European Customs Union

DEFINITION of 'European Customs Union'

The European Customs Union is an alliance formed by the members of the EU, and serves to fulfill two primary functions for the states which form the union. It ensures the tariff-free movement of goods within the territory; whether those goods are made within the union, or imported. It also implements standardized rates of customs duties on goods imported from outside the union, as well as enforces a comprehensive system of regulations for both imports to, and exports from, the union.

BREAKING DOWN 'European Customs Union'

 

Responsibilities of EU Customs

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 coming into the EU. These imports account for almost 16% of the global total, and are estimated at over 2 billion tonnes per year. In 2015, this volume of goods required the processing of more than 290 million declarations.

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

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

Differences between the Customs Union and the Single Market

Although both the European 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 in regard to policies focused on the free movement of labour, working conditions, and health and safety standards within the region.

Norway is an example of a country that is not a part of the European Customs Union, but is a member of the Single Market. As such, Norway sets its own trade agreements for imports from outside the union, but must comply with EU regulations in regard to movement of goods and people within the Single Market. As a result of not being a part of the Customs 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 a part of the EU or the Single Market; however the European Community has customs union agreements with these countries.