Agreement between two or more (usually neighboring) countries to remove trade barriers, and reduce or eliminate customs duty on mutual trade. A customs union (unlike a free trade area) generally imposes a common external-tariff (CTF) on imports from non-member countries and (unlike a common market) generally does not allow free movement of capital and labor among member countries.
· Indirect tax
· State Aids
· Monopolies
· Public purchasing
· Cartels (syndicate, sales agency)
· Rules and regulations
· Security issue
· A custom union is a type of trade block which is composed of a free trade with common external tariff.
· The participant countries set up common external trade policy, but in some cases they used different quotas.
· Examples - MERCCOSUR
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