single Market are entities created by the member states of the EU, there are some fundamental differences. It is possible for a country to be a member of the Single Market but not the Customs Union and vice versa:

  • The Customs Union regulates international trade deals and handles imports from outside the union.
  • The focus of the Single Market is on the free movement of labor as well as on working conditions and health and safety standards throughout the region.

Single Market Status

Norway is not a part of the Customs Union but is a member of the Single Market.

Norway sets its own trade agreements for imports from outside the union but follows EU regulations for 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. 

In mid-April 2022, Ukraine President Volodymyr Zelenskyy submitted a questionnaire on European Union membership to a Union envoy. The nation is seeking to fast-track its EU membership application in the wake of Russia's invasion of the country.

European Customs Union and Brexit

The United Kingdom is no longer a member of the European Union, and that means it's no longer a part of the European Customs Union. The changes are varied and complex.

For one thing, it means that businesses in England, Wales, and Scotland (but not Northern Ireland) have to make customs declarations for goods they import and export to EU nations, as they would for trade with any foreign nation. No new taxes or limits have been imposed, but the bureaucratic burden is significant.

On the positive side, Brexit has ensured that the U.K. can make its own trade deals with other nations like the U.S. It also is now free of European Union rules and regulations regarding imports and exports.

Northern Ireland is being permitted to continue to follow most E.U. regulations, as does the Republic of Ireland, which remains a part of the EU.

For British travelers to Europe, the changes are myriad. One big one: No more guarantees of free-roaming charges on cell plans.

History of the European Customs Union

Since its establishment in 1968, the European Customs Union has continuously moved towards ease of movement of goods and people across Europe.

In 1987, hundreds of customs declaration forms issued by many nations were replaced with a single standard form. Customs formalities for commercial vehicles crossing borders were discontinued in 1987. Customs offices were electronically connected in 2005.

The Union also has taken an active role in the security at the borders of member nations.

Do You Pay Customs Within the EU?

No customs duties are collected when goods are transported across EU borders by individual travelers or by commercial carriers.

That doesn't mean that the buyer isn't paying duties. The duties owed on goods imported to the EU are paid when they enter an EU nation.

If an American (or any other non-EU citizen) buys goods online from an EU nation, a value-added tax (VAT) will be applied. This tax varies by state. Excise duty is charged on sales of alcohol and tobacco products.

What Countries Are in the European Customs Union?

The member nations of the European Customs Union as of 2022 are Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungar, the Republic of Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, and Sweden.

Norway, Iceland, and Liechtenstein have a free trade area relationship with the EU but are not members of the customs union.

How Much Is the Customs Between the EU and the UK?

It's complicated.

Orders from most online retailers valued at £135 or less can be received without additional duties. Duties must be paid on more valuable items at rates that vary by product.

Gifts worth more than £39 are subject to a 20% import tax.

Before Brexit, UK consumers could buy or bring in goods from Europe without paying import duties. That changed in early 2021 as one step in the gradual Brexit implementation.

Why Is Norway Not in the EU?

With 27 member nations, the European Union has absorbed most of Europe, even stubbornly independent nations like Sweden and Austria. But Norway remains aloof.

It's a notable omission since Norway is one of Europe's most prosperous nations.

Norwegian voters vetoed EU membership by referendum in 1972. An active movement against membership has persisted ever since, and makes a number of arguments:

  • Norwegian citizens have greater democratic voices if they remain independent of the EU.
  • The EU is forcing its poorer member nations into accepting globalization to the detriment of their own businesses.
  • The EU has failed to address environmental issues effectively.
  • Norway has greater autonomy by remaining outside the EU.

Article Sources

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  2. Government of the United Kingdom. "Countries in the EU and EEA."

  3. European Commission. "EU Customs Union – unique in the world."

  4. European Commission. "Customs sees what you don't… and protects you."

  5. European Commission. "Taxation and Customs Union. List of non-EU countries."

  6. Reuters. "Zelenskiy: Ukraine could become EU candidate within weeks."

  7. BBC News. "Brexit: Seven things changing on 1 January."

  8. European Commission. "History of the EU Customs Union."

  9. European Commission. "Buying goods online from within the European Union."

  10. European Commission. "Taxation and Customs Union."

  11. Lawyers for Britain. "What is the EU Customs Union?"

  12. The Guardian. "EU website purchases: the import charges UK customers have to pay."

  13. European Horizons. "Norwegian Exceptionalism: How the European Union Can Use Norway to further European Integration."

  14. Systems Change Alliance. "Why Norway Refused to Join the EU."

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