Unions and free trade agreements may be similar. The difference between the two is that, in a customs union, participating countries establish a common tariff (a uniform external tariff applied by all Member States) against third countries, whereas this is not the case in a free trade agreement. The result is other differences: (i) within the framework of a customs union, participating countries must conduct trade negotiations as a single unit (usually the EU), while members can negotiate individually under a free trade agreement; (ii) in a customs union, the free movement of goods between Member States is permitted, but not in a free trade agreement; and (iii) within the framework of a customs union, customs between Member States is not necessary, but a free trade agreement requires it and its function can even be strengthened. Until the Article 50 negotiations are completed (with or without a withdrawal treaty), the UK is still a member of the EU and is therefore not allowed to conclude its own trade agreements with other countries. If we left both the internal market and the customs union, we could negotiate a free trade agreement with the EU. A free trade area is an area in which there are no tariffs or taxes or quotas for goods and/or services from a country entering another country. Third, such an agreement would involve sending tariffs on exports to the EU and it is highly unlikely that it would include free trade in services (neither the Canadian Free Trade Agreement nor the standard WTO framework). This is a problem for the UK, as it exports far more services to the EU than goods. A common market is generally called the first step towards the creation of an internal market. It generally relies on a tariff-free trade area on goods and the relatively free movement of capital and services, but it is not as advanced in removing other trade barriers. A single market is the last step and the ultimate goal of an internal market. It requires the full free movement of goods, services (including financial services), capital and people, regardless of national borders. On the other hand, the United Kingdom could follow Norway`s lead.
Norway is part of the internal market, but it is not part of the customs union, i.e. it sets its own tariffs on external goods, while Norwegian goods are freely imported into the EU. One way or another, there are three difficulties. Firstly, selling in the internal market would continue to require British companies to comply with EU law; but after leaving the EU, the UK would not have the opportunity to influence how they are made (this is the difficulty that Norway and Switzerland currently face). Negotiations can therefore be very long and complicated and the result can still leave many obstacles to trade. For both businesses in the market and consumers, an internal market is a competitive environment that complicates the existence of monopolies. [Citation required] This means that inefficient companies suffer market share losses and may have to close. However, efficient businesses can benefit from economies of scale, increased competitiveness and lower costs, and they expect profitability to be increased. [Citation required] This is especially true for companies that sell goods and services that can easily be distributed in countries in the internal market.