Which of the following statements best defines a customs union?
A)All barriers to the trade of goods and services among member countries are removed and each country maintains its own policy towards nonmember countries.
B)It eliminates trade barriers between member countries and adopts a common external trade policy and a common currency.
C)It has no barriers to trade between member countries,includes a common external trade policy,and allows factors of production to move freely between members.
D)It eliminates trade barriers between member countries and adopts a common external trade policy.

Question

Quizplus · Accepted Answer

A customs union eliminates trade barriers between member countries and adopts a common external trade policy. This means that all member countries have the same tariffs, quotas, and other trade restrictions against nonmember countries. However, each country maintains its own policies towards nonmember countries, so there may still be some differences in trade policies. A customs union does not necessarily involve a common currency or free movement of factors of production.

Which of the Following Statements Best Defines a Customs Union