„Frictionless trade between countries has led to very close economic ties between European companies and to cross-border value chains – many people have long referred to them as value networks.“ Olaf Scholz, German Finance Minister
#EuroABC – Customs union
In a customs union, several countries join forces to create a single customs territory. The members do not collect duties on goods that they trade with each other, and they charge uniform external tariffs on goods coming from third countries. The European customs union, which has existed since 1968, is of crucial importance today, especially for the orderly functioning of the single market.
How the customs union protects people and promotes trade
EU citizens benefit from the customs union in multiple ways. It allows the free movement of goods among EU member states. Travellers carrying goods can cross borders quickly and easily. Generally there are no restrictions on the value or quantity of goods carried. Exceptions apply in some cases, for example to goods such as cigarettes or alcohol, which are subject to excise duties. In general, customs authorities do not carry out any checks on the movement of goods across internal EU borders. This speeds up cross-border journeys within the EU, and it means that no customs duties are charged on goods.
The import and export of goods from and to third countries is monitored by customs. As part of these controls, officials also check to see whether legal prohibitions and restrictions apply to the goods in question. Certain goods may not be imported or exported due to these prohibitions and restrictions. These controls serve to protect people’s health, as they ensure that products arriving from third countries are safe and do not pose a danger to health.
Integration instead of separation
The customs union is essential for the functioning of the common internal market and the free movement of goods. Businesses that engage in international trade benefit from the standardised system for the trade in goods and the common legal framework when importing and exporting goods. The EU is one of the world’s biggest trade players, accounting for about 15% of global trade. This gives the EU more negotiating power than any of its member states would have by themselves. The cooperation with its international partners also helps to ensure the security of international supply chains. The concept of “authorised economic operators” plays a key role in this regard. This concept is based on the World Customs Organization’s idea of promoting partnership between customs authorities and businesses. The main aim is to enhance international supply chain security while simultaneously facilitating legitimate trade. For over 10 years, businesses in the EU have been able to apply for the status of authorised economic operator, which allows them to take advantage of simplified procedures.
The European customs union was founded in 1968 with the goal of abolishing internal customs duties and trade restrictions between its members. The customs union opened up national markets, making a greater range of products available. Nowadays, free trade is a matter of course within the EU. Companies base their processes and workflows on the free movement of goods. Brexit has made it clear just how important the customs union is for all participants. Many companies in the single market now need to re-examine the customs rules, known as the Union Customs Code, in light of political developments.
- The European customs union has existed for 52 years (since 1968).
- Over 114,000 customs officials work in the EU to ensure secure and frictionless trade.
- German customs authorities collect around €5 billion in import duties every year.