Legal Definitions - customs union

A customs union is an agreement between two or more countries to form a single customs area with a common external tariff. This means that each country in the union remains politically independent, but they agree to abolish or gradually reduce tariffs on goods traded between them and impose common tariffs on imports from non-members.

• The European Union (EU) is a customs union. Member countries of the EU, such as Germany, France, and Italy, have eliminated tariffs on goods traded between them and imposed common tariffs on imports from non-EU countries.
• The Southern African Customs Union (SACU) is another example of a customs union. Member countries of SACU, such as South Africa, Botswana, and Namibia, have a common external tariff and have eliminated tariffs on goods traded between them.

These examples illustrate how customs unions work in practice. By eliminating or reducing tariffs on goods traded between member countries, customs unions promote trade and economic integration. However, they also limit the ability of member countries to negotiate their own trade agreements with non-member countries.