In: Economics
What is the difference between the EU single market and the EU Customs union?
The single market is different from the European Union Customs Union but they are interconnected. The single market (also called the ‘internal market’ and, before that, the ‘common market’) is the area of the EU in which states freely trade, and with which outside states can align their own rules by agreement.
The Customs Union overlaps with the single market, as it is a club of countries in which customs (tariffs and duties) have been removed from goods.It also ensures that countries charge the same import duties to countries outside of the single market, in order to avoid trade being diverted through members with low duties.
The Customs Union also requires the members of its club to join together to negotiate trade deals involving customs, since these have implications for the entire membership.
Like the single market, non-EU member states can also be part of the Customs Union by agreement. This currently includes Andorra, Monaco, San Marino and Turkey. Many of these arrangements are negotiated by each country and the EU.
For example, Turkey is able to trade freely in goods as a result of the European Union-Turkey Customs Union. Similarly, it is possible for a country to trade in the single market but not to be a member of the Customs Union. This is the case with EEA countries: Iceland, Norway and Liechtenstein.