A customs union is defined as

A customs union is defined as

• A. Eliminates trade barriers between members and adopts a common external trade policy.
• B. Maintains separate external tariffs.
• C. Eliminates tariffs only for agricultural goods.
• D. No common policy.

Answer: (A)

A customs union combines removal of trade barriers among member countries with a common external tariff toward non-members. This means goods move freely inside the union, and all members apply the same tariffs to imports from outside, presenting a single external trade policy. That’s why this choice is correct: it captures both the elimination of internal barriers and the shared external tariff. The other options don’t fit because maintaining separate external tariffs describes a free trade area rather than a customs union, eliminating tariffs only for agricultural goods is too narrow, and having no common policy contradicts the defining external-tariff element of a customs union.

A customs union combines removal of trade barriers among member countries with a common external tariff toward non-members. This means goods move freely inside the union, and all members apply the same tariffs to imports from outside, presenting a single external trade policy. That’s why this choice is correct: it captures both the elimination of internal barriers and the shared external tariff. The other options don’t fit because maintaining separate external tariffs describes a free trade area rather than a customs union, eliminating tariffs only for agricultural goods is too narrow, and having no common policy contradicts the defining external-tariff element of a customs union.