Common External Tariffs

The Daily Telegraph (Saturday, 1st October) pontificated with regard to Britain’s future trading relationship with the EU that “membership of the EU customs union must surely be rejected by the UK”.

Yet there are huge immediate advantages to Britain (and the EU) in continuing, at least for the time being, with one part of the customs union, namely to apply the EU Common External Tariff (CET) to industrial goods imported into the EU and Britain from non-EU countries. The average tariff on this class of product imported into Britain is now very low (about 2.4%), amounting in cash terms to around £2.5 billion per annum, all of which would accrue to Britain rather than the EU as at present.

If a country wishes to be part of a tariff-free trade zone for a given class of product, it has either to accept a  common tariff on those products imported from third parties outside the zone, or accept rules of origin classification procedures to establish the conditions under which products with some third party-content can be allowed to circulate freely in the zone.

For Britain to continue with the CET on industrial goods would mean there would be no change in the customs paperwork on most EU-UK trade, to the great relief of our exporters. There would also be no requirement to establish rules of origin for upwards of the 8,000 industrial product lines in the EU trade codes.

Turkey has had an agreement to apply the EU CET to third party goods imports since 1996, with both agricultural products and free movement of people excluded, as the UK also would require. Turkey has not found their EU agreement to inhibit their making trade agreements with the other countries. Indeed the EU and Turkey have recently agreed to consult each other on any future trade agreements which either makes with third parties.

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