What is a key benefit of a customs union among countries?

A key benefit of a customs union among countries is the standardization of import duties. In a customs union, member countries agree to eliminate tariffs and other trade barriers among themselves, creating a free trade area. At the same time, they typically adopt a common external tariff (CET) on goods imported from non-member countries. This standardization ensures that all member countries apply the same import duties, which simplifies trade and prevents member countries from undercutting each other’s markets through different tax rates.

By having a common external tariff, the customs union also streamlines the customs processes, making it easier for businesses to operate across borders without facing varying duties and regulations in each member country. This uniformity can lead to increased trade between member countries, as businesses can predict costs more accurately and benefit from lower prices resulting from the absence of intra-union tariffs.

While improved international relations, reduction in individual country taxes, and enhanced global competition may stem from or be influenced by the creation of a customs union, they are not as direct or inherent benefits as the standardization of import duties, which is foundational to the functioning of the union itself.