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Customs Union

A customs union is an agreement between two or more countries to remove trade barriers and lower or eliminate tariffs. Members of a customs union generally apply a common external tariff on imports from non-member countries.

The European Union (EU) is an example of a customs union. Goods move between EU member countries without tariffs (duty-free). In addition, all EU members charge non-member countries the same tariffs for imported goods.

A customs union is not the same as an economic union. An economic union applies to more than just goods. It extends to the free movement of money and workers between member countries, which a customs union does not do. The European Union is an economic union as well as a customs union.

Related definitions

Find out more in our glossary

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