Single Market, Customs Union and Free Trade Agreements, Put Simply

By Editor in Chief Cameron Broome

Ever since the British people voted to leave the European Union on the 23rd June, debates have been dominated by the question of whether or not access to the single market can be retained whilst also curbing immigration. Commentators have talked about customs unions, the single market and free trade agreements. But terminology like this can all seem quite messy and complicated. What do these terms actually mean? What’s the difference between them? Here these terms will be Put Simply.

Single Market

  • Free movement of goods, services, capital and people between nation-states
  • Example is the European Union Single Market (Note: not = the “EU” itself)
  • Attempts to also remove “non-tariff barriers” e.g. health and safety regulation
  • Attempts to harmonize regulation of member states to create a level playing field (e.g. EU has environmental regulations which all member states must adhere to)
  • Biggest debate in Britain concerns whether or not access to single market can be maintained whilst also curbing the free movement of labour
  • Note: “access” to the single market is an ambiguous concept and hotly debated (see here for further reading:

Customs Union

  • Free Trade Area (see below) but with a common external tariff: this means that member states establish rules with regards to trading with non-member states
  • Once past customs, products can be exchanged freely within the union
  • Example = European Union
  • Note: the difference between being a member of a customs union (CU) and a single market is that CUs do not require free movement of capital/labour (i.e. you can be a member of EU customs union but not the Single Market)

Free Trade Agreements

  • Where member states agree to reduce trade barriers between one another
  • Negotiations can be complex and timely; each FTA has specific, unique details
  • However, the broad aim of FTAs is to eliminate taxes, tariffs and quotas on the flow of goods and services between countries that have signed the agreement
  • Note: FTAs can be stealthily underpinned what is termed the “Investor State Dispute Settlement”: this can give companies the power to sue nation-states if they implement policies which they believe have damaged their profitability
  • This was behind the opposition to the proposed Transatlantic Trade and Investment Partnership (TTIP): a proposed FTA between the EU and the US (read more here:
  • Note: the difference between FTAs and a customs union is that with a FTA, no agreement is made with regards to trading with non-members of the FTA



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