A customs area refers to a country or group of countries within which duties and import regulations are identical for goods transported between their internal jurisdictions.
Key Characteristics of Customs Areas:
- Customs unions establish common external tariffs while allowing free movement of member state goods, as seen in the EU single market
- Free-trade areas involve solely tariff reduction lacking harmonized external trade policies like NAFTA
- Economic unions coordinate macroeconomic and regulatory policies atop customs agreements
Example Customs Areas:
The World Trade Organization recognizes numerous customs areas like the East African Community comprising Burundi, Kenya, Rwanda, South Sudan, Tanzania and Uganda with a common customs declaration system.
Key Takeaways:
Customs areas foster regional economic integration by liberalizing internal commerce while enabling members to negotiate externally as larger economic blocs. However, non-tariff barriers may still inhibit full liberalization between partner states.