If we leave without a deal, then everything will be up for grabs. We will have no chips to bargain with. To stop the UK haemorrhaging jobs and money, we'll be desperate to accept anything that is offered. The NHS will simply not survive.

You might call this project fear, but I don't see how no-deal could turn out much different. Leave campaigners predicted long queues of countries competing for trade deals with the UK the day after the referendum, but nothing of the sort ever happened. The reality will be much worse. This is from Ian Dunt's 2016 book:

>Ahead of talks, the UK prime minister and the US president hold a joint press conference. Theresa May says it shows countries are still keen to trade with the UK, while her American counterpart confirms the US commitment to the special relationship. Then the doors of the negotiating room close and the two leaders are replaced by grim-faced trade experts.
>
>Britain had a chronic shortage of negotiators during the EU talks and the situation has not improved. The ones facing the American team are those who are not required to fight the fires at the WTO. Many are civil servants who have had to read up on trade in the years since Brexit. They face highly specialised trade experts who have been doing this their entire careers.
>
>The public rhetoric disappears. It is replaced by hard-headed demands. US trade officials inform their British counterparts of the reality of the situation. The UK is in a position of unique and historic vulnerability. Investor confidence has dissolved. Its economy is facing its most significant shock since the Second World War. It has no time. It has no negotiating capacity. But Washington wants to help. It is prepared to rush a trade deal through Congress. It could take less than two years. But for this to be achievable, the UK needs to accept all of its demands. The Americans slide a piece of paper across the desk. The British team read the demands: they are horrendous. Consumer protections are reduced across the board, along with environmental regulations and safeguards for the NHS.
>
>UK civil servants have little option but to capitulate. The only way to protect what remains of the British economy is to sell off British sovereignty. The control wrestled from Brussels is now sold off to the highest bidder, behind closed doors, in a conference room in Washington.

>Brexit: What the Hell Happens Now?

https://www.amazon.co.uk/Brexit-What-Hell-Happens-Now/dp/0995497826/

oder

>The Brexit Survival Activity Book

https://www.amazon.co.uk/Brexit-Survival-Activity-Book/dp/1409171108

You should take a look at THIS BOOK which takes the points made in the article in to far more detail, although keeps it easy to understand, and makes it a genuinely good read - a pretty hard task on a topic so complex as Brexit.

I will try, but it is fairly complex. Corrections welcomed.

A great overview of all this stuff is in "Brexit: What the hell happens now?" by Ian Dunt. Recommended reading.

Overview

The Single Market and the Customs Union put together are a bunch of countries who collaborate to allow each other to buy and sell goods without any interference. Just as Birmingham and Glasgow are able to trade within the UK just by driving the goods from A to B, so France and Germany can trade within the EU (all EU countries are member of both the SM and the CU).

The Single Market

Interference (also called "trade barriers" or "friction") which exist outside the EU includes stuff like tariffs (taxes on goods that are imported to the market), quotas (only allowing a maximum amount of goods in), and compliance checks.

The Single Market is concerned with Compliance Checks, and the Customs Union is concerned with tariffs and quotas.

Compliance checks mean (for example) that if you want to sell a vacuum cleaner in the EU, it has to conform to the EU regulations. Maximum power consumption, maybe. Various safety standards.

To get your vacuum cleaner certified as conforming to all the EU regulations takes time and costs a lot. You have to pay an authorised body to make the checks and get it certified.

Then, when your vacuums arrive at the border, Customs officers are going to open the lorry and check that they are what you have said they are on the shipping manifest. This also takes time. They might also send one machine off for testing, to make sure you really are complying. Otherwise smugglers could just send any old thing through, once they got certified.

Your goods can be delayed for days or even weeks due to border checks.

The Single Market allows France to send goods to Poland (for example) without the lorry being stopped even once for such checks. The goods are assumed to be compliant with all EU rules and regulations because they originate within the Single Market. The lorry just sails on through.

Though that is also, in part, due to the Customs Union.

The Customs Union

The Customs Union is the way that the EU deals with tariffs on goods coming in to the Single Market from non-EU countries (as opposed to goods travelling around inside the market, between France and Poland).

All the countries in the Single Market have to impose the same tariffs on goods that come from outside. Otherwise, if Ireland charged 5% on (say) Chinese tea, but France charged 10%, suppliers would send all their tea to Ireland and then transport it (via the single market - with no lorry stops) to France. They can then sell it cheaper in France than they should be able to.

So France makes sure that they have the same tariff as Ireland.

Quotas (maximum amount allowed to be imported) are also shared. The EU (as a body) might agree with the USA that the EU will impose a 2% tariff on American air conditioners, and there will be a quota of 10,000 per year. US companies can then sell 10,000 air con units to the countries in the Customs Union. Anywhere in it. But once that quota is filled, the US companies have to stop selling until next year.

Having all the Customs Union countries share the quotas is again important because otherwise the USA could import 5,000 to Ireland, and then 6,000 to France - thus exceeding the limit. So the countries must share the quotas and let each other know how many have come in.

Goods within a Customs Union can move more freely than those outside. But there are limits.

Turkey (partial Customs Union only)

Turkey currently has a Customs Union with the EU. But it only relates to certain goods. For these goods, Turkey pays no tariff and has no quota when exporting to the EU. Turkey also charges the same tariff and enforces the same external quotas as the EU does - so no outside countries get an advantage by importing through Turkey.

However, this means that Turkey have to obey EU laws and regulations for all the goods which are covered by their Customs Union. Otherwise, firms could just move to Turkey, bypass regulations, and then move the cheaper goods into the EU and sell them there.

But since not all goods are covered, lorries will be checked to see that they are carrying what they claim to be carrying. There is still a "hard border" between Turkey and the UK, despite there being a Customs Union.

Norway (Single Market only)

Norway is in a different position: they are in the Single Market but not in the Customs Union. They can set their own tariffs with other countries. But goods can pass (almost) freely over the border to the EU. Because Norway are in the Single Market and follow all the laws and regulations, goods do not have to be checked for compliance (they will be checked by Norway on arrival from other countries and are from then on fine). The Norway border means you stop, tell the customs agent what you are carrying, pay any tariffs necessary (or prove they have been paid) and then carry on about your business.

So note that being in either a Customs Union or the Single Market still means that you have to have a hard border, with stops and checks in order to preserve the integrity of those bodies. Otherwise they become easy to bypass.

EU countries (both)

EU countries are in both, so there are no border checks needed for any traffic going between EU countries. At least, not for goods. They might want to check for illegal immigrants, and countries can still close their borders for security reasons (eg a terrorist is on the loose so all passports will be checked and searches may be made).

EEA

The EEA is a group of countries which subscribe to the Four Freedoms of the Single Market. Not all countries are in the EU. Norway, Switzerland, and Iceland are not in the EU but are in the EEA.

Those countries have to follow most EU laws and regulations. Norway has exemptions for fishing and agriculture.

The EEA is open to members of the EU, and members of EFTA (European Free Trade Association). EFTA consists of Iceland, Lichtenstein, Norway, and Switzerland.

EFTA was originally set up to compete with the EU (or the EEC as it was then called). The UK was a founding member. However, it became clear that the EEC was doing a lot better. The UK and Denmark withdrew in 1973, and joined the EU instead. Austria, Finland, Portugal, and Sweden later followed suit.

The remaining countries (Norway, Switzerland, Lichtenstein, and Iceland) are now in the EU Single Market to a greater or lesser degree but are not in the Customs Union.

Implications of withdrawing

Withdrawing from the Customs Union would allow the UK to do its own trade deals in terms of tariff and quotas. It would introduce paperwork required for goods to cross between the EU and the UK and payment of tariffs (unless a free trade agreement is in place - but that would probably introduce a "country of origin" check so that the USA couldn't send goods to the UK for a lower tariff and then move them into the EU.

In UK terms, this would mean goods from Birmingham would be stopped at the Scottish border while customs taxed them and made sure they were from England.


Withdrawing from the Single Market would require paperwork, compliance checks, lorry searches. A much harder border to sustain those.

In UK terms, this would mean the Scottish border agents physically examining the goods in the lorries, taking one for testing, and forcing the lorry to wait until the process completed. This could take weeks. Agricultural produce can spoil. That's tough luck and the risk the farmer took when they accepted an order from outside their free trade area. This was one of the primary drivers behind creating the EU and allowing "frictionless" trade - trade without these checks.

Withdrawing from both means all of the above.

Hope that helps! Any questions, ask.