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An important part of the Brexit debate relates to whether the UK try to retain its...

An important part of the Brexit debate relates to whether the UK try to retain its membership of an EU customs area. What are the benefits and costs of being a member of a customs area, and in what ways does a free trade area differ from a customs union?

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Answer #1

Advantages of being a member of a customs area:

  • It reduces problems associated with shipments of goods.
  • it reduces costs of shipments.

Costs:

  • Cost of storage in custom area may rise due to huge demand for areas,

Free trade simply seeks to eliminate tariffs among the member countries but it does not maintain common tariffs against non member countries. Custom union is next step in free trade area. Here tariffs are eliminated and common tariffs and duties are imposed against non member countries.

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