A customs union is different from a free-trade area, in that:
A) a free-trade area allows for free movement of factors, whereas a customs union does not.
B) a free-trade area allows for uniform tariffs, whereas a customs union does not.
C) a free-trade area removes trade barriers between member countries, whereas a customs union adopts identical tariffs with the rest of the world.
D) a customs union removes trade barriers between member countries, whereas a free-trade area adopts identical tariffs with the rest of the world.

Question

Quizplus · Accepted Answer

A customs union adopts identical tariffs with the rest of the world, while a free-trade area removes trade barriers between member countries but each member can have different tariffs with non-member countries. A customs union also typically involves some level of coordination on trade policies and regulations among member countries to create a more unified trade bloc.

A Customs Union Is Different from a Free-Trade Area, in That