European Union Customs Union

European Union Customs Union
EU member states   Non-EU states which participate in the customs union, or are in bilateral customs unions with the EU
Type	Customs union
Membership	show 27 EU member states  Austria  Belgium  Bulgaria  Croatia  Cyprus  Czech Republic  Denmark  Estonia  Finland  France  Germany  Greece  Hungary  Ireland  Italy  Latvia  Lithuania  Luxembourg  Malta  Netherlands  Poland  Portugal  Romania  Slovakia  Slovenia  Spain  Sweden show 5 states/territories with bilateral agreements  Andorra  Monaco  San Marino  Turkey  Akrotiri and Dhekelia (United Kingdom)
Establishment	1968[1]
Area
• Total	4,950,000 km2 (1,910,000 sq mi)
Population
• 2021 estimate	518,000,000
GDP (PPP)	2021 estimate
• Total	$16.1 trillion
GDP (nominal)	2021 estimate
• Total	$16.6 trillion

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The European Union Customs Union (EUCU) is a customs union which consists of all the member states of the European Union (EU), Monaco, and the British Overseas Territory of Akrotiri and Dhekelia. Some detached territories of EU states do not participate in the customs union, usually as a result of their geographic separation.^[a] In addition to the EUCU, the EU is in customs unions with Andorra, San Marino and Turkey (with the exceptions of certain goods),^[b] through separate bilateral agreements.^[2]

There are no tariffs or non-tariff barriers to trade between members of the customs union and – unlike a free-trade area – members of the customs union impose a common external tariff on all goods entering the union.^[3]

The European Commission's Directorate-General for Trade negotiates for and on behalf of the Union as a whole in international trade deals (such as that with Canada and many others), rather than each member state negotiating individually. It also represents the Union in the World Trade Organization and any trade disputes mediated through it.

Common external tariffs[]

The EU Customs Union sets the tariff rates for imports to the EU from other countries. These rates are detailed and depend on the specific type of product imported, and can also vary by the time of year.^[4] The full WTO Most Favoured Nation tariff rates apply only to those countries that do not have a Free Trade Agreement with the EU, or are not on a WTO recognised exemption scheme such as Everything but Arms (an EU support arrangement for Least Developed Countries).

Union and common transit[]

Union transit, formerly called "Community transit", is a system generally applicable to the movement of non-Union goods for which customs duties and other charges due on import have not been paid, and of Union goods, which, between their point of departure and point of destination in the EU, have to pass through the territory of a third country.^[5]

The 'common' transit procedure is used for the movement of goods between the EU Member States, the EFTA countries (Iceland, Norway, Liechtenstein and Switzerland), Turkey (since 1 December 2012), the Republic of North Macedonia (since 1 July 2015) and Serbia (since 1 February 2016). The operation of the common transit procedure with the UK is ensured as the UK has deposited its instrument of accession on 30 January 2019 with the Secretariat of the Council of the EU.^[5] The procedure is based on the Convention of 20 May 1987 on a common transit procedure. The rules are effectively identical to those of the Union transit.^[5]

Edward Kellett-Bowman MEP, as rapporteur for a European Parliament Committee of Inquiry, presented a report to the Parliament in February 1997 ^[6] which identified the removal of border controls and a lack of co-operation by member states as being responsible for a rise in organised crime and smuggling.^[7] Kellett-Bowman's report led to the European Union setting up a customs investigation body and computerising transit-monitoring systems.^[8]

Union Customs Code[]

The Union Customs Code (UCC), intended to modernise customs procedures, entered into force on 1 May 2016.^[9] Implementation will take place over a period of time and full implementation is anticipated by 31 December 2020 at the latest.^[10] The European Commission has stated that the aims of the UCC are simplicity, service and speed.

Non-EU participants[]

Monaco and the British Overseas Territory of Akrotiri and Dhekelia are integral parts of the EU's customs territory.^[2][11]

State / territory	Agreement	Entry into force
Monaco	Franco-Monegasque Customs Convention[12][13][14]	1968
Akrotiri and Dhekelia (United Kingdom)	Treaty of Accession 2003[15] Brexit withdrawal agreement[11]	1 May 2004

EU territories with opt-outs[]

While all EU member states are part of the customs union, not all of their respective territories participate. Territories of member states which have remained outside of the EU (overseas territories of the European Union) generally do not participate in the customs union.^[16]

However, some territories within the EU do not participate in the customs union for tax and/or geographical reasons:

• Büsingen am Hochrhein (German exclave within Switzerland, part of the )^[17][18]
• Heligoland (small German archipelago in the North Sea with VAT free status)^[17][16]
• Livigno (remote Alpine town in Italy with VAT free status)^[17][18]
• Ceuta and Melilla (Spanish territories in Africa with VAT free status).^[17][18]

Historical opt outs[]

The following territories were excluded until the end of 2019:

• Campione d'Italia (an exclave of Italy surrounded by Swiss territory)
• the Italian waters of Lake Lugano

Bilateral customs unions[]

Andorra, San Marino and Turkey are each in a customs union with the EU.^[2]

State	Agreement	Entry into force	Notes
Andorra	Agreement in the form of an Exchange of Letters between the European Economic Community and the Principality of Andorra – Joint Declarations[19]	1 January 1991	Excludes agricultural produce
San Marino	Agreement on Cooperation and Customs Union between the European Economic Community and the Republic of San Marino[20]	1 April 2002
Turkey	Decision No 1/95 of the EC-Turkey Association Council of 22 December 1995 on implementing the final phase of the Customs Union[21]	31 December 1995	Excludes agricultural produce

Special arrangements concerning territories of the United Kingdom[]

The United Kingdom of Great Britain and Northern Ireland left the European Union on 31 January 2020 and transition arrangements ended on 31 December 2020. Special arrangements have been made for those parts of the United Kingdom and its territories that share a land border with an EU member state.

Northern Ireland[]

Northern Ireland is no longer a member of the European Union Customs Union: its trade with Great Britain and its trade with the European Union are each now regulated by the EU–UK Trade and Cooperation Agreement, the European Union (Future Relationship) Act 2020 and the United Kingdom Internal Market Act 2020. These include special provisions for trade in goods between Northern Ireland and the EU which for many purposes are similar to those that apply within the Customs Union, although Northern Ireland remains part of UK Customs territory.

Gibraltar[]

Gibraltar left the EU concurrently with UK. When part of the EU, it was one of the EU territories with opt-outs and had not been part of the Customs Union. An agreement in principle has been reached between the EU, the United Kingdom, and Gibraltar to negotiate a treaty which would include provisions for trade on goods between the EU and Gibraltar.^[22] These would be "substantially similar" to those within the Customs Union. As of July 2021 the agreement has not yet been concluded.

Akrotiri and Dhekelia[]

As already noted above, the British Overseas Territory of Akrotiri and Dhekelia in Cyprus are integral parts of the EU's customs territory.

See also[]

• Community preference – Former principle of EU governance
• European Union value added tax – EU-wide goods and services tax policy
  • EU VAT area
• European Customs Information Portal – EU Import/Export information service
• European Economic Area (EU and EFTA except Switzerland)
• European Free Trade Association (EFTA)
• European integration – Process of industrial, political, legal, economic, social and cultural integration of states wholly or partially in Europe
• European Single Market – Single market of the European Union and participating non-EU countries
• European Union–Turkey Customs Union – Customs union between Turkey and European Union
• Free trade areas in Europe – EU, EFTA, CEFTA, CISFTA, GUAM, BAFTA
• Free-trade area – Regional trade agreement
• Market access – Ability to sell goods and services across borders
• Non-tariff barriers to trade – Type of trade barriers
• Rules of origin – Rules to attribute a country of origin to a product
• Tariff – Tax on the import and export of goods

Explanatory footnotes[]

References[]

External links[]

• TARIC database enquiry system, gives current tariff rates applicable by exporting country and season – European Commission: Communication and Information Resource Centre for Administrations, Businesses and Citizens.
• TARIC and Quota Data & Information: user guides for the TARIC database above – European Commission: Communication and Information Resource Centre for Administrations, Businesses and Citizens.
• "Turkey border gridlock hints at pain to come for Brexit Britain". Financial Times, February 16, 2017