IEA Conversations

The consequences of a permanent Customs Union

April 25, 2019

Remaining in a customs union with the EU would make it impossible for the UK to establish an independent trade policy, and render reclaiming policy areas such as agriculture and state aid an impossibility, an IEA briefing argues.

With customs union membership still on the table as a way to break the Brexit deadlock, a new IEA briefing outlines how any short-term benefits of customs union membership - such as securing supply chains - would be significantly outweighed in the long-run by the loss of trade opportunities and higher prices for UK consumers. 

Author of the report Shanker Singham, Director of the IEA's trade unit, highlights how a customs union would come with significant risk to UK consumers, who would lack representation in new EU trade agreements; UK consumers could also face price rises that protect EU manufacturers, and find their interests ranked secondary to those of EU producers. It would also reduce the UK’s influence with historic partners across the developing world.

On top of these drawbacks, membership of a customs union does not achieve ‘frictionless’ trade – one of the supposed benefits championed by those in support of staying in a customs union. 

Darren Grimes, Digital Manager at the IEA was joined to discuss by Shanker Singham and the top Brexit wonk who’s never off the telly, Henry Newman, Director of Open Europe.