A KEY part of Brexit negotiations will be a new trade deal, but what are the different options facing the UK? We explain the differences between the EU single market, free trade area and customs union.
GETTYWhat is the EU single market?
The single market is likely the most wide-reaching and ambitious trade agreement in modern history.
As well as removing tariffs and taxes on business and trade, the EU single market also incorporates free movement of goods, people, services and capital.
The four freedoms are enshrined in Brussels’ law and are a non-negotiable part of EU membership.
The freedom of movement has been seen as particularly problematic as it prevents member nations from controlling EU immigration.
The single market also seeks to remove “non-tariff” barriers to trade by unifying rules in areas such as packaging, health and safety and food standards.
In July Britain voted to leave the European Union in order to regain control of its borders, but it could negotiate single market access if Brussels is willing to separate the four freedoms.
GETTYWhat is a free trade area?
A free trade area is different to a single market in that it is focused on removing tariffs, taxes and quotas on goods and services.
Usually free trade areas are not concerned with “non-tariff” barriers or freedom of movement.
Europe has its own free trade area separate from the EU – the European Free Trade Association. It is made up of non-EU members Norway, Iceland, Switzerland and Liechtenstein.
Other exampled of free trade areas are the North American Free Trade Agreement (NAFTA) and the proposed Comprehensive Economic and Trade Agreement (CETA) and Transatlantic Trade and Investment Partnership (TTIP).
What is a customs union?
A customs union goes one step further than a free trade area with members agreeing to apply the same tariffs to goods entering the union from external countries.
Once goods are inside the union, they can move across borders tariff-free. For example, if an American good enters France (part of the EU customs union) if can travel onwards to Italy or Germany without having to pay additional taxes.
Liam Fox has suggested that Britain might remain a part of the EU customs union as part of a transitional deal.
Alternatively the UK could follow Norway’s lead. Norway is part of the single market but not the customs union, meaning it sets its own tariffs on external goods, while Norwegian products are imported freely into the EU.
http://www.express.co.uk/news/politics/745670/EU-single-market-free-trade-area-customs-union-difference-explained
