Customs union is an association of two or more countries to encourage trade. The countries making such an arrangement agree to eliminate duties and other restrictive regulations on trade among them. Members of the union apply a single set of tariffs to all countries outside the union. A free trade area is like a customs union, except that the members of a free trade area may apply separate tariffs against nonmembers.
The best-known customs unions have included the Zollverein, Benelux, and the European Community (EC). The Zollverein was formed by German states in the 1830’s. These states became the German nation in 1871. Belgium, the Netherlands, and Luxembourg established Benelux in the 1940’s. In the 1950’s, Belgium, France, Italy, Luxembourg, the Netherlands, and West Germany set up what became the European Community. Denmark, Ireland, and the United Kingdom joined the EC in 1973. Greece joined in 1981, and Portugal and Spain joined in 1986. In 1993, the EC was incorporated into the European Union (EU). Since then, several other countries have joined the EU. All EU members belong to the EU customs union.
See also Benelux; European Free Trade Association; European Union (EU).
