Customs Unions and Single Markets

Customs Unions and Single Markets are examples of deeper economic integration between countries

How does a trading bloc differ from a customs union?

Trading bloc

A trading bloc is essential an agreement between countries to lower their import tariffs and perhaps extend this to reducing the use of non-tariff barriers to trade. In a free trade area, each country continues to be able to set their own distinct external tariff on goods imported from the rest of the world.

Customs union

A customs union is different from a free trade area, in which means no tariffs are charged on goods and services moving within the area. It adds on a common external tariff on all products flowing from countries outside the customs union, unless specific trade deals have been established. Revenues from import tariffs are combined for all member states. The countries in a customs union negotiate as a bloc when discussing trade deals with countries outside the union. A good example is the recently introduced bilateral trade deal between the European Union and Japan.

Revision Video on the Economics of Brexit

The difference between custom union and monetary union - revision video