What is a customs union?

A customs union is an agreement between two or more countries to:

1. Eliminate trade barriers (such as duties or quotas) on goods traded between member countries.
2. Adopt a common external tariff for goods imported from non-member countries.

How do customs unions differ from Free Trade Agreements?

• Customs union members share identical tariffs and trade rules for all non-members.
• FTA members set their own tariffs for non-member countries.

This means that in a customs union, goods imported from outside the union face the same duty rates no matter which member country they enter.

Example custom unions

• European Union (EU) – Includes a common customs tariff for imports from non-EU countries.
• Southern African Customs Union (SACU) – Includes Botswana, Eswatini, Lesotho, Namibia, and South Africa.