Definitions for "Customs union"
Keywords:  tariff, xxiv, gatt, external, eliminate
The merger of two or more customs territories with the effect that (Art. XXIV GATT and Art. 23 EC Treaty) customs duties and non-tariff barriers are eliminated between the members of the union for substantially all trade, and a common customs tariff and common rules for non-tariff barriers are introduced for substantially all trade with non-member countries.
A group of nations which have eliminated trade barriers amongst themselves and have created a common external commercial policy in respect of all other countries. A customs union forms the basis for a common market which seeks to further liberalize trade.
A customs union is a group of countries among which goods pass free of trade barriers but which also adopts a common external tariff regime. As such, the EC is a customs union, but NAFTA is a free-trade area because the external trade barriers of Canada, Mexico and the US were not harmonized.