Customs Union

Understanding the Concept of Customs Unions

What is a Customs Union?

A customs union is a type of trade bloc that involves the elimination of trade barriers among member countries while maintaining a common external tariff for goods imported from non-member countries.

Examples of Customs Unions

Notable examples of customs unions include:

• European Union Customs Union: Comprises all member states of the European Union.
• Eurasian Economic Union Customs Union: Consisting of Russia, Belarus, Kazakhstan, Armenia, and Kyrgyzstan.

Customs Union vs. Free Trade Area

Customs unions differ from free trade areas in that they not only eliminate tariffs but also create a common external tariff for non-member countries. This ensures that all member countries apply the same tariffs on imported goods, creating a uniform trade environment.

Benefits of Customs Unions

Customs unions offer several advantages:

• Increased trade volume: Removal of barriers facilitates increased trade between member countries.
• Reduced costs: Common external tariffs reduce administrative costs and simplify customs procedures.
• Enhanced competition: Competition stimulated by increased trade benefits consumers with lower prices and improved product quality.