Customs union definition
A customs union is an agreement where member countries eliminate tariffs among themselves and apply a shared external tariff and border policies to non-members.
A customs union is a trade agreement among countries that removes tariffs on trade among members while requiring them to adopt a common external tariff (or customs duties) and coordinated border policies for trade with states that are non-members.
The oldest is the Southern African Customs Union, founded in 1910. Its members, Eswatini, Botswana, Lesotho, Namibia and South Africa, have a common external tariff, and each country has an internal tax that applies to imports from the other member states as well as from third countries.
What is the purpose of a customs union?
Customs unions often serve to bolster regional cooperation and foster trade between member countries. Once goods enter the union, they can move freely between member states without additional customs checks.
What is the difference between a free trade agreement and a customs union?
In a customs union, members of the region set common trade barriers with the rest of the world. In a free trade agreement, there is no such requirement.
