German industry groups have stated that German companies would prefer Britain remain in the customs union after leaving the EU to soften “the horror of Brexit.”
Germany’s BDI industry federation and the VDMA machinery association said on Tuesday that the risk of a “hard Brexit” requires a broader solution than a free-trade agreement, which the VDMA said would be a “significant deterioration compared to the status quo.”
In the EU customs union there are no tariffs imposed between EU members and goods from outside the union have the same tariffs for all EU members. Once goods clear customs in one EU country they can be shipped to another country in the union without additional tariffs.
The UK is the German car industry’s biggest export market, third-biggest destination for exports and its fifth most important trading partner.
Joachim Lang, chief executive of the BDI, said: “For German companies, duty-free and quota-free trade in goods is the minimum requirement, ideally within the framework of a customs union.”
“A mere trade agreement between the EU and the UK is actually too little and would mean a significant deterioration compared to the status quo,” said VDMA chief executive Thilo Brodtmann.
“A trade agreement would in any case mean border controls and customs clearance, even if both sides do not impose customs duties. A customs union between the EU and the UK would take away much of Brexit’s horror,” he added.
Mr Land said that German companies need predictability. The EU summit next week is going to be crucial.
“Now there is the chance to reduce uncertainty for companies on both sides of the channel,” Mr Lang said.
“If the EU summit does not provide clarity, then some companies will be forced to trigger their contingency plans,” he added.