what is Customs Union: Customs union is agreement among nations to eliminate trade barriers such as tariffs and quotas among themselves or members and to adopt common barriers to imports from non- member- countries.
Characteristics of customs union
- Tariffs are abolished.
- Each member-countries is given free hand to maintain its customs duties and tariffs against non-member countries.
- All track restrictions are abolished.
- The members may agree on common customs duties and tariffs against any non-member country.
Advantages of Customs Union
- It enhances good welfare for the citizen.
- It improves efficiency and stimulation of faster economic development.
- It results in lower cost per unit due to internal economies reaped by producing for a large market.
- There is a large internal market for members and increased trading activities between member countries.
Disadvantages of Customs Union
- There may be possible death of some industries resulting in some degree frictional unemployment.
- There may be loss of revenue that would have accrued as a result of abolition tariffs.