Question

Why the formation of a customs union (such as the European Union or Mercosur) cannot be justified for purely economic reasons. Consider political, cultural, environmental, social and other factors.

Answer 1

Most of us think that the formation of customs unions such as the European Union is mainly derived from the economic terms and situations but this is not the real truth. There are many other factors that can play a significant role in the formation of these unions.

Cultural aspects also play a significant role in the formation. If we look at the different countries which are the members of the European Union, they have some sort of cultural similarities that can either be related to their geography or religion. The formation of these types of unions among the conflicting culture looks quite difficult. As the formation of trade treaty between the European Union and Middle East countries will have a lot of hiccups

Political aspects= This can be seen in the form of the cold war. The USA formed a number of custom unions to deprive USSR of the economic benefits and thus the political reasons may also induce the formation of these unions

Technological factors= Some countries which want to collaborate with each other in the field of the technology can also form such types of unions so that they can help each other in their technological development and they share their research and findings

Social factors= Social unification and to have greater interaction between the different societies can also be the underlying reasons for the formation of these unions