CUSTOMS UNION

A customs union is a is a type of trade bloc which is 
composed of a free trade area with a common external tariff. 
The participant countries set up common external trade
 policy, but in some cases they use different import quotas. 

Common competition policy is also helpful to avoid 
competition deficiency.

Purposes for establishing a customs union normally include 
increasing economic efficiency and establishing closer 
political and cultural ties between the member countries.

It is the third stage of economic integration.
Customs union is established through trade pac
 Trade Bloc

A trade bloc is a type of intergovernmental agreement, 
often part of a regional intergovernmental organization, 
where regional barriers to trade (tariffs and 
non-tariff barriers) are reduced or eliminated among the 
participating states

One of the first economic blocs was the German 
Customs Union (Zollverein) initiated in 1834, formed on 
the basis of the German Confederation and 
subsequently German Empire from 1871
 Trade  pact

A trade pact is a wide ranging tax, tariff and trade 
pact that often includes investment guarantees. Trade 
pacts are frequently politically contentious since they 
may change economic customs and deepen 
interdependence with trade partners. Increasing 
efficiency through "free trade" is a common goal. The 
anti-globalization movement opposes such 
agreements almost by definition, but some groups 
normally allied within that movement, e.g. 
green parties, seek fair trade or safe trade provisions 
that moderate what they perceive to be the ill effects 
of globalization.
 Economic  Integration

Preferential  Free trade area Customs 

trading area  union 

Economic 
Complete  Common 
and 
economic  market
monetary 
integration
union
Customs union is a trade agreement by which a 
group of countries charges a common set of tariffs 
to the rest of the world while granting free trade 
among themselves. 

It is a partial form of economic integration that 
offers an intermediate step between free-trade 
zones (which allow mutual free trade but lack a 
common tariff system) and common markets.

 The customs duty is collected once at the port of 
entry under the Union. The rate of customs duty is 
same. A part of the duty collected goes to meet 
expenses of the Customs activity of the Union 
Staff.
CUSTOMS UNION
INDIA

MALAYSIA

CHINA

SRILANKA
 THE CUSTOM UNION WOULD INCLUDE
INDIA, CHINA, MALAYSIA AND SRILANKA.

 ALL FOUR COUNTRIES ARE ASIA’S

EMERGING ECONOMIC MARKETS AND
HAVE THE POTENTIAL TO FORM A
POWERFUL ECONOMIC BLOC.
 Raw material To Manufactured goods
DIAGRAM:-
MALAYSIA
•CRUDE OIL
INDIA
•NATURAL GAS

SRILANKA AND
•METAL AND 
STEEL
CHINA
•LEATHER AND 
RUBBER
 ABOUT…
 The countries indulging in a custom union
have a free trade area with common external
tariffs.
 Here china and India being amongst the
biggest producers of goods but lack in
natural resources.
 Srilanka and Malaysia have plenty of natural
resources but they lack in factors of
production.
 ADVANTAGES
 MAXIMUM UTILISATION OF NATURAL
RESOURCES.
 INCREASE IN EMPLOYMENT.
 INCREASE IN TRADE.
 INCREASE IN GDP.
 OVERALL ECONOMIC PROSPERITY.
 A Custom Union solves which two
problems of the Free Trade Area?

The Common Tariff issue and Tariff Evasion. 
                     
                                  though 

The Common Tariff issue and the Joint Custom 
Revenue is also correct because customs is collected at 
the entry point irrespective of the country
Ag ree ment Da te ( in force)

Central American Common Market (CACM) 1961-10-12

Andean Community (CAN) 1988-5-25

Caribbean Community (CARICOM) 1973-8-1

Economic and Monetary Community of Central Africa (CEMAC) 1999-6-24

East African Community (EAC) 2000-7-7

Eurasian Economic Community (EAEC) 1997-10-8

European Economic Area (EEA)Needs updating 1958-1-1

- EC — Andorra 1991-7-1

- EC — Turkey 1996-1-1

Gulf Cooperation Council (GCC) 2003-1-1

Southern Common Market (MERCOSUR) 1991-11-29

Southern African Customs Union (SACU) 2004-7-15

West African Economic and Monetary Union (WAEMU) 2000-1-1

 Pr op os ed
 2007 Economic Community of West African States
(ECOWAS)
 2008 Common Market for Eastern and Southern Africa
(COMESA)
 2010 Arab Customs Union (ACU)[1]
 2010 Southern African Development Community (SADC)
 2011 Economic Community of Central African States
(ECCAS)
 2015 Arab Common Market (ACM)]
 2019 African Economic Community (AEC)
 Closer Economic Relations (FTA between Australia and
New Zealand)
 North American Free Trade Area (NAFTA)
 common ma rket
 A common marke t is a type of
trade bloc which is composed of a
customs union with common policies on
product regulation, and
freedom of movement of the
factors of production (capital and labour)
and of enterprise. The goal is that the
movement of capital, labour, goods, and
services between the members is as easy
as within them.
COMMON MARKET
Angola

Tanzania

Zimbabwe

Namibia

South Africa
 All 5 countries mentioned here, i.e., Angola,
Tanzania, Zimbabwe, Namibia, South Africa
southern African developing countries.

 Each country has a developing economy.

 ABOUT…. Common market
 It is a customs union with common policies on
product regulation.

 Makes freedom of movement of all the 3 factors

of production (land, capital and labour) and
services between the members as easy as within
them.
 ADVANTAGES
 INCREASE IN EMPLOYMENT
OPPORTUNITIES.
 INCREASE IN TRADE OPPORTUNITIES.
 LEAD TO HEALTH AND EDUCATION
SECURITY.
 OVERALL GROWTH OF GDP.
 Single Market

 Sometimes a single market is differentiated as a more 
advanced form of common market. In comparison to a 
common market a single market envisions more efforts 
geared towards removing the physical (borders), 
technical (standards) and fiscal (taxes) barriers among 
the member states. 
 These barriers obstruct the freedom of movement of the 
four factors of production. 
 To remove these barriers the member states need 
political will and they have to formulate common 
economic policies.
 List of single market

 Andean Community (CAN) - 31 December 2005[1] 
 Caribbean Community single market (CARICOM) 
 Central American Common Market (CACM) 
 Economic and Monetary Community of Central Africa 
(CEMAC) 
 European Economic Area (EEA) between the EC, 
Norway, Iceland and Liechtenstein
FR EE TR AD E AR EA

UNITED STATES OF AMERICA

NEW ZEALAND
 INTRODUTION
 New Zealand and the United States are old
friends.
 NEW ZEALAND IS A VERY SMALL ECONOMY AS
COMPARED TO U.S. YET IT HAS ENOUGH
SCOPE.
 BOTH COUNTRIES SHARE GOOD WORKING
RELATIONS AND SHARE AN EXCELLENT
SYSTEM OF COMMUNICATION.
 BOTH COUNTRIES WILL BE BENEFICIAL.
 ADVANTAGES TO NEW
ZEALAND
 IT’LL SUSTANTIALLY INCREASE THE EXPORT OF
ITS WELL RENOWNED DAIRY PRODUCTS.

 MORE TRADE MEANS MORE EMPLOYMENT.

 ADVANTAGES TO U.S.
 US merchandise exports to New Zealand would
rise by about 25% and virtually every US sector
would benefit.
 NEW ZEALAND HAS FTA AGREEMENT WITH
AUSTRALIA FROM THE PAST 20 YEARS.
 IT’LL HELP MERGE U.S. WITH AUSTRALIA
FUTURE GIVING THEM LARGER MARKET
SHARE.
 eco nom ic an d monetary
union
 An eco nomi c an d monet ar y union is a type of
trade bloc which is composed of a single market with a
common currency. It is to be distinguished from a mere
currency union (e.g. the Latin Monetary Union in the
1800s), which does not involve a single market. This is
the fifth stage of economic integration. EMU is
established through a currency-related trade pact
 Com plet e econ omic
in teg ration
 Co mpl et e economic int egr at ion is the final stage of
economic integration. After complete economic
integration, the integrated units have no or negligible
control of economic policy, including full monetary union
and complete or near-complete fiscal policy
harmonisation.
 Complete economic integration is most common within
countries, rather than within supranational institutions.