What is a customs union? The meaning of a customs union.

When two or more countries enter into an agreement to establish a unified customs territory, within which the member states mutually reduce or eliminate tariffs, and apply a common customs tariff and foreign trade policy to goods imported from countries or regions outside this territory, this is called a customs union. A customs union is generally highly exclusive in nature, thus the goods of member states within the unified customs territory can avoid competition from goods of non-member states, thereby expanding the sales market.

The exclusive protective measures of a customs union mainly include the following: 1. Reducing and eventually eliminating internal tariffs within the union. To achieve this goal, the union often stipulates that member states must, within a specified period, transition in stages and gradually from their respective current external tariff rates to the unified tariff rate prescribed by the union, until tariffs among member states are finally eliminated. 
 
2. Formulating a unified foreign trade policy and external tariff rate. Externally, member states must, within a prescribed timeframe, respectively raise or lower their respective original external tariff rates to ultimately establish a common external tariff rate; and gradually unify their respective foreign trade policies, such as external discriminatory policies, import quantity restrictions, etc.

3. Imposing common differential tariffs on goods imported from outside the union, based on the type of goods and the providing country, such as preferential rates, rates for agreement countries, most-favored-nation rates, general preferential rates, and general rates.

4. Formulating unified protective measures, such as import quotas, sanitary and epidemic standards, etc.

Customs unions can generally be divided into two categories: One type is established among developed countries, such as the customs union of the European Economic Community, whose purpose is to secure the markets of Western European countries, resist competition from American products, promote the development of internal trade, and actively advance the process of European economic integration.

The other type is established by developing countries, with the main purpose of safeguarding the national interests of the countries in the region and promoting intra-regional economic cooperation and common development. Examples include the Central African Customs and Economic Union, the Andean Pact Organization, the Caribbean Community and Common Market, the Economic Community of West African States, the Economic Community of the Great Lakes Countries, and the Economic Community of Central African States.