Brush up on your Brexit vocab

Jul 02, 2018
In the last edition, we looked at why the Brexit vote was called in the first place. This time around, Crona Brady looks at some common terms that crop up time and time again in the Brexit debate.

What is a hard and soft Brexit?

The terms relate to the UK’s relationship with the EU after Brexit. A hard Brexit could see restrictions on the free movement of people and trade between the UK and the EU, as well as physical infrastructure at the border between Northern Ireland and the Republic of Ireland.  A soft Brexit would mean free movement of people and goods, and no physical border. 

What is the single market?

The single market allows all member states in the EU to act as a single entity and guarantees free movement of goods, services, money and people within the EU. It also standardises rules and regulations on products and services.  

For example, it allows Italian people to live in the UK and Britons to live in Spain, and bans the manufacture or sale of vacuum cleaners across the EU with motors more powerful than 900W.

What is a customs union?

A customs union is a group of countries that have agreed to allow free trade between them. Turkey is in a customs union with the EU but is not a member of the EU meaning Turkey and the EU can trade freely with each other without customs checks at the borders. Turkey must charge the same customs duties to countries outside the EU as the EU does and there are limitations on Turkey being free to strike its own trade deals. 

What is the difference between a customs union and the single market?

A customs union generally only covers free trade, while the single market allows free movement of goods, people, services and money. Some countries outside the EU are in the single market but not the customs union. For example, Iceland is a member of the single market but not the customs union.

The UK wants to leave the EU Customs Union – what will this mean?

Unless the UK agrees a free trade agreement with the EU, UK imports into the EU will suffer customs duties on some goods which could range from 1% right up to in excess of 50%. There could also be checks at EU borders meaning customs checks and controls on the island of Ireland.

What is a free trade area?

In a free trade area, there are no customs duties or limits on goods or services. Parties to a free trade agreement are also free to make their own trade deals with other countries. 

For example, in September 2017, the EU and Canada reached agreement on free trade under an agreement entitled Comprehensive Economic and Trade Agreement (CETA). CETA removes duties on 98% of products that the EU trades with Canada, a saving worth several hundred million euro. 

What if the UK leaves the EU Customs Union and does not agree a free trade agreement with the EU?

If this happens, trade between the UK and the EU will operate under World Trade Organisation rules; custom duties and limits may apply on trade between the UK and the EU.

Unfortunately, an agreement must be reached on all these Brexit details by October 2018 at the very latest.