A customs union is:

Question

A customs union is:

Quizplus · Accepted Answer

A customs union is a type of trade agreement in which member countries agree to eliminate internal tariffs and establish a common external tariff on goods imported from non-member countries. In other words, goods can move freely among member countries, but face the same hefty customs duties at the border when imported from outside of the union. This is different from a free trade area (option C) because in a free trade area, member countries eliminate tariffs among themselves but retain their own individual tariffs on non-members. Option A and D are partially correct but do not encompass the entire concept of a customs union. Option E is incorrect as there is a correct answer.

A Customs Union Is