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Trade frictions inside and outside of a customs union

Geoff Riley

26th June 2018

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This graphic displays one of the clearest contextual examples of trade frictions outside a customs union that you could possibly find. Gold dust for the classroom!

Honda is a prime exponent of just-in-time production. Consider this quote from the article if leaving the customs union threatens their model. "A warehouse capable of holding nine days’ worth of Honda stock would need to be... one of the largest buildings on earth"

Honda's supply chain:

Within the customs union, 5-24 hours to purchase a part from rest of EU

Outside the customs union, 2-9 days due to new import declarations, then 2 sets of customs clearance/border checks at EU & UK ports#Brexit #cars #supplychain https://t.co/6nySF7VR4i pic.twitter.com/8cjB7lHXqr
— Linda Yueh (@lindayueh) June 26, 2018

Honda explains to FT customs union exit impact on supplychain:

-Extra 24 hours on current 5-24 hours for production/ transport of parts within EU

- Extra 24-36 hrs entry clearance into EU for half of cars exported

- 3-6 days having to avoid congested Chunnel by shipping pic.twitter.com/T6DwRauYf8
— Faisal Islam (@faisalislam) June 26, 2018

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Geoff Riley

Geoff Riley FRSA has been teaching Economics for nearly forty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD and Revision conferences in the UK and overseas.

@tutor2uGeoff

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Trade frictions inside and outside of a customs union

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Teaching Economics

Trade frictions inside and outside of a customs union

Geoff Riley

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