If Chile and Mexico abolish all tariffs on each other's products while maintaining their own tariffs against other countries, these two countries have formed a customs union.

Question

Quizplus · Accepted Answer

Chile and Mexico would have formed a free trade area, not a customs union. A customs union requires a common external tariff on imports from non-member countries, which is not mentioned in the scenario.

If Chile and Mexico Abolish All Tariffs on Each Other's