A customs union is an area in which:
- No cross-border tariffs apply between member states; and
- All member states must charge the same tariffs on goods entering their country from outside the customs union.
A customs union is a stronger form of a free trade agreement, because of the second of these conditions.
In most free trade agreements, individual participating countries retain the right to set different tariffs on goods entering their individual countries.
2. European Union.
An abbreviation for the European Customs Union.