Customs Union Agreement

A Customs Union Agreement is a formal arrangement between countries where they agree to eliminate tariffs (taxes) on goods traded between them and adopt a common external tariff on imports from other countries. This facilitates easier and more predictable trade among member countries, promoting economic integration. Unlike a free trade area, which only removes internal tariffs, a customs union ensures a unified trade policy toward non-member nations. Examples include the European Union Customs Union, which enables member states to trade seamlessly with each other while maintaining a shared tariff policy.