What is the customs union and why is it important?

The government says Brexit will include the UK leaving the EU customs union in order to sign new global trade deals.

But what exactly does the EU customs union do and how will leaving it affect Britain?

The customs union is separate from the single market and regulates how the EU trades with the rest of the world.

Custom union members negotiate trade deals with nations outside of the EU as a bloc, meaning that members are not allowed to make individual agreements.

All members are required to implement the same customs barriers for outside states and impose common external tariffs.

Leaving the customs union will have a number of implications for the UK, which cannot strike any deals with countries outside the EU until the Brexit negotiations have finished.

Once Britain has left the customs union, it will no longer be part of the 56 EU free trade agreements with countries such as Mexico, Korea and Chile. UK exporters could face increased tariffs and trade barriers in these countries.

As well as waiting for the outcome of the Brexit negotiations before making new trade agreements, Britain’s timetable for forging new free trade agreements may also be put back by its status at the World Trade Organisation (WTO).

Currently the UK is represented at the WTO as part of the EU bloc. This means that when the UK leaves the customs union, its position at the WTO will need to be changed.

The easiest route will be for Britain’s existing WTO commitments to be replicated. However, that will require another set of complex negotiations between the UK, the EU and other nations – all of whom have competing interests.

Another result of leaving the customs union will be the resurrection of costly border controls between EU and UK territories to check the origin of goods entering the single market and to ensure the correct tariffs have been paid.

A system of physically checking a certain percentage of all of goods entering the EU from the UK is likely to be implemented.

Despite proposals by the government to circumnavigate the issue with a “completely new customs arrangement”, the UK Trade Policy Observatory says any new arrangement will still slow cross border trade with the EU and increase export costs by between one and 10 percent for British exporters.

In Turkey, which has its own customs union agreement with the EU, lorries regularly queue for more than 14 hours to enter Bulgaria.

Information on how the single market operates can be found here.