Question

A customs union is:

A.) a group of countries that agrees there will be "no rules" about trade.

B.) a group of countries agreeing to eliminate barrires to trade among themselves but keeping tariffs in place against the rest of the world.

C.) a groups countries that eliminates trade barrier among themselves and elects a common tariff against all other nations.

Answer 1

Option C

• Customs union is a trade agreement between two or more neighbouring countries.
• The neighbouring countries set their own common tariffs that they use on other outside countries.
• This group of countries remove the trade barriers among the member countries,
• And set common tariffs against non member countries.
• This type of trade agreement allows free movement of goods and services among the member countries.
• Thus by eliminating internal tariffs, the common markets allow them the free movement of labour, capital and other resources.